Iberia Capital Calls Anadarko The Most Attractive Buyout Opportunity For Larger Oil And Gas Companies

Anadarko Petroleum Corporation’s APC 2Q16 results reflected the company’s superior business model, Iberia Capital’s Eric Fox said in a report. He maintained an Outperform rating on Anadarko, commenting that the stock could appreciate following the latest earnings release.

Anadarko’s 2Q16 results indicated strength across the company’s diversified portfolio, helping to overcome operational issues being faced in Ghana, analyst Eric Fox mentioned.

Although Anadarko kept its full-year guidance for capex spending and IDUC inventory unchanged, the capex year-to-date is tracking below plan. Management commentary “seems to indicate that a faster pace might be forthcoming if commodity prices "continue to improve.",” Fox stated.

Anadarko reported its adjusted loss lower than expected, mainly due to lower operating, exploration and DDA expenses, offset slightly by higher G&A costs.

Production And Exploration

Production also beat expectations, with strong oil and natural gas production in the US. The company reported positive results on Shenandoah-5 and another successful exploration well in Cote D'Ivoire.

Investment Thesis

Anadarko has a superior and diversified asset base, including a large US onshore position anchored by the Wattenberg and certain oily assets in politically stable international regions, the analyst noted.

“Other attractive components of its business model include a leading and value added exploration program that generates long-term growth and an active monetization program that reduces development costs,” Fox said, while adding that the stock was “the most attractive take out candidate for a larger oil and gas company looking to supplement its current portfolio.”

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