Anadarko Sells Midstream Assets to Western Gas, Combines Western Gas Entities

Updated 2 years 10 months ago

Anadarko will sell substantially all of its remaining midstream assets to Western Gas for USD 4.015 billion with USD 2.0075 billion in cash and the balance in Western Gas equity. Concurrently, Western Gas plans to merge Western Gas Partners and Western Gas Equity Partners to simplify its corporate structure with the sale and merger expected to close in Q1 2019.

The acquired assets include DBM Oil Services (100% interest), APC Water Holdings (100% interest), the Bone Spring Gas Plant (50% non-operated interest), and the MiVida Gas Plant (50% non-operated interest) in the Delaware basin. In the DJ Basin, WES will acquire Anadarko's 100% interest in both the DJ Basin Oil System and the Wattenberg Plant. Additional Anadarko midstream assets to be acquired by WES include equity stakes in the Saddlehorn Pipeline (20% non-operated interest), the Panola Pipeline (15% non-operated interest), and the Wamsutter Pipeline (100% interest).

"The size of this asset sale, along with the clear benefits of the simplification transaction, highlights the tremendous value of Anadarko's midstream business," said Al Walker, Anadarko Chairman, President and CEO. "This will enhance the read-through value of Anadarko's midstream ownership through increased liquidity and a less complex structure. Further, it supports our durable strategy of returning value to Anadarko's shareholders, as we expect to continue prioritizing the use of cash and free cash flow to repurchase shares, reduce debt, and increase the dividend over time."

Under the terms of their merger transaction, WGP will acquire all of the outstanding publicly held common units of WES and substantially all of the WES common units owned by Anadarko in a unit-for-unit, tax-free exchange. WES will survive as a partnership with no publicly traded equity, owned 98% by WGP and 2% by Anadarko. WES will remain the borrower for all existing debt and future issuances and the owner of all operating assets and equity investments. The closing of the asset sale and merger is subject to the parties obtaining regulatory approvals and other customary closing conditions. The closing of the merger is subject to obtaining WES unitholder approval.

Barclays acted as financial and structuring advisor to Anadarko and Western Gas, and Vinson & Elkins served as the transaction counsel. Goldman Sachs acted as financial advisor to the Anadarko board of directors.