Freeport-McMoRan Oil and Gas

Freeport-McMoRan to acquire oil, gas assets in $20 billion deal
December 18, 2014 – 09:35 am

Freeport-McMoRan sells Eagle Freeport-McMoRan charters Rowan drillship | Offshore Energy Today

The Phoenix-based mining company will pay $3.4 billion in cash to purchase its sister company, McMoRan Exploration Co., which was spun off from Freeport-McMoRan in the 1990s. Also, Plains Exploration, a Houston-based oil and gas company, will be acquired for about $6.9 billion in cash and stock. Freeport-McMoRan will assume an additional $11 billion in debt as part of the deal.

The move is the second attempt at diversification beyond metals for Freeport-McMoRan and a lifeline for McMoRan Exploration, which has been struggling to persuade investors that its clogged, ultra-deep oil well in the Gulf of Mexico will soon come online. McMoRan shares have fallen 46 percent in the past year and dropped 9.7 percent early Monday as the company announced the well was restricted by skin or formation damage.

"The transaction offers significant values to the [McMoRan] and [Plains Exploration] shareholders and will enable [Freeport-McMoRan] to build on these values through a much larger, well capitalized platform, " James R. Moffett, chairman of the board of Freeport-McMoRan, said in a statement.

Some see the purchase as a bold move at a time when many companies are cautiously tiptoeing around the fiscal cliff.

The US Energy Information Administration expects domestic natural gas production to be up nearly 4 percent this year from 2011's record levels. The US is projected to become the world's leading oil producer by 2020, according to the International Energy Agency.

McMoRan stock soared 75 percent and Plains Exploration shares jumped by a quarter in response to the acquisition, but Freeport-McMoRan investors were less impressed.

Freeport-McMoRan will be among only a handful of major miners that have expanded beyond core metals and bulk commodities. Shares of the company's stock fell 15 percent on news of the purchase.

Source: www.csmonitor.com
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