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

To: Dennis Roth who wrote (118)	3/26/2008 8:28:35 AM
From: Dennis Roth	Respond to of 129

Anadarko Petroleum Corp. (APC): New guidance generally in line with our estimates; remains Neutral - Goldman Sachs - March 26, 2008 News At its investor conference on March 25, Anadarko raised 2008 production and capex guidance and introduced guidance for 2009-2010 which was generally neutral or slightly stronger versus our estimates. Management raised its estimated resource potential for the Greater Natural Buttes field. Analysis We had believed Anadarko’s previous 2008 production guidance was conservative, and the new guidance of 207-212 MMBOE is in line with our unchanged estimate of 211 MMBOE. Increased cash from higher commodity prices and asset sales has given management added flexibility to spend more capital while still focusing on maintaining an investment grade credit rating without issuing equity. This increases our confidence that management will be able to deliver production growth in 2009 within the company’s 5%-9% growth range. An increase of 1.3 Tcfe in resource potential was announced in the Greater Natural Buttes field, which was not wholly unexpected, but nevertheless is positive. Anadarko also announced its expectations to sanction the Jubilee (Ghana) and Tonga West (Gulf of Mexico) deepwater developments later this year. This will allow for proved reserve bookings and likely have a slightly positive impact on 2010 production growth. Implications We continue to rate Anadarko Neutral relative to our Attractive coverage view and see 31% upside to our 12-month, DCF-based target price of $82 (commodity price volatility, drilling results, cost pressures and government pronouncements are key risks). We are more confident in Anadarko’s medium term production outlook and believe Anadarko can benefit from our bullish view of natural gas prices. However, we see greater relative momentum for other E&P stocks at present. Commodity piece volatility, drilling results, cost pressures and government pronouncements are key risks.