TEXT-Moody's release on Anadarko Petroleum Corporation

(The following statement was released by the ratings agency)

Aug 26 - Moody's Investors Service commented that Anadarko Petroleum Corporation's (APC.N) plan to undertake a share repurchase program will not affect the company's Baa3 long-term debt rating or its stable rating outlook. Anadarko announced on August 25, 2008 that its Board approved an authorization to repurchase of up to $5 billion of its common stock over the next three years.

Anadarko has largely restructured its upstream asset base and is generating stronger than anticipated cash flow from operations in 2008, benefiting from higher oil and natural gas prices and rising production volumes. Consequently, the company is expected to continue to generate free cash flow to re-deploy after funding its capital spending and dividends.

The company's stable rating outlook is based on its intention to continue to fund capital spending at higher expected levels and to reduce debt in 2008 and beyond in 2009, using free cash flow and more than $1.8 billion pre-tax of proceeds from asset sales yet to be completed, which includes the pending sale of a 50% interest in the Peregrino field offshore Brazil and other assets. Anadarko's debt remains elevated as of June 30, 2008, including $11.1 billion of parent company debt and some $1.9 billion of debt incurred by its midstream subsidiary in 2007. The midstream debt is expected to be reduced further in tandem with the recent initial public offering of and asset drop-downs to Western Gas Partners LP (WES.N), Anadarko's midstream master limited partnership.

A key aspect to maintaining the Baa3 long-term debt rating with a stable outlook is that share repurchases will be funded only from free cash flow and will not give rise to debt increases. This approach to funding repurchases will be important to improving the balance sheet, while allowing Anadarko to re-invest in upstream exploration and production and deliver on its expected production growth in 2009 and beyond.

Anadarko Petroleum Corporation, a large independent exploration and production company, is headquartered in The Woodlands, Texas.