HOUSTON, Sept. 20 /PRNewswire-FirstCall/ -- Plains
Exploration & Production Company (NYSE: PXP) ("PXP" or the
"Company") announces today it and certain of its subsidiaries have
executed an agreement with McMoRan Exploration Co. (NYSE: MMR) to
divest PXP's interests in properties located in Gulf of Mexico shallow water for a combination
of cash and stock. PXP will receive $75
million in cash and 51 million shares of McMoRan common
stock in exchange for PXP's interests in all of its Gulf of Mexico leasehold located in less than
500 feet of water ($818 million total
consideration using McMoRan's stock price of $14.57 on September 17,
2010). These properties are currently producing
approximately 45 million cubic feet of natural gas equivalents per
day net to PXP and include estimated proved reserves of
approximately 63.9 billion cubic feet of natural gas equivalents as
of June 30, 2010. In conjunction with
the transaction, McMoRan has secured $900
million of committed financing from an investor group and
PXP will have the right to designate two directors to McMoRan's
Board of Directors. Separately, PXP has begun the process of
marketing the Company's Gulf of
Mexico deepwater assets.
James C. Flores, Chairman,
President and CEO of PXP commented, "Our Gulf of Mexico exploration
program has been an on-going success for PXP's shareholders and a
consistent value creation strategy by using our exploration
expertise in this prolific hydrocarbon basin. We are proud of the
Gulf of Mexico exploration
accomplishments achieved by PXP and its partners.
"The transaction with McMoRan creates a premium
operator/ownership structure that maximizes value for both PXP and
McMoRan shareholders from the ultra-deep program's existing
discoveries and exploratory potential. Through PXP's ownership
position in McMoRan, PXP will maintain upside exposure to the
multi-trillion cubic feet equivalent ultra-deep exploratory
potential without the substantial long-lead time capital
requirements. Starting nearly four years ago, the highly successful
shallow water exploration program began with the Flatrock discovery
and its subsequent development and follow up discoveries at
Hurricane Deep and Blueberry Hill. Recent exploration efforts in
the sub-salt, ultra-deep program continue
that success, initially with the Blackbeard
West discovery followed by the latest successful
discovery at the Davy Jones mega structure announced earlier
this year. With the ongoing development of the existing
discoveries and additional exploration drilling
required on additional related structures, the
combination of PXP's position with our partner/operator McMoRan is
a unique opportunity for PXP shareholders to maintain equity
growth exposure to this dynamic and emerging play. As
everyone knows, we have great admiration for Jim Bob Moffett and his entire team in which PXP
has been and will continue to be a valued partner in its new role
as a significant McMoRan shareholder."
The transaction is effective August 1,
2010 and is expected to close by year-end 2010, subject to
McMoRan shareholder approval and customary closing conditions and
adjustments. PXP plans to provide updated financial and operating
guidance after the transaction is closed.
The planned Gulf of Mexico
deepwater divestment is aimed at optimizing the value of PXP's
deepwater portfolio. The portfolio is anchored by Friesian and
Lucius, two high-quality oil discoveries, and a comprehensive
exploration portfolio with interests in 107 blocks, 9 well defined
prospects and an additional 22 prospects or leads in Pliocene,
Miocene and Lower Tertiary reservoirs. The data room process is
underway with final bids expected in late-October to mid-November.
PXP expects the transaction to close by year-end 2010.
PXP engaged Barclays Capital and Jefferies & Company to
assist in executing both transactions. Barclays Capital provided a
fairness opinion to the PXP Board of Directors on the divestiture
of its shallow water properties to McMoRan.
CONFERENCE CALL
Management of PXP and McMoRan will host a conference call today,
Monday, September 20, 2010, at
10:00 a.m. Eastern time to discuss
the details of the transaction. Investors wishing to participate in
the conference call may dial 888-647-2712. The conference call and
replay ID is 12325625.
PXP is an independent oil and gas company primarily engaged in
the activities of acquiring, developing, exploring and producing
oil and gas in California,
Texas, Louisiana and the Gulf of Mexico. PXP is headquartered in
Houston, Texas.
ADDITIONAL INFORMATION & FORWARD-LOOKING
STATEMENTS
This press release contains forward-looking information
regarding PXP that is intended to be covered by the safe harbor
"forward-looking statements" provided by the Private Securities
Litigation Reform Act of 1995. All statements included in this
press release that address activities, events or developments that
PXP expects, believes or anticipates will or may occur in the
future are forward-looking statement. These include statements
regarding:
* value and completion of the proposed divestments, including
receipt of McMoRan shareholder approval of the issuances of
securities,
* value and completion of the proposed financing,
* reserve and production estimates,
* oil and gas prices,
* cash flow estimates,
* future financial performance,
* capital and credit market conditions,
* planned capital expenditures, and
* other matters that are discussed in PXP's filings with the
SEC.
These statements are based on our current expectations and
projections about future events and involve known and unknown
risks, uncertainties, and other factors that may cause our actual
results and performance to be materially different from any future
results or performance expressed or implied by these
forward-looking statements. Please refer to our filings with the
SEC, including our Form 10-K, for a discussion of these
risks.
References to quantities of oil or natural gas may include
amounts that the Company believes will ultimately be produced, but
that are not yet classified as "proved reserves" under SEC
definitions.
All forward-looking statements in this report are made as of
the date hereof, and you should not place undue reliance on these
statements without also considering the risks and uncertainties
associated with these statements and our business that are
discussed in this report and our other filings with the SEC.
Moreover, although we believe the expectations reflected in the
forward-looking statements are based upon reasonable assumptions,
we can give no assurance that we will attain these expectations or
that any deviations will not be material. Except as required by
law, we do not intend to update these forward-looking statements
and information.
SOURCE Plains Exploration & Production Company
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