Mozambique Solidifies Long-Term Cash Flow Position: Anadarko Petroleum Corporation (APC)

Anadarko’s Only Competitor in Mozambique is Enersis

Chevron Corporation (NYSE:CVX) sold all of its downstream assets in Mozambique to Engen in October 2011. These acquisitions continue to help Engen establish its presence in Mozambique. However, Chevron, a formidable American rival of Anadarko, lost quite a bit of action in Mozambique. If Chevron had stayed on in Mozambique and entered the exploration and drilling space, there would have been quite a bit of competition for both Anadarko and Enersis.

Chevron said fourth-quarter profits increased a whopping 41% to a record $7.25 billion due to stronger refining results and a boost from the Australian natural gas field swap. Chevron’s net income jumped to $3.70 a share from $2.58 in the same period in 2011.

Royal Dutch Shell plc (ADR) (NYSE:RDS.A) lost a deal in 2012 that would have allowed it to explore and drill in Mozambique. Shell’s exploration chief Andy Brown reiterated that the company is still interested in Mozambique’s gas bonanza and will make every effort to get a piece of the cake.

Total bought a 40% stake in a production contract for an undisclosed amount from Malaysia’s Petronas Gas bhd. The field is located off the coast of Mozambique, at Rovuma Basin. Total might be able to create a sort of competitive spirit among Enersis and Anadarko, which so far has remained collaborative.

Conclusion

Anadarko currently trades at $81 and has a market cap of $40 billion. With an enterprise value of $51 billion, it is one of the largest oil and natural gas companies in the world. The company’s price to sales ratio of 2.96 and price to book ratio of 1.95 are particularly impressive. With a profit margin of 13.64% and an operating margin of 8.73%, this stock will continue to be profitable in the long term. Anadarko is certainly one of the most valuable gas stocks at the moment. Like most analysts have stated, Anadarko will be a great long-term investment with regular dividends and benefits.

Rate of net profitability is likely to hit almost 20% by 2014

The projected revenue for 2018 is $23.5 billion, with a 4% growth rate. Analysts also note that Anadarko has a 45% cash flow potential with a potential price of $44. The projected gross profit for the year 2018 is $14 billion, which is roughly the value of LNG reserves in Mozambique in 2018. Though production has not begun yet, and the projects are still in the drilling stage, revenue and profit will soon help Anadarko’s cash flow increase.

The article Mozambique Solidifies Long-Term Cash Flow Position originally appeared on Fool.com and is written by Jordo Bivona.

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