Oil Power (Oklahoma City, Anadarko, Howe: real estate, to buy, cost)

[happytown]

Thu July 12, 2007
Kerr-McGee Tower sold

Don Mecoy
Business Writer

SandRidge Energy will move its corporate headquarters into the Kerr-McGee Tower in downtown Oklahoma City as part of an innovative three-company deal announced today to restore and repopulate the vacated landmark building.


SandRidge acquired the 30-story tower at 123 Robert S. Kerr Ave. and surrounding buildings and three downtown parking lots from Chesapeake Energy Corp., which obtained all the former Oklahoma City real estate holdings of Kerr-McGee in a transaction with Anadarko Petroleum Corp. The amount of the transaction between SandRidge and Chesapeake was not immediately disclosed.

Anadarko last year bought Kerr-McGee in a $17 billion deal. Kerr-McGee’s Oklahoma City office employees were either absorbed or cut loose by the Texas-based company.

SandRidge plans to renovate Kerr-McGee Tower and relocate its base from the Valliance Bank Building later this year or early next year.

“I am very pleased to announce this transaction with Chesapeake whereby SandRidge now owns one of Oklahoma City’s largest and most important buildings,” said Tom L. Ward, SandRidge chairman and chief executive officer.

“Our company is growing very rapidly and the Kerr-McGee Tower is an ideal location for our corporate headquarters,” Ward said. “I look forward to becoming a member of the downtown business community and to contributing to the ongoing renaissance of downtown Oklahoma City.”

Ward co-founded Chesapeake with Aubrey McClendon, but stepped down last year to pursue other interests. However, within three months Ward leveraged his large Chesapeake holdings to buy a controlling stake in Riata Energy in Amarillo, Texas, for $500 million. Ward moved the company’s headquarters to Oklahoma City and renamed it SandRidge.

SandRidge employs about 1,600 people, including more than 200 at its headquarters.

Chesapeake acquired the former Kerr-McGee property in Oklahoma City as part of a joint venture with Anadarko. Chesapeake obtained energy assets in west Texas and western Oklahoma in exchange for $310 million in cash, future cash for development of some of the assets contained in the deal and half of some Chesapeake interests in Loving County, Texas.

The transaction between Chesapeake and Anadarko was negotiated for months, but the Kerr-McGee properties “became the last chip on the table,” McClendon said. However, Chesapeake, with its sprawling campus near NW 63 and Western, has no need for a large downtown building.

McClendon contacted his former partner and friend Ward to see if he was interested in acquiring the downtown properties from Chesapeake. Ward was “very agreeable” to the offer, McClendon said.

“These properties are important to our community and we are happy to return them to local ownership,” McClendon said.

As part of the deal, Chesapeake and SandRidge have agreed to jointly maintain Kerr Park downtown at no cost to Oklahoma City for the next 10 years. The companies have asked Rand Elliot to develop a new plan for the park, McClendon said.