In another asset sale in less than a week, Anadarko Petroleum Corp. on Tuesday announced an agreement to divest “Phase 1” of its Canadian properties to a subsidiary of Calgary-based Advantage Energy Income Fund for $142 million. The package holds an estimated 9.9 MMboe of proved reserves and current net production of 4,500 boe/d (net after royalties).
Advantage Oil & Gas Ltd. will acquire the properties, which are located in central and southern Alberta and southeast Saskatchewan in a region where it now focuses. The new assets include 35 fields, totaling approximately 130,000 net acres. Oil and natural gas production from the package is 60% operated by Anadarko, and nine of the properties represent 87% of current production. According to Advantage, production is weighted 49% light oil and natural gas liquids, 40% natural gas and 11% heavy oil.
“The completion of this first phase of our divestiture program in Canada is yet another step forward in the execution of our refocused corporate strategy,” said Jim Hackett, Anadarko CEO. “The valuations represented by this agreement and last week’s Gulf of Mexico Shelf announcement provide further confidence in our estimate of at least $2.5 billion in after-tax proceeds from the corporate asset realignment.”
As it refocuses its operations, Anadarko announced in June it would sell a large package of its North American assets, which totaled about 15% of its proved reserves and 25% of its current oil and gas production (see Daily GPI, June 10). Anadarko sold nearly all of its Shelf properties last Friday in a $1.3 billion transaction with Apache Corp. and Morgan Stanley Capital Group (see Daily GPI, Aug. 23).
“Our Phase 1 asset package generated a lot of interest in the market,” said Mike Bridges, president, Anadarko Canada Corp. “We anticipate at least as much interest in our Phase 2 package, for which the data room opens this week. As we achieve success in these sales, we can then deploy our human and capital resources to other areas where we can achieve sustainable growth and attractive returns.”
The Phase 1 transaction is expected to close by Sept. 30, 2004, with an effective date of July 1, 2004. Kobayashi Partners Ltd. served as the transaction adviser to Anadarko.
“This acquisition is consistent with our strategy of focusing on natural gas and light oil acquisitions that provide significant low risk drilling upside,” said Kelly Drader, CEO of Advantage. Drader said the acquisition will be “highly accretive” to current cash flow and production/unit immediately and on a fully diluted basis.
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