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Anadarko Petroleum: Key Trends and Fundamentals

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Anadarko Petroleum: Key Trends and Fundamentals PART 1 OF 14

Key Trends in Anadarko Petroleum’s Net Debt

Anadarko’s net debt

In a previous series, we looked at Anadarko Petroleum’s (APC) key strategies, goals, and expectations for this year. In this series, we’ll look at Anadarko’s key fundamentals and stock price movement.

 

Key Trends in Anadarko Petroleum&#8217;s Net Debt

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Anadarko’s net-debt-to-adjusted-EBITDA (earnings before interest, tax, depreciation, and amortization) multiple has declined significantly since last year. As we can see in the graph above, its net-debt-to-adjusted-EBITDA multiple has been mirroring movements in its net debt, which has also fallen since it peaked in 1Q16. In 1Q16, its net-debt-to-adjusted-EBITDA multiple was ~10.0x, and its net debt was ~$16 billion.

On the other hand, Anadarko’s adjusted EBITDA have increased considerably since last year, which contributed to the decrease in its net-debt-to-adjusted-EBITDA multiple. Anadarko’s 1Q17 net debt was ~$9.5 billion, compared with ~$15.8 billion in 1Q16. Its net debt in 4Q16 was $12 billion. Its trailing-12-month adjusted EBITDA as of 1Q17 was ~$3.7 billion, compared with ~$931 million in 1Q16.

Anadarko’s net debt rose sharply between 3Q15 and 1Q16 as its EBITDA fell, resulting in its net-debt-to-adjusted-EBITDA multiple rising significantly. However, since 2Q16, Anadarko’s adjusted EBITDA have risen and its debt levels have fallen, explaining the decline in its net-debt-to-adjusted-EBITDA multiple since 2Q16.

Peers, liquidity, and financial position

Anadarko noted that it had $5.8 billion in cash and cash equivalents on March 31, 2017. According to its annual report, Anadarko has a $3 billion five-year revolving credit facility that will mature in January 2021. It also has a $2 billion 364-day credit facility. In January this year, Anadarko announced that it had extended the maturity date of the credit facility to January 2018.

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