Freeport-McMoRan to Sell Deepwater Gulf Assets to Anadarko -- 2nd Update
September 12 2016 - 6:50PM
Dow Jones News
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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