Anadarko Sells Assets to Korean National Oil Company (APC, CHK, BHP, CEO)

Anadarko Petroleum Co. (NYSE: APC) has agreed to sell a stake in its Eagle Ford shale play to the Korean National Oil Company, KNOC, for $1.55 billion. KNOC’s investment gives Korea about a one-third stake in Anadarko’s Maverick Basin assets in exchange for funding 100% of drilling costs in the basin in 2011 and up to 90% going forward. The funding is expected to run out by the end of 2013.

The deal is about the same size as the one Anadarko struck last year with Japan’s Mitsui & Co. for $1.5 billion to develop assets in the Marcellus shale. It is about one-third the size of the recently announced $4.75 billion sale by Chesapeake Energy Corp. (NYSE: CHK) of its Fayetteville shale  assets to BHP Billiton Ltd. (NYSE: BHP). China’s Cnooc Ltd. (NYSE: CEO) bought a one-third stake in certain Chesapeake assets last year for $1.08 billion.

The assets that KNOC acquired produce both oil and gas. Of the 80,000 net acres in the Eagle Ford play, 75% of production is oil, which is now being produced at the rate of 28,000 barrels/day. That’s about one-half of the increased production of 60,000 barrels/day that KNOC has set as a target for this year. By the end of 2011, KNOC plans to produce 240,000 barrels/day.

The benefit to Anadarko is that the deal frees up more of the company’s capital to develop more of its acreage. The Eagle Ford play is rich in liquids, both oil and condensates, which sell for higher prices than natural gas.

KNOC also acquired a 95% stake in oil blocks in Kazakhstan for $515 million from a subsidiary of commodity trading house Vitol Group, according to Bloomberg.

Anadarko shares are up about 2.5% this morning.

Paul Ausick