Anadarko's Centerra Delays Could Be a Big Setback
cris is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Anadarko (NYSE: APC) has experienced some setbacks in its oil drilling operations in the Centerra development in east Loveland, Colorado where the company's oil drilling operations were recently put on hold.
The plans between Centerra and Anadarko to sign a lease deal that would allow for the drilling activities to continue have been temporarily, one must hope, shelved. Anadarko wishes to get hold of the gas reserves that are right in the middle of Centerra. Despite the indications that their discussion will continue regarding the lease, I believe one of the main reasons why drilling operations have been put on hold is because the actual residents of Centerra were not informed of these potential developments. They are now collectively voicing their anger on the issue.
The key issue is that the Centerra developer, McWhinney, initially stressed the environmental concerns of the company when it sold the homes in Centerra. This was a key reason why residents bought land in the area in the first place. If Anadarko begins drilling operations, it will seem like a breach of faith between the people of Centerra and McWhinney developers.
Anadarko, which has had to do a lot of damage control over the past two years due to its involvement in the Gulf of Mexico oil spill, will have very little say in where the drilling operations will take place, should the sides agree upon the lease. This power to specify the location for the drilling operations will rest with McWhinney. I would imagine Anadarko is looking to protect its fragile image in the US, but surely it would like to get back to drilling as soon as possible.
Anadarko is one of the companies that have made discoveries of new fuel sources off the coast of Mozambique. In response to the new discoveries, Mozambique intends to open up a round of bidding to see who will have the rights to operate in the area. Many different companies have expressed their interest, as you can imagine. It is discoveries of new gas and oil sources such as these that keep Anadarko near the top of the food chain in the market. Look for the company to bid high on the Mozambique prospect if it sees the area as a solid supply of fuel sources in the future.
One of Anadarko's main competitors, BP (NYSE: BP), is not having very good luck at present. Two years after the Gulf oil spill, it is still dealing with the aftermath. Recently, Kurt Mix, a former employee of the company, was arrested under allegations of attempting to cover up the extent of the spill, as well as the fact that clean up operations were proving ineffective. This is likely to delay the court's decision to grant preliminary approval of a $7.8 billion civil settlement between BP and the committee of plaintiffs. Halliburton (HAL) is also making waves in terms of the settlement by insisting that it cannot be forced to contribute to BP's payments to plaintiffs. Halliburton also indicated that it would like to reach settlements itself with several of the plaintiffs in the case. Even when a settlement has been reached, it is unlikely that the situation will be resolved for BP. More and more ill and mutated fish are uncovered every day in the area, something for which BP will be held accountable for a long time yet to come, especially due to the huge impact it has on the fishing industry.
Another Anadarko competitor suffering from bad luck would appear to be ATP Oil & Gas (NASDAQOTH: ATPAQ.PK). ATP stock has decreased significantly over the last year and it would seem that there is a small chance for recovery. This has caused many stockholders to sell their ATP stock, although a bullish trader may see it as an opportunity to buy and hope for the best in the future. Regardless, the weakened ATP should be out of Anadarko's way for the near future.
Chevron (NYSE: CVX) seems to be a bit more lucky than its competitors. The company has been involved in a lawsuit for more than 10 years related to the shooting of several Nigerians back when Chevron was engaged in drilling activities there. Recently, however, courts acquitted Chevron of any wrongdoing in the situation and now the terrible business can be put behind it. Look for the company to make big moves now that its attention is no longer tied down in court.
Cabot Oil & Gas (NYSE: COG) seems to have the right idea about how to survive in the oil and gas industry with the current economic climate. This proactive company is making its own luck. The latest development is that of the new pipeline the company is involved in developing. The pipeline will run from Pennsylvania to Tennessee and will carry huge amounts of natural gas. The pipeline represents a very promising future for Cabot, as well as for Cabot's partner in this exciting new venture, Williams Partners (WPZ). Although Williams Partners owns the majority of the pipeline (namely 75%), the 25% that Cabot owns will no doubt yield great returns for the company. Because the pipeline is predicted to be non-operational until 2015, now is the best time to buy Cabot stock. Companies like Anadarko may want to take note of the proactive approach and invest in long-term solutions like this.
Andarko needs to take care of the small mess in Loveland. After that, and after it has gotten back to drilling, it can focus on increasing production. Its competitors are in mixed states right now, so Andarko needs to decide whether it's going to be tied up in problems or expanding. As an investor, I'd hope for the latter.
jewishitalian31 has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.