Paula Dittrick
Senior Staff Writer
HOUSTON, Dec. 3 -- Anadarko Petroleum Inc. named James T. Hackett as its president and CEO, effective immediately, in what one analyst calls a move to help restore investor confidence in the Houston-based company.
Hackett joined Anadarko from Devon Energy Corp., Oklahoma City, where he was president and chief operating officer.
Robert J. Allison Jr. plans to will retire immediately as Anadarko president and CEO. He will continue as executive chairman through Jan. 1, 2004, and then will serve as non-executive chairman.
In March, Allison as chairman, assumed the roles of president and CEO, following the resignation of John N. Seitz, who formerly held those positions. No reason was given for Seitz's resignation (OGJ Online, Mar. 25, 2003).
Anadarko has refused to comment on earlier news reports and comments by analysts that it was in contact with several potential buyers this year. The company slashed its annual overhead by $100 million, or 15%, by eliminating 400 staff and contract positions and closing offices in Amarillo and Midland, Tex. (OGJ, Aug. 11, 2003).
Meanwhile, a Devon spokesman said J. Larry Nichols, Devon's chairman and CEO, will reassume the role of president of Devon. Nichols was president for 25 years until Hackett was named president.
Hackett served as chairman, president, and CEO of Ocean Energy Inc., following its merger with Seagull Energy Corp., where he was chairman, CEO, and president (OGJ, Dec. 28, 1998, p. 26). Devon later bought Ocean (OGJ Online, Feb. 24, 2003).
Currently, Hackett is the chairman of the Domestic Petroleum Council and a board member of the American Petroleum Institute.
Analysts' comments
Merrill Lynch Global Securities Research & Economics Group upgraded Anadarko's rating to a buy from a neutral upon the announcement of the change in management.
"We believe that the appointment. . .will act as a catalyst for change at the company, and remove the overhang regarding the future [Anadarko] leadership," said Merrill Lynch analyst John P. Herrlin Jr., New York.
Anadarko's stock performance "has lagged that of its peers recently due to lowered volume forecasts, and an uncertain succession plan" for Allison, Herrlin said, adding Hackett's appointment "clearly resolves the latter issue, and we believe will serve as a catalyst for the stock."
Fahel Gheit, analyst with Oppenheimer & Co., New York, told OGJ that the new management was an alternative plan since there had not been "any bidding war" for Anadarko.
The company's stock has been undervalued, and board has been under "tremendous pressure," he said.
"Anadarko does not fit another company perfectly," when it comes to being acquired, Gheit said. "Plan B was to get some guy that the board feels is able to turn this company around. You could not find any other person better for the job than Hackett."
Anadarko also announced that Michael Rose, executive vice-president and chief financial officer, and Charles Manley, executive vice-president, administration, will retire on Dec. 31. No replacements have been named for either position.
Gheit called that good news, saying that that Hackett will select his own management team and will impose his own business strategies.
Anadarko's future
Hackett is likely to implement a major asset sales program for Anadarko, Gheit said. "Whatever Anadarko does now, it needs to be bold, drastic, and different."
Gheit suggested that Hackett might curtail drilling and other expenditures while Anadarko upgrades its portfolio by selling some assets. In turn, Anadarko could use the proceeds from asset sales to buy back its own stock, the analyst said.
He declined to suggest what assets Anadarko might consider selling.
"A guy like Hackett is going to take control of the cost structure," Gheit said, adding that a stock buyback program would improve return on capital deployed and would make a clear statement to investors.
"He has to work very quickly. Anadarko has disappointed investors for 3 years. Anadarko has to regain its popular appeal. Hackett has to find a way to restore investor confidence," Gheit said.
Contact Paula Dittrick at [email protected]
