McMoRan Exploration Co. Reports Third-Quarter/Nine-Month 2012 Results
Additionally, McMoRan expects the previously disclosed pending sale of a package of GOM traditional shelf oil and gas properties in the Eugene Island area to a third party for cash consideration before closing adjustments of $36.8 million and the assumption of related abandonment obligations to close in the fourth quarter of 2012. The assets included in the transaction represented approximately six percent of McMoRan’s total average daily production for the third quarter 2012 and six percent of McMoRan’s total estimated reserves at June 30, 2012. Independent reserve engineers’ estimates of proved reserves at June 30, 2012 approximated 15.2 billion cubic feet of natural gas equivalents, with approximately 78 percent from natural gas and 21 percent proved developed producing. The transaction will be effective July 1, 2012 and is subject to the completion of certain customary closing conditions.
The combined cash proceeds from the two transactions before closing adjustments will total $64.8 million and assumed reclamation obligations will total $43.4 million. McMoRan expects to record net gains totaling approximately $40 million in the fourth quarter of 2012 in connection with these transactions.
CASH, LIQUIDITY AND CAPITAL EXPENDITURES
At September 30, 2012, McMoRan had $191.9 million in cash. Total debt was $557.1 million at September 30, 2012, including $257.1 million in convertible securities. At September 30, 2012, McMoRan had no borrowings and $100 million of letters of credit issued under its revolving credit facility.McMoRan is engaged in discussions regarding financing of its future exploration and development activities. The company’s positive exploration results to date have significantly reduced the exploration risk of the play and have established the potential for the development of a major new resource trend. Successful flow testing of discoveries will further reduce development risks. The technologies and proprietary processes developed by McMoRan, combined with significant potential resources drilled to date and our extensive inventory of prospects and acreage position, are expected to provide multiple financing options and opportunities to advance value creation through joint ventures or other financing transactions. In addition, the company may consider additional sales of noncore assets.
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