Western Gas Partners LP, the midstream partnership formed by Anadarko Petroleum Corp. earlier this year, will spin off as a separate company to hold some of the producer's domestic assets in an offering expected to fetch $375 million.

Anadarko filed a Form S-1 with the Securities and Exchange Commission (SEC) last week for an initial public offering (IPO) of the limited partnership, which was formed in August. On an adjusted basis, the partnership's dedicated gas production would have had volumes of about 755 MMcf/d on earnings of $33.2 million and revenue of $56.7 million in the first six months of 2007.

Western Gas Partners' assets currently consist of six gathering systems, five natural gas treating facilities and one interstate pipeline, which are located in East Texas, West Texas, the Rocky Mountains (Utah and Wyoming) and the Midcontinent (Kansas and Oklahoma).

Spokesman John Christiansen could not offer details of the IPO. He told NGI that Anadarko was in a "quiet period" as required under SEC regulations.

Anadarko's Midstream Group was formed in 2005 to more effectively manage its growing midstream business segment. At mid-year, Anadarko's total domestic midstream asset portfolio consisted of 25 gathering systems and one transportation system with an aggregate throughput of about 3 Bcf/d, 11,200 miles of pipeline and 25 processing and/or treating facilities. Following the IPO, the SEC filing indicated that its remaining midstream business would consist of 19 gathering systems with an aggregate throughput of 2.2 Bcf/d, 8,400 miles of pipeline and 20 processing and/or treating facilities. The assets to be retained generated about $120 million of cash flow from operating activities in the first half of 2007.

According to the SEC filing, Western Gas Partners now consists of the following:

"We expect to pursue accretive acquisitions opportunities within the midstream energy industry from Anadarko and third parties," Western Gas Partners stated. It also expects to "grow organically" by meeting Anadarko's gathering needs, "which we expect to increase as a result of its anticipated drilling activity in our areas of operations." The partnership also intends to "actively market our midstream services to and pursue strategic relationships with third-party producers..."

Once the IPO is launched, Anadarko will own a 2% general partner interest in Western Gas Partners, all of its incentive distribution rights and a 57.3% limited partner interest.

"Given Anadarko's significant ownership of limited and general partner interests in us following this offering, we believe it will be in Anadarko's best interest for it to sell additional assets to us over time; however, Anadarko continually evaluates acquisitions and divestitures and may elect to acquire, construct or dispose of midstream assets in the future without offering us the opportunity to acquire or construct those assets," the filing stated. "Anadarko is under no contractual obligation to offer any such opportunities to us, nor are we obligated to participate in any such opportunities. We cannot state with any certainty which, if any, opportunities to acquire assets from Anadarko may be made available to us or if we will elect to pursue any such opportunities."

The SEC filing indicated that Anadarko is the "sole member" of the general partner and will have the right to appoint the general partner's entire board of directors. Some of its officers and directors also are officers of Anadarko.

UBS Investment Bank is the IPO's lead underwriter. Western Gas Partners has given its underwriter the option to buy up to about 2.8 million additional common units to cover any overallotments. The partnership plans to list its common units on the New York Stock Exchange under the symbol "WES."

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