Freeport enters energy sector with $9B merger
Phoenix-based copper and gold mining company Freeport-McMoRan (FCX) has moved to acquire subsidiary McMoRan Exploration as well as Houston-based Plains Exploration & Production Company (PXP) in a $9 billion buying spree.
Freeport announced on 5 December that all three companies have signed definitive merger agreements. Freeport will pay $6.9 billion for PXP and $2.1 billion for McMoRan Exploration. With the deal, Freeport seeks to holds assets in major US spots such as California, Eagle Ford and the Gulf of Mexico.
“The oil and gas assets being acquired possess the asset quality characteristics that we seek in our mining business - large scale assets with long lives, low cost and geologic potential to support growth through exploration and development,” said Richard C. Adkerson, president and CEO of FCX.
The acquisition of newcomer PXP comes just days after the company announced it had closed on deals worth a combined $6.1 billion with BP and Shell for portions of their Gulf of Mexico acreage.
“I am proud of the accomplishments of our team who have built a strong company and created the opportunity for our shareholders to participate in this exciting transaction,” said James C. Flores, chairman and CEO of PXP.
“I believe that the addition of PXP’s U.S. oil and gas assets to FCX’s global mining business will establish a very significant, long-term commodities business positioned to generate meaningful returns over an extended period. We look forward to becoming part of FCX’s global team and to the contributions of the PXP assets to the combined company, which we expect will provide strong margins and meaningful reserve additions in the years to come.”
Pending approval by each company’s board of directors, the mergers are expected to close by 2Q 2013.