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Front Page » July 6, 2006 » Local News » Anadarko poised to acquire companies
Published 3,378 days ago

Anadarko poised to acquire companies

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Sun Advocate reporter

A major player in oil and gas development in Carbon County, Anadarko Petroleum Corporation, announced last week that the company had agreed to acquire Kerr McGee Corporation and Western Gas Resources Inc.

If approved by shareholders, Anadarko will become the largest oil and gas developer in the nation.

With current development trends in Castle Valley and the Unitah Basin, the June 23 announcements of the acquisition could have significant impacts in Carbon County and across the state.

In 2000, Anadarko merged with Union Pacific Resources, becoming one of the largest oil and gas developers in eastern Utah.

Anadarko will purchase the two companies in two separate transactions totaling $21.1 billion and assume an estimated $2.2 billion in outstanding debts for the two companies.

"We are creating a combined company with industry leading positions in the deepwater Gulf of Mexico and the Rockies, two of the fastest-growing oil and gas producing regions in North America," indicated Jim Hackett, chairman, president and chief executive officer of Anadarko.

With oil and gas companies making record profits, the acquisition demonstrates the assets available to energy developers. Anadarko employs more than 250 people in Utah and Wyoming.

"Given our outlook for energy markets, these transactions make a lot of sense for Anadarko shareholders," said Hackett.

On June 28, Anadarko announced that it would be selling its Canadian subsidiary, Anadarko Canada Corporation.

"Properties like ours are in high demand in Canada right now, attracting valuations significantly above those reflected in our stock price," said Hackett. "This arbitrage opportunity motivates us to essentially trade out of the Canadian operations and into the Kerr-McGee and Western properties."

Based in Houston, Texas, Anadarko has considerable assets in the Drunkards Wash gas field in Carbon County with other producing wells in the Helper gas field.

Kerr-McGee, on the other hand has been one of the prominent players in developments in oil and gas developments in the Uintah Basin, where it holds 237,000 net acres and operates more than 1,400 gas wells.

The company also has drilling operations off the Gulf of Mexico, the Bohai Bay area of China and exploration activities on the North Slope of Alaska and offshore Brazil, Trinidad and Tobago and West Africa. Headquarters for Kerr-McGee are in Oklahoma City, Okla.

Anadarko has agreed to purchase Kerr-McGee for $16.4 billion, or $70.50 per Kerr-McGee share. Kerr-McGee also has estimated debt and other liabilities of $1.6 billion, which Anadarko will assume.

Stock prices for Kerr-McGee closed at $50.30 per share on June 22, and rose to $68.61 after the announcement. Prices have continued to climb, closing at $69.46 on Monday.

Kerr-McGee has an estimated 898 million barrels or oils and gas reserves.

That figure does not include assets on the Gulf of Mexico shelf, which are pending a divestment from Kerr-McGee. An estimates 62 percent of the reserves are natural gas.

In a smaller transaction, Anadarko has announced that it will acquire Western Gas Resources for $4.7 billion, or $61 per share.

Western Gas has reserves estimated at 153 million barrels. The reserves are virtually all natural gas, 57 percent of which are undeveloped.

Reserves are located in two areas of Wyoming: coal bed methane reserves in the Pow-River Basin, and tight gas in the Pinedale field. Western Gas is headquartered in Denver, Colo.

Similar to Kerr McGee, stock prices for Western Gas saw increases after the announcement of the acquisition.

Closing at $40.86 on June 22, prices registered at $59.60 after the announcement. The prices have seen modest increases, closing at $59.88 on Monday.

The two transactions are still subject to the approval by Kerr-McGee and Western Gas shareholders.

The members of the board of directors of all three companies have already approved the acquisition.

Anadarko will finance the acquisition through a $24 billion, 364-day committed acquisition facility provided by UBS, Credit Suisse and Citigroup.

Anadarko's shares were valued at $48.39 per share at the close of business on June 22, prior to the announcement of the acquisition.

While shares dropped to $43.62 after the announcement, the price rebounded to $48.75 at the close of business on Monday.

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