Anadarko to sell pipeline and storage assets for $4bn

Anadarko Petroleum Corporation has announced a transaction to sell substantially all of its remaining midstream assets for $4.015bn to Western Gas Partners (WES) with $2.0075bn cash proceeds, and the balance to be paid in new Western Gas equity. 

Concurrently WES announced it has entered into a merger agreement with Western Gas Equity Partners, LP, which will result in a simplified midstream structure. The sale is expected to close in the first quarter of 2019, concurrently with the closing of the merger. 

The sale will generates more than $4bn in net proceeds to Anadarko, including more than $2 billion of cash plus new Western Gas equity units. It also results in expected 2019 cash distributions paid to Anadarko totalling more than $600m, which is an increase of almost 50 percent versus prior expectations.

Anadarko will also maintain operating control of one of the largest midstream master limited partnerships (MLP), with approximately 55.5 percent pro-forma ownership of the combined entity.

“The size of this asset sale, along with the clear benefits of the simplification transaction, highlights the tremendous value of Anadarko’s midstream business,” said Al Walker, Anadarko Chairman, President and CEO. “This will enhance the read-through value of Anadarko’s midstream ownership through increased liquidity and a less complex structure. Further, it supports our durable strategy of returning value to Anadarko’s shareholders, as we expect to continue prioritizing the use of cash and free cash flow to repurchase shares, reduce debt, and increase the dividend over time.”

Under the terms of the asset sale transaction, WES will acquire substantially all of Anadarko’s remaining midstream assets, which are largely associated with Anadarko’s two premier U.S. onshore oil plays in the Delaware and DJ basins. The acquired assets include DBM Oil Services (100-percent interest), APC Water Holdings (100-percent interest), the Bone Spring Gas Plant (50-percent non-operated interest), and the MiVida Gas Plant (50-percent non-operated interest) in the Delaware Basin of West Texas. In the DJ Basin of northeast Colorado, WES will acquire Anadarko’s 100-percent interest in both the DJ Basin Oil System and the Wattenberg Plant. Additional Anadarko midstream assets to be acquired by WES include equity stakes in the Saddlehorn Pipeline (20-percent non-operated interest), the Panola Pipeline (15-percent non-operated interest), and the Wamsutter Pipeline (100-percent interest).

Under the terms of their merger transaction, WGP will acquire all of the outstanding publicly held common units of WES and substantially all of the WES common units owned by Anadarko in a unit-for-unit, tax-free exchange. WES will survive as a partnership with no publicly traded equity, owned 98 percent by WGP and 2 percent by Anadarko. WES will remain the borrower for all existing debt and future issuances and the owner of all operating assets and equity investments assets for $4bn.

For more information visit: www.anadarko.com

9th November 2018