In a Nov. 16 research note, Stifel analyst Michael Scialla reported on Anadarko Petroleum Corp.'s (APC:NYSE) "2019 investor-friendly plan," which includes double digit growth with "debt-adjusted share growth of 15% year over year."
Scialla presented the key points of the Anadarko's plan. The company projects 10% year-over-year (YOY) oil production growth, reaching total production of 260270 billion barrels of oil equivalent. This amount equates to 712740 thousand barrels of oil equivalent per day or 410435 barrels of oil per day. It is 2% lower than the Street's forecast.
The company targets total 2019 capex at $4.3$4.7 billion, 13% below consensus' estimate and 3% below Anadarko's 2018 budget at the midpoint.
The explorer and producer's project focus in 2019 will be primarily on the "three Ds"the Delaware Basin, Denver-Julesburg Basin and deep water Gulf of Mexico, with 15 rigs and 10 completion teams operating mostly onshore in the basins, the analyst stated.
Individual plans for each asset, domestic and international, are:
- Delaware Basin: to spend $1.4 billion, or 31% of the budget, and complete 150175 wells in its transition to multiwell pad development
- Denver-Julesburg Basin: to spend $1.3 billion, or 29% of the budget, and complete 275300 wells
- Gulf of Mexico: spend $500 million on 79 wells to maintain 140150 thousand barrels of oil equivalent per day production
- Powder River Basin: to spend $250 million for 1015 appraisal wells, targeting the Turner Formation
- Algeria/Ghana: to spend about $200 million to generate excess cash flow and maintain YOY production
- Mozambique: to spend $200M million for site preparation and advancing the liquefied natural gas project toward a final investment decision, anticipated in H1/19
Further, Scialla highlighted, Anadarko's 2019 plan "underscores the company's commitment to returning capital to shareholders." The energy firm increased its share repurchase program to $5 billion from $4 billion, and it raised its dividend 20% to $0.30 per share. "The dividend yield of about 2% will be second highest in our 11-company bellwether peer group," the analyst noted. Finally, the company also increased its debt reduction by $500 million to $2 billion.
Stifel has a Buy rating and an $88 per share target price on Anadarko, whose stock presently trades at around $54.16 per share.[NLINSERT]
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Disclosures from Stifel Nicolaus & Company, Anadarko Petroleum Corp., November 16, 2018
I, Michael S. Scialla, certify that the views expressed in this research report accurately reflect my personal views about the subject securities or issuers; and I, Michael Scialla, certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. Our European Policy for Managing Research Conflicts of Interest is available at www.stifel.com.
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Anadarko Corp. (APC) is the parent company of Western Gas Partners, LP (WES). For all relevant disclosures for Western Gas Partners, LP please go to the research page at www.stifel.com.
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