Anadarko Sells Remaining Midstream Assets

US$5.015 billion deal with Western Gas Partners

Anadarko Petroleum Corp. announced it would sell substantially all of its remaining midstream assets for US$4.015 billion to Western Gas Partners (WES).

At the same time, WES announced it has entered into a merger agreement with Western Gas Equity Partners LP, with the goal of simplifying its midstream structure. The sale is expected to close in the first quarter of 2019, concurrently with the closing of the merger.

“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.”

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 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% 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.

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