McMoRan to Acquire Plains Exploration Natural Gas Asset

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McMoRan Exploration as independent oil and natural gas company. said it has agreed to acquire the shallow water shelf assets of Plains Exploration & Production Co. for about $818 million in stock and cash. Plains Exploration will name two nominees to McMoRan’s board as part of the deal.

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. 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.

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. McMoran shares fell 37 cents to $14.20 in pre-market trading. 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.

McMoRan 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.