- Associated Press - Wednesday, January 15, 2014

(For use by New York Times News Service Clients)

c.2013 Houston Chronicle< Investors boosted Anadarko Petroleum’s market value by $1.4 billion on Tuesday, a day after the company’s Kerr-McGee unit pushed back on a federal court’s ruling that it owes up to $14 billion in civil liabilities.

Kerr-McGee said in court filings Monday it used the Manhattan bankruptcy court’s own framework to determine it only should have to pay $850 million to $1.8 billion to Tronox, the titanium producer it spun off in 2005.

Last month, U.S. Bankruptcy Judge Allan Gropper found that Anadarko’s Kerr-McGee subsidiary had left Tronox insolvent and loaded with old environmental liabilities, forcing it to file for bankruptcy in 2009.

Investors sent Anadarko’s stock price hurtling down when Gropper estimated its liabilities at $5 billion to $14 billion, the largest amount ever awarded in a bankruptcy case for federal environmental claims and one of the largest environmental enforcement awards in U.S. history.

The ruling came “completely out of left field” for Wall Street analysts who had expected Anadarko to owe $3 billion at most in the case, said Fadel Gheit, an analyst at Oppenheimer & Co.

”They were staggering numbers. We were shocked,” he said.

Anadarko - an independent oil producer based in The Woodlands - bought Kerr-McGee for $18 billion in 2006. A few years earlier, it had passed on buying the Oklahoma-based oil and gas producer because of its large environmental liabilities, according to court documents. The deal was made less than a year after Kerr-McGee spun out Tronox.

Gheit said that “no one can declare victory yet” despite investors’ positive reaction to what he called the “compelling argument” in Kerr-McGee’s brief Monday - that it had used Gropper’s own framework to calculate its liabilities.

Gropper’s Dec. 12 ruling was not final, and Tronox has 30 days to respond. If Anadarko appeals the final judgment, the court battles that started half a decade ago could continue for years.

”It’s not done by any stretch of the imagination,” said Andrew Coleman, an analyst with Raymond James.

Anadarko considers Gropper’s calculations of its liabilities incorrect and still may appeal, CEO Al Walker said in a written statement. An Anadarko spokesman declined to comment further Tuesday.

Gheit said a settlement may be more attractive than an appeal, since a lengthy court battle could leave a cloud of uncertainty hanging over Anadarko’s stock price. Investors, he said, would rather see Anadarko executives focus their efforts on operational growth.

In 2011 Anadarko agreed to pay $4 billion in a settlement with BP over claims from the 2010 Gulf of Mexico oil spill. Anadarko was a co-owner with BP in the Macondo well that blew out.

”The company has a good track record of making tough decisions to move forward,” Gheit said.

Tudor Pickering Holt & Co. analysts wrote Tuesday that they expect Gropper to issue a final ruling by the end of the first quarter, but that they have included a $14 billion liability in their view of Anadarko’s net asset value “until greater clarity can be gained on a settlement.”

Anadarko shares rose $2.47 to $80.84 on the New York Stock Exchange on Tuesday. XXX - End of Story<3D>

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