Anadarko shows interest in buying Chesapeake assets

By Zain Shauk and Simone Sebastian

Anadarko Petroleum Corp. may be interested in purchasing some of heavily indebted Chesapeake Energy Corp.’s assets, the company’s new CEO said Tuesday.

“I think Chesapeake has a lot of attractive assets, including the Permian,” Anadarko CEO Al Walker said, referring to Chesapeake’s holdings in the oil-rich Permian basin of West Texas. “We certainly have some operations in the Permian, where we are partners with them. And as a result we will take a look at those.”

Chesapeake, the nation’s second-largest natural gas producer after Exxon Mobil Corp., is scrambling to sell its assets amid a cash flow shortage that has forced it to take on more debt as it attempts to keep operations running while paying off old loans. The Oklahoma City-based company has more than $13 billion in long-term debt on its balance sheet and has struggled to earn enough money during a period of low natural gas prices to pay down existing debt through its own operations, according to Securities and Exchange Commission filings.

The company announced a new loan of about $3 billion last week to help pay off other lenders and buy more time to make asset sales. On Tuesday, Chesapeake said it had increased the total of that loan from Goldman Sachs to $4 billion.

Chesapeake has said it will not be able to continue operating without selling up to $11.5 billion in assets this year, which CEO Aubrey McClendon believes it can do because of the company’s attractive asset base.

Walker appeared to agree on the quality of the assets and said the companies’ past partnerships would make an acquisition of some assets a comfortable decision.

“I wouldn’t want to commit to more than saying we’ll look at it,” Walker said. “But the reason is, we do have an overlap of operations. We are partners with them in a number of wells in West Texas.  So where we are partners with them, we probably have in interest in looking at those specific locations.”

Walker said Anadarko probably isn’t interested in Chesapeake’s assets beyond the Permian.

“I think what they are trying to attract is a larger buyer than we’re likely to be,” he said. “I think we’d only be interested in the properties that we see ourselves currently in. In the areas where we do have participation in wells and areas of operation, those are the ones we’ll initially focus on.”