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Anadarko withdraws bid for Apache Deal would have created one of the large independents in the world; acquisition might have had implications for Alaska ERIC LIDJI For Petroleum News
Gone before news of its existence had even arrived, Anadarko Petroleum Corp. announced Nov. 11 that it had withdrawn an unsuccessful bid to buy Apache Corp.
In a deal that could have had ramifications for Alaska, Anadarko said it had recently proposed a non-binding offer to purchase Apache in an all-stock transaction with a “modest premium,” but that the deal fell apart before the parties had a chance to meet.
Anadarko said it had based its offer on publicly available information. “Our efforts to enter into a mutually acceptable confidentiality agreement for the purpose of exploring the merits of a potential transaction were summarily rejected and no discussions of substance occurred. We are unwilling to pursue the transaction without access to detailed non-public information, and based on our analysis, which shows that Apache appears to trade at or near full value currently, the offer was withdrawn,” Anadarko Chairman, President and Chief Executive Officer Al Walker said Nov. 11, in a prepared statement.
The company issued the statement after news outlets including Bloomberg News and Reuters began publishing anonymously sourced articles about the potential merger.
Anadarko: out of gas Similar to ExxonMobil Corp.’s acquisition of XTO Energy Inc. in 2010, the deal involved two companies with Alaska holdings but was proposed for reasons far from Alaska.
According to analysts, Anadarko made the move in an attempt to avoid a takeover. The acquisition would have given Anadarko a strong position in the Permian basin of west Texas and created a company with more than 580,000 barrels per day of oil production.
Anadarko and Apache both maintain large lease positions in Alaska but have decreased their activities in the state in recent years because of strategic and economic reasons.
Anadarko arrived in Alaska in the early 1990s, shortly after North Slope oil production peaked. The company wanted to bring the agility of a large independent company to a region occupied more or less exclusively by vertically integrated major companies.
Looking for a large “anchor” field, Anadarko activity pursued opportunities across the North Slope and in the Cook Inlet region, both alone and in partnership. The company discovered several fields on the west side of the Cook Inlet basin before selling its Cook Inlet properties in 2002, helped operator ConocoPhillips Alaska Inc. bring the Alpine field into production at the Colville River unit in 2000 and drilled the unsuccessful Altamura No. 1 well in the National Petroleum Reserve-Alaska and explored the geologically unique Jacob’s Ladder prospect, just southeast of the Prudhoe Bay unit.
Foothills search for gas The largest venture Anadarko undertook was its pioneering search for natural gas in the foothills of the Brooks Range Mountains, in a region known as the Gubik complex.
After amassing several million acres in the region from the state of Alaska and Arctic Slope Regional Corp., and for a time becoming the largest leaseholder in the state, the company drilled four exploration wells in 2008 and 2009 in partnership with Petro-Canada and BG Group. The wells were the first in northern Alaska to specifically target natural gas, which remains stranded for lack of available transportation infrastructure.
One of the wells flowed at 15 million cubic feet per day, which encouraged state officials looking for local energy supplies but failed to fully describe the success of the venture.
In mid-2009, Suncor Energy acquired Petro-Canada and showed much less interest in Alaska than its predecessor. Then, in October 2011, Anadarko paid some $4 billion to settle claims related to the Deepwater Horizon oil spill, on which it had been a partner.
In early 2012, Anadarko returned to the Gubik complex to conduct a rigless test at a previous well. The company never released results and in the years since has gradually relinquished leases and allowed others to expire. Today, the company’s biggest asset in Alaska is its minority interest in the Colville River and Greater Mooses Tooth units.
Apache: fast then slow Apache arrived in Alaska in mid-2010 when it acquired 196,524 acres from Samuel H. Cade, Daniel K. Donkel and three other independent investors. The acreage was scattered throughout the Cook Inlet basin, and included both onshore and offshore tracts. Through lease sales and private deals, Apache claimed to hold some 800,000 acres at its peak.
Known for reviving aging oil basins around the world, Apache brought state-of-the-art seismic technology to Alaska and talked optimistically about “a 25- to 30-year plan for the Cook Inlet.” The company compared the geology of the region to “an oil museum” and claimed there was still as much oil yet to be discovered in the basin as has already been produced since the first discovery well in the region more than half a century earlier.
The company quickly proposed an exploration program but later reduced the scope of its efforts. The results of the Kaldachabuna No. 2 well from November 2012 proved disappointing and ongoing legal and regulatory challenges to its seismic program proved discouraging, and eventually the company announced plans to slow its pace in Alaska.
In 2014 and 2015, the company resumed its seismic program and continued permitting other activities in the region but no longer discusses Alaska with its earlier enthusiasm.
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