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Anadarko's Marcellus sale a $1.2B twist for buyer, a veteran shale land flipper

The private company paying $1.24 billion for Anadarko Petroleum Corp.'s northeast Marcellus Shale operations has a track record of finding, proving and flipping land in shales across the U.S. and Canada but had never bought into a developed field like this.

Analysts noted that the deal, announced Dec. 21, has Anadarko selling the noncore Marcellus operations to a subsidiary of the Houston-based Alta Resources LLC at a discount. "We estimate that [Anadarko] is selling roughly 5% of its total companywide production on a Boe-basis for about 2% of its enterprise value," Barclays analyst Tom Driscoll wrote the next day.

"Low sale price not a great read-through to other operators in northeast Pennsylvania, but this is not necessarily a negative, as the uniqueness of the deal skews the read through to others," Capital One Securities Inc. analyst Phillips Johnston told his clients. "Namely, a large percentage of the properties are non-operated. Moreover, they are operated by Chesapeake, who likely will not allocate any meaningful amount of capital to the assets anytime soon. Accordingly, a discounted valuation is warranted."

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The assets include about 195,000 net acres with gas production volumes of about 470 MMcf/d in Pennsylvania's Bradford, Sullivan, Tioga, Lycoming, Clinton and Centre counties. Wells in Bradford, Sullivan and Tioga are operated by Chesapeake Energy Corp. Also included in the deal are the gathering pipelines not owned by Anadarko's MLP, Western Gas Partners LP.

Founded in 1999, Atlas' corporate bloodlines run back to the dawn of the shale revolution in the U.S. Founder and CEO Joseph Greenberg's original investor, and still a board member, is Todd Mitchell, son of fracking pioneer George Mitchell of Mitchell Energy Corp.

Greenberg followed Southwestern Energy Co. into the then-unknown Fayetteville Shale in Arkansas, leasing, proving and then selling two large blocks in 2007 and 2008 for a total of $559 million to independents Petrohawk Energy Corp., later acquired by BHP Billiton, and XTO Energy Inc., later acquired by Exxon Mobil Corp. Greenberg was already proving up acreage in Alta's maiden trip into the northeast Marcellus, land it would sell to Williams Cos. Inc.'s old production unit, WPX Energy Inc., for $513 million. That acreage would be re-sold to current owner Southwestern in December 2014.

Greenberg and Alta teamed up with private equity firm Blackstone Capital Partners in 2011 and moved north to Canada's Duvernay Shale. There it proved and sold 67,900 acres to Chevron Canada in 2013 for an undisclosed sum. Similar acreage deals in the gas- and condensate-rich Alberta shale were priced at $9,000 per acre, putting Alta's take at roughly $600 million.

Alta declined to comment on its plans for the new acreage.

Anadarko said it will use the sale proceeds for more drilling in the oil-rich Delaware Basin of Texas and the DJ Basin in Colorado.

"We like the deal [for Anadarko] as it improves the pro-forma corporate growth profile and liquids cut and leaves [about] $3.7B of cash on hand pro-forma," analysts at Tudor Pickering Holt & Co. said. "We expect management to use the potential $6.5-7B war chest to boost inventory in the Delaware and DJ."