UPDATE 2-Anadarko retires debt, has $1.9 billion cash

(Recasts first paragraph, changes dateline from NEW YORK, adds details, byline, share price, analyst comment)

By Anna Driver

HOUSTON, Oct 7 (Reuters) - Anadarko Petroleum Corp (APC.N) said on Tuesday that it had completed the first phase of its $5 billion share buyback program and retired some notes, which puts the independent oil and gas company on track to meet its year-end debt levels.

Anadarko also said it had $1.9 billion in cash at the end of September.

Unlike some of their smaller peers which need to outspend cash flow to expand production, big independent oil and gas companies like Anadarko are seen to be in a better position to weather the financial crisis.

"During the third quarter, we completed a $600 million share repurchase and retired approximately $350 million of floating-rate notes," Chief Financial Officer Al Walker said in a statement.

The company said it expects to meet its year-end debt-to-capital target range of 25 to 35 percent and also has an undrawn $1.3 billion revolving credit facility.

If oil and gas prices stay at or above current levels, Anadarko said it would be able to use any excess free cash flow to buy back more shares in 2009.

"Anadarko is one of few free cash flow positive firms with a low enough debt to cap to be able to make share repurchases while equity prices are at 2 to 3-year lows, which should provide some stability for the stock," energy investment bank and research firm Simmons & Co. Int'l said in a note to clients.

In August, Anadarko's board authorized a $5 billion share repurchase plan, $600 million of which was to be completed before the end of 2008.

The Houston-based company said it expects to close its previously announced divestiture of the offshore Brazilian Peregrino field by year-end and use the proceeds for additional debt reduction.

Shares of Anadarko were flat at at $39.59 in late morning trading on the New York Stock Exchange, compared with a 0.7 percent gain in the Chicago Board Options Exchange index of oil companies .OIX.