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TheStreet Open House

McMoRan Exploration Co. Reports Fourth-Quarter/Twelve-Month 2012 Results

Stocks in this article: EXXIMMR

James R. Moffett and Richard Adkerson, McMoRan’s Co-Chairmen, said, “The geologic data from our drilling results on seven wells associated with the ultra-deep sub-salt trend indicate significant resource potential on the Shelf of the Gulf of Mexico and onshore in the Gulf Coast area. These results, combined with advances in proprietary technologies required to develop and produce these large structures, establish a multi-year program to unlock a significant long-term natural gas resource. Through the proposed acquisition transaction, McMoRan shareholders will receive cash compensation for the value potential of this emerging new trend and an ongoing participation through the distribution of royalty trust units.”

SUMMARY FINANCIAL TABLE*

Fourth Quarter   Twelve Months  
2012   2011   2012   2011  
  (In thousands, except per share amounts)
Revenues $ 84,170 $ 121,919 $ 376,888 $ 555,414
Operating income (loss) 10,724 43,189 (91,646 ) 1,368
Income (loss) from continuing operations 10,767 43,385 (97,033 ) (6,604 )
Loss from discontinued operations (1,688 ) (4,642 ) (7,261 ) (9,364 )
Net income (loss) applicable to common stock (a,b,c) (1,207 ) d 28,400 e (145,570 ) d (58,768 ) e

Diluted net income (loss) per share:Continuing operations

 

$

(0.00 )

$

0.19

$

(0.86 )

$

(0.31 )

Discontinued operations

(0.01 ) (0.03 ) (0.04 ) (0.06 )
Applicable to common stock $ (0.01 ) $ 0.16 $ (0.90 ) $ (0.37 )
Diluted average shares outstanding 161,928 181,436 161,702 159,216
Operating cash flows (f) $ (28,878 ) $ 48,535 $ 33,650 $ 227,048
EBITDAX (g) $ 37,022 $ 67,558 $ 180,073 $ 309,815
Capital Expenditures $ 89,505   $ 105,606   $ 505,132   $ 509,494  
 

*

        If any in-progress well or unproved property is determined to be non-productive or no longer meets the capitalization requirements under applicable accounting rules after the date of this release but prior to the filing of McMoRan’s 2012 Form 10-K, the related costs incurred through December 31, 2012 would be charged to expense in McMoRan’s 2012 financial statements.  At December 31, 2012 McMoRan’s total drilling costs for its nine in-progress or unproven wells totaled $1,828.2 million, including $693.5 million in allocated value associated with property acquisitions.

 

a.

  After preferred dividends.

 

b.

  Includes impairment charges totaling $34.5 million in fourth-quarter 2012, $9.1 million in fourth-quarter 2011, $46.2 million in 2012 and $71.1 million in 2011 to reduce certain fields’ net carrying value to fair value.  Also includes adjustments for asset retirement obligations associated with certain of McMoRan’s oil and gas properties totaling approximately $1.3 million in the fourth-quarter 2012, $11.4 million in the fourth-quarter 2011, $17.6 million in 2012 and $57.3 million in 2011.

 

c.

  Includes $93.5 million of charges to exploration expense in 2012 primarily resulting from the write-off of allocated carrying value of leasehold interests from the December 2010 property acquisition no longer being pursued as well as the write-off of costs associated with the lease expiration of the Boudin well.  Also includes charges to exploration expense totaling $42.3 million in 2011 for non-commercial well costs primarily associated with the Blueberry Hill #9 STK1 well.

 

d.

  Includes gain on sale of oil and gas properties resulting from McMoRan’s completed sale of two traditional GOM shelf oil and gas property packages totaling $39.7 million in the fourth quarter 2012 and $40.5 million in 2012.

 

e.

  Includes McMoRan’s share of insurance reimbursements related to losses incurred from the September 2008 hurricanes totaling $39.1 million in fourth quarter 2011 and $91.1 million in 2011.

 

f.

  Includes reclamation spending of $28.4 million in fourth-quarter 2012, $56.6 million in fourth-quarter 2011, $76.6 million in 2012 and $150.0 million in 2011.  Also includes working capital sources/(uses) of $(31.0) million in fourth-quarter 2012, $2.5 million in fourth quarter 2011, $(28.7) million in 2012 and $30.4 million in 2011.

 

g.

  See reconciliation of EBITDAX to net loss applicable to common stock on page III.

PROPOSED TRANSACTION UPDATE

On December 5, 2012, McMoRan entered into an agreement whereby Freeport-McMoRan Copper & Gold Inc. (FCX) would acquire McMoRan for per-share consideration consisting of $14.75 in cash and 1.15 units of a royalty trust, which will hold a 5 percent overriding royalty interest in future production from McMoRan’s existing ultra-deep exploration prospects. In connection with the proposed transaction, Gulf Coast Ultra Deep Royalty Trust, the royalty trust formed, has filed with the Securities and Exchange Commission a registration statement on Form S-4 that includes a preliminary proxy statement of McMoRan that also constitutes a prospectus of the royalty trust. In addition to the transaction requiring McMoRan’s shareholder approval, U.S. antitrust clearance under the Hart-Scott-Rodino Act is also required. On December 26, 2012, the Federal Trade Commission granted early termination of the Hart-Scott-Rodino waiting period. The transaction is expected to close in the second quarter of 2013.

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