Feb. 22 (Bloomberg) -- Anadarko Petroleum Corp. anointed a former investment banker as its new chief executive officer as the company’s growth in U.S. shale fields and deep-water projects has secured its spot as the largest U.S. independent oil and natural-gas producer.
Chief Operating Officer Al Walker, a former investment banker at UBS AG who joined Anadarko six years ago, will succeed Jim Hackett as CEO on May 15. Hackett will become executive chairman and retire in 2013.
In the eight years since he took over in December 2003, Hackett oversaw Anadarko’s transformation from a producer that missed output targets three years in a row to one of the industry’s premier explorers charting discoveries off the coast of Africa, Brazil and in the Gulf of Mexico.
“Jim Hackett has done the major repositioning,” Jeb Armstrong, an analyst at Credit Agricole in New York, who rates the shares an “outperform” and owns none, said in an interview yesterday. “He’s re-shaped and re-worked the company. Now it’s about execution and blocking and tackling and making those projects come to life.”
Walker will assume leadership of a $42.7 billion company that’s more than tripled in market value as his predecessor bought and sold assets in more than 53 transactions, according to data compiled by Bloomberg. Hackett’s biggest day of deals came June 23, 2006, when Anadarko announced two separate acquisitions, buying Kerr-McGee Corp. and Western Gas Resources Inc. for a total of more than $21 billion.
Walker was an influential factor in those transactions, said Stephen Trauber, global head of energy investment banking at Citigroup Inc. in Houston. Trauber, who was then at UBS, hired Walker from Houston-based oil and gas producer 3Tec Energy Corp. to work as an investment banker before Walker left for Anadarko in 2005.
“He drove them to those deals, which turned out to be very, very successful for Anadarko,” Trauber said in an interview yesterday. Trauber advised Anadarko on both the Kerr-McGee and Western Gas acquisitions.
Hackett called Walker “integral to a lot of the big decisions we’ve made, both strategically and tactically,” during a conference call with reporters yesterday announcing the CEO change.
Hackett also led Anadarko through the aftermath of BP Plc’s 2010 oil spill in the Gulf of Mexico, in which Anadarko shared responsibility through its 25 percent ownership of the ill-fated Macondo well. Anadarko lost more than half its stock value after the well explosion. Shares closed yesterday at $85.74 in New York, 17 percent higher than the day before the spill.
Anadarko agreed in October to pay BP $4 billion to settle a dispute over its share of the oil spill costs.
“Macondo was a very unfortunate speed bump,” said Subash Chandra, an analyst at Jefferies & Co. in New York, who rates the shares a “buy” and owns none. He called Anadarko, “pound for pound one of the best exploration and production companies in the world.”
Walker will take charge of a company now viewed as “the most attractive takeover target in the industry” because of its overseas assets and Gulf of Mexico holdings, said Fadel Gheit, a New York-based analyst for Oppenheimer & Co., who rates Anadarko “outperform” and owns none.
The CEO change increases the potential for Anadarko to be viewed as a potential acquisition by one of the large, integrated oil companies, said Citigroup’s Trauber. Any sale might be more likely during the transition period than after Hackett leaves, he said.
“There’s been a little bit of change here, so that always gets people to re-think, ‘Is this a time to do something?’” Trauber said.
Exxon Mobil Corp. might be interested in looking at Anadarko for its Gulf holdings, Gheit said in an interview yesterday. Patrick McGinn, a spokesman for Exxon Mobil, didn’t respond to a phone call and e-mail requesting comment.
Anadarko may be more likely to merge with a like-sized independent such as Apache Corp. or ConocoPhillips after that company spins off its refining business this year, said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University in Dallas. Bill Mintz, a spokesman for Apache, and Aftab Ahmed, a spokesman for ConocoPhillips, declined to comment in telephone interviews.
Andarko shares more than tripled to an all-time high on Feb. 17 of $88.05 from $23.31 on Dec. 3, 2003, when Hackett’s hiring was announced. The shares have 22 “buy” ratings from analysts, 7 “hold” ratings and 1 “sell.”
“The assets continue to deliver great exploration results and they continue to build up the pipeline of big projects,” Andrew Coleman, a Houston-based analyst at Raymond James & Associates Inc., said in a interview yesterday.
That pipeline may also prove to be Walker’s biggest challenge as the company plunges further into expensive deep-water projects and costs rise, said Phil Weiss, an analyst at Argus Research in New York, who rates the shares a “hold” and owns none.
“I just worry about spending getting out of control,” Weiss said. “The more efficient you can be from a cost perspective, the less sensitive you are to changes in oil prices.”
Walker will stand for election to Anadarko’s board at the May 15 annual meeting, the company said.
“This is a good time for the transition to a long-planned succession, given the company’s strong exploration and operational success and robust portfolio for long-term growth,” Hackett said in the statement.
Anadarko is the largest U.S. independent producer by market value. Independent oil and gas producers don’t refine fuels or sell them at retail.
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