Well-known shareholder activist Carl Icahn, who has made a run on energy companies to improve their performance — and their stock prices — purchased about 3.1 million shares of Anadarko Petroleum Corp., a stake worth an estimated $133.4 million on March 31, according to a regulatory filing with the Securities and Exchange Commission (SEC).
Two years ago, Icahn Partners Master Fund LP teamed up with Jana Partners LP to acquire about $1 billion of Kerr-McGee Corp. stock (see NGI, March 7, 2005). Icahn’s group then called for massive changes, insisting that Kerr-McGee sell its chemical unit, sell forward energy reserves to lock in higher commodity prices and use cash to buy back $10 billion in stock rather than finance deepwater exploration. Kerr-McGee resolved an expected proxy fight after complying with many of the requests (see NGI, April 18, 2005).
Ben Dell, a research analyst with Sanford C. Bernstein and Co. LLC, said the Icahn purchase of Anadarko stock “looks like a normal equity play…It’s not big enough to have any material influence.” Dell does not own Anadarko stock and rates the company “underperform.”
Anadarko bought Kerr-McGee and Western Gas Resources for $21.1 billion cash last year (see NGI, Aug. 14, 2006). Since completing the massive deal, Anadarko has been selling off noncore assets to pay down its debt. It expects to sell another $2 billion worth of assets this year.
CEO Jim Hackett earlier this year asked shareholders for patience because the restructured portfolio will affect “several of our future quarters following the outgrowth of our transactions in the last year. We are eager to prove we can execute.”Anadarko’s year-end 2006 reserves were “lower than anticipated” because the company did not “predict the downward spike in commodity prices” (see NGI, Feb. 12). Downward reserve revisions included 99 MMboe, which resulted from lower prices at year-end, and 136 MMboe from “performance issues,” most notably at its K2 Unit in the Gulf of Mexico.
In related news, Japanese refiner Nippon Oil Corp. and Mitsubishi Corp. disclosed earlier this month that they spent $1.2 billion to purchase an estimated 23% stake in the K2 Unit. Nippon and Mitsubishi will each hold an 11.6% stake in the field. Anadarko had announced the sale in March, but it had not disclosed the buyers (see NGI, March 19).
Earlier this month, Anadarko said an unexpected windfall tax on its production in Algeria will cost the company nearly half a billion dollars this year (see NGI, May 7). In the first quarter, net earnings fell to $104 million (23 cents/share) from $660 million ($1.42) in 1Q2006.
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