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Anadarko moves quickly toward divestiture goal Company chalks up another $850 million in non-core U.S. property sales Ray Tyson Petroleum News Houston Correspondent
Anadarko Petroleum continues to weed its garden in rapid fashion, agreeing to sell more non-core North American oil and gas properties to undisclosed buyers for $850 million and bringing the Houston-based independent ever closer to attaining its $2.5-billion divestiture goal.
Just three weeks prior to announcing the pending sale of $850 million worth of producing fields in seven U.S. states, Anadarko agreed to sell all of its properties on the Gulf of Mexico’s outer continental shelf for $1.3 billion to Apache and investment bank Morgan Stanley and some of its Canadian assets for $142 million to undisclosed buyers.
That made a total of nearly $2.30 billion worth of sales agreements announced since Aug. 20, just $200 million shy of its initial sales target with additional Canadian and U.S. onshore properties yet to be sold.
“The divestiture of non-strategic properties allows Anadarko to focus on areas that have consistently produced the best results for us, as well as new growth areas,” Jim Hackett, Anadarko’s chief executive officer, said Sept 10.
He said Anadarko is now on target “to generate at least $2.5 billion in after-tax proceeds from our divestiture program.” Proceeds to reduce debt, repurchase stock Anadarko has said it intends to use proceeds from the property sales to reduce debt and to repurchase stock. The board of directors has authorized the buy back of up to $2 billion of Anadarko common stock.
Anadarko’s latest transaction includes an estimated 108 million barrels of oil equivalent in proved reserves as of year-end 2003, and current daily net production of about 38,000 barrels of oil equivalent, in some 180 fields across Texas, Oklahoma, Kansas, Wyoming, Utah, Louisiana and Alabama.
Those properties represent 30 percent of Anadarko’s fields worldwide, but only 4 percent of year-end 2003 reserves and 7 percent of current production, the company said.
As part of the sale, Anadarko would receive cash, as well as the buyers’ interests in the Brown Cow and Hartzog Draw fields in Wyoming, representing proved reserves of 2 million barrels of oil equivalent and estimated probable reserves of 7 million barrels of equivalent.
“These assets complement Anadarko’s unconventional resource development strategy and add to its activity in the region,” the company said.
The transaction is subject to purchase price adjustments, including preferential right elections involving third parties. The deal was expected by Dec. 1. Other assets targeted Other U.S. onshore assets targeted for divestiture include a separate package in Southeast Colorado, the West Panhandle and Slaughter fields in Texas, and exploration acreage in the Deep Hugoton basin in Kansas and Oklahoma, Anadarko said.
The company said data rooms remain open for Southeast Colorado, with bids due Sept. 21. The Texas assets are being held for ongoing property trade discussions, the company added, and the Deep Hugoton exploration acreage remains available for third-party proposals.
Anadarko’s operational focus extends from the deepwater Gulf of Mexico, up through Texas, Louisiana, the Mid-Continent, western U.S. and Canadian Rockies and onto the North Slope of Alaska. Anadarko also has significant production in Algeria, Venezuela and Qatar.
Anadarko has made sweeping changes in the way it conducts business, including ridding itself of high-cost, non-core properties.
The company actually began restructuring itself last year several months after then CEO John Seitz resigned under pressure from a board of directors seriously concerned about the company’s performance and lagging stock price. The company laid off about 10 percent of its workforce in an effort to save an annual $100 million, set out to reduce debt by $300 million and closed two offices in Texas.
Properties identified for sale are estimated to include between 325 and 350 million barrels of oil equivalent of proved reserves and between 115,000 and 125,000 barrels of equivalent per day of production.
The divestiture program is expected to reduce Anadarko’s overall reserve base by 15 percent and its production by 25 percent, but also is expected to create a stronger foundation on which to grow the company.
In June, Anadarko said its new strategy largely entailed using profits from proven “foundation assets” onshore United States and Canada to fuel “growth platforms” in the Gulf of Mexico, Algeria and Qatar.
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