Anadarko buys Kerr-McGee Corp.

0 Comments | Deseret News (Salt Lake City), Aug 11, 2006 | by Jeff Latzke Associated Press

OKLAHOMA CITY -- Anadarko Petroleum Corp. closed its $16.4 billion buyout of fellow oil and natural gas producer Kerr-McGee Corp. on Thursday after shareholders for Kerr-McGee agreed to the deal.

Houston-based Anadarko announced in June that it would buy Oklahoma City-based Kerr-McGee and pay $4.7 billion to buy Denver- based Western Gas Resources in a move to more than double its annual sales and gain a bigger footprint in the deepwater Gulf of Mexico and the Rockies.

"The Kerr-McGee transaction makes Anadarko one of the leading companies in the deepwater Gulf of Mexico and in the Rockies, two of the fastest-growing oil and natural gas producing regions in North America," Anadarko chairman Jim Hackett said in a statement.

In Utah, Kerr-McGee holds 237,000 net acres in the Uinta Basin's Greater Natural Buttes gas play, according to a company press release.

Kerr-McGee stockholders will receive $70.50 per share in cash for each share of common stock. Kerr-McGee traded at about $50 a share before the deal was announced June 23.

Its shares rose 4 cents to close at $70.47 on the New York Stock Exchange. Anadarko shares fell 25 cents to close at $47.24 on the NYSE.

The deal calls for Kerr-McGee to be combined with Anadarko subsidiary APC Acquisitions Sub Inc. but for Kerr-McGee to be the surviving corporation under Anadarko.

Shareholders of Western Gas will meet Aug. 23 in Denver to vote on that company's proposed acquisition by Anadarko.

The three companies together had more than $17 billion in annual revenue last year. Anadarko is taking on $1.6 billion in debt and other liabilities to complete the Kerr-McGee buyout and another $560 million in debt as part of the purchase of Western Gas.

To cover that debt, Hackett, who is also Anadarko's president and CEO, said the company is reviewing the assets of the companies and has identified assets it believes it could sell for more than $10 billion in after-tax proceeds.

That total includes Anadarko's Canadian natural-gas subsidiary, Anadarko Canada Corp., which the company put up for sale in June. Anadarko spokeswoman Susan Richardson said she couldn't estimate the market price of the company's Canada assets.

Hackett said Anadarko's portfolio would be more "capital efficient" after the divestiture.

"It's safe to say that we're bringing in all of their assets from both companies, and we're going to be looking at all of those and thinking about any of them as possible divestiture candidates," Richardson said.

Kerr-McGee has about 3,800 workers, including 190 corporate service workers at its headquarters in downtown Oklahoma City.

In its second-quarter earnings last week, Kerr-McGee reported its net income dropped to $305 million from $370 million in the second quarter last year.

After the buyout, Kerr-McGee vice president of exploration and production Charles A. Meloy will become Anadarko's senior vice president of Gulf of Mexico and international operations.

Luke R. Corbett, Kerr-McGee's chairman and CEO, has been appointed to Anadarko's board of directors.