Moody's downgrades Anadarko

Moody's Investors Service said it downgraded Anadarko Petroleum Corp.'s long-term debt rating to Baa3 from Baa2 and its commercial paper rating to Prime-3 from Prime-2.

The outlook is negative.

Following the acquisitions of in Kerr-McGee and Western Gas Resources in 2006, total debt peaked at $26 billion, and the company indicated it would seek to reduce financial leverage via some combination of $15 billion in proceeds from asset sales and new equity issuance. In December, management announced that it expected to rely primarily on property sales to reduce debt in 2007, citing portfolio benefits, expected proceeds in the range of $11 billion to $15 billion after-tax and a targeted debt balance of $12 billion or lower by the end of 2007.

"We see the shift in debt reduction strategy as a higher-risk story for debtholders, in effect one that depends more on long-term production growth and less on the certainty of upfront equity issuance. We see the company remaining fairly highly leveraged and are maintaining a negative rating outlook over the intermediate term to reflect the risks in Anadarko's operational and financial transition," Moody's senior vice president Tom Coleman said in an agency rating.

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