Anadarko Petroleum has entered into a definitive agreement to acquire thedeepwater Gulf of Mexico assets of Freeport McMoRan Oil & Gas for $2.0 billion. The transaction, effective Aug. 1, 2016, is expected to close prior to year end.
- Doubles Anadarko’s ownership in the Lucius development to approx. 49 percent
- Adds approximately 80,000 net barrels of oil equivalent (BOE) per day, more than 80 percent of which is oil
- Expands Anadarko’s operated infrastructure throughout the Gulf of Mexico
- Generates an estimated $3.0 billion of incremental Gulf of Mexico free cash flow over the next five years at current strip prices
- Enables accelerated investment in Anadarko’s Delaware and DJ basin assets
‘This immediately accretive, bolt-on transaction strengthens our industry-leading position in the Gulf of Mexico and is a catalyst for the company’s oil-growth objectives, with quality assets being acquired at an attractive price to create significant value,’ said Anadarko Chairman, President and CEO Al Walker. ‘We expect these acquired assets to generate substantial free cash flow, enhancing our ability to increase U.S. onshore activity in the Delaware and DJ basins. Our current plans are to add two rigs in each play later this year, and to increase activity further thereafter, with an expectation of more than doubling our production to at least 600,000 BOE per day collectively from these two basins over the next five years. This increased activity would drive a company-wide 10- to 12-percent 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. 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 per day, comprised of approx. 85-percent oil.’
DOUBLING OWNERSHIP IN LUCIUS
Anadarko’s operated Lucius facility in the deepwater Gulf of Mexico 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 million BOE from the previous 300-plus million BOE. Additionally, gross oil sales volumes through the facility recently surpassed 100,000 barrels of oil per day (BOPD). Under the terms of the transaction, Anadarko will increase its working interest in Lucius to approx. 49 percent from its previous 23.8-percent ownership, enabling the company to further capitalize on additional future value-adding opportunities at Lucius.
ATTRACTIVE ACQUISITION METRICS
The acquisition and development cost of the acquired properties, excluding a total of approximately $300 million of materials inventory and seismic, is approximately $13.50 per BOE for the estimated proved reserves to be acquired. The assets are being acquired at an estimated EBITDAX multiple of 1.5 for the expected sales volumes over the coming 12 months, using the current futures strip price for oil and natural gas. Please see the supplemental information available at http://www.anadarko.com for additional details on the transaction.
Upon closing, the transaction is expected to add approx. 80,000 BOE per day to Anadarko’s sales-volume guidance – more than 80 percent of which is comprised of oil. The company also is expected to increase its 2016 full-year capital guidance, not including the acquisition, to a range of $2.8 to $3.0 billion, primarily reflecting the increased activity in the Delaware and DJ basins.
Jefferies Group LLC and Latham & Watkins LLP are serving as advisors to Anadarko on the acquisition.(Source: Original article link; Source: Anadarko Petroleum Corp)