McMoRan Exploration reported an agreement to acquire Plains Exploration & Production Company's shallow water Gulf of Mexico (GOM) shelf assets for a combination of stock and cash. Under the terms of the transaction, McMoRan will issue 51 million shares of McMoRan common stock and $75 million in cash to acquire all of PXP's interests and exploration rights in the shallow waters of the shelf of the GOM.

McMoRan currently owns working interests in substantially all of the properties being acquired.

The properties being acquired include PXP's 27.7% interest in the significant ultra-deep discovery at Davy Jones, PXP's 35% interest in Blackbeard West and all of PXP's interests in deep gas and ultra-deep exploration prospects on the shelf of the GOM, including Blackbeard East which is currently being drilled; PXP's 30.0% working interest in the multi-well Flatrock field, 47.9% interest in Blueberry Hill and 30.0% working interest in Hurricane Deep. Independent reserve estimates for the proved reserves being acquired, excluding the significant reserve potential from Davy Jones and recent results from Blueberry Hill, approximated 60 billion cubic feet of natural gas equivalents as of June 30, 2010 and current production rates approximate 45 million cubic feet of natural gas equivalents per day. The effective date of the transaction will be August 1, 2010.

The transaction will increase McMoRan's scale of operations on the GOM shelf, consolidate its ownership in core focus areas, expand its participation in future production from its deep gas and ultradeep exploration and development programs and increase current reserves and production. In addition, McMoRan will continue to benefit from its positive relationship with PXP through PXP's significant shareholding position in McMoRan. PXP will have the right to designate two nominees to McMoRan's Board of Directors.

James R. Moffett and Richard C. Adkerson, Co-Chairmen of McMoRan said: "We are pleased to announce this important transaction which will enable us to effectively double our participation in our key exploration and production projects in the shallow waters of the GOM.

Tags: McMoRan Exploration Co.