ANADARKO BOUGHT MEXICO $2 BLN
OGFJ wrote, Anadarko Petroleum Corp. (NYSE: APC) has entered into a definitive agreement to acquire the deepwater 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 approximately 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(1) over the next five years at current strip prices
- Enables accelerated investment in Anadarko's Delaware and DJ basin assets
"We expect these acquired assets to generate substantial free cash flow,(1) enhancing our ability to increase US 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 approximately 85-percent oil," said Anadarko chairman, president and CEO Al Walker.
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 approximately 49% from its previous 23.8% ownership.
Acquisition metricsThe 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 (1)(2) of 1.5 for the expected sales volumes over the coming 12 months, using the current futures strip price for oil and natural gas.
Upon closing, the transaction is expected to add approximately 80,000 BOE per day to Anadarko's sales-volume guidance – more than 80% 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.
Latham & Watkins LLP advised Anadarko on the transaction.
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