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APC to Double Ownership in Lucius Development after Acquisition

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Sep. 22 2016, Updated 10:04 a.m. ET

APC doubles ownership in the Lucius facility

In its recently announced acquisition, Anadarko Petroleum (APC) highlighted the acquisition of an interest in the Lucius development in the Gulf of Mexico. The transaction increases APC’s ownership in the Lucius development to ~49%. APC‘s interest in the Lucius development prior to the transaction was ~24%. Other partners having ownership interests in the Lucius development are ExxonMobil (XOM), Petrobras (PBR) Japanese oil company INPEX, and Italian oil and gas company Eni (E).

APC’s press release noted that the APC-operated Lucius facility “continues to achieve strong reservoir performance and facility productivity.”

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As a result, APC has increased the estimated ultimate recovery of the field to more than 400 million barrels of oil equivalent (or MMboe). The previous figure was more than 300 MMboe. APC also noted that gross oil sales volumes from the Lucius development recently crossed 100,000 barrels of oil per day from six producing wells.

APC noted in a press release, “The transaction expands Anadarko’s infrastructure in the Gulf, adds to our unmatched inventory of low-cost, subsea tieback opportunities, and bolsters optionality with new exploration prospects.”

APC’s recent acquisition announcement stands in stark contrast to one its key strategies in 2016, asset monetization, to maintain balance sheet strength. At the end of 2Q16, APC closed asset monetizations worth ~$2.5 billion. However, as we saw in the previous part, APC plans to fund this transaction via equity instead of debt. So, the deal will not weigh heavily on APC’s balance sheet. We’ll discuss APC’s balance sheet position in a later part of this series.

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