Anadarko Petroleum Corp. (NYSE: APC) is exiting one more noncore area in another billion-dollar deal, filling the Houston-based company's war chest with close to $7 billion of funds.
Alta Marcellus Development LLC, subsidiary of Alta Resources Development LLC, agreed to pay $1.24 billion for Anadarko's operated and nonoperated upstream assets and operated midstream assets in the Marcellus, Anadarko said Dec. 21.
Japanese trading house Mitsui & Co also agreed to sell a 20% stake in its Marcellus project to Alta Resources Development for $207 million, according to a Reuters report on Dec. 22.
Anadarko's Marcellus position consists of roughly 195,000 net acres in north-central Pennsylvania. The properties' sales volumes totaled about 470 million cubic feet per day at the end of third-quarter 2016.
"We continue to like the name [Anadarko] as we expect management to use the potential $6.5 billion to $7 billion war chest to boost inventory in the Delaware/D-J after filling the implied cash flow gap stemming from recent acceleration plans, biasing growth/net asset value higher," Tudor, Pickering, Holt & Co. (TPH) said in a Dec. 22 report.
So far in 2016, Anadarko has sold assets in excess of $5 billion as the company streamlines its portfolio to focus in the Delaware and Denver-Julesburg (D-J) basins.
The company said Oct. 31 that it made a deal with an undisclosed company to sell its Carthage assets on the eastern border of Texas for more than $1 billion.
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Though it hasn't all been just divestitures for Anadarko this year, the company doubled its ownership in the Lucius development in the Gulf of Mexico (GoM) by acquiring Freeport McMoRan Oil & Gas' deepwater GoM assets for $2 billion. The acquisition closed Dec. 15.
Pro-forma for the Marcellus/Carthage sales, GoM acquisition and planned debt redemptions, Anadarko has about $3.75 billion cash on hand, TPH said.
The firm also continues to believe Anadarko could divest its Eagle Ford position in the near-term for an estimated $3 billion.
Anadarko is one of the largest producers in the Eagle Ford, according to the company's website.
The company has roughly 388,000 gross acres in Dimmit, LaSalle, Maverick and Webb counties in South Texas. Sales volumes from its Eagle Ford properties were about 73,000 barrels of oil equivalent per day in third-quarter 2016.
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In early September, Pearce Hammond, senior research analyst at Piper Jaffray & Co., said “everything that APC owns in the U.S. onshore besides the D-J and Permian are candidates for potential divestiture at the right price. We would not be surprised if APC moved to sell their Eagle Ford asset.”
Anadarko's management has said it isn’t opposed to selling assets, but that it doesn’t need to, either. The company will evaluate any play unable to compete for capital with its Delaware and D-J basin positions.
Anadarko's Marcellus sale doesn't include midstream assets owned by its sponsored MLP, Western Gas Partners LP (NYSE: WES).
The transaction is expected to close during the first quarter of 2017, subject to customary closing conditions and adjustments. Jefferies LLC marketed the assets, and Sidley Austin LLP served as Anadarko's legal counsel.
Kirkland & Ellis LLP counseled Alta Resources Development on its purchases from Anadarko and Mitsui.
Emily Patsy can be reached at epatsy@hartenergy.com.
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