McMoRan Exploration to acquire shallow water shelf assets of Plains Exploration for $818M

McMoRan to buy Gulf assets from Plains Exploration

NEW YORK — Independent oil and natural gas company McMoRan Exploration Co. said Monday it has agreed to acquire the shallow water shelf assets of Plains Exploration & Production Co. for about $818 million in stock and cash.

McMoRan has been an aggressive explorer for natural gas in the shallow waters of the Gulf of Mexico. The acquisition will give McMoRan a bigger stake in many assets it already owns.

McMoRan said it will issue 51 million shares of its stock and pay $75 million in cash for all interests and exploration rights. That values at deal at $818 million based on Friday’s its closing price of $14.57.

Plains Exploration will name two nominees to McMoRan’s board as part of the deal.

McMoRan shares rose $1.39, or 9.5 percent, to $15.96 Monday.

In January, McMoRan said it made what could be one the largest gas discoveries in the shallow Gulf in decades. The company drilled more than 28,000 feet beneath the ocean floor — in 20 feet of water — at its Davy Jones prospect. With this deal, McMoRan will acquire Plains Exploration’s 27.7 percent stake in the Davy Jones.

To finance its latest deal, McMoRan plans to privately issue $900 million in convertible securities. That issue is expected when the deal is completed, possibly by the end of the year.

The private placement will include $200 million of 7-year 4 percent convertible senior notes and $700 million of 5 3/4 percent convertible perpetual preferred stock.

Freeport-McMoRan Copper & Gold Inc. has agreed to purchase 56 percent of the securities. A group of institutional investors has agreed to purchase 44 percent.