Anadarko (APC) Likely Accountable in Tronox Case but Fines Could Be Manageable

A court in Manhattan heard closing arguments in a $25 billion suit against Anadarko Petroleum Corp. (NYSE: APC) over its handling of titanium-dioxide spinoff, Tronox. The suit claims Anadarko spun-off the company knowing it had insufficient assets to settle environmental claims.

Commenting on the developments, analyst Subash Chandra said "opining on potential outcomes in such complex litigation is not our preference. But . . . analysis of Anadarko without a sophisticated understanding of Tronox would be woefully incomplete."

Chandra added that "We think Court's questions/comments suggest that Kerr McGee (hence APC) would be accountable for not thoroughly estimating future environmental costs. In one of Court's questions, implication was that $2 - $3B would be minimum acceptable to US for clean-up. This would be a bullish outcome as we believe at least $4B is priced into shares, not giving credit for Mozambique."

Jefferies has a Buy rating on Anadarko Petroleum (NYSE: APC) with a price target of $96.00.

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 $75.54 yesterday.

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