Last year, Anadarko acquired Kerr-McGee for $16.4 billion and Western Gas for $4.7 billion in cash.

"By the time we went to the Anadarko board for final approval to make offers to Kerr-McGee and Western Gas, we already had a list of potential legacy Anadarko divestment candidates. That allowed us to announce that we were divesting our Canadian operations shortly after we announced those two acquisitions," Jackson said.

The Anadarko team decided that debt financing was going to be its preferred funding strategy, she said, and with the magnitude of the Kerr-McGee and Western Gas acquisitions, deleveraging would inevitably require at least some level of divestment to help generate cash.

"We realized last year when we were structuring the deal that being able to use our balance sheet, being able to offer cash and execute quick transactions, was a key competitive edge in getting the deals done. If we had offered stock components, with the requirement for mutual due diligence, the deal timeline would have been a lot longer, and we think the probability of success would have decreased."

The team also believed that, at that time, Anadarko's equity was undervalued, but by using cash the company could optimize the size and the timing of any subsequent equity issuance.

"Making cash offers for both companies involved a total equity transaction value of $21.1 billion plus the assumption of the debt of both companies, which left the new Anadarko with $26 billion of net debt as of the third quarter of 2006 after the acquisitions closed."

The first step post-closing, was to look at the combined asset base and determine the optimum go-forward portfolio and where opportunities for divestiture lay.

"We set ourselves two objectives. Clearly, we had to generate proceeds to reduce leverage and we established a target of $13- to $15 billion of after-tax proceeds. But also we needed to optimize the asset base to enhance operational metrics and the predictability of the portfolio," Jackson said.

Last year, Anadarko sold its Canadian subsidiary, Anadarko Canada Corp., to Calgary-based Canadian Natural Resources Ltd.

"The continued buoyancy in the asset market really helped us throughout our divestments. At the time of the Canadian transaction, Anadarko was trading in the equity markets at more than $8 a barrel on a reserve basis.

We were able to divest our Canadian operations for $4.3 billion, which, in terms of reserve metrics, is equivalent to greater than $16 a barrel, or $20 a barrel on an asset-sale basis," she said.

Anadarko decided to sell Canadian assets first in part due to the robust appetite prevalent in the Canadian A&D market.

"Our divestment process has resulted in a high-graded asset portfolio. We have concentrated on selling down some of our more capital-intensive properties and retaining our low-decline and higher-growth assets. We have improved the capital efficiency of our asset portfolio, lowered the maintenance capital required to keep production consistent, and enhanced the predictability of our results."

In addition to Canada, Anadarko has divested packages in the deepwater Gulf of Mexico, Rocky Mountains, Permian Basin, Midcontinent and certain midstream assets in Texas and Oklahoma. The sale of its producing assets in Qatar has been announced, but has not yet closed. Altogether, Anadarko expects to realize $12.7 billion of after-tax proceeds from these announced and closed divestitures.

"We have a little more to do in terms of divestitures in 2007," Jackson said, "but the main challenge for us now is to deliver on the potential of our new asset base through meeting our production growth and reserve replacement projections."

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