Iberia Views Anadarko's New Asset Purchase Favorably, Sees Higher Margin Potential

Iberia Capital views the recent acquisition of
Anadarko Petroleum CorporationAPC
favorably, as the deal enhances one of the company's core areas at a very reasonable price and lower operational risk.

Anadarko is buying interests in two producing projects (Lucius and Heidelberg) in which it currently operates. In addition to those, the company is also accruing a non-operated WI in a successful prospect (Vito), which it sold in late 2014.

"Higher margins are likely as APC's GOM scale and more efficient operations should reduce overall operating costs. G&A and other cost synergies are also expected from the combined operations," analyst Eric Fox wrote in a note.

Related Link: Anadarko's Deepwater Gulf Purchase A Positive In Goldman's View

"[T]he higher long-term growth detailed by APC in its presentation may lead to multiple expansion for the stock. Monetization opportunities will increase as well and enable additional investments in short cycle development in a more constructive commodity price environment," Fox continued.

Fox noted that potential upside includes future exploration success with 15 prospects identified on the acquired properties. Further, the analyst highlighted many of these prospects are near existing GOM infrastructure already used by Anadarko and would be more economical than earlier.

At time of writing, shares of Anadarko were up 2.05 percent to $58.77.

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Posted In: Analyst ColorLong IdeasNewsCommoditiesReiterationM&AMarketsAnalyst RatingsMoversTrading IdeasEric FoxHeidelbergIberia CapitalLucius
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