Houston Community News >> Anadarko buys two smaller competitors
6/23/2006 Houston -- Oil and natural gas producer Anadarko Petroleum Corp. on Friday agreed to pay $21 billion to acquire two smaller competitors, Kerr-McGee Corp. and Denver-based Western Gas Resources Inc., in a bid to boost its North American output.
The acquisitions, which would more than double Anadarko's annual sales, provide the Houston-based company with a bigger footprint in two burgeoning regions for natural-gas drilling — the deepwater Gulf of Mexico and the Rockies — at a time when the continent's demand is rising but overall output is stagnating.
Anadarko also will pay $4.74 billion, or $61 per share, to buy Western Gas Resources and will assume $560 million in debt. That cash offer represents a 49 percent premium over the company's closing stock price of $40.91 on Thursday.
"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," Anadarko Chairman, President and CEO Jim Hackett said. Hackett also said he expects to generate "substantial after-tax proceeds" by selling some assets from all three of the companies.
The hefty premium shows industry executives remain confident that natural gas prices will remain higher than historical levels because of robust demand for a fuel used to heat homes, produce electricity and manufacture all sorts of petrochemicals. Imports of liquefied natural gas are on the rise, but building the ships and terminals necessary to support this side of the business takes years and permitting has proven difficult.
Moreover, with the cost of exploration rising and companies having a hard time gaining access to resources, analysts say acquisitions are a quick and easy way for companies to grow. Friday's news sent shares of Western Gas sharply higher to $59.59, up $18.68, or 46 percent, from Thursday's close. Kerr-McGee shares jumped $18.41, or 37 percent, to $68.71, while shares of Anadarko fell $2.39, or 4.9 percent, to $46.
Kerr-McGee's core properties are located in the deepwater Gulf of Mexico and onshore in Colorado and Utah. The company has about 3,800 workers.
Western Gas Resources' producing properties are located primarily in Wyoming. The Company also owns and operates natural gas gathering, processing and treating facilities in major gas-producing basins in the Rocky Mountain, Mid-Continent and West Texas regions of the United States. The company's work force totals about 800.
Anadarko is one of the world's largest independent exploration and production companies, concentrated in North America. It's operations extend from the deepwater Gulf of Mexico, up through the western U.S. and Canadian regions and onto the North Slope of Alaska. Anadarko also has major positions in North Africa, the Middle East and Indonesia, as well as exploration or production operations in several other countries.
