Energy
Top Jefferies Energy Picks as 4 Big Producers Freeze Production
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We wrote back in January that eventually somebody would blink, and while at first glance the news of a production freeze at January levels from Saudi Arabia, Russia, Qatar and Venezuela is not a cut, it’s a start. With the Saudi and Russian economies both desperately in need of higher prices, and Iran’s production coming into the markets after years of international sanctions, it would seem like a cut can’t be too far behind.
A new Jefferies research note says that a 1 million barrel per day cut should start to stabilize markets, and a 1.5 million barrel cut should help to draw down global inventory balance by the second half of this year. The report lists top picks for investors from the energy research team, and we focus on four that could react the fastest to positive news.
Anadarko Petroleum
Shares of this top company are down a stunning 65% since May of 2015. Anadarko Petroleum Corp. (NYSE: APC) operates through three segments. The Oil and Gas Exploration and Production segment explores for and produces natural gas, oil, condensate and natural gas liquids (NGLs).
The Midstream segment provides gathering, processing, treating and transportation services to Anadarko and third-party oil, natural-gas and NGLs producers, as well as owns and operates gathering, processing, treating and transportation systems in the United States. The Marketing segment markets oil, natural gas and NGLs in the United States; oil and NGLs internationally; and anticipated liquefied natural gas production from Mozambique.
The company’s asset portfolio includes U.S. onshore resource plays in the Rocky Mountains, the southern United States, the Appalachian basin and Alaska. It also includes the deepwater Gulf of Mexico and Mozambique, Algeria, Ghana, Brazil, Colombia, Côte d’Ivoire, Kenya, Liberia, New Zealand and other countries. As of December 31, 2014, it had approximately 2.9 billion barrels of oil equivalent of proved reserves.
In December the company once again posted earnings that beat estimates and raised the guidance going forward. In addition to strong performance, it is lowering costs and keeping the balance sheet as clean as possible.
Anadarko investors receive a 0.51% dividend, after a huge 81% cut. The Jefferies price target for the stock is $53, and the Thomson/First call consensus target is $65. Shares closed on Tuesday at $39.09.
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