Freeport-McMoRan to buy deepwater gulf assets for $1.4 billion

Freeport-McMoRan Oil & Gas LLC, a subsidiary of Freeport-McMoRan Copper & Gold Inc., has entered into a definitive purchase and sale agreement with Apache Corp. to acquire certain interests in the deepwater Gulf of Mexico, including interests in the Lucius and Heidelberg oil production development projects and 11 exploration leases, for $1.4 billion, effective May 1.

Freeport McMoRan O&G said the acquisition will be funded with proceeds from the sale reported on May 7 of its Eagle Ford shale assets to Encana Oil & Gas Inc. for $3.1 billion (OGJ Online, May 7, 2014).

The gulf assets, including Apache’s 11.7% interests in the Lucius and 12.5% interest in Heidelberg oil production development projects, have estimated proved, probable, and possible reserves of 55 million boe and several hundred million boe resource potential, Freeport-McMoRan O&G said.

The Lucius unit includes Keathley Canyon Blocks 874, 875, 918, and, 919. Freeport-McMoRan O&G will own 5% working interest in development, which the company said is on track to commence production in the second half of the year.

The hull fabrication for the 80,000-boe/d Lucius-look-alike facility is more than 85% complete and the spar is expected to be towed to the gulf later this year, Freeport McMoRan O&G said. Topsides fabrication is currently more than 25% complete.

The Heidelberg unit, a large, high-quality oil development project in 5,000 ft of water in the Green Canyon area, includes Green Canyon Blocks 859, 903, 904, and 948. It’s operated by Anadarko Petroleum Corp. and is expected to commence production in mid-2016.

The 11 exploration leases to be acquired include Apache’s interests in the Lucius Offset, Capri, and Silver Fox/Parmer exploration areas with working interests ranging from 16.67% to 60%. The transaction is expected to close by the end of the second quarter.

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