Anadarko Petroleum (ticker: APC) realized royalty revenues in 2013 of approximately $675 million from oil and natural gas and mineral interests and is on pace to eclipse this total in 2014, the company said in a fact sheet released today.
The 2013 royalty revenues from the Wattenberg horizontal program were approximately $300 million, and Anadarko expects significant growth with more than 2,500 potential horizontal drill sites yet to be developed on the Company’s fee mineral-interest acreage in the Wattenberg field. “Through the technological advances of horizontal drilling, the Wattenberg field is expected to provide continued exceptional growth metrics with an anticipated double-digit compounded annual growth rate (CAGR) through the end of the decade,” the company said in its report.
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Analyst Commentary
Capital One Securities Note - (7.15.14)
There has been considerable investor interest in public E&P ownership of mineral rights & royalty interests following the successful partial monetization via IPO of EnCana’s royalty business in Canada (PrairieSky Royalty - TSX: PSK) and a portion of Diamondback’s mineral interests in the Permian (Viper Energy Partners – NASDAQ: VNOM). As investors look to other E&P names w/ significant ownership of mineral rights that possibly have hidden value, we have recently noted that APC obviously comes to mind given its mineral rights associated with the vast ~8MM net acre Land Grant in CO, WY, and UT, which includes strategic positions in CO’s Wattenberg field and WY’s Moxa, Wamsutter, and Monell areas. Today APC provided additional disclosure regarding its mineral interest ownership, noting ~$675MM in revenues last year, including ~$600MM from oil and gas royalties and ~$75MM from 3rd-party coal, soda ash, and other hard minerals operations, and noting that it is on pace to eclipse this total in 2014. Of this amount, ~75% of the royalty revenues were associated with the ~8MM Land Grant position, with the remainder located in several areas throughout its Southern Region and in the GOM. Also, ~50% of the oil and gas royalties came from APC’s Wattenberg field. We believe the additional disclosure is in response to many inbound questions that APC has received around its mineral interests and does not necessarily imply that the company will execute a PrairieSky or Viper-like transaction, but we have noted that mgmt has accelerated value from this asset in the past and will continue to pursue all ways of accelerating value from it going forward.
