Anadarko Hopes to Get $9B from Asset Sell-off
Anadarko said Tuesday it will sell off additional oil-field assets valued at up to $9 billion and may create a separate partnership for its pipeline holdings as part of a sweeping plan to raise cash to pay down debts.
Among the properties going on the block are projects in northern Louisiana, West Texas and in the northern Rockies, a stake in a deep-water field in the Gulf of Mexico and all the firm's assets in Venezuela, Anadarko executives told analysts during a presentation at the company's headquarters in The Woodlands.
The divestitures could generate between $5 billion and $9 billion after taxes, while a new master limited partnership, which would issue stock and buy the firm's pipeline assets, could add another $1.3 billion to company coffers for debt reduction, Anadarko said.
The moves come as the company is trying to clean up its balance sheet after spending $22.5 billion in August to acquire Kerr-McGee Corp. and Western Gas Resources.
With the additional asset sales outlined Tuesday, Anadarko is well on its way to reducing debt by $15 billion without the need to issue equity, two analysts, David Heikkinen and Marshall Carver, with Pickering Energy Partners, wrote in a report. "This is a good thing for the stock."
But investors were less convinced Tuesday. Anadarko shares traded down $2.31, or 4.9I The acquisitions, which made Anadarko the nation's largest independent oil and natural gas producer, have also strained the company as it adjusts to its new size. percent, to $47.55 on the New York Stock Exchange.
The acquisitions, which made Anadarko the nation's largest independent oil and natural gas producer, have also strained the company as it adjusts to its new size.
Anadarko is now weighted down with $26Ubillion in debt. It aims to slash the total to $12 billion by the end of next year, said Al Walker, the company's chief financial officer.
It plans to do so by eliminating overlap after the acquisitions, shedding business units that don't fit into growth plans or don't produce strong enough returns on investment, he said. The company could announce buyers for assets in North Louisiana and West Texas as early as this month; it hopes to disclose deals for the rest by mid-2007, he said. But not all the holdings being unloaded will be sold outright.
Anadarko will offer up a quarter interest in its K2 oil fields in the deep waters of the Gulf of Mexico, a rich discovery off the coast of Louisiana, Walker said.
As part of a broader belt-tightening next year, the firm's capital spending will actually go down, even with new assets to feed after the mergers.
Walker said capital spending in 2007 will be in the range of $4 billion to $4.2 billion, down from this year's expected range of $4.9 billion and $5.1 billion.
The company also expects to take a one-time charge betweenE$160 million and $200 million in the fourth quarter for an unspecified number of job reductions across the company, he said.
Many of the job cuts will be tied to the sales of Anadarko assets, a company spokesman said. In those cases, employees will retain work with the business units that are sold.
In recent months Anadarko has announced agreements to sell assets for approximately $5.5 billion on an after-tax basis, including a Canadian subsidiary for about $4.2 billion to Canadian Natural Resources.
Copyright 2006, Houston Chronicle. Distributed by McClatchy-Tribune Business News.
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