Anadarko Petroleum (APC) said late Monday that it will buy deepwater Gulf of Mexico assets from Freeport McMoRan (FCX) for $2 billion, paid for via a new stock offering.
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The offshore assets will generate $3 billion of additional free cash flow over the next five years that will help boost production in West Texas’ Delaware Basin and the DJ Basin centered in Colorado, Anadarko said. With both these transactions expected to close in Q4, the composition of Freeport’s 2017 revenue and EBITDA breakdown would change as shown below. See the links below.
Shares of Freeport gained 7.7 percent in Monday trading, closing at $11.08, though the stock was not trading in after-hours sessions.
The investment proved wise when oil prices stayed above $100, but they began a steep drop starting in fall 2014.
Freeport-McMoran Copper & Gold has 1,328,258,000 shares now held by shareholders which now trade around the 11.08 mark which totals Freeport-McMoran Copper & Gold’s market capitalisation to 14.72B United States dollars. (NYSE:FCX) has been assigned a $12.00 price target by stock analysts at BMO Capital Markets in a report released on Tuesday.
The deep-water assets in the Gulf represent just over half Freeport’s overall oil and gas production exposure.
Freeport-McMoRan Inc (NYSE:FCX) have shown a low EPS growth of -34.90% in the last 5 years and has earnings growth of 87.40% yoy. For the reporting quarter, equity analysts expect the stock to deliver $0.2 in earnings per share (EPS).
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Freeport-McMoRan has been working to reduce debt. As the newly acquired assets in GoM are expected to be immediately accretive to Anadarko Petroleum’s cash flow, the deal is projected to bolster its balance sheet position in a low oil environment. The up-down ratio between the uptick and downtick was 2.71, confirming that the stronger hands have been buying the stock on every weakness. Analysts believe the company can continue to increase in value to reach at $16.78 a share over the next twelve months. It provides financing products, including retail installment sale contracts for new and used vehicles; and direct financing leases for new vehicles to retail and commercial customers, government entities, daily rental auto companies, leasing companies, and fleet customers. Some investors may question Anadarko’s increasing exposure in the Deepwater Gulf at the expense of onshore assets, Pearce Hammond, an analyst at Piper Jaffray, said in a research note.
