Anadarko to Acquire Kerr-McGee Corporation & Western Gas Resources, Inc. in Separate Transactions Totaling $23.3 Billion.HOUSTON -- Anadarko Petroleum Corporation Anadarko Petroleum Corporation (NYSE: APC) is one of the world’s largest independent oil and gas exploration and production companies, with 2.37 billion barrels of oil equivalent (BOE) of proved reserves and a production of 190 million BOE in 2004. Ranked No. (NYSE NYSE See: New York Stock Exchange : APC (1) (American Power Conversion Corporation, West Kingston, RI, www.apcc.com) The leading manufacturer of UPS systems and surge suppressors, founded in 1981 by Rodger Dowdell, Neil Rasmussen and Emanual Landsman, three electronic power engineers who had worked at MIT. ): --Deals Create Leading Positions in Two of North America's Most Prolific Producing Regions --Portfolio to Be Optimized Through Asset Sales Anadarko Petroleum Corporation (NYSE: APC) today announced it has agreed to acquire Kerr-McGee Corporation (NYSE: KMG KMG Kerr-McGee KMG Koi Mil Gaya (Hindi movie) KMG Kunming, China - Kunming (Airport Code) KMG Kent Messenger Group (UK) ) and Western Gas Resources Western Gas Resources is a Fortune 1000 company based in Denver, Colorado and founded in 1971. Western is an independent natural gas explorer, producer, gatherer, processor, transporter and energy marketer. , Inc. (NYSE: WGR WGR Wireless Gaming Review (gaming resource website) WGR Western Gas Resources, Inc. WGR Waveguide Grating Router (IEEE) WGR Women in Government Relations, Inc. ) in separate all-cash transactions totaling $21.1 billion, plus the assumption of debt estimated at $2.2 billion. "We are creating a combined company with industry-leading positions in the deepwater Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east and the Rockies, two of the fastest-growing oil and natural gas producing regions in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. ," Anadarko Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Jim Hackett said. "The core assets being acquired strongly complement Anadarko's existing properties, providing the scale and focus needed to deliver more robust, predictable and efficient growth. Kerr-McGee's outstanding deepwater holdings and skill sets will elevate Anadarko into the top echelon of deepwater operators. Similarly, Kerr-McGee's long-lived natural gas resource plays in Colorado and Utah, along with Western Gas Resources' in Wyoming, will combine with Anadarko's assets to make us one of the largest producers in several of the most prolific basins in the Rockies. Together, these acquisitions create a more focused portfolio, which will enhance our ability to deliver very competitive growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. and returns." Hackett emphasized that the transactions are consistent with Anadarko's strategy, which is built around the company's core competencies in unconventional resource development and high-impact exploration. "Two years ago, we unveiled a strategy that included a solid North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. foundation of onshore resource plays, a growing deepwater Gulf of Mexico program and an expanding international portfolio," he said. "Kerr-McGee and Western Gas Resources strengthen Anadarko's position on all three counts, with captured growth projects that are consistent with our core skill sets. The transactions enable us to create a more focused operating strategy with a larger and lower-risk asset base." Hackett said Anadarko will conduct a thorough review of the consolidated assets to select divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). candidates, with the dual goals of paring acquisition-related debt and refocusing Noun 1. refocusing - focusing again focalisation, focalization, focusing - the act of bringing into focus the portfolio. "All three companies have certain assets that we will likely deem to be non-core once combined," he said. "Even with divestitures that we believe could generate substantial after-tax proceeds, we expect the proposed acquisitions to be accretive to both earnings and cash flow on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis." Anadarko will finance the acquisitions through a $24 billion, 364-day committed acquisition facility provided by UBS UBS Union Bank of Switzerland UBS United Bible Societies UBS United Blood Services UBS United Buying Service UBS Used Bookstore UBS University Business Services UBS Universal Building Society (UK) UBS Ulaanbaatar Broadcasting System , Credit Suisse The Credit Suisse Group (SWX:CSGN, NYSE: CS) is a financial services company, headquartered in Zürich, Switzerland. It is the second-largest Swiss bank, behind UBS AG. and Citigroup. Anadarko plans to use proceeds from asset sales, free cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses and the issuance of equity to reduce debt over the next 18 to 24 months. "Given our outlook for energy markets, these transactions make a lot of sense for Anadarko shareholders. We expect to hedge up to 75 percent of the acquired production through late 2008 using a series of three-way collars, with floors designed to ensure a return on our investment and ceilings that allow considerable upside," Hackett said. "We also expect cost reductions as we consolidate certain administrative functions, but the biggest synergies are expected to come from combining the complementary assets of the three companies and the skills of their employees. In today's tight labor markets labor market A place where labor is exchanged for wages; an LM is defined by geography, education and technical expertise, occupation, licensure or certification requirements, and job experience , gaining qualified people is a bigger focus than achieving cost savings through consolidation. "Anadarko is offering Kerr-McGee and Western's shareholders significant premiums over the companies' recent current stock prices, but looking backward Looking Backward Julian West awakens more than a century later to enjoy a new life in the Boston of A.D. 2000. [Am. Lit.: Looking Backward in Magill I, 520] See : Time Travel 30 days results in premiums that are more comparable to precedent transactions. In any case, we believe we are capturing a substantial disconnect between current property valuations and equity market valuations, and gaining some exceptional properties and talent in the process," Hackett said. "The day-one metrics on proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. and daily production are in-line with other recent transactions. On a full-cycle basis, including the acquisition and future development costs, we expect to ultimately recover 3.8 billion barrels of oil equivalent (BOE BOE Based on Experience BOE Board of Education BOE Boletín Oficial del Estado (Spanish) BOE Bank of England BOE Board of Equalization BOE Board of Elections BOE Barrel of Oil Equivalent BOE Bind on Equip ) from the acquired properties at less than $12.00 per BOE. Opportunities to gain access to such large, high-margin resource opportunities at such economic full-cycle costs are rare, and we are excited about the value we expect to create for Anadarko shareholders." SUMMARY OF THE KERR-MCGEE CORPORATION TRANSACTION Anadarko has agreed to acquire Kerr-McGee Corporation in an all-cash transaction totaling $16.4 billion, or $70.50 per Kerr-McGee share, plus the assumption of net debt and other liabilities other liabilities Small and relatively insignificant liabilities. For financial reporting purposes, firms often combine small liabilities into this single category rather than listing each liability separately. estimated at $1.6 billion. Kerr-McGee's year-end 2005 proved reserves (excluding pending Gulf of Mexico shelf divestitures) totaled 898 million BOE, of which approximately 62 percent is natural gas. Proven undeveloped reserves represented 30 percent of the total. Production in 2006 is expected to be about 92 million BOE, with natural gas representing approximately 60 percent of the total. Anadarko expects to ultimately recover more than 3.1 billion BOE on the Kerr-McGee properties, at a full-cycle cost of approximately $39.2 billion ($12.40 per BOE), including the acquisition cost. Kerr-McGee's core properties are located in the deepwater Gulf of Mexico and onshore in Colorado and Utah. They include 504 deepwater Gulf of Mexico blocks, encompassing seven operated and three non-operated producing fields, three operated and five non-operated discoveries in varying stages of development, and four additional prospects that will be drilled this year. These assets are supported by Kerr-McGee's extensive "hub-and-spoke" infrastructure, which offers highly cost-effective future development potential. In Colorado, Kerr-McGee holds 451,000 net acres in the Wattenberg natural gas play, located largely on the Land Grant, where Anadarko owns the royalty interest royalty interest The proportional ownership interest by the owner of oil and gas rights in income produced by the asset. See also overriding royalty interest. . In Utah, Kerr-McGee holds 237,000 net acres in the Uinta basin's prolific Greater Natural Buttes Buttes is a municipality in the district of Val-de-Travers in the canton of Neuchâtel in Switzerland. gas play. In addition to its extensive, rapidly growing U.S. portfolio, Kerr-McGee produces oil and is continuing to develop and explore offshore China, has made discoveries and is pursuing the development of fields on the North Slope North Slope, Alaska: see Alaska North Slope. of Alaska and offshore Brazil, and is exploring offshore Australia, West Africa West Africa A region of western Africa between the Sahara Desert and the Gulf of Guinea. It was largely controlled by colonial powers until the 20th century. West African adj. & n. and the islands of Trinidad and Tobago Trinidad and Tobago is an archipelagic republic in the southern Caribbean which consists of 23 distinct islands. The following is a list of these islands. Major islands
Anadarko expects to assign almost the entire acquisition price to Kerr-McGee's oil and natural gas properties. Separate valuations for Kerr-McGee's extensive "midstream mid·stream n. 1. The middle part of a stream. 2. The part of a course that is neither at the beginning nor at the end: the midstream of life. Noun 1. " gathering and processing assets are not available, since those assets are operated in conjunction with the upstream properties rather than as a separate business segment. Refer to the attached schedule for further detail on Kerr-McGee's properties. Anadarko's and Kerr-McGee's boards of directors have unanimously approved the terms of the agreement, and Kerr-McGee's board has recommended that its shareholders approve the transaction. The agreement includes a right to match competing offers and a break-up fee of $493 million to be paid under certain circumstances. The transaction, subject to the approval of Kerr-McGee shareholders as well as other conditions including customary regulatory approvals, is expected to close by the end of the third quarter. For Anadarko, Credit Suisse and UBS acted as financial advisors, Goldman Sachs The Goldman Sachs Group, Inc., or simply Goldman Sachs (NYSE: GS) is one of the world's largest global investment banks. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street. provided the fairness opinion Fairness Opinion A report put together by qualified analysts or advisors providing to key decision makers an evaluation of and facts about a merger or acquisition. Notes: A fairness opinion serves as a document used for guidance in a merger, takeover, or acquisition. and Akin Gump Strauss Hauer & Feld LLP LLP - Lower Layer Protocol acted as legal counsel. SUMMARY OF THE WESTERN GAS RESOURCES, INC. TRANSACTION Anadarko has agreed to acquire Western Gas Resources, Inc. in an all-cash transaction totaling $4.7 billion, or $61.00 per Western Gas Resources share, plus the assumption of debt and other liabilities estimated at $600 million. Western Gas Resources year-end 2005 proven reserves totaled 153 million BOE, with proved undeveloped reserves representing 57 percent of the total, while 2006 production is expected to total about 12.5 million BOE. Essentially all of the reserves and production are natural gas. Anadarko expects to ultimately recover about 705 million BOE on the Western Gas Resources properties, at a full-cycle E&P cost of approximately $6.7 billion, or less than $10 per BOE, including the acquisition cost of the oil and gas properties. Approximately $1.6 billion of the total acquisition price will be allocated to "midstream" gathering, processing and transportation assets. Virtually all of the remaining value is assigned to two natural gas resource plays in Wyoming: coalbed methane Coalbed methane is a form of natural gas extracted from coal beds. In recent decades it has become an important source of energy in United States, Canada, and other countries. (CBM CBM Commodore Business Machines CBM Coalbed Methane CBM Christoffel Blindenmission CBM Condition Based Maintenance CBM Confidence-Building Measures CBM Curriculum Based Measurement (education) CBM Cubic Meter ) in the Powder River Basin The Powder River Basin is a region in southeast Montana and northeast Wyoming about 120 miles east to west and 200 miles north to south known for its coal deposits. It is both a topographic drainage and geologic structural basin. , primarily within the Big George coals, and tight gas in the Pinedale field. Western Gas Resources CBM properties within the Powder River Basin are estimated to hold about 9 trillion cubic feet (Tcf) of original gas in place and are directly adjacent to Anadarko's assets in this developing play. Western Gas Resources also has a 10 percent average working interest in their Pinedale/Jonah joint ventures, which encompass world-class fields totaling more than 40 Tcf of original estimated gas in place. Anadarko expects that combining its properties with Western's will accelerate the development of these natural gas resources and produce strong volume growth through the end of the decade, and possibly longer, with more than 12,000 identified drilling locations in inventory. Refer to the attached schedule for further detail on Western Gas Resources' properties. Anadarko's and Western Gas Resources' boards of directors have unanimously approved the terms of the agreement, and Western's board has recommended that its shareholders approve the transaction. The agreement includes a right to match competing offers and a break-up fee of $154 million to be paid under certain circumstances. Holders of 17 percent of Western's outstanding common shares have agreed to vote in favor of the transaction. Subject to the approval of Western Gas Resources' shareholders as well as other conditions including customary regulatory approvals, the transaction is expected to close by the end of the third quarter. For Anadarko, Credit Suisse and UBS acted as financial advisors, Goldman Sachs provided the fairness opinion and Akin Gump Strauss Hauer & Feld LLP acted as legal counsel. This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Anadarko believes that its expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct or that the transactions described above will occur. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release. See "Risk Factors" in the company's 2005 Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and other public filings, press releases and discussions with company management. Anadarko undertakes no obligation to publicly update or revise any forward-looking statements. ANALYST CONFERENCE CALL TODAY AT 8:30 A.M. CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT , 9:30 A.M. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT Anadarko will host an analyst conference call today, Friday, June 23, 2006 at 8:30 a.m. Central Daylight Time (9:30 a.m. Eastern Daylight Time) to discuss the transactions. The dial-in number is 913-981-4900, and the confirmation number is 1843925. For complete instructions on how to actively participate in the conference call, or to listen to the live audio webcast or a replay, please refer to www.anadarko.com. MEDIA CONFERENCE CALL TODAY AT 10:30 A.M. CDT, 11:30 A.M. EDT Anadarko will host a media conference call today, Friday, June 23, 2006 at 10:30 a.m. Central Daylight Time (11:30 a.m. Eastern Daylight Time) to discuss the transactions. The dial-in number is 913-981-5591, and the confirmation number is 7678745. This call is for professional working journalists only. Participants will be required to register prior to joining the call. ABOUT ANADARKO Anadarko Petroleum Corporation's mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world's health and welfare. As of year-end 2005, the company had 2.45 billion barrels-equivalent of proved reserves, making it one of the world's largest independent exploration and production companies. Anadarko's operational focus in North America extends from the deepwater Gulf of Mexico, up through the western U.S. and Canadian regions and onto the North Slope of Alaska. Anadarko's international activities are focused on major positions in North Africa, the Middle East and Indonesia, as well as exploration or production operations in several other countries. For more information about how Anadarko is bringing excellence to the surface, please visit: www.anadarko.com.
Anadarko Petroleum Corporation
Transaction Details - Kerr-McGee Corporation (NYSE: KMG)
Purchase Price
Equity value @ $70.50 / share $16.4 Billion
Assumption of debt and other
liabilities(a) $1.6
-----------------------------------------
Total $18.0 Billion
Purchase Price Allocation
Proven reserves $11.0 Billion
Unproven / leasehold $7.0
Midstream $-
-----------------------------------------
Total $18.0 Billion
Deferred Tax Step-Up $4.5 Billion
Resource Potential
Proven reserves @ YE 2005 898 MM Boe 62% Gas
Probables, possibles 2,245 MM Boe 70% Gas
Future Development Capital
Associated with proven reserves $3.5 Billion
Associated with probables,
possibles $17.4
---------
Total $21.0 Billion
YE 05(b) Est YE 06 1Q2006
Net Proven Net Net
Acreage Reserves Probables Production
Asset Details (M Acres)(MM Boe) (MM Boe) (M Boe/d)
--------------------------------------
Gulf of Mexico (deepwater) 1,667 269 173 87
Uinta Basin, Utah (Natural
Buttes tight gas) 237 153 945 30
DJ Basin, Colorado (Wattenberg
tight gas) 451 234 240 39
Other Rockies 620 45 21 14
Southern Region 1,400 153 125 54
International (includes Alaska) 14,062 44 293 16
----------------------------------------------------------------------
Total 18,437 898 1,797 239
Headquarters Location Oklahoma City
Number of Employees 1,755
--------------------------------------------------
(a) Net of working capital and expected proceeds
for assets held for sale
(b) Excludes GOM Shelf
Anadarko Petroleum Corporation
Transaction Details - Western Gas Resources, Inc. (NYSE: WGR)
Purchase Price
Equity value @ $61.00
/ share $4.7 Billion
Assumption of debt
and other
liabilities $0.6
------------------------------
Total $5.3 Billion
Purchase Price
Allocation
Proven reserves $1.7 Billion
Unproven / leasehold $2.0
Midstream $1.6
------------------------------
Total $5.3 Billion
Deferred Tax Step-Up $1.3 Billion
Resource Potential
Proven reserves @ YE
2005 153 MM Boe 99% Gas
Probables, possibles 552 MM Boe 99% Gas
Future Development
Capital
Associated with
proven reserves $0.6 Billion
Associated with
probables, possibles $2.4
---------
Total $3.0 Billion
NSAI YE Est YE
05 06 1Q 2006 2005
Net Proven Net Net Midstream
Acreage Reserves Probables Production Throughput
Asset Details (M Acres)(MM Boe) (MM Boe) (MMcfe/d) (MMcf/d)
-------------------------------------------------
Powder River Basin,
Wy (coalbed methane) 565 57 336 125 433
Green River Basin, Wy
(Pinedale tight gas) 24 88 162 45 443
Other 1,138 9 0 18 544
----------------------------------------------------------------------
Total 1,727 153 498 188 1,420
Headquarters Location Denver
Number of Employees 800
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion