Largest environmental cleanup in DOJ history ends uncertainty for APC: stock celebrates
Manhattan federal Judge Katherine Forrest approved a deal yesterday to have Anadarko Petroleum Corp. (ticker: APC) pay $5.15 billion to clean up nuclear fuel and other pollution in the largest-ever environmental cleanup recovery in the Department of Justice’s history, Reuters reported.
Kerr-McGee Corp. (ticker: KMG), which Anadarko acquired in 2006, was accused of shuffling off its environmental responsibilities in order to make itself a more attractive acquisition. Tronox (ticker: TROXG), the company that was spun off of Kerr-McGee, claimed in its lawsuit that its bankruptcy was caused by the environmental liabilities it took on when Kerr-McGee split it off in 2005.
According to The Hill, Kerr-McGee was responsible for contaminating sites for 85 years with harmful toxins, including uranium, before its acquisition by Anadarko. Preet Bharara, U.S. attorney for the southern district of New York was quoted in The Hill, saying “Kerr-McGee left behind piles of radioactive waste when it stopped mining uranium … Kerr-McGee sought simply to walk away from it all in a corporate shell game.”
The $5.15 billion settlement will fund a wide array of projects across 2,000 U.S. sites, including $1 billion for the Navajo Nation, which was hit especially hard by the effects of Kerr-McGee’s old uranium mining operations, according to Reuters. Al Walker, Anadarko’s chairman and president, was quoted in The Hill, saying “This settlement agreement with the litigation trust and the U.S. government eliminates the uncertainty this dispute has created.” In its own statement, Anadarko said it is glad to close the case, and that all of Kerr-McGee’s illegal actions in the case took place before the acquisition.
The deal seems to have done wonders for Anadarko. Following the announcement, the company’s shares soared 15% to an all-time high, Bloomberg reported. Bloomberg attributes the gain to Anadarko being able to focus on growth now that it is no longer mired in litigation. Anadarko rose 1.3% to $100.35 at 11:48 a.m. in New York, raising the company’s market value to $51.4 billion.
Anadarko has operations in nearly a dozen major U.S. onshore resource plays, deepwater Gulf of Mexico, Alaska, Algeria, Brazil, Colombia, Ghana, Guyana, New Zealand, Mozambique, Kenya, and West and South Africa. On Oct. 28, the company reported Q3 2014 net income attributable to common shareholders of $1.087 billion, or $2.12 per share (diluted). Anadarko reported 2.79 BBOE of proved reserves at year-end 2013.
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