Anadarko Sells East Texas Assets for Over $1B to Castleton Commodities

Anadarko Petroleum Corp.   (APC)  has divested more than $1 billion worth of upstream and midstream oil and natural gas assets in east Texas to Castleton Commodities International LLC, the buyer said Friday, Nov. 18. 

The Stamford, Conn.-based buyer said Friday that it will own more than 160,000 net acres of leasehold in East Texas following the transaction and boast net production of more than 320 million cubic feet of national gas per day.  

Castleton said it will pick up Carthage upstream and midstream assets in Texas' gassy Haynesville Shale from subsidiaries of Anadarko. 

The Deal, a sister publication of TheStreet, reported in late September that Anadarko was likely considering shopping assets, including in the Haynesville Shale in east Texas and northern Louisiana, as well as its assets in south Texas' Eagle Ford Shale, the Marcellus Shale in Appalachia and the greater Natural Buttes area in Utah. 

The move is consistent with recent deal flow activity in the oil patch as operators continue to divest noncore assets in high-cost basins outside of the country's most profitable plays, such as west Texas' Permian Basin and south central Oklahoma's Anadarko Basin, in an attempt to whether lower-for-longer commodity prices.

U.S. benchmark West Texas Intermediate crude oil prices continue to be volatile ahead of the Organization of the Petroleum Exporting Countries' Nov. 30 meeting, where the so-called oil cartel is expected to make a firm decision on production limits.

WTI crude contracts for December delivery were down a fraction of a percent to around $45 per barrel Friday after gaining ground earlier in the week. 

Meanwhile, natural gas prices have fallen well off one-year highs hit in mid-October, but are still up from lows hit in the spring.

Castleton Commodities president Craig Jarchow said in a Friday statement that his company is well positioned to enhance the value of the newly acquired assets through further development of the Haynesville shale. 

He added that the firm looks forward to growing and diversifying its upstream and midstream assets and broadening its portfolio. 

Anadarko had not released a statement or filed anything with the Securities and Exchange Commission as of Friday afternoon, and a company official did not return requests for comment. Two sources familiar with the situation confirmed the transaction, however.

Castleton is a private company that is backed by a number of high profile investors including Glenn Dubin, the lead investor and founder of private investment firm Dubin & Co., hedge fund manager Paul Tudor Jones and Paul Fribourg, the CEO of Continental Grain Co. 

Last year the company acquired the oil trading and storage business from Morgan Stanley for a price between $1 billion and $1.5 billion.

JPMorgan Chase Bank NA acted as lead arranger and lead bookrunner in connection with the reserve based lending facility for the deal with Anadarko, Castleton said in a statement.

ABN AMRO Capital USA LLC, Wells Fargo Securities LLC, Societe Generale, and Bank of America Merrill Lynch acted as joint lead arrangers and joint bookrunners on the facility.

Funds managed by HPS Investment Partners made an unsecured mezzanine debt investment in the transaction, the statement said.

More from Mergers and Acquisitions

10 Questions for PayPal Ahead of Its Big Investor Day

10 Questions for PayPal Ahead of Its Big Investor Day

Congress May Have Just Set in Motion a Huge Banking Industry Merger Wave

Congress May Have Just Set in Motion a Huge Banking Industry Merger Wave

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Apple Buys Tesla? Amazon Buys Sears? 3 Dream Mergers That Just Make Sense

Apple Buys Tesla? Amazon Buys Sears? 3 Dream Mergers That Just Make Sense

Square Shares Shake Off Concerns About PayPal's Deal for iZettle

Square Shares Shake Off Concerns About PayPal's Deal for iZettle