KLR Group Raises Price Target on Anadarko Petroleum (APC) Following Deepwater GOM Assets Acquisition
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KLR Group reiterated a Buy rating on Anadarko Petroleum (NYSE: APC), and raised the price target to $93.00 (from $85.00), following an accretive $2 billion acquisition of Freeport-McMoRan’s (NYSE: FCX) deepwater GOM assets. The acquired properties include a 100% operated interest in the Holstein, Horn Mountain and Marlin production facilities.
Analyst John Gerdes commented, "We are increasing our APC target price $8 to $93 per share due to the accretive $2 billion acquisition of Freeport-McMoRan’s (FCX, $9.94, NR) deepwater GOM assets and subsequent increase in capital spending given the incremental liquidity provided by the acquired assets. Specifically, Anadarko plans to increase ’16 capital spending ~$200 million with the addition of two rigs respectively in the Delaware and DJ Basin, in line with our expectation. Incrementally, we are increasing capital spending in ’18 by $300 million and by $600 million per annum thereafter given the liquidity provided by the acquired assets. The equityfinanced acquisition is approximately 10% accretive to ’17 CFPS and should increase ’17 EBITDA by ~$1.06 billion. Our '17 oil production growth expectation of ~14% is ~2% above company guidance (10%-12%)."
Shares of Anadarko Petroleum closed at $57.52 yesterday.
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