After months of a painful bearish trend in the oil sector, Anadarko was strongly penalized in price too. Lost 71.5% of its value in less than a year. It went from $112.69 to $32.02. Investing firms around the world have recently become very curious about the company since the price dropped so much. After it hit the bottom price of $32 it started to gain some value back. Now supports are expected around $45 and resistances at $55 which has already been reached during the session of Wednesday morning of April 27th. As I mentioned in the title of this article, oil has also been showing some recovery, dragging Anadarko’s stock price up with it.
Anadarko, the fourth largest oil company in the US cut 1,000 jobs in 2015, which means reduce by 17 percent its workforce globally to address the scenario of low oil prices and natural gas. The cuts affected both employees at its headquarters, located in Texas (USA), and other divisions throughout the country. Anadarko announced in February that it would cut in half its capital spending budget this year to overcome the low oil prices and assess their staffing needs, given the reduction in activity.
Most of the oil companies worldwide have been forced to reduce the number of workers after 18 months of declines in international oil prices. One of the latest to announce staff reductions was Cotemar, will lay off 2,300 workers by freezing Pemex contract. US workforce reductions have been widespread due to the drop in drilling activity. Services company Baker Hughes has predicted that the number of platforms falls at a 30% in 2016, globally, affecting the workforces of companies worldwide.
Anadarko agreed in late 2014 to pay the Department of Justice $5.15 billion for environmental damage caused by its subsidiary Tronox, which is the largest such compensation agreed in the US. Since then the company has done more to lose market value. Along with consecutive falls in oil prices they have left the value at historic lows. It was time to have bought at $32 but it was risky. Now that it has been passed the $50 barrier we can say that Anadarko is consolidating its recovery. The cuts applied to the workforce and changes on some production lines and storage capacity have allowed Anadarko balance its 2016 sheets to avoid selling any assets as in 2015 they had to.
In a public statement, the board of directors want to ensure its faithful commitment towards the investor to maintain the dividend. From the company they always mention their intention to increase the dividend as soon as possible, back to the $0.25 per share, and hope that soon they can increase it from the $0.05 that was given last February. CEOs want to insist on their long term horizon in terms of investment planning. So all their investments follow that approach to a conservative and sustainable in the long run. That is another reason why I personally think it is a good moment to buy Anadarko, always keeping an eye to the oil price performance and maybe would sell if it reaches $75 – $90 depending how is the mid-short perspective at that time.