Anadarko Petroleum Corp. (APC) inked a definitive agreement to divest 10% of its interest in the Mozambique liquefied natural gas (“LNG”) prospect to ONGC Videsh Ltd., an operating wing of India’s Oil and Natural Gas Corporation (ONGC) Limited. The transaction is priced at $2.64 billion and will be concluded by late 2013.
The deal is subject to existing preferential rights, governmental approvals and other customary closing conditions. Despite the divestment, Anadarko Petroleum will continue to be the majority interest holder (26.5%) and operator of the Mozambique offshore Area 1 field.
Besides Anadarko Petroleum, Mitsui E&P Mozambique Area 1, Limited carries a 20% working interest followed by BPRL Ventures Mozambique B.V. (10%), Videocon Mozambique Rovuma 1 Limited (10%) and PTT Exploration & Production Plc. (8.5%). Empresa Nacional de Hidrocarbonetos also has a 15% stake in the field through the exploration phase.
The Area 1 block comprises the Prosperidade and Golfinho/Atum natural gas complexes with a projected 35 to 65-plus trillion cubic feet of recoverable natural gas resources. The first LNG shipments are anticipated in 2018.
Anadarko Moçambique Area 1 Limitada is operating the Area 1 field situated in Mozambique’s deepwater Rovuma basin. Anadarko Petroleum and its partners along with Eni SpA (E) are collaborating with the Mozambique government for the advancement of the LNG facility.
The company intends to plough back the sale proceeds to its domestic high-growth drilling opportunities – the Wattenberg field, Eagleford Shale, Permian and Powder River basins, as well as the Gulf of Mexico.
The proceeds from the sale will boost Anadarko’s operating cash flow. The company will thus be able to step-up its more mature U.S. onshore drilling programs in the near term. We note that the Mozambique natural gas drilling program is still in its nascent stage.
To take advantage of the high oil prices, Anadarko Petroleum is gearing up to bolster its drilling activities in the resource-rich onshore U.S. basins. The company is targeting to spend $5.5 billion in 2013. These expansion initiatives will act as key catalysts for Anadarko Petroleum.
In addition to development and exploration activities, Anadarko Petroleum also strives to maintain a healthy dividend payout on the back of its successful exploration and development activities, thus boosting wealth for its shareholders. However, growing political instability in Africa will remain a concern. Anadarko Petroleum at present retains a Zacks Rank #3 (Hold).
Other better placed exploration operators are Zacks Ranked #1 (Strong Buy) Abraxas Petroleum Corp. (AXAS) and Range Resources Corp. (RRC).
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