Anadarko Petroleum Corp. has agreed to buy the majority of bankrupt San Antonio-based TXCO Resources Inc. Anadarko's bid of as much as $310 million beat an earlier offer from Newfield Exploration Co.
The deal is expected to close by Feb. 28, and it is to be effective as of Jan. 1, 2010. Assets to be retained by TXCO include drilling rigs, offshore properties, Oklahoma properties, nonoperated properties within the Williston Basin, nonoperated properties in South Texas outside Maverick, LaSalle, Zavala and Dimmit counties, and the company's interests in the "Dexter Waterflood Unit," the "Forrest WM B1U" and the "Vinton Dome."
The agreement with Anadarko specifies a price of the lesser of $1 million more than an amount sufficient to repay TXCO lenders; pay all other creditors in full with interest; and pay any cure amounts of executory contracts to be assumed by Anadarko (other than Anadarko's claims, which are to be waived at closing); or $310 million in cash, according to a regulatory filing.
TXCO had in November agreed to sell the assets to Newfield for $223 million. "The board of directors of TXCO has determined that the agreement [with Anadarko] constitutes a superior proposal to the Newfield [purchase and sale agreement]," the company said. The agreement with Newfield will be terminated assuming the bankruptcy court accepts the Anadarko agreement.
TXCO filed for Chapter 11 bankruptcy protection on May 17 last year (see NGI, May 25, 2009). The company continues to operate its business as debtor-in-possession under the jurisdiction of the bankruptcy court.
The company spent $182 million in 2008 for the development and purchase of oil and gas properties, which was an increase from $117 million in 2007. While ambition and rising costs drove spending up, growing supply and a weakening economy drove commodity prices down. Last February TXCO gave notice that it was in violation of a debt covenant and was working with creditors.
In 2008 Anadarko granted drilling rights to TXCO and St. Mary Land & Exploration Co. to explore part of its leasehold in the Pearsall and Eagle Ford gas shale plays in the Maverick Basin of Texas, an area in which TXCO already had enjoyed success (see NGI, April 7, 2008).
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