Anadarko Petroleum Corp. said Monday it agreed to sell a portion of its interest in the K2 Unit in the Gulf of Mexico to two undisclosed parties for $1.2 billion effective Jan. 1, 2007.
In the year to date, gross daily production averaged 37,100 boe/d from six wells within the K2 Unit, in which Anadarko currently has a 65% working interest and is operator. The sale represents a 23.2% working interest. Following the transaction, Anadarko will remain the K2 Unit operator with a 41.8% working interest.
“This partial sale affirms our view of the value of this field and its contribution to our equity story, as well as keeping us ahead of schedule on debt reduction efforts,” said Anadarko CFO Al Walker.
“This transaction allows us to both diversify our risk profile and retain a meaningful working interest as the operator in the unit,” said CEO Jim Hackett. “We believe there is outstanding upside potential in this unit and are working with our partners to finalize plans to enhance the recovery of oil from this large reservoir.
“We believe getting our debt reduced quickly and maintaining a solid investment-grade credit rating are integral to the successful execution of our business model.”
Anadarko began reshaping its portfolio when it purchased Kerr-McGee Corp. and Western Gas Resources in separate transactions last year (see Daily GPI, June 26, 2006). To rebuild the bottom line, the company sold several fields in Louisiana, Wyoming and Texas, as well as its Canadian subsidiary. So far this year, Anadarko also has sold properties in Oklahoma and Texas, and assets in Venezuela and elsewhere remain for sale.
Hackett recently admitted that year-end 2006 reserves were “lower than anticipated” because the company did not “predict the downward spike in commodity prices.” Downward reserve revisions included 99 MMboe, which resulted from lower prices at year-end and 136 MMboe from “performance issues,” most notably the K2 complex (see Daily GPI, Feb. 7).
The transaction is expected to close in the second quarter, subject to applicable pre-emption rights of co-owners in the subject leases and other closing conditions agreed to by the parties. Scotia Waterous marketed the assets, while UBS and Credit Suisse served as Anadarko’s financial advisors.
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