Anadarko Jumps on Natural Gas Discovery

Shares of Anadarko Petroleum(APC) surged more than 5% on Monday after the company more than doubled the estimate of its biggest natural gas discovery to date.

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The energy company said the successful results of its Barquentine-3 appraisal well offshore Mozambique expands "the estimated recoverable resource range to 15 to 30+ trillion cubic feet (Tcf) of natural gas."

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Philip Weiss of Argus Research wonders if the discovery means the project may be too big for Anadarko to handle alone. Though "anything that helps confirm the size of a resource is helpful," Weiss said, it also raises the question of whether Anadarko will look to bring in other partners with capital. Post-production for this area is expected to be around 2017-2018, he said, and Anadarko is typically part of deepwater projects that are closer to being brought to market. For companies such as Chevron(CVX), BP(BP) and Exxon(XOM) with deeper pockets, tying up capital for six years doesn't mean the same thing as it does for Anadarko, Weiss noted. Anadarko had $3.05 billion in a net attributable loss in the third quarter. Exxon reported $10.3 billion in third-quarter earnings.On the plus side, being one of the first companies to get into this area means Anadarko should benefit from lower acreage costs.Weiss has a hold rating on Anadarko, citing valuation concerns and higher expenses than its peers. The stock finished up 5.5% at $75.77 in Monday's regular session. --. >To submit a news tip, send an email to: tips@thestreet.com.

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