With buyers said to be lined up with unsolicited offers, Anadarko Petroleum Corp. late Wednesday announced it will sell profitable subsidiary Anadarko Canada Corp. for an undisclosed price. In 2005, the Canadian subsidiary provided 11% of Anadarko’s total proved reserves.
CEO Jim Hackett said the divestiture is expected to proceed quickly because of the many unsolicited expressions of interest. Proceeds from the expected sale would be used to retire debt associated with its acquisitions of Kerr-McGee Corp. and Western Gas Resources (see Daily GPI, June 26).
In its combined $21.1 billion offer for Kerr-McGee and Western, Anadarko will assume a total of $2.2 billion in debt: $1.6 billion for Kerr-McGee and $600 million for Western. To protect the ballooning balance sheet, Anadarko said it planned extensive asset sales and natural gas hedges. It also plans to use cash flow, equity issuance and noncore asset sales to pay down debt by $15 billion over the next 18 to 24 months.
“Anadarko has built one of Canada’s leading natural gas operations over the past six years, and I am very proud of all that our Canadian group has been able to accomplish through exploration and high-value natural gas resource development,” Hackett said. “Properties like ours are in high demand in Canada right now, attracting valuations significantly above those reflected in our stock price. This arbitrage opportunity motivates us to essentially trade out of the Canadian operations and into the Kerr-McGee and Western properties.”
Anadarko gained entry into Canada in 2000 with the purchase of Union Pacific Resources (see Daily GPI, April 4, 2000). After that, it upped its operating budget and acquired other key properties in Canada, including Berkley Petroleum Corp. (see Daily GPI, March 20, 2001). However, when Anadarko began restructuring in 2004, the company began to sell off some of the nonstrategic Canadian acreage (see Daily GPI, Aug. 25, 2004).
Anadarko Canada currently produces 340 MMcfe/d, which is about 85% natural gas. At year-end 2005, the company was averaging 282 MMcf/d of gas (85%) and 9,000 bbl/d of oil, condensate and natural gas liquids. It has more than 3,000 producing wells (net). Last year, drilling activity included 40 exploration wells with an 85% success rate and 108 development wells with a 98% success rate. Year-end 2005 proved reserves in Canada totaled nearly 1.6 Tcfe, 85% natural gas and 76% proved developed.
“Two years ago, we demonstrated our ability to execute on a major portfolio refocusing effort, expeditiously and with higher-than-anticipated results,” Hackett said. “We intend to do so again, and therefore are not waiting for the acquisitions to close before launching the effort, since we expect to divest certain assets that are part of the current Anadarko portfolio.”
With 3.4 million net acres in land holdings, Calgary-based Anadarko Canada has about 575 employees and has with major area offices in Edson, Grande Prairie and Medicine Hat, AB, and Fort St. John, BC.
Anadarko Canada’s major activities include the following:
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