Anadarko Has Been Trading At A 52-Week Low. Where Will It Head Going Into 2019?

by Trefis Team
-14.52%
Downside
72.77
Market
62.20
Trefis
APC
Anadarko
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Anadarko Petroleum (NYSE: APC)  has been trading close to a 52-week low recently. With the stock having fallen from a 52-week high of 76 dollars to 50 dollars recently, what can we expect going into the next couple of quarters for the company and the stock?

We currently have a price estimate of $63 per share for Anadarko Petroleum, which is higher than its market price. View our interactive dashboard – Anadarko In 2019 – and modify the key drivers to visualize the impact on its valuation.

Anadarko Petroleum continues to face issues with production, and the price of oil/natural gas. With the rally in natural gas recently this should provide the company with some respite going forward. It recently made a deal of $4 billion with Western Gas Partners, to sell its mid-stream assets. This will generate $2 billion in cash for Anadarko and the rest of the sale will be settled in equity. We expect that the proceeds from this sale will result in anywhere from $600-620 million in 2019.

 

The company has also taken the route of paying off its shareholders through the increase of debt, and this has significant consequences in a rising rate environment. The company for the year faced a capital expenditure of $4.891 billion, and a cash flow of $4.3 billion.  With a negative cash flow of $589 million. The company’s total debt increased by $2.85 billion,

Anadarko is increasingly reliant on rising oil prices to drive its cash flow. With 2018 production ranging around 240 MMOE, Anadarko expects that its production capacity will increase to 260-270 MMOE in 2019, this is on the back of $4.3 billion capital investment. We expect oil to trade above $50 dollars a barrel in 2019, therefore  cash flows for Anadarko will steady. This could bring the stock above the 52-week low levels it is currently trading at.

 

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