By Erin Ailworth

Anadarko Petroleum Corp. said Monday that it is buying oil and gas assets in the Gulf of Mexico from mining giant Freeport-McMoRan Inc. for $2 billion, expanding its footprint in offshore oil.

Under the deal, Anadarko will pick up 91 drilling blocks in the Gulf of Mexico that will allow the company to double its output in the region to about 155,000 barrels of oil equivalent a day. Before the purchase, Anadarko held 1.6 million acres across 269 drilling blocks in the Gulf of Mexico.

The deal comes as Freeport-McMoRan looks to reduce its debt and refocus on producing copper, and Anadarko moves to generate cash flow to boost its onshore activity in the U.S. It is expected to close by the end of the year.

Al Walker, Anadarko's chief executive, characterized the purchase -- which will mostly add to the company's crude output -- as a "catalyst for the company's oil growth objectives."

Anadarko said free cash flow generated by the assets is expected to help fund an increase in the company's activity in two drilling basins in Texas and Colorado. It plans to add two drilling rigs in each area later this year, and hopes to double output from those basins over the next five years.

On Monday, Anadarko also announced a stock offering of more than 35 million shares, saying the proceeds would be used to finance the Gulf of Mexico acquisition.

Because of the planned increase in activity this year, Anadarko said it was upping its 2016 budget by $200 million; it now expects to spend between $2.8 billion and $3 billion.

Richard C. Adkerson, chief executive of Freeport-McMoRan, said the deal with Anadarko is one of more than $6 billion worth of transactions his company has done this year.

Mr. Adkerson said the sale "reflects our commitment to debt reduction and our focus on dedicating our capital and management resources to our global leading copper business."

Write to Erin Ailworth at Erin.Ailworth@wsj.com

(END) Dow Jones Newswires

September 12, 2016 18:35 ET (22:35 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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