Anadarko Banks on Liquids Production Growth
The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
) --Independent explorer
Anadarko
(APC) - Get Report
has posted growing revenues on strong growth in liquids production that benefited from high oil prices.
The company posted a full year loss for 2011 because of $3.9 billion in losses related to the settlement it reached with BP related to the Deepwater Horizon disaster. Operational results were encouraging, as the company increased liquids production from onshore resources in North America.
Anadarko also announced that it expects further growth in liquids output with its Algerian El Merk project nearing completion and development of its projects in the U.S. Gulf of Mexico. The company competes with vertically integrated players like
Chevron
(CVX) - Get Report
and
ConocoPhillips
(COP) - Get Report
.
We have a $90 price estimate for Anadarko , which is about 5% ahead of its current market price.
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here for our full analysis of Anadarko.
Anadarko has focused on increasing its liquids production volumes because of the supply glut in the U.S. The company posted record volumes in the liquid-rich plays in the Wattenburg, Greater Natural Buttes and Bone Spring areas in North America.
Output from shale plays in the U.S. contributed to 10% of the company's sales volumes. Output from the Eagleford Shale grew to 77,000 barrels of oil equivalent per day with 65% coming in the form of liquids. The company also increased its natural gas output, but price declines resulted in lower revenues in the quarter.
Anadarko also booked an impressive increase in its proven reserves, posting a 159% reserve replacement ratio. The independent explorer led a major gas discovery off the Mozambique coast, which is counted as one of the more important finds of the past decade.
Additionally, the company claimed that its El Merk project in Algeria was 88% complete and that output is expected by the end of this year. Anadarko is also going ahead with the Lucius development in the U.S. Gulf of Mexico, and made its first post-moratorium discovery in the GoM in the Cheyenne East prospect. Production from the field will begin in 2012.
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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.