The Winners Curse of Purchasing Anadarko
Published in the Houston Business Journal
May 31st, 2019
Sterling Concord Partners is a boutique investment bank specializing in sell-side advisory for Middle Market Companies.
SCP is based in Houston, Texas with clients both domestic and international.
A quantitative analysis on the purchase of Anadarko by Occidental Petroleum
A deal at any price is not a deal worth pursuing. Occidental Petroleum (NYSE: OXY) and Anadarko Petroleum Corp. (NYSE: APC) have vastly different trend lines, and an overly leveraged purchase will pull Oxy in the wrong direction.
Previous to the announced deal, Anadarko stock hovered near its multiyear lows largely due to its five year $30 billion capital expenditure, resulting in 50 percent less proven reserves. During this same time period, Oxy spent $25 billion with a 50 percent production increase and a dividend payout six times larger than Anadarko.
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