US oil firms in $21bn merger

24-08-2006

Three of the largest US oil and gas exploration firms are bidding to merge in a combined deal totalling $21 billion (£11.6 billion).

Anadarko Petroleum is set to buy Oklahoma-based Kerr-McGee for $16.4 billion and Western Gas Resources for $4.7 billion in separate deals.

Kerr-McGee controls oil and gas deposits in Colorado, Utah and offshore in the Gulf of Mexico, with Western Gas Resources owning gas fields in Wyoming.

Anadarko, which will assume debt estimated at $2.2 billion, said it was also exploring potential oil reserves in China, Alaska, Brazil, as well as Australia, West Africa and the islands of Trinidad and Tobago.

Both deals require the backing of shareholders.

In a statement, Anadarko said the deal would give the firm market dominance in exploring the Gulf of Mexico and the Rockies – seen as "two of the fastest-growing oil and natural gas producing regions in north America".

Anadarko's chairman, president and chief executive, Jim Hackett, said: "Kerr-McGee's outstanding deepwater holdings and skill sets will elevate Anadarko into the top echelon of deepwater operators."

He added: "Together, these acquisitions create a more focused portfolio, which will enhance our ability to deliver very competitive growth rates and returns."

Mr Hackett said the outlook for energy markets meant the transactions made a lot of sense for shareholders.

In a statement, Kerr-McGee said its board of directors "unanimously" approved the "compelling" all-cash offer.

Luke R Corbett, Kerr-McGee chairman and chief executive officer, said: "The merger with Anadarko combines two companies with similar strategies and creates the largest US-based independent exploration and production company."

Western’s president, Peter Dea, said the deal allowed stockholders to realise "substantial and immediate value at an attractive premium".



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