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Anadarko spends big and sells small

US INDEPENDENT Anadarko has embarked on a significant restructuring, spending $23.3bn acquiring Kerr-McGee and Western Gas, and putting its Canadian assets up for sale. However, investors were unimpressed and shares fell from around $56 in spring to $43 in July.

Kerr-McGee's and Western Gas' proved reserves in 2005 amounted to 0.898bn barrels of oil equivalent (boe) and 153m boe, respectively, bringing Anadarko's global reserves to around 4bn boe. The acquisitions should give Anadarko "industry-leading positions in the deep-water Gulf of Mexico and the Rockies", claimed Jim Hackett, Anadarko's chief executive. According to Hackett, the firm will ultimately recover 3.8bn boe from the companies, implying a purchase price of less than $12/boe.

Anadarko followed those acquisitions by saying it would sell other assets to fund the deals. However, the company's decision to divest its subsidiary in Canada has not worked to plan. "They've hamstrung themselves," says an analyst. "Everyone knows they need to sell, so when they do, that will be reflected in the price."

Indeed, Anadarko Canada, with reserves of around 1.6 trillion cubic feet of gas equivalent, remains on the market. Rumours of interest from Total, Eni, Petro-Canada and others have failed to materialise into a bid. Analysts say the company hopes to secure $3.5bn-4.0bn for the company, but with some 85% of the Canadian unit's assets being gas-related, softer gas prices have also dampened some interest in the sale.

The company has had more success finding a buyer for another Canadian asset it intended to sell, the Bear Head LNG company, a wholly owned subsidiary that is developing a liquefied natural gas (LNG) receiving terminal at Point Tupper, Nova Scotia, in eastern Canada. Anadarko said it had sold the company to the US' Venture Energy, a private equity firm, for $125m. Anadarko has retained the right to take gas from the terminal.

The company's senior vice president, Karl Kurz, said that sale would allow Anadarko to recover its investment "while retaining the ability to supply LNG to the Canadian Maritimes and US northeast".

Meanwhile, the company announced last month that it had signed an exploration deal with Chevron in the Delaware basin, in west Texas. The acreage extends westward from an existing Anadarko leasehold, which includes the rapidly growing Haley gasfield.

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