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Anadarko (APC): Settling Is Good For You

07 April 2014 by HCM

Over the last few months, we had a litany of financial institutions agreeing settlements with the authorities in a variety of cases, ranging to accusation of market disruptions to misselling of financial products. The latest example of a company reaching a agreement with the government is APC (Anadarko Petroleum Corporation). They settled their long standing dispute over the Tronox case, a pollution issue finding its roots in the takeover of Kerr-McGee in 2005. It was feared at some stage the APC could face a bill in the region of $15bln, so the $5.1bln settlement was taken positively by the market as it removes one of the major uncertainties around APC. The 5 year risk premium gapped 20bps on the news, and is now trading at levels not seen since early 2010.