Anadarko Petroleum Corporation engages in the acquisition, exploration, and production of oil and gas primarily in the United States, the deepwater of the Gulf of Mexico, and Algeria. It markets natural gas, and oil and natural gas liquids (NGLs), as well as owns and operates gas gathering and processing systems. The company also engages in the hard minerals business through non-operated joint ventures and royalty arrangements in various coal, trona, and industrial mineral mines located on lands within and adjacent to its Land Grant holdings. In addition, it purchases natural gas, crude oil, and natural gas liquid volumes for resale. Anadarko also has production in the People's Republic of China, Venezuela, and Qatar, as well as a development project in Brazil and various strategic exploration programs in other countries. As of December 31, 2006, it had proved reserves of 10.5 trillion cubic feet of natural gas; and 1.3 billion barrels of crude oil, condensate, and natural gas liquids. The company was founded in 1959 and is headquartered in The Woodlands, Texas.

Energy Industry Analysis

WikiWealth.com Industry Description: The energy industry is a generic term for all of the industries involved in the production and sale of energy, including fuel extraction, manufacturing, refining and distribution. Modern society consumes large amounts of fuel, and the energy industry is a crucial part of the infrastructure and maintenance of society in almost all countries. In particular, the energy industry comprises of oil, gas, coal, nuclear, hydro, wind, solar, and firewood fuel sources…. Read More. Also see the Industry Analysis Home Page.

WikiWealth.com Industry Analysis: The energy industry tends to be very sensitive to economic changes. Demand for energy is inelastic, so it does not easily change with changes in price. Therefore, changes in supply have a large impact on the price of fuel. Some sectors of the energy industry require large investments over an extended period of time, which causes issues with adjusting energy supply with demand, so prices tend to be volatile. Energy industry stock prices tend to move in line with energy commodity prices. During economic recessions, consumers may decrease expenses slightly, but the majority of energy costs are not flexible, because they are needed for everyday living.

Since energy needs are inflexible, stock prices are less influenced by changed in the economy. However, commodity prices such as oil or natural gas have a direct impact on energy stock investments. Changes in commodity prices are a result of changes in supply and demand. Recently, oil prices increased, because of the demand for oil from emerging markets. Unfortunately, the global recession decreased growth estimates and demand until oil prices fell from 160 dollars a barrel to 35 dollars a barrel.

Part of oil prices changes are do to speculation. When speculators increase the price of oil, many alternative sources of fuel become profitable. When companies make investments in these alternative sources of fuel, supply increases until energy prices start to fall. If prices fall too far, then the alternative fuel sources become less profitable and shutdown, which decreases demand. Stock prices rise and fall with energy commodity prices.

¹ WikiWealth.com only uses the largest 30 companies in each industry for the basis of these financial measures. Each statistic is the market weighted average of the 30 companies.

² Investment potential (margin of safety) is a weighted average of the discounted cash flow analysis (DCF), the enterprise value (EV) market multiple analysis, and the Warren Buffett investment analysis. WikiWealth obtains 80% of their quantitative investment potential from fundamental investment analysis.

WikiWealth.com Profit Analysis: The best way to profit from energy stock investments is to find the most undervalued investments (Wall Street and Main Street buy ratings) during economic recessions. Those investments should be undervalued (see Wall Street Analysis on left side), and have high Main Street Common Sense investment ratings (see Main Street Analysis on right side). When an economic recovery occurs, energy stocks tend to outperform the general stock market, because general consumer demand increases.

Energy stocks are most sensitive to commodity prices, which are an indicator of future energy demand. Energy commodity speculators try to predict the demand and supply of commodities, but their generally set prices too high during economic expansions and too low during economic recessions. Therefore, the best time to make energy stock investments is during economic recessions. The best time to sell energy stocks is in the late stages of economic expansions, when energy stocks and commodity prices are above their fair prices. Expensive (overvalued) stocks with low Main Street Common Sense ratings should be sold at any time to invest in better stocks. Two buys ratings are the best and two sell ratings are the worst possible stock investments. For more information on stock research ratings click here.

Investment Moats

Investment Moats are fundamental investing theories developed by Warren Buffett and adapted to the SWOT analysis. Investment moats are general characteristics that separate great investments from average stock investments. The wider the investment moat the better. Read more: Investment Moats. For company-specific investment moats: SWOT Analysis.

SWOT Strengths Increase Investor Moats: Below is a list of relevant industry investment characteristics, if any exist

SWOT Weaknesses Decrease Investor Moats: Below is a list of relevant industry investment characteristics, if any exist

Stock Price Triggers

Triggers were developed by WikiWealth.com to predict changes in stock price direction, which depend on events outside of the control of the company. In general, if SWOT opportunities are greater than SWOT threats, the stock price should raise; the opposite is also true. For more precise measures, examine each SWOT opportunity and threat, then rank them according to importance and timing. The more important the investment characteristic, the greater the impact on stock direction. The sooner a investment trigger may occur, the more influence it will have on stock price direction. Read more: Stock Price Triggers. For company-specific stock price triggers: SWOT Analysis.

SWOT Opportunities are Positive Stock Price Triggers: Below is a list of relevant industry investment characteristics, if any exist.

SWOT Threats are Negative Stock Price Triggers: Below is a list of relevant industry investment characteristics, if any exist.

Long Company Description (help)

]Anadarko Petroleum Corporation (NYSE: APC) is one of the world’s largest independent oil and gas exploration and production companies, with 2.37 billion barrels of oil equivalent (BOE) of proved reserves and a production of 190 million BOE in 2004. Ranked No. 345 on the "Fortune 500" list that year, the company has assets worth $20 billion, and employs a worldwide workforce of about 4,000.

History

Anadarko, a subsidiary of Panhandle Eastern Corporation (1928-1993; Panhandle has since been acquired by Southern Union Company), was formed in 1959 after the discovery of large amounts of natural gas in the Anadarko Basin (the basin comprises the Texas and Oklahoma panhandles, and southwest Kansas), thus the company's name. It now has activities in more than a dozen countries. The United States, Canada and Algeria represent the majority of the company's proved reserves and production; U.S. onshore accounts for about 60%.

Anadarko announced on September 14th, 2006 that they had reached a deal to sell their Canadian assets, Anadarko Canada Corp., to Canadian Natural Resources Ltd.. The deal as announced is valued at $4.24 billion USD. At year end 2005, Anadarko Canada Corp. had proven reserves of 262 million BOE.

Technology

Anadarko has been at the forefront of some of the industry's most significant technological advances in 3-D seismic imaging, drilling and completion technology, and reservoir management. As information is critical in this high-tech business, the company has been placing a lot of emphasis on state-of-the-art visualization technology. Together with Mechdyne Corporation, it has installed eight visualization laboratories in its headquarters complex at The Woodlands, Texas, a suburb of Houston. Dubbed the IDEA system, an acronym for "Image Delivery for Enhanced Awareness", the laboratories allow Anadarko to maximize its sophisticated modeling tools to better evaluate drilling prospects and investment options.

Productions

Apart from oil and gas, Anadarko has a 'Minerals business unit' that manages its non-oil-and-gas mineral resources. The company holds approximately 7.5 million acres (30,000 km²) of fee mineral rights, located in Colorado, Wyoming, and Utah. These lands contain significant resources of coal, trona, limestone, titanium, zeolite, oil shale, and diamonds.

Kerr-McGee

The Kerr-McGee Corporation is an energy company involved in the exploration and production of oil and gas resources. The company, founded in 1929, has about 11.4 billion U.S. dollars in assets as of 3/31/2006. The current CEO is Luke R. Corbett.

On June 23, 2006, Houston-based Anadarko Petroleum Corporation agreed to acquire Kerr-McGee in an all-cash transaction totaling $16.4 billion. Kerr-McGee shareholders voted to approve the offer on August 10, 2006. Kerr-McGee immediately ceased to exist as an independent entity, though many aspects of company procedure and policy (such as healthcare and benefits) will be retained for a period of time. As a result of the takeover, all operations will move out of the State of Oklahoma, where Kerr-McGee employed approximately 200 people at its Oklahoma City headquarters.

Kerr-McGee History

Kerr-McGee was initially focused in mostly off-shore oil exploration and production, being one of the first companies to use drillships in the Gulf of Mexico, and later one of the first companies to use a Spar type platform in the area. With the acquisition of the Oryx Energy Company of Dallas, Texas in 1999, Kerr-McGee gained more onshore assets, as well as significant assets in several foreign areas, most notably Algeria and western Kazakhstan. Later acquisitions of HS Resources and Westport established the base of operations in Denver, Colorado and added large resource areas throughout the Rocky Mountains.

Until 2005, Kerr-McGee had two major divisions: chemical and oil-related. On November 21, 2005, the chemical division of the company, based in Oklahoma City, was sold off by IPO as Tronox, thereby making Oklahoma City home to only the administrative side of Kerr-McGee, while all exploration and production management is located in Denver and Houston.

SWOT Analysis

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