At a time when natural gas and oil prices were at record levels, oil and natural gas producer, Andarko Petroleum, announced on June 23, 2006 the acquisition of two competitors, Kerr-McGee Corp. and Western Gas Resources, for $16.4 billion and $4.7 billion in cash, respectively. These purchase prices represent a substantial 40 percent premium for Kerr-McGee and a 49 percent premium for Western Gas. The acquired assets strongly complement Andarko's existing operations, providing the scale and focus necessary to cut overlapping expenses and to concentrate resources in adjacent properties. What do you believe were the primary forces driving Andarko's acquisition? How will greater scale and focus help Andarko to reduce its costs? Be specific. What are the key assumptions implicit in your argument?