Anadarko Petroleum Corp. said Sept. 12 it agreed to buy Freeport McMoRan Oil & Gas deepwater Gulf of Mexico (GoM) assets for $2 billion.

The deal doubles to about 49% Anadarko’s ownership in the Lucius development and adds production of 80,000 boe/d more than 80% oil.

Anadarko said the acquisition will generate about $3 billion in incremental GoM free cash flow during the next five years at current strip prices. The deal will also allow the company to accelerate capital into the Delaware and Denver-Julesburg (D-J) basins.

“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 Al Walker, Anadarko chairman, president and CEO. “We expect these acquired assets to generate substantial free cash flow, enhancing our ability to increase U.S. onshore activity in the Delaware and D-J basins.”

Anadarko also said Sept. 12 that it will offer about 35.3 million shares of its common stock. The company expects to grant the underwriter, J.P. Morgan Securities LLC, a 30-day option to purchase up to 5.3 additional shares of its common stock.

Anadarko will add two rigs in both the Delaware and D-J plays later this year and plans to further increase activity afterward.

Walker said the company’s expectation is to more than double production to 600 Mboe/d from the two basins during the next five years.

“This increased activity would drive a company-wide 10% to 12% compounded annual growth rate in oil volumes over the same time horizon in a $50 to $60 oilprice environment, while investing within cash flows,” Walker said.

The company’s GoM position, with the addition of the properties, will have net sales volumes of about 155 Mboe/d. The purchase expands Anadarko’s operated infrastructure in the GoM as well.

For Freeport the divestiture is its third following announced deals to sell net mineral acreage in the Permian and nonoperated interests in the Haynesville for a total of $189 million.

The transaction, effective Aug. 1, is expected to close prior to year-end 2016.

—Darren Barbee

Offshore