This Deepwater Company Won't Be Dismantled

Houston rapper Bun B isn't the only one giving a shout-out to the Appalachians these days. On its second-quarter conference call, Anadarko Petroleum (NYSE: APC) tossed out an estimate of "well over one billion barrels of oil equivalent" in risked resource potential across its acreage in the Marcellus shale. That's net to the company, and accounts for the portion vended to joint venture partner Mitsui (Nasdaq: MITSY).

The Marcellus is just one of a handful of resource plays that Anadarko is really starting to ramp up. The shale plays -- the Marcellus, Haynesville, and Eagle Ford -- collectively brought production growth of 75% compared with the first quarter. The Haynesville is clearly the lowest priority right now, with only one non-operated rig running at the end of the quarter. The Eagle Ford, on the other hand, is a major new focus. Anadarko likes the joint venture model so much that it's looking to cut a similar deal down in Texas.

The company can thank Chesapeake Energy (NYSE: CHK) for the bright idea of using other people's money to accelerate shale development and juice rates of return. Chesapeake set an early precedent with JVs it formed in 2008 with partners including Plains Exploration & Production (NYSE: PXP) and BP (NYSE: BP).

Speaking of BP, that's sort of the elephant in the room here. Anadarko, along with Mitsui, was a non-operating partner in the infamous Macondo well. As a 25% partner, Anadarko would normally be responsible for a quarter of the costs associated with the oil spill, but the company has taken the line that "this tragedy was preventable and likely the result of the operator's gross negligence and/or willful misconduct."

Anadarko shares sold off very hard in the months following the spill, with clear uncertainty about the company's potential liability. Investors, including Dan Loeb's hedge fund Third Point, have obviously gained confidence in Anadarko's financial outlook. The fact that the company landed a commitment to expand its credit facility from $1.3 billion to $5 billion certainly helps.

Anadarko obviously faces some near-term hitches in its Gulf of Mexico deepwater program, but we should see that restarted in a matter of months. In the meantime, the company has plenty of exploring to do in places like Brazil, Ghana, and Indonesia.

Alongside the recently acquisitive Apache (NYSE: APA), Anadarko remains one of the premier large-cap exploration and production companies. I regret not being around to bang the table on this company when shares were below $40. There is still plenty of upside to today's share price, though.