Anadarko Petroleum Corporation (APC), CNOOC Limited (ADR) (CEO), Occidental Petroleum Corporation (OXY): As Demand Rises, So Will the Stock Prices of These Three Oil and Gas Companies

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According to the Energy Information Administration, global production of oil will increase from 89.13 million barrels per day in 2012 to 91.40 million barrels per day in 2014. With this, total world consumption is expected to increase from 89.16 million barrels per day in the previous year to 91.22 million barrels per day next year.

This rising demand trend will be beneficial for oil producing & marketing companies. Here is an analysis of three oil and gas companies. Anadarko Petroleum Corporation (NYSE:APC) and CNOOC Limited (ADR) (NYSE:CEO) are focusing on increasing their oil production, whereas Occidental Petroleum Corporation (NYSE:OXY) is benefiting from its marketing and trading business. What opportunities will these companies provide for investors?

Anadarko Petroleum Corporation (NYSE:APC)

Betting on the Sahara

Anadarko Petroleum Corporation (NYSE:APC) has reserves of around 2.5 billion barrels of oil equivalent, and it’s the second largest independent oil production company in the world. During the first quarter, the company started production in the Algerian Sahara Desert, installing production facilities to extract 500,000 barrels of oil per day. Moreover, crude oil produced from Sahara desert is considered high quality, due to low wax and sulfur contents, which results in low processing costs.

The price of crude oil and condensates is estimated to increase from $101 per barrels last year to $106 per barrels in 2014. Anadarko Petroleum Corporation (NYSE:APC) sold 86 million barrels of oil equivalent per day in the first quarter, which is expected to rise to 100 million barrels of oil equivalent per day in 2014. This will boost the total revenue of the company from $13 billion in fiscal 2012 to $16 billion in fiscal 2014.

Anadarko Petroleum Corporation (NYSE:APC) operates in an area of around 2.6 million acres in Mozambique, where the estimated total of recoverable gas is around 65 trillion cubic feet. The company sells its natural gas to industrial users, distribution companies, and downstream companies. As power generation companies shift from coal to natural gas, the International Energy Agency estimates the demand for natural gas will increase. Anadarko Petroleum Corporation (NYSE:APC) is well-positioned to leverage that increase. The company’s total sales volume of gas was around 913 billion cubic feet in the previous year, which is expected to move upward to 1,035 billion cubic feet in 2014.

Promising segment-wide growth

Occidental Petroleum Corporation (NYSE:OXY)’s chemical segment reported earning around $159 million, down by 14% year-over-year. This decline in revenue was primarily driven by higher ethylene costs and an increase in competition. However, higher seasonal demand and construction activities will increase Occidental Petroleum Corporation (NYSE:OXY)’s earnings from this segment to $170 million in the second quarter of 2013.

With this, midstream business of Occidental Petroleum Corporation (NYSE:OXY) reported earning around $215 million in the first quarter of 2013, up by 64% year-over-year. The company will get the benefits of marketing and trading of petroleum products. Earnings in midstream is dependent on arbitrage opportunities and market prices, and Occidental Petroleum Corporation (NYSE:OXY) expects to receive higher prices from its operations. It is expected that Occidental Petroleum Corporation (NYSE:OXY)’s earnings from this segment will surge to $617 million this year, up by 40% year-over-year.

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