Simmons Raises Price Target on Anadarko Petroleum (APC) to $59 Following 1Q Review

Simmons reiterated an Overweight rating on Anadarko Petroleum (NYSE: APC), and raised the price target to $59.00 (from $57.00), following a review of the company's 1Q. There are no changes to the strategic playbook where APC continues to focus more on short-cycle cash flow opportunities and primarily targeting the drillbit at higher RoR tie-back opportunities. Consistent with its desire to focus on short cycle/high return assets, APC has targeted ~45% of its capital to onshore assets. During the quarter, APC once again distinguished itself at the drillbit with materially lower q/q well costs in the Delaware and Wattenberg, and production was up 4% q/q.

Analyst David Kistler commented, "Despite underperforming the EPX by ~4% since releasing 1Q earnings, we viewed the results as constructive for APC in both the short and longer term. Specifically, production (while gassier) exceeded expectations and oil production was in line with estimates and toward the high-end of guidance, allowing the company to continue to reaffirm flat oil production in '16 on a y/y and 4Q'16 vs. 4Q'15 basis. Importantly, costs (LOE/G&A and capex) came in below expectations, providing incremental cash flow that could be deployed to its outperforming Delaware basin assets and may bias production higher. The company will likely remain disciplined in a sub $50/bbl world with respect to spending outside of guidance and is projecting +$700M of divestitures in 2Q, which should support over $1B in cash flow above capex in FY'16 that can be used to reduce its debt burden or be used to accelerate activity in the future."

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 $48.25 yesterday.

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