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Anadarko $4 B midstream asset sale to Western Gas Partners

Anadarko Petroleum Corporation announced a transaction to sell substantially all of its remaining midstream assets for $4.015 billion to Western Gas Partners, LP , with $2.0075 billion cash proceeds, and the balance to be paid in new Western Gas equity. Concurrently WES announced it has entered into a merger agreement with Western Gas Equity Partners, LP, which will result in a simplified midstream structure. The sale is expected to close in the first quarter of 2019, concurrently with the closing of the merger. The closing of the asset sale and merger is subject to the parties obtaining regulatory approvals and other customary closing conditions. The closing of the merger is subject to obtaining WES unitholder approval.

BENEFITS FOR ANADARKO
• Generates more than $4 billion in net proceeds to Anadarko, including more than $2 billion of cash plus new Western Gas equity units

• Results in expected 2019 cash distributions paid to Anadarko totaling more than $600 million, which is an increase of almost 50 percent versus prior expectations.

• Maintains operating control of one of the largest midstream master limited partnerships (MLP), with approximately 55.5 percent pro-forma ownership of the combined entity

• Reduces future midstream capital funding requirements associated with the divested assets

"The size of this asset sale, along with the clear benefits of the simplification transaction, highlights the tremendous value of Anadarko's midstream business," said Al Walker, Anadarko Chairman, President and CEO. "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 prioritizing the use of cash and free cash flow to repurchase shares, reduce debt, and increase the dividend over time."

TRANSACTION HIGHLIGHTS
Under the terms of the asset sale transaction, WES will acquire substantially all of Anadarko's remaining midstream assets, which are largely associated with Anadarko's two premier U.S. onshore oil plays in the Delaware and DJ basins. The acquired assets include DBM Oil Services (100% interest), APC Water Holdings (100% interest), the Bone Spring Gas Plant (50% non-operated interest), and the MiVida Gas Plant (50% non-operated interest) in the Delaware Basin of West Texas. In the DJ Basin of northeast Colorado, WES will acquire Anadarko's 100-percent interest in both the DJ Basin Oil System and the Wattenberg Plant. Additional Anadarko midstream assets to be acquired by WES include equity stakes in the Saddlehorn Pipeline (20% non-operated interest), the Panola Pipeline (15% non-operated interest), and the Wamsutter Pipeline (100% interest).

Under the terms of their merger transaction, WGP will acquire all of the outstanding publicly held common units of WES and substantially all of the WES common units owned by Anadarko in a unit-for-unit, tax-free exchange. WES will survive as a partnership with no publicly traded equity, owned 98% by WGP and 2% by Anadarko. WES will remain the borrower for all existing debt and future issuances and the owner of all operating assets and equity investments.

Barclays Capital Inc. acted as financial and structuring advisor to Anadarko, WES and WGP. Goldman Sachs & Co. LLC acted as financial advisor to the Anadarko board of directors. Vinson & Elkins L.L.P. served as transaction counsel to Anadarko, WES and WGP.

(Source: Anadarko)

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