NEW YORK ( TheDeal) -- Optimism was waning this week that Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) will sweeten the terms of its $5.8 billion merger with Plains Exploration & Production Co. (NYSE:PXP). Freeport is acquiring Plains in a deal that offers a mix of cash and stock initially designed to provide Plains shareholders with $50 in value. Freeport shares have traded down in recent weeks with declines in copper pricing from which the company derives a majority of its revenue. The Plains deal is a diversification into oil and gas exploration and development. In recent days, Plains shares have traded at a significant premium -- as much as $1.65, or 3.7%, to their current deal value, on expectations that Freeport will have to raise the deal terms to get the merger past Plains shareholders. Freeport-McMoRan shares were falling 1.7% to $29.35 in mid-day trading while Plains Exploration was slipping 0.7% to $44.49. Plains shareholders vote on the merger May 20. Freeport shareholders, many of whom raised doubts about the strategic logic of the deal on its announcement, do not have a vote on the transaction. On Friday, the premium risk arbitrageurs were willing to pay for Plains shares relative to the Freeport merger sank to about 25 cents, or 0.6%. Plains has a 50% interest in a Gulf of Mexico deepwater oil exploration project called Phobos along with Anadarko Petroleum Corp. and Exxon Mobil Corp. Anadarko said Thursday the project was off to an outstanding start and that it had encountered "250 net feet of high-quality oil pay." While that seems a positive data point, as it suggests the project will move from exploration to development, analysts may have expected a stronger outlook. Some arbs said Anadarko characterized the results as a double as opposed to a home run; nevertheless, Anadarko shares were up 2.5% on the news. Freeport is thought to have put significant value on Phobos in valuing the Plains deal, a source said. And Plains certainly assessed its potential value and risk, the source said. The notion that Freeport will raise its offer for Plains is off-base, another source said. Expectations for Phobos were baked into Plains shares before the Freeport deal was struck and the merger valuation assumes Phobos was a great prospect, he said. Copper prices have been lower, but Brent oil price is off 10%, which is a key aspect of Plains' valuation, he said.