Anadarko sees higher sales this year from mineral interests

7/16/2014

Anadarko sees higher sales this year from mineral interests

BRADLEY OLSON

THE WOODLANDS, Texas (Bloomberg) -- Anadarko Petroleum Corp., the explorer that owns 8 million acres of mineral rights in the Rocky Mountains, said the holdings are accelerating beyond last year’s $675 million revenue boost.

The disclosure has encouraged investors who want The Woodlands, Texas-based company to sell some interest in the land or find a way to more fully recognize its value, said Fadel Gheit, an analyst with Oppenheimer & Co. in New York. The rights, which date back to land grants given by President Abraham Lincoln during the railroad boom, are in one of the fastest-growing areas for oil drilling in the U.S., he said.

“There are a lot of people wanting to get their hands on these assets,” said Gheit, who rates Anadarko the equivalent of a buy and doesn’t own shares. “It’s only a matter of time.”

The company is weighing a transaction that would amount to “renting” some of the acreage and the revenue it generates to investors, such as a deal 10 years ago where Anadarko sold the forward rights to royalty-related interests for a decade, Robert Morris, an analyst at Citigroup Inc. said July 13 in a note to clients. A similar deal within the next year could be worth as much as $750 million before tax, Morris said.

John Christiansen, a spokesman for Anadarko, declined to comment on any potential transaction.

Anadarko rose 3.6% July 15 to $109.72 at the close in New York, the biggest gain in the Standard & Poor’s 500 Index.

Royalties generated $600 million in oil and natural gas revenues and $75 million from coal, soda ash and other hard minerals last year, Anadarko said in a document posted on its website. Sales reached $180 million from those interests in the first quarter of this year.

The company said royalties from the Wattenberg field in Colorado generated about $300 million last year and it expects significant growth from that field as well as the Niobrara play in Wyoming.

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