Anadarko May Look to Monetize Some Mozambique Assets

APC: Anadarko Petroleum logo
Anadarko Petroleum

Independent oil exploration player Anadarko Corp. (NYSE:APC) may look to sell part of its holdings in the offshore Mozambique gas fields, which are estimated to hold between 15 to 30 Trillion cubic feet (Tcf) of natural gas. [1] Senior vice president Chuck Meloy stated that the gas fields present an opportunity for the company to monetize its stake in the discovery, where Anadarko plans to build a Liquefied Natural Gas facility to export the output from the fields to Asian markets. We have a $88 price estimate from Anadarko which is at a 10% premium over its current market price. Integrated players like BP (NYSE:BP) also have exploration projects in offshore Africa.Click here for our full analysis of Anadarko.

Need for cash

Anadarko agreed to pay BP $4 billion to settle claims relating to the Gulf of Mexico spill arising from its stake in the Macondo well. We previously noted that the company was considering selling its offshore assets in Brazil to cover the settlement expenses. (See: Anadarko to Offload Brazilian Assets to Focus on Gulf of Mex. and Africa) Analysts also point out that Anadarko might consider an alternative whereby it ties up with a larger integrated company. This would allow the company to provide expertise in converting natural gas from the find to exportable LNG and marketing it to foreign markets. LNG projects are capital intensive and the company, along with its partners, is looking to make a final decision by 2013. [1]

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Anadarko has said that it may look to construct 2 to 6 LNG production units under the project, which may cost $6 billion or more according to some analysts. [1] This will result in the production volumes of the company increasing over the next few years as projected in our forecasts. Future assets sales are expected to impact our sales estimates for the company.

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  1. Anadarko Considers Potential Sale of Mozambique Gas Fields, Bloomberg [] [] []