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This is What Sent Anadarko Petroleum Corporation’s Stock Down 19.7% in December

By Matthew DiLallo - Jan 7, 2016 at 1:30PM

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A boatload of bad news weighed the company down last month.


What: December was one of those months where whatever could go wrong seemed to go wrong for Anadarko Petroleum (APC). Not only did the price of crude oil plunge double digits, but there were a number of news items and rumors that added more uncertainty to its future.

So what: The month started off on the wrong foot after the company was ordered to pay a $159.5 million fine resulting from the 2010 Macondo disaster in the Gulf of Mexico. While the fine was far less than the $3.5 billion that the U.S. government was seeking, the company is still considering an appeal because the court ruling said that the company "bears no culpability" in the accident and therefore there was no reason for it to be punished.

In other news, last month the company signed a new agreement with its partner Eni (E 0.21%) to develop adjoining natural gas areas off Mozambique. Eni agreed to develop its reservoirs alongside Anadarko's in a separate but coordinated manner. That said, with the continued weakness in the oil price, Anadarko pushed off a final decision on how it will develop its gas reserves in the country until the second half of this year.

On a more somber note, an explosion at a natural gas planted owned by Western Gas Partners (WES 0.90%), but operated by Anadarko started a fire, resulting in some injuries and the evacuation of that plant. The plant was just acquired by Western Gas Partners in 2014, and was in the process of being expanded. While the impact on Anadarko's production was limited, it still added to the company's pressures last month. 

If that wasn't enough for investors to digest, rumors swirled toward the end of the month that China's Sinopec (SNP 1.67%) was in talks to acquire Anadarko. This was on the heels of Anadarko's own failed bid for a U.S. rival. While the market has been awaiting a merger wave to hit the industry, investors didn't buy the Sinopec rumors. That's because of potential regulatory concerns with having a foreign investor like Sinopec controlling a major U.S. independent oil and gas producer.

Now what: Much of last month's news flow brought uncertainty, instead of clarity, which when added to the continued weakness in crude prices, really weighed on the stock. That said, should crude oil bounce back, it could quickly erase last month's slide given that the main driver of Anadarko's business is its oil-fueled cash flow.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

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Stocks Mentioned

Anadarko Petroleum Corporation Stock Quote
Anadarko Petroleum Corporation
Eni S.p.A. Stock Quote
Eni S.p.A.
$23.51 (0.21%) $0.05
China Petroleum & Chemical Corporation Stock Quote
China Petroleum & Chemical Corporation
$46.83 (1.67%) $0.77
Western Midstream Partners, LP Stock Quote
Western Midstream Partners, LP
$26.93 (0.90%) $0.24

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