NEW YORK -- Freeport McMoRan Copper & Gold Inc.'s (FCX)
acquisition of energy companies McMoRan Exploration Co. (MMR) and
Plains Exploration & Production Co. (PXP) won't be a diversion
from the company's copper business, Freeport's chief executive said
Wednesday.
"This is an addition to our mining business and not a diversion
from the strategy that we've been on," President and CEO Richard
Adkerson said on a company conference call.
Freeport has agreed to buy the two oil companies for about $9
billion.
The acquisitions will shift Freeport from purely a mining
business, to a company where 25% of the business comes from oil and
gas, Mr. Adkerson said.
The new energy assets are "consistent in characteristics" with
Freeport's existing copper and gold assets, meaning they are
high-quality reserves, with a long projected life of operations,
the possibility of expansion and low operating costs, he said.
Growth in Freeport's copper investments was limited by the time
required to turn copper resources into operating mines, he
said.
Freeport's board and management team has a bullish view on
future demand for commodities and brings past experience in the
energy market to the combined company, Mr. Adkerson said.
"We understand that market place and the risk and reward
associated with it," he said.
Freeport said it will pay about $6.9 billion in cash and stock
for Plains and acquire McMoRan Exploration for $2.1 billion in cash
net of the 36% of McMoRan assets currently owned by Freeport and
Plains.
Freeport got into the oil and gas business in the 1970s but sold
many of its assets in that sector in the early 1990s to help fund
development of big new copper and gold discoveries in Indonesia.
The predecessor of what is now McMoRan Exploration was spun off in
1994, with an aim to focus on Gulf of Mexico drilling.
News of Freeport's interest in McMoRan Exploration was earlier
reported by the Financial Times.
-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095;
tatyana.shumsky@dowjones.com
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