Freeport-McMoRan Announces Agreement to Acquire Deepwater GOM Interests for
PHOENIX -- May 8, 2014
Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) announced today that its oil
and gas subsidiary, Freeport-McMoRan Oil & Gas (FM O&G), has entered into a
definitive purchase and sale agreement to acquire certain of Apache
Corporation’s (Apache) (NYSE, Nasdaq: APA) interests in the Deepwater Gulf of
Mexico (GOM), including Apache’s interests in the Lucius and Heidelberg oil
production development projects and 11 exploration leases, for $1.4 billion.
The Deepwater GOM acquisition will be funded with proceeds from the previously
reported sale of FM O&G’s Eagle Ford Shale assets for $3.1 billion. The
estimated combined after-tax net proceeds from these transactions of
approximately $1.3 billion will be used to repay outstanding indebtedness
following closing of the transactions.
James R. Moffett, Chairman of the Board; Richard C. Adkerson, Vice Chairman,
and FCX President and Chief Executive Officer; and James C. Flores, Vice
Chairman, and FM O&G President and Chief Executive Officer, said, “Our
recently announced agreement to sell our Eagle Ford assets provides proceeds
to repay debt and to acquire high-quality assets in our Deepwater GOM focus
area. These transactions are value-accretive and the additional interests will
enhance our portfolio of assets which are characterized by strong margins,
attractive growth potential and compelling investment returns. We remain
focused on opportunities to advance our debt reduction objectives while
strengthening our portfolio of assets with strong margins and impactful
long-term growth opportunities.”
The Deepwater GOM assets being acquired, including Apache’s working interests
in the Lucius (11.7%) and Heidelberg (12.5%) oil production development
projects, have estimated proved, probable and possible reserves of 55 million
barrels of oil equivalents (BOE) and several hundred million barrels of oil
equivalents resource potential. The Lucius unit includes Keathley Canyon
Blocks 874, 875, 918 and 919 and the Heidelberg unit includes Green Canyon
Blocks 859, 903, 904 and 948.
Upon closing of this transaction, FM O&G will own a 35% working interest in
the Lucius development, which is on track to commence production in the second
half of 2014. Heidelberg, which is a large, high-quality oil development
project located in 5,000 feet of water in the Green Canyon area, is operated
by Anadarko Petroleum and is expected to commence production in mid-2016. The
hull fabrication for the 80,000-barrels of oil per day Lucius-look-alike
facility is more than 85% complete and the spar is expected to be towed to the
GOM later this year. Topsides fabrication is currently more than 25% complete.
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 has a May 1, 2014 effective date and is subject to
preferential rights and other customary closing conditions and purchase price
adjustments from the effective date until closing. The transaction is expected
to close by the end of the second quarter of 2014.
FCX is a premier U.S.-based natural resources company with an industry-leading
global portfolio of mineral assets, significant oil and gas resources and a
growing production profile. FCX is the world’s largest publicly traded copper
FCX’s portfolio of assets includes the Grasberg minerals district in
Indonesia, one of the world’s largest copper and gold deposits; significant
mining operations in the Americas, including the large-scale Morenci minerals
district in North America and the Cerro Verde operation in South America; the
Tenke Fungurume minerals district in the Democratic Republic of Congo; and
significant oil and natural gas assets in North America, including reserves in
the Deepwater GOM, onshore and offshore California and in the Eagle Ford and
Haynesville shale plays, and an industry-leading position in the emerging
Inboard Lower Tertiary/Cretaceous natural gas trend in the shallow water of
the GOM and onshore in South Louisiana. Additional information about FCX is
available on FCX’s website at www.fcx.com.
Cautionary Statement Regarding Forward-Looking Statements: This press release
contains forward-looking statements, which are all statements other than
statements of historical facts, such as expectations relating to completion of
the pending transaction. The words “anticipates,” “may,” “can,” “plans,”
“believes,” “potential,” “estimates,” “expects,” “projects,” “targets,”
“intends,” “likely,” “will,” “should,” “to be,” and any similar expressions
are intended to identify those assertions as forward-looking statements. FCX
cautions readers that forward-looking statements are not guarantees of future
performance and its actual results may differ materially from those
anticipated, projected or assumed in the forward-looking statements. Important
factors that can cause FCX’s actual results to differ materially from those
anticipated in the forward-looking statements include the ability of the
parties to satisfy customary closing conditions and consummate the proposed
transaction and other factors described in more detail under the heading “Risk
Factors” in FCX’s Annual Report on Form 10-K for the year ended December 31,
2013, filed with the U.S. Securities and Exchange Commission (SEC).
Investors are cautioned that many of the assumptions on which FCX’s
forward-looking statements are based are likely to change after its
forward-looking statements are made, including for example commodity prices,
which FCX cannot control, and production volumes and costs, some aspects of
which FCX may or may not be able to control. Further, FCX may make changes to
its business plans that could or will affect its results. FCX cautions
investors that it does not intend to update forward-looking statements more
frequently than quarterly notwithstanding any changes in FCX’s assumptions,
changes in business plans, actual experience or other changes, and FCX
undertakes no obligation to update any forward-looking statements.
The SEC requires companies with significant oil and gas producing activities
to disclose, in their filings with the SEC, proved oil and gas reserves that
have been demonstrated by actual production or conclusive formation tests to
be economically and legally producible under existing economic and operating
conditions. The SEC also permits the disclosure of probable and possible oil
and gas reserves, as such terms are defined by the SEC. FCX uses certain
phrases and terms in this press release, such as “resource potential,” which
the SEC’s rules prohibit FCX from including in its filings with the SEC.
“resource potential” does not take into account the certainty of resource
recovery, which is contingent on exploration success, technical improvements
in drilling access, commerciality and other factors, and is therefore not
indicative of expected future resource recovery and should not be relied upon.
Freeport-McMoRan Copper & Gold Inc.
Kathleen L. Quirk, 602-366-8016
David P. Joint, 504-582-4203
Eric E. Kinneberg, 602-366-7994
Press spacebar to pause and continue. Press esc to stop.