Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) today
announced that it has completed the final step of its three-way
combination with Plains Exploration & Production Company (NYSE:
PXP) and McMoRan Exploration Co. (NYSE: MMR). The PXP transaction
closed on May 31, 2013 and the MMR transaction closed on June 3,
2013.
The transactions add a high quality portfolio of oil and gas
assets to FCX’s global mining business to create a premier
U.S.-based natural resource company. The acquired businesses
provide exposure to energy markets with positive fundamentals,
strong margins and cash flows, exploration leverage and financially
attractive long-term investment opportunities. The portfolio of
assets includes established oil production facilities in
California, a growing production profile in the onshore Eagle Ford
trend in Texas, significant production facilities and growth
potential in the Deepwater Gulf of Mexico and large onshore
resources in the Haynesville natural gas trend in Louisiana. The
company will also have an industry leading position in the emerging
shallow water, ultra-deep gas trend on the Shelf of the Gulf of
Mexico and onshore in South Louisiana.
The value of the transactions totaled $19 billion, including
$10.0 billion in assumed debt, $5.5 billion in cash consideration
and 91 million shares of FCX stock (valued at $2.8 billion as of
May 31, 2013) and other consideration, including the PXP
supplemental dividend and the value of the royalty trust units to
MMR shareholders. After giving effect to these transactions, FCX
has approximately 1,038 million shares outstanding.
James R. Moffett, Chairman of the Board of FCX, said: “These
transactions will enhance our portfolio of large-scale,
geographically diverse natural resource assets with exceptional
exploration and development characteristics. We are pleased
to welcome the PXP and MMR oil and gas teams to FCX’s global family
and look forward to the opportunities for value creation that our
expanded asset base provides for shareholders.”
Richard C. Adkerson, Vice Chairman, President and Chief
Executive Officer of FCX, said: “The transaction adds a high
quality portfolio of North American based oil and gas assets with
strong current cash flows, a financially attractive growth profile
and complementary exposure to commodities with favorable supply and
demand fundamentals essential to the world’s economies. We
are focused on executing our strategy of delivering strong
operational and project development performance to provide cash
flows to achieve our debt reduction targets, generate attractive
returns through organic growth and continue our long standing
tradition of providing cash returns to shareholders.”
James. C. Flores, Vice Chairman of FCX and President and
Chief Executive Officer of Freeport-McMoRan Oil & Gas, FCX’s
new wholly owned subsidiary, said: “The addition of PXP’s U.S. oil
and gas assets to FCX’s global mining business establishes a
significant, long-term commodities business positioned to generate
meaningful returns over an extended period. We are excited
to join FCX’s global team and will be focused on executing our
highly profitable, long-term, oil-focused growth plan, which is
complementary to the growth profile and cash margins of the large,
low-cost, expandable asset base characteristics of FCX.”
FINANCIAL PROFILE
For the twelve months ended December 31, 2012, pro forma
revenues totaled $22.7 billion with pro forma EBITDA (equals
operating income plus depreciation, depletion, and amortization) of
$10.5 billion. Pro forma for the transactions, total debt at March
31, 2013 approximated $20.8 billion and consolidated cash totaled
$4.6 billion, excluding supplemental dividends paid or to be paid
totaling $1.4 billion. In addition, FCX has a $3.0 billion
revolving bank credit facility with no amounts drawn.
FCX expects to use cash flows in excess of capital expenditures,
dividends and other cash requirements of the combined company to
reduce debt to a targeted level of $12 billion over the next three
years. As previously announced in May 2013, FCX plans to complete
$1.5 billion in asset sales and reduce its capital spending to
offset the cash required for the recently announced supplemental
dividends.
MANAGEMENT TEAM AND BOARD OF DIRECTORS
James R. Moffett will continue as Chairman of FCX and Richard C.
Adkerson will continue as President and Chief Executive Officer of
FCX and has been appointed Vice Chairman of FCX. James C. Flores,
previously Chairman, President and Chief Executive Officer of PXP,
has been named Vice Chairman of FCX and the President and Chief
Executive Officer of Freeport-McMoRan Oil & Gas, FCX’s new
wholly owned subsidiary. Kathleen L. Quirk will continue as
Executive Vice President and Chief Financial Officer of FCX.
As previously reported, FCX appointed three former directors of
PXP to its Board of Directors: James C. Flores, Alan R. Buckwalter,
III and Thomas A. Fry, III. FCX’s Board of Directors is now
comprised of 15 members, including 11 independent directors, who
possess a diverse range of perspectives and experience in the
mining and oil and gas industries, geology, business, finance,
economics, accounting and public affairs. In addition, Messrs.
Moffett, Adkerson and Flores comprise the newly formed Office of
the Chairman.
FCX is a premier U.S.-based natural resource company with an
industry leading global portfolio of mineral assets, significant
oil and gas resources and a growing production profile. FCX is the
world’s largest publicly traded copper producer.
FCX’s portfolio of assets includes the Grasberg minerals
district in Indonesia, one of the world’s largest copper and gold
deposits; significant mining operations in the Americas, including
the large-scale Morenci minerals district in North America and the
Cerro Verde and El Abra operations in South America; the Tenke
Fungurume minerals district in the Democratic Republic of Congo;
and significant oil and natural gas assets in North America,
including reserves in the Deepwater Gulf of Mexico, onshore and
offshore California, in the Eagle Ford and Haynesville shale plays
and industry leading position in the emerging shallow water,
ultra-deep gas trend on the Shelf of the GOM and onshore in South
Louisiana. Additional information about FCX is available on FCX's
website at www.fcx.com.
Cautionary Statement Regarding Forward Looking
Statements: This press release contains forward-looking
statements. Forward-looking statements are all statements other
than statements of historical facts. The words “anticipates,”
“may,” “can,” “plans,” “believes,” “estimates,” “expects,”
“projects,” “intends,” “likely,” “will,” “should,” “to be,” and any
similar expressions or other words of similar meaning are intended
to identify those assertions as forward-looking statements. It is
uncertain whether the events anticipated will transpire, or if they
do occur what impact they will have on the results of operations
and financial condition of FCX, on any future asset sales or on
future capital allocation decisions. These forward-looking
statements involve significant risks and uncertainties that could
cause actual results to differ materially from those anticipated,
the ability of FCX to integrate the acquired PXP and MMR
operations, the ability of FCX to consummate any future asset sales
on beneficial terms or at all, the timing and proceeds generated by
any such sales, the ability of FCX to determine that all or a
portion of the contemplated asset sales are not desirable and not
to pursue or consummate such sales, the ability of FCX to determine
not to proceed with reductions in any capital spending plans, the
ability of FCX to fund its oil and gas business with cash flows
generated by such business, FCX’s future capital needs and capital
allocation decisions, including future decisions by FCX to allocate
capital among its operating segments and to fund its capital
expenditures in a manner other than the manner set forth in the
press release, FCX’s ability to meet its stated debt reduction
goals, the ability to implement the anticipated business plans
following closing and achieve anticipated benefits and savings, and
the ability to realize opportunities for growth. Other important
economic, political, regulatory, legal, technological, competitive
and other uncertainties are identified in the documents filed with
the Securities and Exchange Commission by FCX from time to time,
including its Annual Report on Form 10-K, Quarterly Report on Form
10-Q, and Current Reports on Form 8-K. The forward-looking
statements including in this press release are made only as of the
date hereof. FCX does not undertake any obligation to update the
forward-looking statements included in this press release to
reflect subsequent events or circumstances.
Freeport-McMoRan Copper & Gold Inc.Financial
Contacts:Kathleen L. Quirk, 602-366-8016orDavid P. Joint,
504-582-4203orMedia Contact:Eric E. Kinneberg, 602-366-7994
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