Anadarko prices unit offerings

Anadarko Petroleum Corp. (NYSE: APC) has priced its registered underwritten public offering of 8,000,000 7.50% tangible equity units (TEUs), with a stated amount per TEU of $50, resulting in net proceeds to Anadarko of $387.1 million, and the pricing of the concurrent registered public offering of 2,000,000 common units representing limited partner interests in Western Gas Equity Partners LP (NYSE: WGP), which were offered to the public at $58.20 per common unit. WGP is a subsidiary of Anadarko formed to own partnership interests in Western Gas Partners LP (NYSE: WES), a separate subsidiary of Anadarko formed to acquire, own, develop, and operate midstream energy assets. Each offering is expected to close on June 10.

Each TEU comprises a prepaid equity purchase contract and a senior amortizing note. Unless earlier settled, each prepaid equity purchase contract will automatically settle on June 7, 2018 (subject to postponement in limited circumstances), for between 0.7159 and 0.8591 WGP common units, subject to adjustments and subject to Anadarko's right to elect to deliver shares of its own common stock in lieu of such WGP common units.

The number of WGP common units, or shares of Anadarko's common stock, as the case may be, to be delivered by Anadarko will be based on the average of the daily volume-weighted average prices of WGP common units for the 20 consecutive trading days beginning on, and including, the 23rd scheduled trading day immediately preceding June 7, 2018. Each amortizing note will pay equal quarterly installments of $0.9375, which in the aggregate will be equivalent to a 7.50% cash payment per year with respect to each $50 stated amount of TEUs. Such quarterly installment payments will constitute a payment of interest and a partial repayment of principal. The amortizing notes have a final installment payment date of June 7, 2018, and will be unsecured senior obligations of Anadarko. The WGP common units that may be delivered to settle the equity purchase contracts and that are being offered in the WGP secondary offering are owned, directly or indirectly, by a wholly owned subsidiary of Anadarko, and WGP is not issuing securities in either offering.

The underwriters of the TEU offering have a 30-day option to purchase up to an additional 1,200,000 TEUs, solely to cover over-allotments, and the underwriters of the WGP secondary offering have a 30-day option to purchase up to an additional 300,000 common units. Proceeds from each of the offerings will be used for Anadarko's general corporate purposes.

JP Morgan Securities LLC served as sole book-running manager for the TEU offering and joint book-running manager for the WGP secondary offering. Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., and Wells Fargo Securities LLC also served as joint book-running managers for the WGP secondary offering.

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