LNG

Occidental Petroleum, the Texas-based company competing with Chevron Corp. to take over Anadarko Petroleum for around $55 billion including debt, has had its revised offer endorsed by the Anadarko board, including the sale of its Mozambique LNG stake and other African assets to French major Total if the deal is finalized.

“Anadarko’s board of directors, in consultation with its financial and legal advisors, has unanimously determined that the revised acquisition proposal it received from Occidental Petroleum on May 5 constitutes a ‘Superior Proposal’ as defined in Anadarko's previously announced merger agreement with Chevron Corp.,” said Anadarko.

The US takeover target added that Chevron has four business days ending on May 10 to increase its offer in accordance with the terms of the Chevron Merger Agreement signed on April 12.

“If Anadarko terminates the Chevron Merger Agreement in order to enter into a definitive agreement with Occidental, Anadarko will pay Chevron a $1 billion termination fee as required by the Agreement,” explained Anadarko.

Occidental’s latest offer amounts to 78 percent cash and 22 percent in Occidental shares, rather than the previous 50-50 split.

The bid is valued at around $38Bln versus $33Bln for the Chevron offer. In addition, the winning bidder would have to assume around $17Bln of Anadarko debts.

In connection with Occidental’s proposal to acquire Anadarko, Occidental has entered into a binding agreement to sell Anadarko’s Algeria, Ghana, Mozambique and South Africa assets to France's Total for $8.8Bln.

Anadarko, whose headquarters are near Houston, is being targeted because of the Mozambique LNG holdings and its strength in US shale production, especially in the Delaware Basin of Texas and New Mexico. Its other main US assets are in Colorado and the Gulf of Mexico.

Anadarko had said it was positioned to take a final investment decision on Mozambique LNG in the first half of this year.

The Anadarko-led Mozambique venture will be the African nation’s first onshore development, initially consisting of two liquefaction Trains with nameplate capacity of 12.9 million tonnes per annum.

Feed-gas would come from the Golfinho-Atum gas fields located within Anadarko’s offshore Area 1 licence of the Rovuma Basin. 

Analysts noted that Chevron is a substantial LNG player and operates two world-class plants in Western Australia and would fit with Anadarko’s development plans for Mozambique.

Occidental, a major North American chemicals manufacturer, has no LNG assets and is centred on US oil and gas as well as midstream, marketing and refining.

France’s Total is now hoping that the Occidental takeover bid for Anadarko is successful because of its deal with Occidental for Anadarko's Mozambique LNG stake and other African holdings.

“If completed, the acquisition offers us the opportunity to acquire a world-class portfolio of assets in Africa, further enhancing our position as the leading IOC on the continent,” said Total Chief Executive Patrick Pouyanne.

“We would be able to leverage our expertise in LNG by operating a major project in Mozambique and in Deepwater in Ghana and we would become operator of major Algerian oil assets where we are already a partner,” he explained.

Occidental Petroleum, the Texas-based company competing with Chevron Corp. to take over Anadarko Petroleum for around $55 billion including debt, has improved the structure of its offer and said it would sell Anadarko’s Mozambique LNG stake and other African assets to French major Total if its deal was accepted.

Occidental’s latest offer would amount to 78 percent cash and 22 percent in Occidental shares, rather than the previous 50-50 split.

Occidental is trying to persuade Anadarko shareholders to accept its offer rather than a merger agreement with Chevron, which is structured as a 75 percent stock and 25 percent cash deal.

“The revised offer creates immediate value for Anadarko shareholders and increases the chances of closing a deal,” said Occidental.

“In connection with Occidental’s proposal to acquire Anadarko, it has entered into a binding agreement to sell Anadarko’s Algeria, Ghana, Mozambique and South Africa assets to Total for $8.8Bln,” added the company.

“The sale is contingent upon Occidental entering into and completing its proposal to acquire Anadarko, and would be expected to close simultaneously or as soon as reasonably practicable afterwards,” stated Occidental.

Anadarko also issued a statement after the revised May 5 offer from Occidental when it referred to the still valid merger agreement with Chevron.

“In accordance with the terms of the Chevron Merger Agreement, and in consultation with its financial and legal advisors, Anadarko's board of directors will carefully review Occidental's Revised Proposal to determine the course of action that it believes is in the best interest of the company's stockholders,” said Anadarko.

Anadarko first announced on April 11 that it had received a takeover bid of $33Bln from Chevron, amounting to $50Bln if debt is included, and the signing of a formal merger agreement.

Anadarko, whose headquarters are near Houston, is being target because of its strength in US shale production, especially in the Delaware Basin of Texas and New Mexico. Its other main US assets are in Colorado and the Gulf of Mexico.

It also owns valuable assets in deep water oil and gas and LNG, including the onshore development in Mozambique.

Anadarko had said it was positioned to take a final investment decision on Mozambique LNG in the first half of this year.

The Anadarko-led Mozambique venture will be the African nation’s first onshore development, initially consisting of two liquefaction Trains with nameplate capacity of 12.9 million tonnes per annum.

Feed-gas would come from the Golfinho-Atum gas fields located within Anadarko’s offshore Area 1 licence of the Rovuma Basin. 

The Mozambique liquefaction plant is being built near the port of Pemba in the northeast Cabo Delgado Province.

Analysts said the revised terms and LNG accord with Total could now force Chevron to consider making an improved offer.

Analysts noted that Chevron is a substantial LNG player and operates two world-class plants in Western Australia and would fit with Anadarko’s development plans for Mozambique.

Occidental, a major North American chemicals manufacturer, has no LNG assets and is centred on US oil and gas as well as midstream, marketing and refining.

France’s Total is now hoping that the Occidental takeover bid for Anadarko is successful.

“If completed, the acquisition offers us the opportunity to acquire a world-class portfolio of assets in Africa, further enhancing our position as the leading IOC on the continent,” said Total Chief Executive Patrick Pouyanne.

“We would be able to leverage our expertise in LNG by operating a major project in Mozambique and in Deepwater in Ghana and we would become operator of major Algerian oil assets where we are already a partner,” he explained.

“We would also be able to generate value through adding volumes to our growing LNG portfolio where we are already the second-largest private player,” added the CEO.

In South Africa, the exploration licences from Anadarko are close to Total’s recent Brulpadda discovery.

Anadarko Petroleum Corp., the company with US onshore assets and a valuable stake in Mozambique LNG, has received a rival take-over bid of $38 billion from Occidental Petroleum Corp. after accepting a $33Bln offer in mid-April from Chevron Corp.

The competition to acquire Anadarko is expected to force Chevron to consider whether it will make a counter-bid.

“Following unanimous approval from the company's board of directors on April 12, 2019, Anadarko entered into a definitive agreement with Chevron under which Chevron would acquire all of the outstanding shares of Anadarko in a stock and cash transaction valued at $33Bln, or $65 per share,” said Anadarko.

“In accordance with the terms of the Chevron Merger Agreement, and in consultation with its financial and legal advisors, Anadarko's board of directors will carefully review Occidental's proposal to determine the course of action that it believes is in the best interest of the company's stockholders,” added the company.

“The Anadarko board has not made any determination as to whether Occidental's proposal constitutes, or could reasonably be expected to result in, a superior proposal under the terms of the Chevron Merger Agreement,” said Anadarko.

“The Anadarko board expects to respond to Occidental's proposal upon completing its review, and accordingly reaffirms its existing recommendation of the transaction with Chevron,” it stated.

Anadarko said its stockholders were advised to take no action at this time.

Analysts pointed out that Chevron is a substantial LNG player and operates two world-class plants in Western Australia and would have fitted with Anadarko’s development plans for Mozambique LNG.

The $33Bln bid from Chevron and the $38Bln counter-offer from Occidental would both be valued at an additional $17Bln because of the scale of Anadarko’s debt commitments.

Anadarko said on April 12 it had accepted Chevron’s bid after rejecting an initial approach from Occidental that fell short of a full bid.

Occidental’s business has no LNG assets and is centred on US oil and gas as well as midstream, marketing and refining. Houston-based Occidental is also a major North American chemicals manufacture.

The Anadarko-led Mozambique venture will be the African nation’s first onshore development, initially consisting of two liquefaction Trains with total nameplate capacity of 12.9 million tonnes per annum with feed-gas coming from the Golfinho-Atum gas fields located within Anadarko’s offshore Area 1 licence of the Rovuma Basin.

The Mozambique plant is being built near the port of Pemba in the northeast Cabo Delgado Province, about 900 kilometres north of Beira.

The Anadarko venture already has supply deals with European utilities Centrica of the UK and French utility EDF, the Japanese utilities Tokyo Gas and Tohoku Electric and energy companies, Royal Dutch Shell, China National Offshore Oil Corp. and Bharat Petroleum of India.

Before the Chevron bid was accepted, Anadarko had been planning to seek long-term charters for around 16 LNG carriers to ship volumes to customers from Mozambique.

The Mozambique LNG project and natural gas assets would also add to Chevron’s global LNG given its volumes from Australia’s Gorgon plant on Barrow Island in Western Australia and the Wheatstone facility at Ashburton in the Pilbara region, both operated by Chevron.

Anadarko shareholders are being offered 0.3869 shares of Chevron and $16.25 in cash for each share, valuing the equity at a total of $33Bln.

Under the Occidental bid, Anadarko shareholders would receive $38.00 in cash and 0.6094 shares of Occidental common stock for each Anadarko share held.

Chevron Corp., the second-largest US oil and gas company and a leading participant in the LNG market with two plants in Western Australia, has agreed a $50 billion deal to buy US energy company Anadarko Petroleum, one of America’s leading independent producers and a key stakeholder in Mozambique LNG assets.

Anadarko Petroleum of the US said it would seek long-term charters for around 16 liquefied natural gas carriers to ship volumes to customers from its proposed liquefaction and export project in Mozambique in southeast Africa.

The US exploration and production company, whose main assets are in onshore shale and conventional basins in the US states of Arkansas, Texas, Colorado and Pennsylvania, is scheduled to make a final investment decision soon along with its partners on the $20-billion Mozambique joint venture.

The supply contracts signed so far are for shipments delivered on an ex-ship (DES) basis whereby the seller provides the sea transportation to deliver to the buyer’s preferred import terminal.

“The project needs approximately 16 LNG vessels to service the DES contracts,” said the US company.

The Anadarko-led Mozambique venture will be the African nation’s first onshore development, initially consisting of two liquefaction Trains with total nameplate capacity of 12.88 MTPA with feed-gas coming from the Golfinho-Atum gas fields located within offshore Area 1 licence of the Rovuma Basin.

The Mozambique plant is being built near the port of Pemba in the northeast Cabo Delgado Province, about 900 kilometres north of Beira, the Mozambican city badly damaged by a cyclone in early March 2019 that caused many casualties.

Anadarko has supply deals with European utilities Centrica of the UK and French utility EDF, the Japanese utilities Tokyo Gas and Tohoku Electric and energy companies, Royal Dutch Shell, China National Offshore Oil Corp. and Bharat Petroleum of India.

The other stakeholders in the Anadarko-controlled Area 1 licence include Japanese trading house Mitsui and Co. and three Indian companies Bharat Petroleum, ONGC Videsh and Oil India Ltd., as well as Thailand’s national energy company PTTEP and the Mozambique state-owned oil and gas firm ENH.

Two other projects are planned in Mozambique from the separate Area 4 licence resources held by Italian energy company Eni and partners.

These include the Coral floating LNG joint venture with capacity of around 3.4 MTPA already under construction and scheduled to come on stream in 2022.

The Area 4 onshore Mamba LNG project is also expected to be sanctioned in 2019 and production is scheduled to start in 2024.

That consortium is formed by Mozambique Rovuma Ventures, comprising Eni 25 percent, ExxonMobil 25 percent and China National Petroleum Corp. (PetroChina) with 20 percent.

The remaining 30 percent of shares in the Area 4 licence are held in parcels of 10 percent by South Korean utility and energy company Korea Gas Corp., Galp Energia of Portugal and Mozambique’s ENH.

Anadarko Petroleum of the US, a main shareholder in the onshore Mozambique LNG export project in southeast Africa using feed-gas from the Area 1 licence block of the Rovuma Basin, said its joint venture continued to make progress on the offtake agreements necessary for project financing.