Occidential Petroleum announced on Tuesday that it plans to sell off certain of Anadarko Petroleum’s assets once the merger of the two companies is complete. In addition to the previously-announced sale of Anadarko’s African LGN operations to Total, Reuters is reporting that Oxy plans to offer the company’s Gulf of Mexico assets and its midstream assets for sale in order to help pay down debt her company had to incur to complete the acquisition.
From Reuters:
Shedding debt will require selling assets when deals have been sluggish, said bankers and merger specialists. The number of U.S. deals has fallen to lows not seen in five years or more as investor demands for capital discipline have driven buyers from the market, said Todd Dittmann, managing director at investment firm Angelo Gordon.
“An acquisition is more often viewed as a confession of poor drilling locations and a failure of prior strategy,” Dittmann said.
Deal-makers say Chief Executive Vicki Hollub’s most likely sale prospects are Anadarko’s offshore assets in the Gulf of Mexico and its pipeline business. Her challenge will be to balance such sales with the need for their cash flow to pay debt and dividends.
Hollub already has one big sale lined up: France’s Total SA agreed to pay $8.8 billion for Anadarko’s oil-and-gas producing assets outside the United States, including its biggest future expense, a multibillion-dollar liquefied natural gas project in Mozambique.
Oxy did not respond to the Reuters report.
