Anadarko Petroleum Corporation (APC) said it has agreed to sell its Bison gas facility and related assets in Powder River Basin to Western Gas Partners L.P. (AES) for $130 million. Following the acquisition, Western Gas will have 100% ownership interest in the Bison assets. The deal is expected to close early this month, with an effective date of July 1, 2011.
Located in northeastern Wyoming, the Bison facility is capable of treating about 450 MMcf/d of carbon dioxide. The cash flow profile of Bison assets is 100% fee-based and entirely supported by demand charges.
Western Gas said it will finance a part of the acquisition using $25 million of cash on hand. For the rest, the partnership plans to issue about 3.0 million common units to Anadarko and 60,210 general partner units to Western Gas Holdings LLC, the partnership's general partner, at an implied price of roughly $34.88 per unit.
Western Gas expects to benefit from the cash flow profile of the acquired assets, which it believes will be a great addition to its portfolio. Further, the partnership expects the assets to be immediately accretive to its distributable cash flow, allowing it to further increase distributions while maintaining a conservative risk profile.
Simultaneous to the acquisition announcement, the board of directors of Western Gas’ general partner declared a second quarter cash distribution of 405 cents per unit, up 4% from the prior quarter’s distribution of 39 cents per unit and 19% increase from the year-ago period distribution. The distribution is payable on August 12, 2011 to unitholders of record at the close of business as on July 29, 2011.
Western Gas Partners L.P. is a limited partnership formed by Anadarko to own, operate, acquire and develop midstream energy assets. The partnership involves in gathering, compressing, processing, treating, and transporting natural gas, condensate, natural gas liquids (NGL), and crude oil for Anadarko Petroleum Corporation and its consolidated subsidiaries, third-party producers, and customers.
Based in The Woodlands, Texas, Anadarko Petroleum is primarily engaged in the exploration, development, production, gathering, processing and marketing of natural gas, crude oil, condensate and NGLs.
Anadarko currently retains a Zacks #3 Rank (short term Hold), which supports our long-term ‘Neutral’ rating on the stock. The company primarily competes with ConocoPhillips (COP) and Exxon Mobil Corp. (XOM), both having a Zack # 3 Rank (short-term Hold) as well.
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