Anadarko Outbid by Private Equity in Asset Contests -CEO

Anadarko Petroleum Corp is encountering stiff competition from private equity firms that have billions to spend on oil and gas assets, the U.S. independent oil and gas company's chief executive officer said on Wednesday.

 

A slide in crude oil prices of more than 50 percent from last year has stirred intense interest in private equity investors looking for opportunity in the downturn.

 

"Where we see ourselves today trying to bid on properties in markets where we have interest, we are being pretty consistently outbid and most oftentimes we're being outbid by private equity-backed management teams," Anadarko Chief Executive Al Walker told analysts on a conference call.

 

As much as $100 billion may have been raised to invest in the energy sector over the next couple of years and as many as 95 management teams backed by private equity are scouting for deals, according to Walker and Anadarko Chief Financial Officer Bob Gwin.

 

The big pool of capital suggests buyers are bidding up prices for assets.

 

Still, private equity interest benefits Anadarko, which has so far this year signed deals to sell $2 billion in assets. More are planned for next year, when the Houston company plans to keep spending in line with the cash generated as low crude oil prices persist.

 

Next year Anadarko's capital spending will essentially be flat with 2015 when adjusting for asset sales, Walker told investors. This year, the company expects to spend $5.4 billion to $5.6 billion.

 

Anadarko has not yet submitted a formal budget to its board of directors for approval, the company said.

 

After the close of trading on Tuesday, Anadarko reported a quarterly loss of $2.24 billion, or $4.41 per share as the company wrote down the value of certain oil and gas properties.

 

The company, which drills in shale basins in Colorado and the deepwater Gulf of Mexico, is maintaining its fairly pessimistic view on crude prices going forward.

 

"Our approach is to plan for the worst and hope for the best," CEO Walker told investors.

 

Shares of Anadarko were up 1.3 percent at $66.17 on Wednesday morning, helped by a 5 percent gain in crude oil prices.