TORONTO (miningweekly.com) – US miner Freeport-McMoRan Copper & Gold on Monday said it had completed the final step of its $19-billion takeover of both Plains Exploration & Production (PXP), which closed on Friday and McMoRan Exploration (MMR), which closed on Monday.
NYSE-listed Freeport said the transactions added a high-quality portfolio of oil and gas assets that would 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 included established oil production facilities in California, a growing production profile in the onshore Eagle Ford trend, in south Texas, significant production facilities and growth potential in the deep-water Gulf of Mexico and large onshore resources in the Haynesville natural gas trend, in Louisiana.
The company would also have a significant 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 totalled $19-billion and included $10-billion in assumed debt, $5.5-billion in cash and 91-million shares of Freeport-McMoRan stock, valued at $2.8-billion on May 31, as well as the PXP supplemental dividend and the value of the royalty trust units to MMR shareholders. After completing these transactions, the company had about 1.03-billion shares outstanding.
“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,” Freeport-McMoRan chairperson James Moffet said.
FINANCIAL PROFILE
For the 12 months ended December 31, 2012, pro forma revenues totalled $22.7-billion with pro forma operating income, including depreciation, depletion, and amortisation of $10.5-billion.
Pro forma for the transactions, total debt Friday was $20.8-billion and consolidated cash totalled $4.6-billion, excluding supplemental dividends paid or to be paid totalling $1.4-billion. Freeport-McMoRan also had a $3-billion revolving bank credit facility with no amounts drawn.
The company said it expected to use cash flows to reduce debt to a target level of $12-billion over the next three years.
Freeport-McMoRan also planned to sell $1.5-billion in assets and reduce its capital spending.