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Anadarko is offloading USD 4bn-worth of midstream assets to MLP
Posted on Friday, 09 November 2018 13:19
US-based Anadarko Petroleum is selling the majority of its midstream assets to its master limited partnership (MLP) Western Gas Partners (WES) for USD 4.02 billion in cash and stock.

The plans are part of the acquiror’s strategy, which also includes announcing a merger at the same time to combine with Western Gas Equity Partners (WGP) to have a more simplified midstream structure.

Oil and gas producer Anadarko will receive USD 2.01 billion in cash proceeds from the sale, in addition to new WES shares.

Closing is expected in the first quarter of 2019, concurrent to the closing of the announced merger, both of which are subject to regulatory approvals, among other conditions.

The assets include two premier US onshore oil plays in the Delaware and DJ basins, with assets such as DBM Oil Services, APC Water Holdings, the Bone Spring Gas Plant and the MiVida Gas Plant.

Anadarko, following the sale and completion of the merger, will continue to be the majority owner of the MLP, with a 55.5 per cent stake.

The group’s chief executive Al Walker, said: “The size of this asset sale, along with the clear benefits of the simplification transaction, highlights the tremendous value of Anadarko's midstream business

“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 prioritising the use of cash and free cash flow to repurchase shares, reduce debt, and increase the dividend over time.”

Under the terms of the combination, WES will receive 1.53 units of WGP per item of stock held, representing a premium of 7.6 per cent.

The acquiror plans to finance the cash-portion of the purchase of Anadarko’s midstream assets through an underwritten commitment for a USD 2.00 billion senior unsecured term loan facility.

WES is now expecting to generate between USD 1.80 billion and USD 1.90 billion in adjusted earnings before interest, taxes, depreciation and amortisation in 2019, in addition to total capital expenditures of up to USD 1.40 billion and total maintenance capital of around USD 110.00 million to USD 120.00 million.

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