Anadarko Petroleum will purchase the Gulf of Mexico (GoM) assets of Phoenix, Arizona-based minerals company Freeport-McMoRan (FCX) for US$2 billion cash consideration, the Houston-based independent said on 12 September.
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Anadarko’s Lucius truss spar when it came onstream in January 2015. Photo from Robert Seale/Anadarko Petroleum |
The deal adds approximately 80,000 boe/d net to Anadarko, of which more than 80% is oil, and expands Anadarko’s operated infrastructure through the GoM.
A key piece of the deal finds the independent doubling its stake in the Lucius development in deepwater GoM, which started producing in January 2015. Previously the firm held 23.8% interest and operatorship, now it holds 49%. Anadarko’s partners in Lucius include US supermajor ExxonMobil (23.3%), Brazil’s Petrobras (11.5%), Italy’s Eni (8.5%), and Japan’s Inpex (7.75%).
The Lucius field is about 275mi southeast of Galveston, Texas, and includes portions of Keathley Canyon blocks 874, 875, 918 and 919 in the deepwater Gulf of Mexico, in about 7000ft water depth. The field’s 110ft-diameter standalone spar was designed for 80,000 bo/d and 450 MMcf/d of natural gas. Reserves will be produced through six initial wet tree wells. Lucius’ spar was built under Anadarko’s “design one, build two” strategy. Lucius’ sister spar, Heidelberg, came online in January 2016.
Anadarko said today that Lucius, which the firm considers its best-performing GoM asset, continues to achieve strong reservoir performance and facility productivity. “As a result of this performance, the company is increasing the estimated ultimate recovery of the field to more than 400 MMboe from the previous 300+ MMboe,” the firm said.
Al Walker, Anadarko’s chairman, president and CEO, said that the deal not only strengthens the company’s position in the GoM, but will also allow the company to increase its US onshore activity, where Anadarko plans to add two rigs per play (Delaware and DJ basins) later this year, with the expectation of doubling production to approximately 600,000 boe/d from both basins over the next five years.
“This increased activity would drive a company-wide 10- to 12% compounded annual growth rate in oil volumes over the same time horizon in a $50 to $60 oil-price environment, while investing within cash flows,” Walker added. “Additionally, the transaction expands Anadarko's infrastructure in the Gulf, adds to our unmatched inventory of low-cost, subsea tieback opportunities, and bolsters optionality with new exploration prospects.
“The company's Gulf of Mexico position, with the addition of these properties, will have net sales volumes of approximately 155,000 boe/d, comprised of approximately 85% oil,” he said.
According to a presentation on the acquisition, Anadarko cites the potential of approximately 20 tieback opportunities, and at least 15 identified exploration prospects, that could arise from the deal.
The Anadarko-FCX deal could also see additional contingent payments up to $150 million to FCX due to recently completed third-party production handling agreement for the FCX-operated Marlin platform, the minerals company said.
“We congratulate our deepwater GoM team on developing a strong portfolio of assets that will enable Anadarko to build on our success,” said Richard C. Adkerson, president and CEO, FCX. “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.”
In October last year, FCX announced it would consider spinning off its oil and gas business and focus on mining, in order to “enhance value to FCX shareholders and achieve self-funding of the oil and gas business from its cash flows and resources.” The retreat was surprising after the company’s big push into the offshore oil and gas sector, starting with its late 2012 $9 billion purchase of Plains Exploration and Production and McMoRan exploration.
In April 2016, FCX saw four top executives within the oil and gas division depart the company in an effort to reduce costs and streamline functions, and enhance capital allocation.
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