Anadarko (APC) Stock Soars on Toxins Case Settlement
Shares of the Anadarko Petroleum Corporation (APC) closed up +12.55 or +14.51 percent on Thursday, after the company announced a $5.1 billion settlement of a long standing litigation over Tronox Limited (TROX). The settlement of the lawsuit will restore thousands of toxin polluted sites and compensate thousands of people with personal injury claims who were exposed to the toxins.
The Woodlands, Texas based Anadarko Petroleum Corporation is the largest publicly held oil and gas production and exploration company in the world. The company began as a subsidiary of Panhandle Eastern Corp after the discovery of natural gas in the Anadarko Basin, made up of the Texas and Oklahoma panhandles. The subsidiary became an independent company in 1986 and currently employs more than 4,000 people worldwide. Oklahoma City, Oklahoma based Tronox Limited, is a global chemical company specializing in titanium products. The company is the worldâ s third largest producer accounting for approximately ten percent of the worldÃƒÂ¢ s titanium ore production. Tronox is a former division of Kerr-McGee, which was bought by Anadarko for $16.4 billion in June of 2006. Kerr-McGee shifted all of its environmental liabilities to Tronox between 2002 and 2006 in order to avoid paying for a huge environmental mess it had created, subsequently spinning off Tronox as an independent company in 2005. The disaster extended to 2,500 locations in 22 states and the Navajo Nation. The liabilities from Tronox, which declared bankruptcy in 2009, reached a total of $25 billion. In December of 2013, a judge ruled that Kerr-McGee had improperly spun off Tronox and that Anadarko could be responsible for as much as $14 billion in claims, driving Anadarko shares down nine percent after the news. Kerr-McGee became infamous in the 1970s when a labor activist, Karen Silkwood, accused the company of poisoning her with radioactive material at the companyÃƒÂ¢ s nuclear materials plant near Crescent, Oklahoma. The story was made into a movie in 1983 starring Meryl Streep as Karen Silkwood. Beneficiaries of the settlement, which is still subject to approval by a judge in federal court, include the Navajo Nation, which will receive $1 billion for damages suffered from the uranium mining operation; $1.1 billion for the clean-up of chemical manufacturing site in Nevada that led to the polluting of Lake Mead, and the E.P.A., which will receive $430 million to clean up New Jersey Superfund sites. The settlement of the lawsuit is a considerable weight lifted from AnadarkoÃƒÂ¢ s shoulders. With the lawsuit out of the way, Anadarko is free to pursue expanding its business in the Gulf of Mexico and in Mozambique, where the company has discovered vast offshore reserves. In addition, Anadarko has become a potential takeover target. With the lawsuit no longer a potential $14 billion liability, the company could attract a buyer such as Exxon Mobile (XOM
) or British Petroleum (BP
). Anadarko stock is already trading over $100 per share in pre-market trading on Friday, a new all-time high. The stock has more than doubled in the last five years and will probably continue to appreciate in the near term. Other News About Anadarko Bullish Anadarko options bets soar on settlement news
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Published on Apr 4, 2014
By Jay Hawk