Anadarko Petroleum Corp. on Friday said it will sell about 30% of its worldwide oil and gas fields — all located onshore in the United States — to a private Dallas-based producer for $850 million in cash plus interests in two oil and natural gas fields in Wyoming. Although the sale involves a large amount of acreage, the assets accounted for only 4% of year-end 2003 reserves and 7% of Anadarko’s current production.

The transaction, effective Sept. 1, includes an estimated 108 MMboe in proved reserves as of year-end 2003, and current daily net production of about 38,000 boe. The assets are located in 180 fields across Texas, Oklahoma, Kansas, Wyoming, Utah, Louisiana and Alabama.

Merit Energy Co., a private oil and gas company based in Dallas, is acquiring the Anadarko assets. Merit was formed in 1989 to specialize in direct investments in oil and gas assets. It acquires, operates and develops properties on behalf of equity-based limited partnerships. Merit currently operates in 13 states, Canada and the Gulf of Mexico with $2.1 billion in total assets. Currently, Merit manages 17 limited partnerships with aggregate capital commitments of $2.5 billion.

As part of the sale, Anadarko will receive cash, as well as Merit’s interests, in the Brown Cow and Hartzog Draw fields in Wyoming, which represent 2 MMboe of proved reserves and an estimated 7 MMboe of probable reserves. These assets complement Anadarko’s unconventional resource development strategy and add to its activity in the region, the company said. Closing is expected by the end of the year.

“This agreement marks another significant milestone in the execution of our refocused strategy,” said CEO Jim Hackett. “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.” He added that the transaction will “keep us on target to generate at least $2.5 billion in after-tax proceeds from our divestiture program.”

Other U.S. onshore assets targeted for divestiture, but not part of Friday’s announced sale, 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. The assets are in various stages of monetization: data rooms remain open for southeast Colorado, with bids due Sept. 21; the Texas assets are being held for ongoing property trade discussions; and the Deep Hugoton exploration acreage remains available for third-party proposals.

Earlier in the week, the independent launched a cash tender offer for approximately $1 billion of its outstanding debt to “strengthen Anadarko’s balance sheet, reduce its annual interest expense and increase its financial flexibility, in line with the refocused strategy announced in June,” said Hackett. “We will fund the tender offer with proceeds from our previously announced divestiture program, which is progressing ahead of plan.”

The tender offers consist of two separate offers: an Any and All Offer and a Maximum Tender Offer. In the Any and All Offer, Anadarko is offering to purchase $1 billion outstanding principal for a series of notes maturing in 2006 through 2008, which carry interest rates between 5.37-7.8%. In the Maximum Tender Offer, Anadarko is offering to purchase, under certain conditions, a series of notes maturing in 2009 through 2012, which carry interest rates between 5-7.3%.

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