[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / October 17, 2016 / Active Wall St. blog coverage looks at the headline from Freeport-McMoRan Inc. (NYSE: FCX). The company announced on October 14th, 2016, that it has agreed to sell its onshore California oil and gas properties for $742 million. The sale from the biggest listed copper miner in the world is part of its efforts to reduce its multi-billion dollar debt. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.
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The Agreement
Sentinel Peak Resources, a private energy company, announced that it has entered into an agreement with the oil and gas subsidiary of Freeport-McMoRan to purchase their onshore California assets for $592 million plus additional consideration of $50 million per annum in each of 2018, 2019, and 2020 if the price of Brent crude oil averages $70 per barrel or higher in that calendar year. The purchaser will also assume future abandonment obligations associated with the properties, which had a book value of approximately $0.1 billion at June 30, 2016.
The transaction has an effective date of July 1, 2016, and is expected to close in the fourth quarter 2016, subject to customary closing conditions.
Production Update
The assets sold by Freeport-McMoRan are currently producing 28,000 barrels of oil per day ("Bopd") including 18,000 Bopd in the San Joaquin Basin and 10,000 Bopd in the LA Basin and Coastal properties. For the twelve month period ended June 30, 2016, net daily sales volumes from these properties averaged 28.6 thousand barrels of oil per day. Over this period, revenues totaled $0.4 billion, cash production costs (before G&A) totaled $0.3 billion and capital expenditures totaled $0.04 billion. Freeport-McMoRan intends to use the proceeds generated from the sale towards debt repayment. The company does not expect to record a material gain or loss on the transaction. The Phoenix-based company has come under pressure to reduce net debt of $18.8 billion.
Following completion of this transaction and the previously announced Deepwater Gulf of Mexico (GOM) sale to Anadarko Petroleum Corporation (NYSE: APC) for total cash consideration of $2.0 billion and up to $150 million in contingent payments, Freeport-McMoRan's portfolio of oil and gas assets would include oil and natural gas production onshore in South Louisiana and on the Shelf of the GOM, oil production offshore California and natural gas production from the Madden area in Central Wyoming. In Q2 2016, these properties produced an average of 8.6 thousand barrels of oil and natural gas liquids per day and 78 million cubic feet of natural gas per day.
Stock Performance
Last Friday, the stock closed the trading session at $9.66, slightly up 0.21% from its previous closing price of $9.64. A total volume of 26.02 million shares have exchanged hands. Freeport-McMoRan's stock price surged 42.69% since the start of the year.
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