MOSCOW (MRC) -- Occidental Petroleum snatched up some of the richest shale oilfields in Texas when it beat out rival Chevron Corp in a bidding war to acquire Anadarko Petroleum, said Reuters.
That means the acquisition’s success will depend on how quickly Occidental can sell off some of Anadarko’s assets and focus on optimizing and integrating the assets it keeps - especially prime U.S. shale fields.
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.
Occidental declined to comment, but CEO Hollub told shareholders and analysts she expects to squeeze $3.5 billion per year in cost savings and capital spending cuts from the deal, and is eager to apply the company’s Permian Basin expertise to Anadarko’s Texas and Colorado oil fields.
“We will make this work,” Hollub vowed. “We will get these synergies.”
In the early May, several major Occidental Petroleum Corp shareholders voiced opposition to the oil company's USD38 billion bid for rival Anadarko Petroleum Corp that now includes a pricey financing deal with billionaire Warren Buffett.
MRC