The Woodlands, Texas-based Anadarko Petroleum Corp. announced that it is selling a large number of its smaller oil and natural-gas properties in Texas and Oklahoma in return for $850 million and a stake in two Wyoming producing fields. Merit Energy Co., a Dallas-based privately held company, is buying the majority of the properties.
With the sale, Anadarko is nearing its previously announced goal of selling off $2.5 billion in North American assets. It plans to use the proceeds to lower debt and refocus on a plan to develop overseas and deepwater Gulf of Mexico exploration.
The properties Anadarko is selling represent 30% of its fields world-wide, but only 4% of proven reserves and 7% of current production. The deal is scheduled to close by the beginning of December.
Merit owns and operates oil and natural-gas fields with $2.1 billion in oil and natural-gas reserves. The company had raised $2.5 billion for additional purchases of oil and gas properties.
It’s too early to say whether Anadarko’s ambitious plan to restructure the company is going to work. However, I am pulling for them. It’s always refreshing to see management of a company address a daunting problem — i.e., the uninviting future of an independent E&P company treading water while living off of declining reserves — and come up with a creative plan to redirect the company toward a potentially more profitable goal. The plan is not without substantial risk, but given Anadarko’s alternatives, it makes a lot of sense to me.