Chevron abandons bid for Anadarko

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Maputo – The Chevron Corporation has abandoned its bid to buy Anadarko Petroleum, the US company at the head of the consortium to develop a liquefied natural gas (LNG) project in Area One of the Rovuma Basin, off the coast of the northern Mozambican province of Cabo Delgado.

In early April, Chevron announced its intention to buy Anadarko for US$35 billion, 75 percent in stock and 25 percent in cash. A few days later, the much smaller company, Occidental Petroleum, made a substantially higher offer of US$38 billion, half in cash and half in stock.

As late as Monday last week, Anadarko and Chevron managers were still talking, and the Anadarko chief executive officer, Al Walker, who visited Maputo on Tuesday, declared “Chevron is not going to miss this opportunity”.

But Chevron decided not to outbid Occidental. According to a report from the Bloomberg news agency, after Chevron declined to increase its bid, Anadarko said on Thursday, that it had reached definitive agreement on selling itself to Occidental, and had paid a one billion dollar break-up fee to Chevron.

Occidental can now proceed with the acquisition of Anadarko, which will double its daily output to the equivalent of more than 1.3 billion barrels of oil a day.

“This exciting transaction will create a global energy leader with a world-class portfolio, proven operational capabilities and industry leading free cash flow metrics,” the Occidental CEO, Vicki Hollub said in a statement. “This transaction further establishes Occidental as a premier operator in prolific global oil and gas regions.”

The Anadarko board of directors had accepted the Occidental bid on Monday, and gave Chevron a deadline of four days to submit a better offer. Instead, Chevron abandoned the deal, apparently to Anadarko’s surprise.

Occidental will not take over Anadarko’s position as operator of Rovuma Basin Area One. It had already struck a deal with the French company Total to sell all of Anadarko’s African assets, including the Anadarko holding in the Rovuma Basin, to Total for 8.8 billion dollars.

Anadarko’s other African assets are in Algeria, Ghana and South Africa. They are overshadowed by its 26.5 percent interest in Rovuma Basin Area One.

The consortium headed by Anadarko plans to build two LNG factories (known as “trains”) in the Afungi peninsula, in the Cabo Delgado district of Palma. These factories, producing 12.8 million tonnes of LNG a year, should come into production by 2024. Rovuma Basin Area One is known to contain at least 60 trillion cubic feet of gas. - AIM.

 

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