US player Freeport-McMoRan has not ruled out further asset disposals after its $3.1 billion sale of Eagle Ford shale interests as it seeks to bankroll exploitation of newly acquired acreage in the deep-water Gulf of Mexico.
The Phoenix, Arizona-based mining-to-oil and gas company recently picked up interests in the Lucius and Heidelberg field projects in the US Gulf, as well as several exploration leases, for $900 million on the heels of its Eagle Ford deal with Canadian buyer Encana.
Freeport-McMoRan was left with net after-tax proceeds of $1.8 billion following the transactions and is now looking to plough cash into drilling and development work in the US Gulf deep as it targets “high-impact growth in oil production and cash margins”.
In particular, the company is looking at “multiple development and exploration opportunities” with the possibility of field tie-backs to its existing operated Holstein, Marlin and Horn Mountain production platforms.
“Operations to pursue these opportunities have commenced and activities are expected to accelerate following the delivery of contracted drillships over the next 12 months,” Freeport-McMoRan said in its results statement.
The company started drilling this month at the Copper prospect south-east of the Holstein field in 4400 feet of water and aims to drill a delineation well at the earlier Holstein Deep discovery in the third quarter.
It also plans to drill five additional sidetracks from the Holstein spar platform in the next two years after the current one is completed, as well as drill five subsea tie-back wells using drillships over the same period to boost output from the facility.
Freeport-McMoRan is also investing heavily in the under-development Lucius and Heidelberg fields that are due to start production in the second half of this year and in mid-2016, respectively.
Lucius in Keathley Canyon is being developed using a truss spar with Heidelberg in Green Canyon being tapped using a look-alike facility that is currently under construction and due to be towed to the field site later this year.
Oil and gas subsidiary FM O&G holds respective working interests of 25.1% and 12.5% in Lucius and Heidelberg.
The company said “additional oil and gas asset sales may be considered to provide additional funding to accelerate” its growth plans in the offshore play, where it was also awarded 20 exploration leases in Central Gulf of Mexico lease sale 231 earlier this year.
Its capital expenditure on oil and gas operations, which amounted to $1.5 billion in the first half, is projected to reach $3.4 billion for the full year, including $1.8 billion in the US Gulf deep.
FM O&G, which incorporates the former Plains E&P and McMoRan that were acquired last year, also holds producing oil assets onshore and offshore California, onshore natural gas resources in Louisiana’s Haynesville shale play, gas production from the Madden area of Wyoming and coastal gas acreage in the shallow-water US Gulf and onshore south Louisiana.
The subsidiary generated second-quarter revenue of $1.24 billion, up from $372 million a year earlier, as parent Freeport-McMoRan, which also has copper and gold mining operations, was left with unchanged net income of $482 million for the period.