In the energy sector, investors never want the same thing for long. Oil is hot until it isn't again; foreign reserves are a great growth opportunity until local governments want to revisit the deals; and offshore is the last great opportunity to build reserves until somebody screws it up for everybody. For investors who don't want to try to play that game, Anadarko (NYSE: APC) is a good balanced play with solid exposure to emerging shales, oil-rich offshore deposits, and high-potential overseas reserves.
Good Cost Control in Q1
First quarter results for Anadarko were really solid, due in large part to good cost control. Production jumped more than 13% on a sequential basis, with most of the growth in natural gas and natural gas liquids (though oil was up 9% sequentially). Pricing was also solid, and that blended into 21% sequential revenue growth. (For more, see
Oil And Gas Industry Primer.)
On the cost side of the ledger, Anadarko saw production expenses fall 3% sequentially. On a per barrel basis, cash costs dropped about 8%, with operating costs down almost 12% and DD&A expenses rising 2%. Results were definitely helped by the company's drilling success and that may not be sustainable. Likewise, production costs could be more problematic as the company expands its shale and offshore operations - companies like
Halliburton (NYSE:
HAL),
Schulmberger (NYSE:
SLB) and
Transocean (NYSE:
RIG) are all looking to make their own growth targets on those markets.
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