Investopedia: Anadarko: A Balanced Player In An Imbalanced Time

It is an ironic part of commodity investing that good times usually work against the best companies. When prices are soaring, those higher realizations paper over a lot of the sins and shortcomings of inferior players and those stocks often outperform those of the companies built to list. To that end, Anadarko Petroleum (NYSE:APC) is a fine company and a very credible candidate for longer term portfolios, but probably does not have the same upside leverage to higher energy prices as other names.

The Quarter That Was
For the fourth quarter of 2010, Anadarko reported that revenue (outside of divestitures) rose about 9%. Growth was helped by both higher production (though production slipped on a sequential basis) and higher price realizations in oil.

Across the board Anadarko saw good cost control this quarter. Although EBITDA rose about 4% as reported, cash cost growth was contained to 2% on a per-barrel basis (coming in at about $7.57/boe). What makes that all the more impressive is that Anadarko operates in some expensive regions; Anadarko is the largest operator in Eagle Ford, for instance. Said differently, in an environment where companies like Schlumberger (NYSE:SLB) and Halliburton (NYSE:HAL) are seeing good results, it is no small detail that Anadarko is keeping a lid on costs. (For more, see Eagle Ford Shale Midstream Assets Coming.)

The Look Ahead
Although the company did report that it achieved 140% reserve replacement for 2010, the news was not wholly perfect. The company did report that the start of the Caesar-Tonga project is looking like a 2012 or beyond event instead of a 2011 event, and the company continues to wait for greater clarity from the federal government as it pertains to operating in the Gulf of Mexico. 


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