Moody's affirms Anadarko

Moody's Investor Service said it affirmed Anadarko Petroleum Corp.'s Baa1 long-term and Prime-2 commercial paper ratings with a stable outlook.

The affirmation followed the company's announcement that it would undertake strategic changes and a significant asset realignment to reduce unit costs and financial leverage, enhance returns, and promote production growth from a smaller re-sized reserve base.

Following a strategic study undertaken in 2004 by its new chief executive officer, Jim Hackett, Anadarko announced an upstream portfolio restructuring that will result in the sale of 325-350 million barrels of oil equivalent reserves, equal to about 15% of total proved reserves at year-end 2003 and 115-125,000 BOE per day of production, or some 23% of current rates.

Moody's said the asset sales will primarily affect proved developed reserves that have high decline rates and rising unit costs, as in the Gulf of Mexico shelf and other onshore locations in the United States and Canada. The company estimates proceeds could exceed $2.5 billion after-tax, the bulk of which will be allocated between a balance of debt reduction and share repurchases.

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