NEW YORK (AP) -- Shares of Anadarko Petroleum Corp. rose 3 percent Monday as the company negotiated a potential legal settlement with Tronox Inc.
Tronox, a paint materials company based in Oklahoma City, is suing Anadarko for what it considers to be an illegal spinoff of the company in 2006. Anadarko says Tronox is claiming $14.5 billion plus litigation fees and costs.
Tronox says former parent Kerr-McGee Corp. stripped the company of its most valuable assets and cash before the spinoff. Anadarko bought Kerr-McGee for $18 billion five months later. Tronox says it was stuck with hundreds of millions of dollars of environmental legacy lawsuits. The company filed for Chapter 11 bankruptcy protection in January 2009.
If Anadarko can settle the Tronox lawsuit, its market value should rise, Credit Suisse analyst Arun Jayaram wrote in a note. Jayaram pointed out that Anadarko shares have lagged behind its peers this year, even though it has added key assets in Mozambique, Algeria and the U.S.
Jayaram upgraded Anadarko shares to "Outperform" from "Neutral" and set a 12-month price target of $90 per share.
Anadarko shares added $2.14, or 3 percent, to $70.95 in afternoon trading. Shares are still down 7 percent from the beginning of the year.