Freeport-McMoRan Inc. (NYSE: FCX) announced late Monday that the company’s oil and gas subsidiary has agreed to sell its deepwater Gulf of Mexico assets to Anadarko Petroleum Corp. (NYSE: APC) for $2 billion in cash and up to $150 million additional contingency payments. The effective date of the transaction is August 1, and the company expects the sale to close in the fourth quarter of this year.

In 2013 Freeport completed its acquisitions of McMoRan Exploration, paying $2.1 billion in cash for the company and another $6.9 billion for Plains Exploration, plus assuming another $10 billion in debt. Freeport enjoyed about a year’s worth of solid returns from the purchase before the bottom fell out of the crude market in August of 2014.

The good news for Freeport shareholders is that the deepwater properties sold to Anadarko have mostly retained their cash value, although the stock dilution remains as a legacy of the ill-fated deal. The less good news is that nearly $600 million in proceeds from the sale will go to preferred shareholders before the balance is applied to existing debt.

Freeport CEO Richard Adkerson said:

We are pleased to announce this transaction which brings our total 2016 asset sale transactions to over $6 billion and reflects our commitment to debt reduction and our focus on dedicating our capital and management resources to our global leading copper business. With our announced asset sale transactions combined with cash flows from operations and previously announced at-the-market equity transactions, we are on track to achieve our stated balance sheet objectives.

Freeport’s goal is to reduce its net debt from some $18.8 billion to a range of $10.5 billion to $13.2 billion by the end of 2017.

Activist investor Carl Icahn, who owns 7.8% of Freeport’s outstanding shares, applauded the sale, saying that it showed the company is “making good on its stated goal of deleveraging.”

Also on Monday, Freeport initiated a consent solicitation from holders of five of its oil and gas subsidiary’s notes with an aggregate principal amount of $2.3 billion to amend the indenture governing the notes. The company’s goal is “to align certain covenants in the indenture with those governing the existing notes issued by FCX.” The consent solicitations were made in connection with Monday’s announced sale of the Gulf of Mexico properties.

Freeport’s stock traded down 7% Tuesday morning, at $10.30 in a 52-week range of $3.52 to $14.20. The consensus 12-month target is $11.99.

Anadarko’s shares traded down fractionally to $57.47, in a 52-week range of $28.16 to $73.87. Its consensus price target is $66.87.

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