Noting that management was outperforming macro concerns, Credit Suisse’s Edward Westlake stated that Anadarko Petroleum Corporation’s APC future investment profile is based primarily on its “competitively advantaged positions” in Delaware, Wattenberg and Gulf of Mexico.
Westlake upgraded the stock from Neutral to Outperform, while raising the price target from $70 to $77.
Ups & Downs
The analyst explained that the price target had been raised based on “Delaware Estimated Ultimate Recoverys, some option value for Proven Undeveloped Reserves in gassy disposals, some value for Cote D'Ivoire and two extra tiebacks in the Gulf of Mexico per year.”
However, Westlake expressed concern regarding the oil price trajectory, in the event that OPEC does not rein in output.
At the same time, the analyst expects Anadarko Petroleum to continue to monetize assets to lower the absolute level of net debt.
Shares Decline
The company reported wider than expected loss for Q3. According to a Reuters report, this was the fifth consecutive quarter that Anadarko Petroleum reported quarterly losses, driven by weak oil prices.
Westlake believes shares “could pull back into the $50's as oil falls but there seem to be higher highs ahead.”
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