HOUSTON (The Deal) -- Keeping its promise to expand further in the deepwater Gulf of Mexico, Freeport-McMoRan Copper & Gold (FCX) said Thursday its oil and gas unit agreed to pick up non-operated interests in the Lucius and Heidelberg oil production development projects and 11 exploration leases in the area from Apache (APA) of Houston for $1.4 billion.
The Phoenix-based resources company will fund the acquisition with proceeds from the sale of its Eagle Ford Shale properties in South Texas to Canada's Encana (ECA) for $3.1 billion, which it announced Wednesday.
Both deals are expected to close this quarter and Freeport-McMoRan plans to use the estimated $1.3 billion in after-tax net proceeds to pay down debt.
Freeport-McMoRan management, including Jim Bob Moffett, Richard Adkerson and Jim Flores, said in a statement that the Eagle Ford sale gives it funding to repay debt and acquire high-quality assets in its deepwater Gulf of Mexico 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," they said. "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."
Thomas Voytovich, Apache's chief operating officer for offshore and international operations, said in a separate statement that the company is focusing on subsalt and other deeper exploration opportunities in water depths less than 1,000 feet, which have been relatively untested by industry. "Discoveries on the shelf have quicker cycle times, require less capital and provide more options to bring oil and gas to market," he said.