Anadarko Petroleum has completed a $2.2 billion transaction that has accelerated the monetization of its midstream assets while retaining its existing ownership, control and management of the assets, the company said.

Proceeds will be used to reduce debt associated with the acquisitions of Kerr-McGee and Western Gas Resources, the Houston-based independent producer said (see Daily GPI, June 26, 2006). It noted that the transaction will have no effect on the company’s proposed plan to form a master limited partnership for its midstream assets (see Daily GPI, Nov. 17, 2006).

To facilitate the transaction, Anadarko said it formed a subsidiary that owns or has rights to substantially all of the company’s midstream assets. An investment entity raised funds from a group of investors and advanced the funds to the midstream subsidiary on a non-recourse basis to Anadarko. The company said it intends to further monetize the subsidiary’s assets. A portion of the proceeds received from the monetization will be used by the subsidiary to partially redeem the advance, with the balance of the proceeds retained by Anadarko.

“This transaction highlights the value of our midstream asset portfolio and enables use to realize a substantial portion of that value currently,” said Anadarko CFO Al Walker.

The producer’s midstream portfolio is expected to generate approximately $350 million of EBITDA (earnings before interest, taxes, depreciation and amortization) for 2007, with additional projects likely to further increase operating performance in 2008, Anadarko said.

“With the closing of this transaction, Anadarko has successfully completed the 2007 balance sheet restoration plan it announced in conjunction with the acquisitions of Kerr-McGee and Western Gas Resources by achieving our net long-term debt target of approximately $12 billion — without issuing equity. Further leverage reduction is expected to occur in 2008 from free cash flow and other normal course activities,” Walker said.

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