Anadarko’s key management objectives
Anadarko Petroleum (APC) has taken several steps to counter lower commodity prices. These key management objectives include improving cost efficiencies and asset monetizations. APC noted that it had reduced its lease operating expenses by ~17% year-over-year in 1H15.
On the company’s 3Q15 earnings conference call, its chairman and chief executive officer Robert Walker said, “In addition to improving our cost structure by working with our service providers and vendors, we’re also making permanent process enhancements and optimizing our operations in a manner that is sustainable over the longer term.”
As of 3Q15, the company had reached agreements or closed asset monetizations worth ~$2 billion. This included the Powder River Basin coalbed methane divestiture it closed on September 1, 2015. Like many oil and gas companies, APC too has resorted to the sale of non-core assets to strengthen its financial position.
Walker said, “We’ll remain focused on creating value by enhancing our wellhead margins and moderating our base decline, improving cost efficiencies, maintaining an active exploration program and pursuing ongoing monetizations like we have done in prior years. The value we are creating today will give us the foundation for future success. And when we see value in pursuing growth, we’ll be prepared to accelerate activity.”
Anadarko’s reduced spending
Like many upstream companies, Anadarko also scaled back its 2015 capital expenditure. Its 2015 estimated capex of $5.4–$5.8 billion is 33% less than 2014 levels. However, unlike other upstream companies, APC hasn’t revisited this figure in 2015.
Companies such as Chesapeake Energy (CHK), Marathon Oil (MRO), and Hess (HES) further reduced their capex figures from the initial guidances they’d provided at the start of 2015. These companies combined make up ~2.7% of the Energy Select Sector SPDR ETF (XLE).
For a detailed overview of Chesapeake Energy, you can read Will Chesapeake Energy Succumb to an Energy-Driven Debt Crisis?
Analyst targets for Anadarko Petroleum
The above graph notes high, low, average, and median analyst target prices for APC. The consensus target price of ~$77 indicates positive returns of about ~76% compared to current levels over the next 12 months.