Energy Losers: Anadarko Petroleum

Anadarko Petroleum shares slide as the government says BP didn't cut corners in the Macondo well design.

Author:: Eric Rosenbaum
Publish date:: Nov 8, 2010 2:19 PM EST

NEW YORK (

) -- The BP oil spill is back in the news on Monday, and if any of the oil spill-related stocks is suffering as a result of the latest government comments about the investigation, its

Anadarko Petroleum

(APC) - Get Report

The federal government's lead investigator said on Monday that there were no indications that BP, or any of the companies involved, had cut corners, saving themselves a few pennies while paying no attention to safety, and causing the worst oil spill in U.S. history.

Anadarko shares are down 6% today, the only major loser among the oil spill group of stocks, which also includes

(BP) - Get Report

Halliburton

(HAL) - Get Report

and

Transocean

(RIG) - Get Report

. Anadarko was the worst-performer in the S&P 500 Index on Monday in the early afternoon.

"To date we have not seen a single instance where a human being made a conscious decision to favor dollars over safety," the commission's Chief Counsel Fred Bartlit said at a meeting exploring the causes of the Gulf spill.

The oil spill commission chief also said the panel agreed with 90% of the findings of BP's internal investigation of the accident, which placed much of the blame on the Halliburton cement job. Halliburton shares, after selling off by as much as 15% on Oct. 28 when the government said its tests of the cement showed major flaws, was up close to 5% on Monday.

>>Halliburton Stock Crash: 4 Key Questions

One big difference between Anadarko, on the one hand, and Halliburton and Transocean on the other, is that Anadarko owns 25% of the BP Macondo well. Transocean and Halliburton can stick to their legal defense that their contracts with BP fully protect them from any liabilities.

As an owner of 25% of the Macondo well, that's a harder case for Anadarko to make without gross negligence on the part of BP. Halliburton took the unusual step of posting a copy of its BP contract to the investor relations section of its web site after the government released the cement test results at the end of October, to make the case in contract language that it was fully protected from oil spill liabilities. Anadarko has no such security blanket.

It's circumstantial to make the case that Anadarko shares would sell off solely as a result of the latest government comments. However, Anadarko has consistently and aggressively levied accusations of gross negligence against BP. Those claims clearly aren't supported by the government's findings. The government lead investigator did stress on Monday that its finding in no way have legal applications, including with questions of negligence.

Analysts noted that when Anadarko reported earnings last week, it stuck to its strong language attacking BP. Analysts say that while Anadarko still refuses to take any charge related to the oil spill, investors may be increasingly worried about that eventuality based on the government statement on Monday.

"This certainly weakens the gross negligence arguments," said Phil Weiss, analyst at Argus Research, who has maintained that Anadarko will have to take an oil spill charge at some point.

There are a few other trading-specific factors that could explain the Anadarko selloff. For one, Anadarko has moved up strongly over the past two weeks, from under $56 a share on Oct. 19 to over $67 at the end of last week. Additionally, Anadarko shares are up hugely since their oil-spill low under $35 hit in June. The $67 mark hit at the end of last week represented a near-doubling of that low.

A little bit of the Anadarko recent rallying was due to market chatter about the company being an M&A target.

>>Anadarko Petroleum: Energy Winners

If the BP gross negligence argument is out, and thereby, Anadarko will have to take a charge, it's not as attractive a takeout candidate. Some analysts say Anadarko was never really a takeout candidate anyway, since no one would want to buy a company with potential BP oil spill liability. In any event, there was a specific piece of oil M&A news on Monday that could also contribute to a less optimistic takeout argument for Anadarko.

Royal Dutch Shell

(RDS.A)

announced on Monday that it was selling a 30% stake in Australia's

Woodside Petroleum

(RDS.A)

, valued at over $3 billion. With Anadarko being a less attractive takeover candidate, the Shell news could signal that potential acquirers of an Anadarko might be looking elsewhere with Woodside also in play.

-- Written by Eric Rosenbaum from New York.

>>Halliburton Stock Crash: 4 Key Questions

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