Boston, MA 06/02/2014 (wallstreetpr) – Freeport’s subsidiary Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) will acquire Apache Corporation’s interest at Deepwater Gulf of Mexico (GOM) for $1.4 billion.
It includes Apache’s oil production development projects at Lucius and Heidelberg and 11 exploration leases. The transaction expects to close by second quarter of 2014.
Acquisition Advantage
The acquisition includes 11.7% interest in Lucius and 12.5% interests in Heidelberg that will provide proved probable and possible reserves of ~ 55 million barrels of oil equivalents (BOE) and will create several hundred million BOE resources potential.
On completion, Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) will have ownership of 35% in the Lucius development, which is likely to commence its production by 2Q2014. Heidelberg is a larger project compared to Lucius and expects produce high quality oil. The projects are primarily operated by Anadarko Petroleum and situated in 5,000 feet of water at the Green Canyon area and expected to initiate production by mid-2016.
In addition, the 11 exploration leases will increase the working interest from 16.67% to 60%, which include the Lucius Offset, Silver Fox/Parmer and Capri exploration areas.
During first quarter 2014, FM O&G generated 70 million BOE from its GOM operations and the acquisition of Apache’s interest in deepwater GOM will further increase the production volume and enhance the Company’s asset portfolio.
Source Of Funding
Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) will finance the acquisition process through the available funds of $3.1 billion which the Company received from the sales of Eagle Ford Shale assets.
The Company expects net proceeds of ~$1.3 billion from the transaction that will help to repay the outstanding external borrowings.
Final Take
Freeport intends to focus on divesting non-core assets that creates negative effects over its operating margin and continues to invest in assets that have strong growth potential so to improve the margin and help in debt reduction.
