Freeport-McMoRan Announces Agreement to Sell its Deepwater Gulf of Mexico Properties
September 12 2016 - 4:05PM
Business Wire
Freeport-McMoRan Inc. (NYSE: FCX) announced today that its oil
and gas subsidiary, Freeport-McMoRan Oil & Gas (FM O&G),
has entered into a purchase and sale agreement with Anadarko
Petroleum Corporation (NYSE: APC) for the sale of its Deepwater
Gulf of Mexico (GOM) properties for total cash consideration of
$2.0 billion and up to $150 million in contingent payments.
The contingent payments would be received over time as Anadarko
realizes future cash flows in connection with FM O&G’s recently
completed third-party production handling agreement for the Marlin
platform. Anadarko will also assume future abandonment obligations
associated with the properties which had a book value of
approximately $0.5 billion at June 30, 2016.
Richard C. Adkerson, President and Chief Executive Officer,
said, "We are pleased to announce this transaction which brings our
total 2016 asset sale transactions to over $6 billion and reflects
our commitment to debt reduction and our focus on dedicating our
capital and management resources to our global leading copper
business. With our announced asset sale transactions combined with
cash flows from operations and previously announced at-the-market
equity transactions, we are on track to achieve our stated balance
sheet objectives. We congratulate our Deepwater GOM team on
developing a strong portfolio of assets that will enable Anadarko
to build on our success. We look forward to closing both the
Deepwater GOM transaction and the previously announced Tenke
transaction during 2016 and to continuing to execute our plans to
enhance long-term value for shareholders.”
The transaction has an effective date of August 1, 2016, and is
expected to close in fourth-quarter 2016, subject to customary
closing conditions.
For the twelve month period ended June 30, 2016, net daily sales
volumes from FM O&G’s Deepwater GOM properties averaged
approximately 73 thousand barrels of oil equivalents (MBOE). Over
this period, revenues totaled $1.0 billion, cash production costs
(before G&A) totaled $0.3 billion and capital expenditures
totaled $1.6 billion.
Preferred shareholders in FM O&G’s consolidated subsidiary,
Plains Offshore Operations Inc., are entitled to receive $582
million in connection with the transaction. The remaining net
proceeds will be used for debt repayment.
FCX does not expect to record a material gain or loss on the
transaction.
FCX also announced today it is commencing a consent solicitation
to obtain approval from holders of five series of FM O&G Notes
to align covenants to those in the existing Notes previously issued
by FCX. FCX is the guarantor of FM O&G Notes with aggregate
principal amounts totaling $2.3 billion. Prior to completing the
Deepwater GOM sale transaction, FCX plans to merge FM O&G into
FCX, or alternatively amend the FM O&G Notes to conform the
indentures to FCX’s Senior Notes. In either scenario, there is no
requirement to redeem the FM O&G Notes in connection with this
transaction.
FCX is a premier U.S.-based natural resources company with an
industry-leading global portfolio of mineral assets. FCX is the
world's largest publicly traded copper producer.
FCX's portfolio of assets includes the Grasberg minerals
district in Indonesia, one of the world's largest copper and gold
deposits; significant mining operations in the Americas, including
the large-scale Morenci minerals district in North America and the
Cerro Verde operation in South America. Additional information
about FCX is available on FCX's website at "fcx.com."
Cautionary Statement Regarding Forward-Looking
Statements: This press release contains forward-looking
statements, which are all statements other than statements of
historical facts, such as expectations related to completion of the
pending transaction. The words “anticipates,” “may,” “can,”
“plans,” “believes,” “estimates,” “expects,” “projects,” "targets,"
“intends,” “likely,” “will,” “should,” “to be,” ”potential" and any
similar expressions are intended to identify those assertions as
forward-looking statements. FCX cautions readers that
forward-looking statements are not guarantees of future performance
and actual results may differ materially from those anticipated,
projected or assumed in the forward-looking statements. Important
factors that can cause FCX's actual results to differ materially
from those anticipated in the forward-looking statements include
the ability of the parties to secure regulatory approvals, satisfy
closing conditions and consummate the pending transaction and other
factors described in more detail under the heading “Risk Factors”
in FCX's Annual Report on Form 10-K for the year ended December 31,
2015, filed with the U.S. Securities and Exchange Commission (SEC)
as updated by FCX's subsequent filings with the SEC.
Investors are cautioned that many of the assumptions upon which
FCX's forward-looking statements are based are likely to change
after the forward-looking statements are made, including for
example commodity prices, which FCX cannot control, and production
volumes and costs, some aspects of which FCX may not be able to
control. Further, FCX may make changes to its business plans that
could affect its results. FCX cautions investors that it does not
intend to update forward-looking statements more frequently than
quarterly notwithstanding any changes in its assumptions, changes
in business plans, actual experience or other changes, and FCX
undertakes no obligation to update any forward looking
statements.
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version on businesswire.com: http://www.businesswire.com/news/home/20160912006440/en/
Freeport-McMoRan Inc.Financial
Contacts:Kathleen L. Quirk,
602-366-8016orDavid P. Joint,
504-582-4203orMedia Contact:Eric E. Kinneberg,
602-366-7994
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