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Gold/Mining/Energy : Anadarko Petroleum Cp -- Ignore unavailable to you. Want to Upgrade?

To: PuddleGlum who wrote (23)	6/8/1999 9:17:00 PM
From: The Ox	Read Replies (1) \| Respond to of 129

Hi PG, I've been intending to post this information for a while and seeing your post tonight has lit a fire under me to follow through on my intentions. It's funny you mentioned 46 because that's the "12-month price target" from Robert Morris of PaineWebber, the source of the "analysis" in this post. On May 18, PW upgraded APC to "Buy from Attractive based on price and a heightened outlook for commodity prices." One of the catalysts that could improve APC's situation is for "potential success" in the company's offshore GOM sub-salt prospects. APC had success in 1998 from the Tanzanite and Hickory discoveries and APC's first new sub-salt GOM well was supposed to begin drilling by now. I may call the company to see if they have begun the drilling. PW says that the recent equity offering has raised cash and reduced debt-to-book capitalization from 56% to 47% without "any material impact on our per share earnings and cash flow estimate. This certainly addressed one concern held by investors with regard to financial leverage......Our current 1999 discretionary cash flow estimates, deducting capitalized items, is approximately $126 million." APC has "an enlarged exploration lease inventory in the vicinity of it's Alpine field discovery in Alaska as the result of the recent National Petroleum Reserve-Alaska federal lease sale". The recent GOM sub-salt discoveries added 20% to APC's proved reserves and with expanded drilling could add even more to proved reserves. 4 additional sub-salt prospects have been slated for drilling in 1999. These projects are still considered "wildcat exploration prospect that management assigns no more than a 35% chance of success." "the company's leverage to changing oil prices should increase over the next couple of years as it's oil development projects expand in Algeria and Alaska. Consequently, it's projected production is expected to be roughly 55% crude oil and natural gas liquids in 2001." "A $1/bbl change in PW's 1999 WTI spot oil price forecast of $15.66/bbl impacts the company's 1999 projected cash flow by 15.8% compared to a 6.4% average impact for our coverage group." Of course they end with the usual risks disclaimer. My 2 cents: if Oil prices stay where they are today, $17/bbl, I have a $55 12-month target, which could look very conservative looking back. PG, what's the time frame for your contest? I'm not sure this stock is ready to fly short term but a slow rise won't surprise me at all. Michael