The Commodity Investor: Why Anadarko Petroleum Is A Strong Buy

August 29, 2014

American oil exploration and production firm has put is dark days behind it.


Anadarko (NYSE:APC) is one of those rare breeds of petroleum companies: a U.S.-based independent exploration and production company with a diverse and growing portfolio of international assets that generate incredible growth.

It is no secret that the vast majority of American independent E&P companies have been drastically scaling back their international operations, and selling and divesting assets in jurisdictions such as Africa, Asia and Latin America in order to focus on producing assets back home—assets in North Dakota’s Bakken, in the Gulf of Mexico and other areas where the fracking revolution has made possible extraction of hydrocarbons in a way never seen before.

Anadarko, headquartered in Texas, has actually been increasing its ownership of foreign assets, and with extremely positive results. Global output is up more than 15 percent this year, and the company has been increasing its dividend, a sure sign of its commitment to give back cash to shareholders.




This is a very different company from the one just a few years ago, which was forced to pay almost $10 billion to settle a legal settlement. In this report, we look at the new Anadarko and whether it can be a valuable addition to your portfolio.

Change Of Fortunes

Only three years ago, many in the press were writing Anadarko’s obituary. And indeed, those were dark days. APC was involved, alongside BP (NYSE:BP), in the biggest oil spill in history when the Macondo well in the Gulf of Mexico blew underwater.

Anadarko held 25 percent of the offshore block and was therefore held responsible both financially and legally for the oil spill. All in all, the company paid approximately $10 billion to settle the case, which included a multibillion-dollar punitive payment to the Justice Department.

Very few companies can come back from a legal bill that costly, especially considering the reputational damage the company suffered in the marketplace. However, Anadarko successfully put these dark days behind it and is now one of the high-flying stocks in the market today.

The common stock is up a staggering 39 percent year-to-date, driven by extremely solid operational and financial results.



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