DBRS Places BBB Rating of Anadarko Petroleum Under Review - Negative

DBRS has today placed the BBB rating of the Senior Unsecured Notes and Debentures of Anadarko Petroleum Corporation (Anadarko or the Company) and the BBB rating of the Senior Unsecured Notes and Debentures of Anadarko’s wholly-owned subsidiary, Kerr-McGee Corporation (Kerr-McGee), Under Review with Negative Implications. The rating actions reflect uncertainties regarding the Company’s potential share of significant liabilities and clean-up costs associated with the Macondo well oil spill in the Gulf of Mexico, which started on April 20, 2010. The Company has a 25% non-operated working interest in the well, of which BP plc (BP - see concurrent press release for additional information on the oil spill) is a 65% owner and operator.

While placing Anadarko Under Review with Negative Implications, DBRS is cognizant of the Company’s strong liquidity position, with about $3.7 billion of cash balances and $1.3 billion of available credit facilities at March 31, 2010. There are no debt maturities until 2011 (about $700 million). DBRS will continue to monitor the Company’s situation, and will re-assess the impact on its credit profile, when a complete stoppage of the oil spill is achieved (expected upon completion of the relief well in early August) and more reliable estimates of the extent of the costs and potential liabilities associated with the spill are available. DBRS will also review measures taken by the Company to maintain its financial profile, while addressing the potential share of its liabilities arising from the oil spill. Apart from the substantial liquidity mentioned above, alternative funding sources include potential proceeds from the sale of some of its global assets or joint ventures as seen in the past few years.

The Company reported satisfactory operating results for the three months ended March 31, 2010 with total debt-to-capital of 38% (30% net of cash) and debt-to-cash flow of 2.02 times (1.44 times net), and increased production from its continuing operations to about 690,000 barrels of oil equivalent per day. Substantial hedges in place, covering its projected 2010 production, should provide a measure of stability to its cash flow, near term.

Note:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Oil & Gas Companies, which can be found on the DBRS website under Methodologies.

This is a Corporate rating.