Anadarko Petroleum Corp. (NYSE: APC) finished up third-quarter 2016 with a monster A&D performance that included $1.5 billion in asset sales to go along with its purchase of U.S. Gulf of Mexico (GoM) assets in September.

Anadarko said Oct. 31 that it has a deal to sell its Carthage assets on the eastern border of Texas for more than $1 billion. The Carthage assets in East Texas produced 40,000 barrels of oil equivalent per day (Mboe/d) in the third quarter including 72% gas, 25% NGL and 3% oil.

Since the end of the second quarter, the company also closed more than $500 million in asset sales through divesting assets in Elm Grove, Hearne, Hugoton and Ozona, Texas, and in Adams County, Colo.

With the divestitures, the company exceeded its March goal of selling up to $3 billion worth of assets. This year, Anadarko closed $3.08 billion in sales and, with the Carthage sale, will eclipse $4 billion.

Buyers for the assets were not disclosed.

Collectively, the assets produced 68 Mboe/d, most of it natural gas. That “implies a price paid of $22,000 per barrels of oil per day assuming modest value for non-PDP assets,” said Scott Hanold, an analyst at RBC Capital Markets LLC. “This is in line with other recent transactions with a similar commodity mix.”

Anadarko maintains an enormous bankroll. Anadarko ended the third quarter with about $4 billion of cash on hand, enhanced by its successful $2.16 billion equity offering during the quarter and its successful divestitures.

Its cash position will be cut by $1.8 billion to pay for its September acquisition of Freeport McMoRan Oil & Gas’ deepwater GoM assets for $2 billion. The deal doubles to about 49% Anadarko’s ownership in the Lucius development and adds production of 80 Mboe/d, more than 80% oil.

RELATED: Splashdown: Anadarko Lands $2 Billion Gulf Deal

Anadarko also plans to redeem its remaining $750 million of senior notes due September 2017.

As a result of efforts to strengthen its financial position, both Moody's and S&P recently improved their ratings on Anadarko to Stable.

The company had a strong quarter overall, analysts said.

Reported production was 780 Mboe/d, beating consensus forecasts of 755 Mboe/d. Anadarko’s production guidance in the fourth quarter is 696 Mboe/d and 717 Mboe/d, excluding divestitures, Baird Equity Research said.

The company said capex was down to $697 million, less than Wall Street’s consensus of $745 million, said Pearce Hammond, senior research analyst at Piper Jaffray & Co. Nevertheless, 2016 capex is estimated to be $2.95 billion at the high point, slightly tighter than its previous upper limit of $3 billion.

Anadarko also raised its Delaware Basin EUR by 1 MM boe/d, a 25% increase from EURs of 800 Mboe. The EUR upgrade was at a 4,500 ft lateral length.

Darren Barbee can be reached at dbarbee@hartenergy.com.

Comments