Freeport McMoRan acquires Plains for US$17 billion Report

Deal Insight 05 December 2012

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Report summary

Freeport-McMoRan Copper & Gold Inc. (FCX) is to acquire Plains E&P for a total of US$17.2 billion (including debt). In a separate transaction announced on the same day, FCX acquired McMoRan Exploration in a deal that valued the company at US$3.4 billion. This note concerns only the former transaction.Our base-case valuation of the Plains acquisition is US$13.7 billion (NPV10, discounted to January 2013). Against our modelling, the consideration equates to an Implied Long-Term Oil ...

Executive summary
Transaction details
Upstream assets
- Onshore US
- Deepwater Gulf of Mexico
- McMoRan Exploration
Deal analysis
Upsides and risks
- Onshore upsides
- Deepwater upsides
- Investment high-grading
- Operational learning curve
Strategic rationale
- Plains
- Freeport-McMoRan
  - Geographic diversification
  - Commodity diversification
  - Big is beautiful
Oil & gas pricing and assumptions

Tables and charts

This report includes 8 images and tables including:

PXP acquisition details
Plains reported historic and Wood Mackenzie forecast total production, including upside potential
Deal analysis: Table 1

Deal analysis: Table 2
Oil & gas pricing and assumptions: Table 1
Oil & gas pricing and assumptions: Table 2
Upstream assets: Table 1
WoodMac forecast of Plains net debt cash position and free cash flow outlook sensitivities