Anadarko Petroleum Corp. officials offered no comment to rumors that the huge independent may be for sale, but a report Friday in a London publication suggested that Royal Dutch/Shell Group may be considering a $10 billion bid for the company. Shell has played bridesmaid in attempts for the past few years to capture other gas-rich North American independents, but none were as large or as formidable as the world-class producer.

Anadarko CEO Robert Allison, who presided over a conference call with analysts Friday morning, neither confirmed nor denied whether there was any truth to the rumors that the company is for sale, or whether it might consider an offer. Instead, the 64-year-old CEO offered “no comment on any sale prospects.”

Rumors concerning major changes at Anadarko have grown in recent days, following an announced 10% workforce layoff and the company’s decision to shutter some onshore U.S. rigs. In an unsubstantiated report Friday by the London-based Evening Standard’s This is London, Shell was cited as a possible Anadarko suitor. “It is understood Anadarko has retained investment bank Credit Suisse First Boston to try to put a deal together,” the report said. “The unusual choice of adviser for a U.S. company suggests it has its sights on a European oil major.”

The report noted that speculation about Shell came after the oil major shelved a share buyback program in mid-July, a sign that it may be trying to put cash together for an acquisition. Also named in the London report was Agip, the exploration and production division of Italy’s Eni, as well as Exxon Mobil Corp. Shell apparently has continued its search for a gas-rich producer in North America, after losing out in attempts on several deals, including an aggressive bid two years ago to buy Barrett Resources (see Daily GPI, March 12, 2001). Shell offered no comment to the Anadarko rumors.

The conference call by Anadarko on Friday followed a busy week of announcements and rumors for the independent, which is headquartered north of Houston in The Woodlands. However, Allison offered a strong and confident outlook, and said the company had made “good progress toward our goals,” with “way too many development projects” to discuss.

“There’s a tremendous amount of work left to do…a heck of a lot of work,” Allison said. He said the cost cutting announcement on Thursday (see Daily GPI, Aug. 1) had been “very painful to go through but vital to our position.” Among other things, the cutbacks will allow the E&P team to report directly to him. “People responsible for getting the job done now have a direct link, and that saves overhead.” The CEO noted that the cost cutting efforts have not ended. “We are looking for additional areas. This is no means the last you’ll hear on the subject.”

Because of the cuts, however, Anadarko expects to take a $40 million charge in the third quarter, which will be worked into a new earnings forecast, he added.

Allison went into detail on why the company decided to shut down some of its onshore U.S. rigs, which were the first hint last week that considerable changes were coming. He said there had been “huge misconceptions” on why Anadarko had made the move to shut the rigs down, explaining that it had “nothing to do with the economics or the depth of drilling.” He said “the fact is, our onshore U.S. drilling program has been front loaded all year. By mid-year, we had already spent 70% of our U.S. costs. Clearly, we haven’t cut back, but we are committed to paying down debt. It’s that simple.”

Although speculation had the rig cutbacks as high as 30, Allison said the onshore rig count overall would only drop by eight, and in Canada, four rigs were being ramped up in preparation for winter drilling. As of Friday, Anadarko has 81 operated and nonoperated rigs working in North America, he said, and 10-15 onshore U.S. rigs may be shuttered in the short term.

He said rumors about poor drilling prospects were “hogwash….we have thousands of identified but not budgeted prospects. They are robust at today’s prices or they wouldn’t be in the portfolio to begin with. It chaps me when I hear such nonsense. How can people print things that they know are absolutely wrong?,” he asked, referring to analysts who have speculated that Anadarko’s prospects are dwindling. “We can do better than we’ve done in recent years,” and the latest news is “more of a tweak than a shift” in policy. And, he hinted that Anadarko may be looking for more acquisitions.

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