Anadarko Addresses Kerr-McGee's Filings in the Tronox Adversary Proceeding

Anadarko Addresses Kerr-McGee's Filings in the Tronox Adversary Proceeding 
HOUSTON, TX -- (Marketwired) -- 01/13/14 --  Anadarko Petroleum
Corporation (NYSE: APC) announced that Kerr-McGee Corporation
(Kerr-McGee), a wholly owned subsidiary, in response to the
instructions of the Court in the Tronox Adversary Proceeding, today
filed a claim under Section 502(h) of the U.S. Bankruptcy Code and a
supporting brief regarding certain issues related to the amount of
Kerr-McGee's claim and how the Court should treat that claim, which
will be offset against an award of damages by the Court. Kerr-McGee
asserted in today's filing that the Court should not dilute
Kerr-McGee's claim because diluting the claim is not allowed under
Tronox's Confirmed Plan of Reorganization (the Plan) and is also not
allowed under applicable principles of law. Additionally, Kerr-McGee
asserted that the Court in its provisional findings has not properly
considered the amount of Kerr-McGee's offset claim, nor the related
percentage of recovery applied to such claim. 
"We believe the Court's approach in its provisional findings, as
applied, leads to incorrect conclusions for the calculation of
damages and is contrary to the Court's stated view that the purpose
of the applicable law is 'remedial rather than punitive,'" said
Anadarko Chairman, President and CEO Al Walker. "Today's filing is in
direct response and in deference to the Court's instructions and thus
is limited in scope to the appropriate amount of Kerr-McGee's offset
to any award of damages. As previously stated, we respect the Court,
though we strongly disagree with its Memorandum of Opinion (Opinion)
issued on Dec. 12, 2013, and we continue to reserve all of our
objections to the Opinion and our right to appeal." 
Amount of Offset Claim 
 In summary, the Court's Opinion suggested
that the calculation of Kerr-McGee's offset claim should be (i) the
value of the transferred assets as of Nov. 28, 2005, which was the
date of Tronox's Initial Public Offering (IPO), at $14.459 billion,
less (ii) the environmental and tort liabilities. The Court used
plaintiffs' 2010 post-petition unproven $4 billion estimate to
account for the amount of environmental and tort liabilities. Using
this calculation, Kerr-McGee's offset claim would be limited to
$10.459 billion.  
In today's brief, Kerr-McGee utilized the Court's framework for
calculating its claim and argued that the Court should use its own
specific finding of $1.757 billion stated in the Opinion to define
the amount of the environmental and tort liabilities as of the date
of the IPO in 2005 (as opposed to the $4 billion estimate referenced
above). In its Opinion, the Court also found that after netting all
of Tronox's available assets with all of its liabilities, including
the $1.757 billion of environmental and tort liabilities at the time
of the IPO, there was a creditor shortfall of $850 million.  
Percentage Recovery 
 The Court also suggested in its Opinion that
the percentage of recovery to be applied to the claim could be either
89 percent or 2.8 percent. The Court's explanation for suggesting 89
percent is that the Disclosure Statement estimated recovery for
Unsecured Class 3 Creditors to be between 78 percent and 100 percent,
and the Court selected the midpoint of that range, or 89 percent. In
its Opinion, the Court also noted that the issue of whether to add
back Kerr-McGee's offset claim to Class 3 was left open. Inclusion of
Kerr-McGee's claim in Class 3 would result in dilution of
Kerr-McGee's claim by more than 97 percent (i.e., a multiplier of 2.8
percent). 
In today's brief, Kerr-McGee argued that the percentage recovery
applicable to Kerr-McGee's offset claim should be determined by the
plain language in the Plan. Based upon that language, Kerr-McGee is
entitled to the same percentage recovery that the Class 3 general
unsecured creditors actually received in the bankruptcy, which was
well over 100 percent. The brief contends that, at the very least,
Kerr-McGee is entitled to 100 percent of its claim. Kerr-McGee
asserted that reducing the amount of its claim to anything less than
100 percent would be contrary to the Plan and would violate
fundamental bankruptcy and equitable principles. 
Summary 
 In its filing today, Kerr-McGee has applied the Court's own
findings as to the amount of the environmental and tort liabilities
and has applied the Court's formulation for determining the claim, as
provided in page 143 of the Court's Dec. 12, 2013 Opinion: "In this
case, if the parties are to be restored to the position they held
before the transfers, Defendants would be entitled to the residual
value of the E&P assets after their debts, including the legacy
liabilities, were paid in full."  
Using the Court's prescribed framework, Kerr-McGee argued that its
offset is $13.609 billion, resulting in net damages of $850 million.
Alternatively, if the Court rejects the $13.609 billion amount,
Kerr-McGee asserted that its offset should be $12.702 billion,
resulting in net damages of $1.757 billion. These net amounts do not
include any amounts plaintiffs may assert for interest, attorneys'
fees or other costs. The plaintiffs also previously received
substantial other assets and approximately $270 million in cash in
partial satisfaction of their claims through the bankruptcy, the
value of which is not included in the net amounts above. 
According to the Court's instructions, the plaintiffs have 30 days
from today to file a response to the 502(h) claim and brief, to file
a request for attorneys' fees and to file a proposed form of
judgment. Kerr-McGee will then have 30 days to reply to the
plaintiffs' brief and propose a counter-form of judgment. Either
party can request a hearing on the issues. The Tronox Adversary
Proceeding is pending in the U.S. Bankruptcy Court for the Southern
District of New York, Adv. Pro. No. 09-01198 (ALG). A copy of
Kerr-McGee's 502(h) claim and the supporting brief it filed today can
be found under the APC Flash Feed on our website at www.anadarko.com. 
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Anadarko believes that its
expectations are based on reasonable assumptions. No assurance,
however, can be given that such expectations will prove to have been
correct. A number of factors could cause actual results to differ
materially from the projections, anticipated results or other
expectations expressed in this news release, including the nature and
timing of a final judgment or other decisions rendered relating to
the Tronox Adversary Proceeding, the amount of damages, interest,
attorneys' fees and other costs for which the defendants may be found
liable, and the effect of such amounts on our business, prospects,
results of operations, financial condition and liquidity. See "Risk
Factors" in the company's 2012 Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and other public filings and press releases.
Anadarko undertakes no obligation to publicly update or revise any
forward-looking statements. 
Anadarko Contacts  
Media:
John Christiansen
john.christiansen@anadarko.com
832.636.8736 
Investors:
John Colglazier
john.colglazier@anadarko.com
832.636.2306
Bill Tedesco
william.tedesco@anadarko.com
832.636.3375
Jeremy Smith
jeremy.smith@anadarko.com
832.636.1544 
 
 
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