Freeport-McMoRan to buy Apache deepwater GoM interests for $1.4 bn
PHOENIX, Arizona -- Freeport-McMoRan Oil & Gas (FM O&G) has entered into a definitive purchase and sale agreement to acquire certain of Apache Corporation’s interests in the deepwater Gulf of Mexico (GOM), including Apache’s interests in the Lucius and Heidelberg oil production development projects and 11 exploration leases, for $1.4 bn.
The deepwater GoM acquisition will be funded with proceeds from the previously reported sale of FM O&G’s Eagle Ford shale assets for $3.1 bn. The estimated combined after-tax net proceeds from these transactions of approximately $1.3 bn will be used to repay outstanding indebtedness following closing of the transactions
James R. Moffett, Chairman of the Board; Richard C. Adkerson, Vice Chairman, and FCX President and CEO; and James C. Flores, Vice Chairman, and FM O&G President and CEO, said, “Our recently announced agreement to sell our Eagle Ford assets provides proceeds to repay debt and to acquire high-quality assets in our deepwater GOM focus area. These transactions are value-accretive and the additional interests will enhance our portfolio of assets which are characterized by strong margins, attractive growth potential and compelling investment returns."
The deepwater GoM assets being acquired, including Apache’s working interests in the Lucius (11.7%) and Heidelberg (12.5%) oil production development projects, have estimated proved, probable and possible reserves of 55 MMboe and several hundred million barrels of oil equivalents resource potential.
The Lucius unit includes Keathley Canyon Blocks 874, 875, 918 and 919 and the Heidelberg unit includes Green Canyon Blocks 859, 903, 904 and 948.
Upon closing of this transaction, FM O&G will own a 35% working interest in the Lucius development, which is on track to commence production in the second half of 2014. Heidelberg, which is a large, high-quality oil development project located in 5,000 ft of water in the Green Canyon area, is operated by Anadarko Petroleum and is expected to commence production in mid-2016.
The hull fabrication for the 80,000-bopd Lucius-look-alike facility is more than 85% complete and the spar is expected to be towed to the GoM later this year. Topsides fabrication is currently more than 25% complete.
The 11 exploration leases to be acquired include Apache’s interests in the Lucius Offset, Capri and Silver Fox/Parmer exploration areas with working interests ranging from 16.67% to 60%.
The transaction is expected to close by the end of the second quarter of 2014.