Anadarko Petroleum doubles dividend

If I were buying anything now, this energy play would be a stock pick.

By Jim J. Jubak Aug 7, 2013 6:46PM

Image: Oil drilling platform (© Scott Gibson/Corbis)I’m not buying much of anything right now -- the current market action makes me think we’ll see profit-taking for August, and September looks potentially volatile on worries about a taper at the Federal Reserve’s September meeting and threats of a government shutdown at the end of the month.


But if I were, shares of Anadarko Petroleum (APC) would be near the top of the list for any new money buys in the energy sector. That’s especially true after Anadarko’s post-New York close announcement on Tuesday, that the company would increase its quarterly dividend to 18 cents a share from 9 cents. That’s not the kind of yield that makes anyone rich -- it’s less than 1% -- but it is an important vote of confidence by the company’s board, in the company’s ability to turn its huge portfolio of discoveries into cash flow.


That vote of confidence is particularly important to me because Anadarko has a big position in the Marcellus shale, and I’m starting to hear worries that production from the Marcellus will knock natural gas prices down to the floor (or even the sub-basement) again.  Anadarko doesn’t seem to share that worry. (The dividend increase is also a statement that Anadarko feels it can handle any negative result from the Tronox lawsuit without serious disruption to its cash flow.)


Anadarko has 24 projects in its current development pipeline. Some of the big ones are in the deepwater Gulf of Mexico, where Anadarko keeps hitting major oil on its lease properties.


Production from the Caesar/Tonga project in the Gulf of Mexico came on line earlier in 2013, and Anadarko’s Lucius project in the deepwater Gulf of Mexico remains on schedule for first oil in the second half of 2014. In addition Anadarko recently discovered oil at Raptor, in 8,200 feet of water, and on the Walker Ridge in 5,800 feet of water. These discoveries are near Anadarko’s Shenandoah and Coronado discoveries in the Gulf.


The company’s other mega-projects in Algeria, Ghana, and Mozambique showed continued progress in the just-reported second quarter. The Jubilee field off Ghana, one of the largest discoveries in the world when it was found in 2007, has produced its first oil. In Algeria a second oil train is on schedule to increase production to 30,000 barrels a day from the company’s El Merk project by the end of 2013. In the waters off Mozambique, Anadarko discovered natural gas in 1,536 feet of water at Espadarte. That discovery adds to natural gas reserves off Mozambique -- that the company sees as the foundation for a terminal to export liquefied natural gas from Mozambique later in the decade.


Back on land in the United States, the company reported strong drilling results from its shale oil and gas positions in the Delaware Wolfcamp, Wattenberg, Eagle Ford, East Texas, and Marcellus geologies.


A recent report from the U.S. Energy Information Administration doubled estimates for natural gas in the Marcellus formation -- that stretches from Kentucky to New York -- to 31.9 trillion cubic feet of natural gas. And early results show wells in the region are relatively cheap to drill and produce very strong flows.


That’s not exactly bad news -- except that the region is currently very under-served by pipelines, making it hard to get gas to market and sending prices for gas from Marcellus down to $1 per million BTUs (British Thermal Units) at some local hubs.


That gas will eventually find its way to the main natural gas market at the Henry Hub in Louisiana, and the worry is this new supply will send prices that have only gradually clawed their way above $3 per million BTUs back toward $2. I wouldn’t discount that worry but Anadarko’s dividend hike tells me that this company, at least, thinks it has enough other production projects in the works to make Marcellus worries relatively minor.


Before you buy Anadarko, of course, you should be familiar with the Tronox lawsuit. Tronox, a former subsidiary of Kerr-McGee, which is itself now a subsidiary of Anadarko, has filed suit claiming that it was insolvent and under-capitalized when it was spun off from Kerr-McGee in 2005.


Tronox subsequently filed for Chapter 11 bankruptcy in 2009 under the weight of environmental penalties brought by the Environmental Protection Agency. Tronox has claimed that Kerr-McGee didn’t set aside enough money for Tronox to pay its environmental obligations in the spin off. The suit, seeking up to $25 billion in damages and fees, went to final argument in December 2012 and could be decided in the relatively near term in the Southern District of New York.


According to calculations by Credit Suisse, Anadarko’s current stock price includes about $3.3 billion for the cost of the suit. That’s more than double Anadarko’s projection of liability of up to $1.4 billion. A survey by Credit Suisse suggests that the suit has kept a sizeable number of investors who would otherwise own Anadarko on the sidelines. A settlement is possible as early as August.


Assuming that it isn’t an unexpectedly large disaster for Anadarko, a settlement in the Tronox suit should push the stock higher as money comes off the sidelines.


Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund, I liquidated all my individual stock holdings and put the money into the fund. The fund may or may not now own positions in any stock mentioned in this post. The fund did own shares of Anadarko Petroleum as of the end of June. For a full list of the stocks in the fund as of the end of June see the fund’s portfolio.


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Tags: APCoil
14Comments
Aug 7, 2013 8:49PM
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I'll say it AGAIN... Ben Bernanke has been pumping $85 billion a month through the front door and an ungodly undisclosed sum through the back door of the stock markets for 5 solid years now. That's too many TRILLIONS to count. Don't buy ANY stock because 100% of stocks are tainted by false equity in the form of Ben's fiat cash. The NEXT DAY after QE ends, most American "business platforms" crash and burn. Worse yet... because they have been SO GREEDY about wealth, NOT ONE could revive what it used to be and be an enterprise. You tell me... which "blue chip" isn't in bed with the Chinese and solely reliant on imported parts pieces and a drop-shipping scam. A goon squad of administrators lawyers financiers paper and button pushers doesn't make a company, it makes a pariah.
Aug 8, 2013 9:43AM
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cont. from below:

 

Latest Headlines:
03:14 AM EST on August 7th, 2013 | 45 comments
NYTimes: 400 tons of highly radioactive water going into Pacific each day from Fukushima plant, says Tepco — Top Nuclear Regulator: This is a crisis

12:20 AM EST on August 7th, 2013 | 23 comments
Tepco Official: This is extremely serious — We are unable to control radioactive water seeping out of Fukushima plant (VIDEO)

10:09 PM EST on August 6th, 2013 | 26 comments
CNN Nuclear Expert: Fukushima plant is in ‘uncharted territory’ — Highly radioactive water to either be boiled until it evaporates, or dumped in ocean

07:39 PM EST on August 6th, 2013 | 18 comments
Japan’s Top Nuclear Official: Tepco will never be able to store all the radioactive water at Fukushima plant — They’ll end up dumping it into ocean

04:45 PM EST on August 6th, 2013 | 65 comments
Wall St. Journal: Official warns Fukushima reactor buildings could “topple” — Tepco’s work to change flow of groundwater can form pools below surface that soften the earth

03:14 PM EST on August 6th, 2013 | 34 comments
BBC: Water crisis at Fukushima has only just begun — “Plant sits smack in the middle of an underground aquifer” — It’s rapidly being overwhelmed deep beneath ground (VIDEO)

01:26 PM EST on August 6th, 2013 | 32 comments
Wall St. Journal: Fukushima leaks are “massive public health issue” — Obviously this could spread throughout Pacific and get into food supply (VIDEO)

11:40 AM EST on August 6th, 2013 | 31 comments
Oregon Health Officials: We are actively monitoring the situation in Japan — We are not ‘yet’ mobilizing in response to the news — We will respond with enhanced efforts as appropriate

09:28 AM EST on August 6th, 2013 | 15 comments
Vice Governor: “Emergency situation” at Fukushima; Tepco has increased the risk of further leaks; Gov’t needs to take over — NHK: Officials make “emergency visit” to damaged nuclear plant (VIDEOS)

08:29 AM EST on August 6th, 2013 | 6 comments
TV: Nuclear expert says Fukushima “is already beyond Tepco’s control” — Gov’t concerned leakage to rapidly accelerate (VIDEO)

03:19 AM EST on August 6th, 2013 | 13 comments
Asahi: Radioactive contamination ‘soaring’ in Fukushima groundwater — Strontium and other beta emitters up 4,500% in recent days; Cesium rises nearly 1,500% — Tepco says it doesn’t know why levels spiked (VIDEO)

12:20 AM EST on August 6th, 2013 | 48 comments
Tepco Press Conference: The situation at Fukushima is bleak — “This discharge is beyond our control” (VIDEO)

11:25 PM EST on August 5th, 2013 | 64 comments
Shock? UC Berkeley Professor Claims: “No matter what happens in Fukushima, it’s not going to be a problem over here” — U.S. Gov’t: “Any kind of release in Japan would be non-detectable here” (Studies say otherwise)

-------------------------

The irony,

 

And what is a resonable anount of time and what goes on durring this reasonable amount of people,plants,air,etc.,etc.,

 

Yes it's all such hilarious stuff. Why the clown heads over at the msn 1 board spoke about these things as nonsense and what a story and fun to listen to while they invest into greed of demise.

 

 As we watch the sesmic activity expand in the Gulf we have a sick laugh at those that dismiss things and play string puppet clown patrol on Fantasy Island. As we did say 'it all comes out in the wash' and Poof! just like Magic for the clowns,

 

August 8,2013 - Exclusive: Censored EPA PA Fracking Water Contamination Presentation Published for First Time

(if the link don't show up just run a search)

 

Those that have followed along understand.

Aug 8, 2013 10:06AM
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Say what's wrong with this board?

 

Ya try posting relevant NEWS as to these great companies to invest in however when you spill the trash can your entry is cleaned of the spill?

Aug 8, 2013 9:58AM
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Aug. 8,2013 - Exclusive: Censored EPA PA Fracking Water Contamination Presentation Published

 

Goes hand in hand with this 3 part entry enjoy. Board won't allow the link to.

Aug 8, 2013 9:42AM
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Good morning folks!

 

Back at the old msn refugee 1 board where the financial circus clowns and string puppets of Fantasy Island play we explained. And they poked and mocked and ridiculed and boasted about their fracking and ge stocks amongst other things.

 

Why when we broke the story line down they called us nuts and that we did not know what we were talking about. Imagine that as the 50/50 half truther club in the financial boards that way have been losing their own credibility quite quickly and time is accelerating for them in that arena of lost credibility (if they ever had any for that matter).

 

Today's entry should be in a couple of topics we have so we combined the silent riddles and presented them in The POST today. Is the sangrias and wxyz and frank,bimetal and others reading today (as they do comment about VL over here). And if you are reading we ask you,how far do your mocking and poking go now big time nothings? As you all stated we had no idea what we were talking about and that these things were all cleaned up and over with. REALLY!

 

Aug. 6,2013 - New Leaks Into Pacific at Japan Nuclear Plant

 

Tons of contaminated groundwater from the stricken Fukushima nuclear plant have overwhelmed an underground barrier and are emptying daily into the Pacific, creating what a top regulator has called a crisis.

The water contains strontium and cesium [...]

“Tepco lacks a sufficient sense of urgency for this crisis,” Shinji Kinjo, a high-level official at the country’s nuclear regulatory watchdog, said Tuesday in an interview. [...]

Tepco now says the groundwater is emptying into the plant’s man-made harbor at a rate of 400 tons a day [...] While the company did not specifically say how much of the water was contaminated, it offered a calculation for the amount of tritium being released that assumed all of the water was contaminated.

[...] experts agree with Tepco’s assessment that the amounts of radioactive material released into the Pacific have been too small to pose a risk to human health. Still, some critics contend that the plant has emitted far more radioactive materials than it is saying, based in part on levels of contaminants discovered in the harbor, which are well above safe levels in some places. [...]

Mr. Kinjo [...] said that the levels of contamination in the water that had collected in the reactor buildings was too low to account for the radiation levels seen in the groundwater now flowing into the ocean, so the water at the reactors was unlikely to be the source of the latest leaks.

The most likely source appears to be pools of highly radioactive water that collected in the plant’s maze of underground conduits [...]

&

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Here's a REALLY good stock to buy right now....

 

I would buy it myself but........................

 

Come on Jim, I'm not as dumb as I look..... If its such a GOOD deal, why are you gobbling up shares of this prime company????

 

More worthless wah wah to fill airspace......

 

 

Aug 8, 2013 9:45AM
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cont. from below entries:

 

So while the pumpers are pumping away with their 50/50 jibbersish of half truths for profits of demise why this is what we speak of when we state that those of such caliber are unable to look in the mirror and identify themselves as they don't know which mask belongs to them as they have told so many lies.

 

Msn Refugee Board 2 / The DECOY409 POST

Aug 9, 2013 1:02PM
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Currency Reset in Motion - The QUADRILLION (Plus!) Ticking Time Bomb,Derivatives

We wrote this piece with help from the watchers of like ourselves. Clown patrol 50/50 spin artists such as (well we know) had a hard with such a article as there is no where to run when she goes. However these 50/50 spin artists gambling with demise all for the fame of "Look what I have" in a Jones vs Jones world (for them that is) like the gambling with purchase of Demise.


Would be pretty funny to SEE what they hoop and holler about when their credit vouchers of paper expire. As we have been barking about clickity-click and DEBT,DEBT,DEBT and these spin artists that insist that what they have made off of demise will be waiting for them.


The jokes on them folks ands we have stated all along. Why they were laughing about a interest rate at a certain TBTF that they stated just was not true when we announced 4.5% on your paper. Yes that was a year ago and the begging dept. could not cough up the cake in which was taken and deposited with them as they said it would take 10-14 days to have it back in stacks instead of a clickity-click bogus check. Why they were so upset at the asking for it back and closing the acct. they offered 4.5% to stay a loyal customer.


When we refused that they offered the clickity-click paper check. And we refused that. That brought the old pres. out of the office to SE what the noise was. Why the pres offered the same remedy and we declined. We stated to give back what had been deposited in good faith. And next stop was a theft charge as they stated that a wait of 10-14 days was needed not required in this situation. And we said no.


Was a rough day a year ago for somebody as they did give it up in paper bills measuring down to $1-$5-$10. Had to laugh as it was like all they had for all we know behind those vault doors. Similar to that of the GOLD and SILVER messy trail of where did it go. As allocated accts. have been used for recent servicing of orders.


That article from last year, The Decoy 409 POST - July 5,2011 - The QUADRILLION (Plus!) Ticking Time Bomb,Derivatives


You may want to have a look at that now and combine the following out as of recent (our thanks to the gang at Investmentwatch for keeping time),


Aug. 9,2013 - Global Currency Reset In Process: The Fed Can’t Exit Easy Monetary Policy As USD Comes Under Attack, China and Russia Suggesting A New Bretton Woods, One Quadrillion Dollars of Derivatives Time Bomb Is Set To Explode

source/Investmentwatch


But these are things that TRUTH brings to the surface. Daniels dream explained as in the good book. All things shall be revealed for what they are. We call the casino and the past few years of endless rising from nothing SUPER MILKER or Sham WoW.

 

The Decoy 409 POST / Msn Refugee Board 2

Aug 8, 2013 8:12AM
Aug 8, 2013 1:30AM
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APC is in my backyard here in the Woodlands Texas, and I wouldn't invest in a oil company such as APC. What a measly dividend. I do think the market is due for a major correction, and as we can see from the latest earnings reports,  some companies will be in a world of hurt soon. My next oil purchase is going to be COP, but after I see it drop another 6 dollars or so. For an oil stock, that is a respectable dividend. My favorite oil stock is SDRL. Now your talking about a company willing to share the wealth with investors. EPD is another  albeit a more slower growth/slash dividend stock.

 

  Hey JIM, you still gung ho in the Chinese stocks?  No way am I investing in that circus!

Sep 15, 2013 11:10AM
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Perhaps APC needs the proceeds from their Mozambique sale to settle the Tronok lawsuit....
Aug 7, 2013 9:58PM
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A 0.40 percent dividend and look at the P/E ratio.

 

No wonder Jim is bald.

 

Wouldn't it be better to invest in China?

 

 

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