Fitch Affirms Anadarko Petroleum's IDR at 'BBB-'; Outlook Stable

Business Wire, August 26, 2008

NEW YORK -- Fitch Ratings has affirmed Anadarko Petroleum Corporation's (NYSE:APC) long-term Issuer Default Rating (IDR) and other associated debt ratings following its announcement of a $5 billion stock repurchase program.

Anadarko Petroleum Corp.

--Long-term IDR affirmed at 'BBB-';

--Sr. Unsecured affirmed at 'BBB-';

--Bank Loan affirmed at 'BBB-';

--Short-term IDR affirmed at 'F3';

--Commercial Paper affirmed at 'F3';

Kerr-McGee Corp.

--Long-term IDR affirmed at 'BBB-';

--Sr. Unsecured affirmed at 'BBB-';

The Rating Outlook is Stable.

The affirmation reflects Anadarko's progress in reducing debt to date and expectations of further debt reduction notwithstanding the recent stock repurchase announcement. Fitch notes the repurchase program just announced is a multi-year program and will be funded with free cash flow from operations. Moreover, only $600 million of common equity will be purchased this year while Fitch expects that Anadarko will decrease debt by approximately $2 billion by yearend 2008 bringing total unadjusted balance sheet debt to approximately $11 billion (including the midstream notes payable which are non-recourse to Anadarko Petroleum). In 2009, Fitch expects leverage to decrease somewhat further through a portion of free cash flow and other sources as adjusted E&P debt to PDP is expected to decrease from over $7.50 per PDP as of June 30, 2008 to under $6.00 in 2009. Given the level of debt reduction that has already occurred and expectations of further debt reduction, Fitch believes the current rating level is appropriate at this time for the company given the repurchase program.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.