…successful suitor could get offshore assets in Guyana
Reuters is reporting that Occidental Petroleum Corp on Wednesday offered $38 billion for Anadarko Petroleum Corp, a bid that topped a $33 billion offer by Chevron Corp.
The report said that both suitors offered a premium for Anadarko’s holdings in the Permian Basin of West Texas and New Mexico. According to the report, the vast shale field holds oil and gas deposits that can produce supplies for decades using new, low-cost drilling techniques.
“Occidental’s surprise $76-per-share bid is valued at $57 billion, including debt. That is well above Chevron’s $65 per share offer, worth $50 billion including debt, and would make an Occidental-Anadarko deal the fourth-largest in oil production,” the article stated.
Anadarko said it had received the bid but had not yet determined whether it was a “superior proposal,” and for now “reaffirmed its recommendation of a sale to Chevron.” The article said that Occidental said it boosted the cash portion of its offer to 50 percent and that Chevron offered 25 percent cash and 75 percent stock.
“We are very confident. Our proposal is so strong, it’s definitely superior, and we now know the value which we can communicate to shareholders,” Vicki Hollub, Occidental’s chief executive officer, is quoted as saying in an interview. She reportedly said the deal would boost cash flow and allow Occidental to raise its dividend over time.
“The value of this is in the shale,” said Hollub, who ran Occidental’s Permian Basin operations before becoming CEO in 2016.
According to the report, the Anadarko board will have to give the Occidental offer “strong consideration” and would be “hard pressed” to reject it outright even though it clearly prefers to sell to Chevron, said Brian Kessens, portfolio manager at Tortoise Capital.
“Occidental’s latest offer could pressure Chevron to revise its bid, although Kessens said Chevron has no incentive to do so unless the Anadarko board accepts Occidental,” the article said.
Anadarko holds an exploration licence for the Roraima Block offshore Guyana. The company has been carrying out exploration surveys offshore Guyana in October 2013 when its survey vessel Teknik Perdana was arrested by Venezuelan military and made to sail to the Venezuelan island of Margarita. In july 2015 officials of Anadarko had visited Minister of Natural Resources Raphael Trotman and restated their intention to continue exploration activities offshore Guyana.
Officials of Chevron visited Guyana during 2017 and met with President David Granger for discussions on possible entrance into the country’s burgeoning oil and gas landscape.
With 13 discoveries made in the Stabroek Block offshore Guyana since May 2015 by ExxonMobil and its joint venture partners HESS and CNOOC Nexen and with recoverable resources being estimated at more than 5.5 billion barrels of oil equivalent, Guyana is considered a hot spot by oil and gas companies and industry watchers. ExxonMobil is expected to commence oil production in early 2020 at a rate of 120,000 barrels per day.