Door open to global growth
Anadarko’s $5 billion pollution settlement will free it to pursue expanded exploration.
The $5 billion settlement of a long-running pollution case will free Anadarko Petroleum to rival the world’s biggest energy companies and pursue global ambitions from Mozambique to the Gulf ofMexico.
That is, if they don’t get bought first.
Built for a potential sale by former chief executive officer James Hackett, a renowned dealmaker, Anadarko may have outgrown all but a few possible suitors. Two major legal cases in the past five years involving toxic pollution have kept buyers and investors away. With Thursday’s agreement resolving the last of its liability, the question now is whether Anadarko will continue growing, or become the latest “independent” to be swallowed by Big Oil.
“This is a company that people have been thinking the majors would buy for a long time now, but I don’t think they’re in a buying mood,” said Tim Beranek, a money manager at Denver-based Cambiar Investors, which owns nearly 2 million shares. Anadarko will be able to grow faster than many people expect, he said. “They have a rich portfolio, and there’s a lot that they can do.”
Anadarko, based in The Woodlands, Texas, is the second-largest operator in the Denver-Julesburg Basin on Colorado’s Front Range, with 350,000 acres to develop, reserves estimated at up to the equivalent of 1.5 billion barrels and 4,000 potential drilling locations.
Anadarko drilled 300 wells in 2013 and plans to drill 400 in 2014. The company employs 796 people inColorado.
Anadarko shares soared 15 percent to an all-time high after it agreed with the Justice Department to pay $5.15 billion to clean up 85 years worth of pollution left behind by its Kerr-McGee unit.
An estimated $4.4 billion from the settlement, the government’s largest recovery ever for environmental cleanup, will be spent on contamination that stretches from Western uranium mines in Navajo territories to woodtreatment plants in Mississippi and Pennsylvania. The rest will go to injury claims, according to court documents.
“Investor focus can now return to the tremendous value embedded in Anadarko’s asset base, allowing our peerleading operational and exploration results to again becomethe basis for valuation,” chairman and chief executive officer Al Walker said in a statement.
Anadarko rose 2 percent, or $2.01, to close at $101.03 Friday after the average price target of 28 analysts rose to $111.32, according to data compiled by Bloomberg. The company’smarket value rose to $51.9 billion.