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Barclays’ Thomas R. Driscoll maintained an Equal Weight rating on Anadarko Petroleum Corporation (NYSE: APC), while raising the price target from $33 to $39.
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While noting that the company has been taking steps to improve its liquidity, through a dividend cut and asset sales, Driscoll mentioned that the stock was currently trading at a 10 percent premium to peers, “on multiples of debt adjusted cash flow.”
“APC is motivated to deliver its planned $2-3 billion of asset sales as it is relatively highly levered and has debt maturities of $3.75 bn in ‘16- ’17,” the analyst pointed out.
Management has guided to capex of $2.7 billion in 2016, due to “divestiture adjusted” production decline expected at 3 percent and relatively flat oil volumes.
Liquidity Measures
Anadarko Petroleum recently reduced its dividend by more than 80 percent, thereby saving $450 million annually.
In addition, Driscoll expects the company’s asset sales to strengthen the balance sheet and offer an alternative to the issuance of equity.
“We estimate the divested assets (Springfield Pipeline, East Chalk and Soda Ash interests) had associated EBITDA in the ~$175-200 million range,” the analyst mentioned.
The company’s is also expected to reduce U.S. onshore spending in 2016 by 70 percent, as compared to 2015, while bringing down international spending by 30 percent.
“We are lowering 2017 price assumptions to $2.75 for natural gas and $58 for WTI as introducing as 2018 “mid-cycle” estimates based on $3.00 and $70,” Driscoll added.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.