S&P Places Anadarko (APC) on CreditWatch Positive; Cites Tronox Adversary Proceeding on the Move

Standard & Poor's Ratings Services placed its 'BBB-' corporate credit rating on The Woodlands, Texas-based Anadarko Petroleum Corp. (NYSE: APC) on CreditWatch with positive implications.



The positive CreditWatch placement follows Anadarko's announcement that it has settled its long-running Tronox Adversary Proceeding to resolve all claims stemming from subsidiary Kerr McGee Corp.'s alleged actions before its acquisition by Anadarko in 2006. The settlement will result in a complete release of all claims against Kerr McGee and provides protection from third parties seeking reimbursement for potential environmental liabilities at more than 4,000 sites.



Anadarko has agreed to pay $5.15 billion gross, or $4.6 billion net of estimated tax benefits. At year-end 2013, the company had $3.7 billion of cash and full availability under its $5 billion revolving credit facility. It has also agreed to sell assets in Mozambique and China for a combined $3.1 billion of estimated net proceeds.



Although a $4.6 billion net payment weakens Anadarko's credit protection measures and liquidity, the amount is at the low-end of our estimated range of potential exposure. The settlement also removes a significant layer of uncertainty from our forecasts, and thus we are maintaining our assessment of the company's financial risk profile at "significant."



"We intend to resolve the CreditWatch listing around the time of the settlement approval and payment, which we expect in the third quarter of 2014," said Standard & Poor's credit analyst Carin Dehne-Kiley. "At that time, we anticipate an upgrade of one notch, to 'BBB', based on our assessment of Anadarko's "strong" business risk and significant financial risk profiles."

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