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Anadarko Petroleum to Sell Its Marcellus Natural Gas Assets

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Marcellus divestiture

On December 21, 2016, Anadarko Petroleum (APC) announced that it had agreed to sell a portion of its Marcellus natural gas (UGAZ) assets to Alta Marcellus Development, a subsidiary of Alta Resources Development, for ~$1.2 billion.

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Management’s comments

Al Walker, APC’s CEO, said in a press release, “With this transaction, we have announced or closed monetizations totaling well in excess of $5 billion in 2016, while principally focusing Anadarko’s U.S. onshore activities on our world-class oil-levered assets in the Delaware and DJ basins.”

APC’s asset monetization this year is more than the company had forecast. The asset monetization target, which the company laid out at the beginning of the year, was $2 billion–$3 billion. It was updated to $2.5 billion–$3.5 billion in 2Q16, and in 3Q16 it was updated to over $4 billion.

APC seems to have been an aggressive dealmaker this year, including more than just asset sales. The company has also added assets to its existing portfolio. On September 12, 2016, Anadarko Petroleum announced that it had agreed to acquire Freeport-McMoRan’s (FCX) Gulf of Mexico assets for $2 billion.

The moves made by APC in the past couple of months seem to be in line with its strategy of focusing on the DJ Basin and the Gulf of Mexico.

APC’s latest sale includes 195,000 net acres in the Marcellus Shale. APC noted that in 3Q16, production from these properties was ~470 million cubic feet per day. The sale doesn’t include midstream assets owned by Western Gas Partners (WES), APC’s MLP. The company expects to close the deal in 1Q17.

The Marcellus Shale play runs through northern Appalachia, primarily in Pennsylvania, West Virginia, New York, and Ohio. A key factor severely affecting producers in the Marcellus Shale has been insufficient takeaway capacity. For more on this, read Why the Marcellus Shale Is Both Boon and Bane for Cabot Oil & Gas.

Key players in the Marcellus play include Cabot Oil & Gas (COG), Range Resources (RRC), Chevron (CVX), and Rice Energy (RICE).

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