June 10, 2004
Anadarko plans big asset sale
The Woodlands-based Anardarko Petroleum Corp. is one the largest energy producers in North America. Yesterday, the company announced that says it plans to sell oil and natural-gas properties valued at about $2.5 billion and redirect its focus to overseas efforts.
Anadarko will be selling interests in producing oil and gas fields in Oklahoma, Texas and Canada, and then plans on managing its remaining North American assets as a source of capital for high-risk, high-reward exploration projects in Qatar, Algeria and the deepwater Gulf of Mexico. In addition, the company will use proceeds of the asset sales to pay down debt by $1.4 billion and fund at least a $1.1 billion stock repurchase plan.
Although the sales when completed will cut Anadarko's production by 25% and proved reserves by 15%, the theory behind the plan is for the company to imporve its growth rate. Anadarko's new CEO, James T. Hackett, said the plan is similar to "pruning the tree to make it healthier."
Anadarko's plan is a fairly typical response of energy companies that rely heavily on declining North American oil and natural-gas production. Such large independent producers eventually are forced to make a choice between riskier international and deepwater exploration or boosting profits on their declining reserves by hacking costs and improving efficiency. Anadarko's plan is announcing to the market that the company prefers to play rather than clip coupons.
This plan comes after a period of upheaval at Anardarko, with management changes and a failed sale bid. The above-described plan is new CEO Mr. Hackett's first step in charting the company's future course.
Posted by Tom at June 10, 2004 7:49 AM |
Intriguing. I'm doing some work for Anadarko right now. Wonder if this will affect the company's strategy, though I doubt it.
Posted by: TP at June 10, 2004 9:37 AM
Anadarko is a good company, and Hackett (ex of Ocean Energy) is well thought of in the oil and gas community. Should be a good client of yours for years.
Posted by: Tom Kirkendall at June 10, 2004 2:08 PM
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