Freeport to pay $9B for Plains, Mcmoran

Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly traded copper producer, agreed to buy Plains Exploration & Production Co. and McMoRan Exploration Co. for about $9 billion as the company returns to its roots in energy.

Freeport will pay about $50 a share in cash and stock for Plains, representing a takeover premium of about 39 per cent based on the companies’ closing share prices yesterday, Phoenix-based Freeport said Wednesday today in a statement.

Holders of each McMoRan share will get $14.75 in cash and 1.15 units of a royalty trust.

The deal would give Freeport oilfields in the Gulf of Mexico, after Houston-based Plains bought assets from BP PLC and Royal Dutch Shell Plc for $6.1 billion in September. McMoRan, a company that was spun out of Freeport-McMoRan Inc., slumped 28 per cent last month on concern that its Davy Jones well in the Gulf of Mexico is a dud.

The three companies already have connections.

Plains chief executive officer James Flores sits on the board of McMoRan and Plains owns 31.5 per cent of the company. McMoRan CEO Jim Bob Moffett, an oilman ranked by billionaire T. Boone Pickens as among the top five U.S. wildcatters, is chairman of Freeport. B.M. Rankin, a co-founder of Freeport with Moffett, sits on McMoRan’s board.

McMoRan is seeking to pioneer ultra-deep production with Davy Jones, a well drilled in shallow water off the Gulf Coast that descends 29,000 feet (8,839 meters) amid high temperatures and pressures.

Complications have repeatedly delayed the project since late 2011 and the company said last month it will try the flow test again, without specifying when or how long it might be before results are available.

McMoRan operates and has a 63.4 per cent working interest in Davy Jones, according to statements from the company.