Since its blockbuster acquisitions of Kerr-McGee Corp. and Western Gas Resources Inc. (see NGI, Aug. 28, 2006; June 26, 2006), Anadarko Petroleum Corp. has been on a divestiture tear, cutting down acquisition debt through multiple asset sales. So far, the company’s plan to end 2007 with $12 billion of debt is on track, according to analysts.

Friday Anadarko completed the previously announced sale of its interests in the deepwater Gulf of Mexico Genghis Khan discovery (see NGI, Nov. 20, 2006) to the owners of the adjacent Shenzi field for $1.33 billion.

“Asset sales to date have lowered Anadarko’s net debt to a manageable $15.8 billion, down from a post-acquisition high of $27 billion,” wrote Friedman, Billings, Ramsey & Co. Inc. (FBR) analysts in a note last week. “The company is quickly progressing toward its YE07 net debt target of $12 billion with further sales expected.

“The next milestones will be the [deepwater Gulf of Mexico] K2 and EGOM [eastern Gulf of Mexico Independence Hub] announcements in which we expect Anadarko to sell down its interest in the developments for $3.5 billion in gross proceeds. The company’s current net debt/total capitalization ratio of 44% is down from 58% immediately after the acquisitions; we expect the ratio to drop to 36% by YE07.”

Since the Kerr-McGee and Western transactions Anadarko has sold more than 500 MMboe through eight divestitures at a weighted-average price of $17.46/boe, the analysts wrote. “Incorporating the recent asset sales and debt reduction, we arrive at a current TEV [total enterprise value]/boe of $10.54, indicating that the company’s reserves are valued by the stock market at a steep discount to the valuation verified by the asset sales.

Anadarko shares have been trading around $42 on the New York Stock Exchange, significantly less than their 52-week high of $56.98.

“We believe that the asset sale metric of $17.46/boe is evidence of significant value embedded within the company’s asset base that continues to go unappreciated by the stock market. The downward trend in the TEV/boe metric over the last few months has been value accretive, especially when viewed in light of the prices that Anadarko has received for its assets.”

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