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New president and CEO of Encana Doug Suttles answers questions during a media round table in Calgary, Alberta, June 11, 2013. (Todd Korol For The Globe and Mail)
New president and CEO of Encana Doug Suttles answers questions during a media round table in Calgary, Alberta, June 11, 2013. (Todd Korol For The Globe and Mail)

Freeport to buy Apache assets after Encana shale sale Add to ...

Freeport-McMoRan Copper & Gold Inc. said on Thursday that it would buy Apache Corp.’s deep-water oil and gas projects in the Gulf of Mexico for $1.4-billion (U.S.), a day after announcing it would shed $3.1-billion in Eagle Ford shale assets in Texas.

Mining giant Freeport said the Eagle Ford asset sale will fund the purchase of interests in two development projects and 11 deep-water exploration blocks in the Gulf of Mexico.

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Meanwhile, Apache, known for its experience using hydraulic fracturing, or fracking, to unlock oil and gas from rock, has been selling assets overseas and in the Gulf to focus on lucrative shale fields in North America.

A 21-per-cent rise in liquids production from onshore fields helped Apache post a better-than-expected first-quarter profit on Thursday.

Apache, like Occidental Petroleum Corp. and Hess Corp., has been boosting production in North American shale where growth is seen as more predictable.

Freeport, a major copper producer, said on Wednesday that it was selling some Eagle Ford assets to Encana Corp., Canada’s top natural gas company, as part of a plan to raise as much as $4-billion.

Freeport is looking to reduce its $20.9-billion debt load, which ballooned after it surprised the market in late 2012 with a $9-billion purchase of both Plains Exploration & Production Co. and McMoRan Exploration Co.

The assets being acquired have 55 million oil-equivalent barrels in estimated proved, probable and possible reserves.

FASTER CYCLES

Apache said it would focus more on exploration opportunities in water depths less than 305 metres in the Gulf of Mexico, while looking for joint venture options for its other deep-water fields.

“Discoveries on the shelf have quicker cycle times, require less capital, and provide more options to bring oil and gas to market,” said Thomas E. Voytovich, Apache’s chief operating officer for offshore and international operations.

Apache, which has sold its properties in Canada and Argentina, is also aiming to sell a part of its 50-per-cent stake in the Kitimat liquefied natural gas export project in British Columbia.

On a conference call with investors, Apache chief executive officer Steve Farris said the company has also cut its expected capital expenditure for Kitimat this year to $600-million from $1-billion.

APACHE PROFIT TOPS ESTIMATES

Apache’s first-quarter adjusted profit was $1.78 per share, above the average analyst estimate of $1.62, according to Thomson Reuters I/B/E/S. But worldwide net daily production of oil, natural gas and natural gas liquids fell 18 per cent on the year to average 640,000 barrels of oil equivalent.

Based on good well data, Apache plans to double the number of rigs running in the Eagle Ford Shale in south Texas to eight by midyear. It may also reallocate capital to that area and the Permian Basin.

Revenue fell 7 per cent to $3.67-billion, but beat the average analyst estimate of $3.56-billion.

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