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Anadarko Selling GOM Genghis Khan to BHP, Hess, Repsol Group

Houston-based Anadarko Petroleum Corp. notched another sale in its ongoing divestiture plan. The company is selling its Genghis Khan discovery in the deepwater Gulf of Mexico (GOM) to the owners of the adjacent Shenzi field for $1.35 billion.

The sale comprises Anadarko's 100% working interests in Green Canyon block 652 and certain deep rights in Green Canyon block 608. The Shenzi ownership group is comprised of BHP Billiton, with 44%, and Hess Corp. and Repsol, each with 28%.

"Similar to the Statoil transaction announced Nov. 6 (see Daily GPI, Nov. 7), this divestiture further advances our efforts to reduce financial leverage following the acquisitions of Kerr-McGee and Western Gas Resources in August" (see Daily GPI, Aug. 24; June 26), said Anadarko CEO Jim Hackett. "Due to the size and quality of the portfolio we have established in the deepwater Gulf of Mexico, we have the opportunity to realize value from targeted divestitures. Our deepwater position in the Gulf is robust, with nine hub-and-spoke development projects already on-line, a number of discoveries proceeding toward sanction, several exploration wells currently drilling and a solid prospect inventory for the future."

Genghis Khan, in water depths of about 4,300 feet, is part of the same geologic structure as the recently sanctioned Shenzi project and includes estimated gross reserves in the range of 65 million to 170 million boe, said Hess. The field has two wells and development infrastructure in place. First oil is expected in mid-2007. Ownership in Genghis Khan will be the same as the Shenzi development.

The field is located within three miles of the Marco Polo production platform, and development of the reserves at Genghis Khan will proceed through the connection of subsea wells where the pipeline infrastructure is already in place, said BHP Billiton. Development may include up to seven wells.

"The acquisition of Genghis Khan provides BHP Billiton with a significant undeveloped asset in the deepwater Gulf of Mexico with near-term production that we will operate,” said J. Michael Yeager, group president energy for BHP Billiton. "Additionally, Genghis Khan being adjacent to our Shenzi oil and gas field will allow us to benefit from developmental synergies, and will give us knowledge that will enhance the Shenzi development when it comes on-stream in 2009."

Monday, BHP shares closed at $40.88, down $1.43 or 3.38%; Hess closed at $45.24, up 24 cents or 0.53%; Repsol closed at $35.58, down 25 cents or 0.70%; and Anadarko closed at $46.80, down 45 cents or 0.95%.

The sale is expected to close in the fourth quarter, subject to closing conditions. Randall & Dewey marketed the asset and served as Anadarko's financial advisor.

Kerr-McGee and Western contributed significantly to Anadarko's third-quarter performance (see Daily GPI, Nov. 8). Anadarko announced a divestiture plan in June (see Daily GPI, June 29). The company said in September that it was well on its way to restoring its balance sheet and establishing permanent financing for the Kerr-McGee and Western deals (see Daily GPI, Sept. 20). Progress has included the sale of Anadarko Canada Corp. to a Canadian Natural Resources Ltd. (see Daily GPI, Sept. 15). Anadarko also agreed to divest its remaining Canadian arctic frontier interests through a separate exchange of assets with Chevron USA Inc. and Chevron Canada Ltd., wholly owned subsidiaries of Chevron Corp. (see Daily GPI, Nov.3). Anadarko so far has been unsuccessful in its attempts to sell its Bear Head LNG project (see Daily GPI, Sept. 29; July 11).

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