UBS Reiterates Buy on Anadarko Petroleum (APC) Following Acquisition Agreement

September 13, 2016 9:58 AM EDT
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Price: $67.67 -0.91%

Rating Summary:
    33 Buy, 5 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 16 | Down: 26 | New: 28
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UBS reiterated a Buy rating and $69.00 price target on Anadarko Petroleum (NYSE: APC) following the company's announcement that it has agreed to acquire FCX's deepwater GoM assets for $2 billion.

Analyst William Featherston commented, "APC agreed to acquire FCX's deepwater GoM assets for $2 billion, funding the deal by issuing 35.25MM shares (8% dilution including the over-allotment). The deal adds ~80 MBoed (>80% oil) of net production, ~150 MMBoe of proved reserves, and adds ~20 tieback opportunities & >15 identified exploration prospects. The acquisition price is particularly attractive: 1.5x 2017E EBITDX and a 26% discount to WoodMac's $2.7 billion valuation for its key assets (Figure 1). The majority of the value in the assets are in two fields where APC already has an interest: Lucius where it is increasing the resource size by 33% to 400 MMBoe and Heidelberg. But the greatest attribute of this deal is APC expects the assets to generate ~$3-4bn of FCF over 2017-21 assuming $50-60/Bbl oil, implying a 150-200% payback in 5 years. This free cash flow will enable an acceleration in drilling activity in Permian & DJ boosting APC's overall growth rate."

For an analyst ratings summary and ratings history on Anadarko Petroleum click here. For more ratings news on Anadarko Petroleum click here.

Shares of Anadarko Petroleum closed at $57.79 yesterday.



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