Fitch Rates Anadarko's Senior Note Issuance 'BBB-'

  Fitch Rates Anadarko's Senior Note Issuance 'BBB-'

Business Wire

CHICAGO -- July 1, 2014

Fitch Ratings has assigned a rating of 'BBB-' to Anadarko Petroleum's
(Anadarko) issuance of senior notes due 2024 and 2044. The issuance is to
re-finance debt that matured earlier this year and for general corporate
purposes.

Anadarko's Rating Outlook is Positive.

KEY RATING DRIVERS

The current ratings reflect Anadarko's large size, high-quality asset position
worldwide, modestly levered capital structure and strong liquidity position.
The company had nearly 2.8 billion barrels of proved reserves at the end of
2013 making it one of the world's largest independent exploration and
production companies. At year-end 2013, more than 70% of the proved reserves
were developed and production is currently expected to be over 800,000 barrels
of oil equivalent per day for 2014 which would mark six straight years of
production increases. As of March 31, 2014, Anadarko's balance sheet debt
levels stood at approximately $15 billion.

The Positive Outlook reflects Anadarko's strong operational performance over
the last several years as well as the anticipated satisfactory resolution of
the Tronox Proceedings. Operationally, the company's production levels have
grown over a third since the end of 2009 with essentially the same balance
sheet debt levels. Other operational metrics are very strong as well with
three year average reserve replacement well in excess of 100% at competitive
finding, development and acquisition costs of approximately $15 per barrel of
oil equivalent. Debt/proved developed reserves and debt/daily production
metrics are solidly within the 'BBB' category expected range.

Liquidity is primarily provided by existing cash balances of nearly $6 billion
and the company's current $5 billion secured revolving credit facility.
Additionally, a newly signed five-year $3 billion unsecured facility and a
$2.0 billion 364 agreement will become effective once the $5 billion secured
revolving credit facility has been fully repaid and the Tronox settlement has
been satisfactorily approved and paid. After that point, the $5 billion
facility terminates. The Tronox settlement is expected to be paid by the end
of the third quarter of this year and will be approximately $5.2 billion
including accrued interest. Additional liquidity is provided by Western Gas
Partners LP's $1.2 billion senior unsecured credit revolver due 2019.
Anadarko's nearest term maturity is $1.75 billion due in September of 2016. In
addition, holders of the company's zero coupon senior notes due 2036 have the
option to put the then accreted value of the outstanding notes in October of
each year. The accreted value is approximately $0.7 billion. Fitch does not
currently expect these notes to be put.

RATING SENSITIVITIES

Positive: Future developments that may, individually or collectively, lead to
positive rating action include:

--Completion of necessary final and non-appealable recommendations, approvals
and injunctions related to the Tronox Adversary Proceeding settlement process.

--Strong operating results combined with continued conservative financial
management of the balance sheet.

Negative: Future developments that may, individually or collectively, lead to
negative rating action include:

--Large debt-financed acquisitions or share repurchases;

--A significant and sustained deterioration in credit metrics.

Fitch rates Anadarko and its affiliate Kerr-McGee as follows:

Anadarko Petroleum Corp.

--LT IDR 'BBB-';

--Sr. Notes & Debentures 'BBB-';

--Secured Credit Facility 'BBB'.

Kerr-McGee Corp.

--LT IDR 'BBB-';

--Sr. Unsecured 'BBB-'.

The Rating Outlook is Positive.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Relevant Research:

--'Corporate Rating Methodology' (May 28, 2014);

--'Cash Flow Trends in the U.S. Energy Sector-Shareholder Activism Having an
Impact' (Feb. 4, 2014);

--'Scenario Analysis: Lifting the U.S. Crude Export Ban' (Jan. 27, 2014);

--'2014 Outlook: North American Oil & Gas' (Dec. 12, 2013).

Applicable Criteria and Related Research:

Corporate Rating Methodology - Including Short-Term Ratings and Parent and
Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749393

Cash Flow Trends in the U.S. Energy Sector (Shareholder Activism Having an
Impact)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=733556

Scenario Analysis: Lifting the Crude Export Ban (Overall Credit Impact Limited
but Varies by Industry)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732055

2014 Outlook: North American Oil & Gas (Strong Oil Prices Continue to Support
Energy Complex)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=726499

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=837530

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Contact:

Fitch Ratings
Primary Analyst
Sean T. Sexton, CFA
Managing Director
+1-312-368-3130
Fitch Ratings, Inc.
70 West Madison St.
Chicago, IL 60602
or
Secondary Analyst
Mark C. Sadeghian, CFA
Senior Director
+1-312-368-2090
or
Committee Chairperson
Stephen Brown
Senior Director
+1-312-368-3139
or
Media Relations
Brian Bertsch, New York, +1 212-908-0549
brian.bertsch@fitchratings.com
 
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