McMoRan Posts Narrow 4Q Loss
McMoRan reported a net loss applicable to common stock of $9.5 million, $0.11 per share, for the fourth quarter of 2009 compared with a net loss applicable to common stock of $314.6 million, $4.46 per share, for the fourth quarter of 2008.
For the twelve months ended December 31, 2009, McMoRan reported a net loss applicable to common stock of $225.3 million, $2.87 per share, compared with a net loss applicable to common stock of $239.0 million, $3.88 per share, in the 2008 period.
James R. Moffett and Richard Adkerson, McMoRan's Co-Chairmen, said, "We are excited by the results from the Davy Jones ultra-deep well, which indicate a major discovery. These important geologic results combined with the data available from other wells are redefining the subsurface geologic landscape below 20,000 feet on the Shelf of the Gulf of Mexico. We look forward to future activities to define the potential of this promising new exploration frontier."
McMoRan's fourth-quarter 2009 oil and gas revenues totaled $128.0 million, compared to $111.8 million during the fourth quarter of 2008. During the fourth quarter of 2009, McMoRan’s sales volumes totaled 13.1 Bcf of gas, 731,800 barrels of oil and condensate and 1.8 Bcfe of plant products, compared to 10.2 Bcf of gas, 607,500 barrels of oil and condensate and 1.0 Bcfe of plant products in the fourth quarter of 2008. McMoRan’s fourth-quarter comparable average realizations for gas (before hedging) were $4.70 per thousand cubic feet (Mcf) in 2009 and $6.77 per Mcf in 2008; for oil and condensate McMoRan received an average of $75.15 per barrel in fourth-quarter 2009 compared to $53.84 per barrel in fourth-quarter 2008.
CASH, LIQUIDITY AND CAPITAL EXPENDITURES
At December 31, 2009, McMoRan had $241 million in cash, compared with $225 million on September 30, 2009. Total debt was $375 million at December 31, 2009, including $75 million in convertible senior notes due in 2011 with a conversion price of $16.575 per share. In the fourth quarter of 2009, McMoRan's bank group completed the semi-annual re-determination of its borrowing base under its credit facility. The impact of year-to-date production and lower natural gas price assumptions used by the bank group in the assessments resulted in a lower base amount available under the credit facility.
McMoRan’s borrowing base was revised from $235 million to $175 million. McMoRan currently has no borrowings outstanding under its revolving credit facility. McMoRan does not expect the redetermination to impact its future plans or operations.
Capital expenditures totaled $24.6 million for the fourth quarter of 2009 and $138.0 million for the twelve-months ended December 31, 2009. Capital expenditures for 2009 are lower than previous estimates of $155 million because of changes in the timing of planned expenditures. Capital expenditures are expected to approximate $240 million in 2010, including $170 million in exploration and $70 million in
development spending. Capital spending will continue to be driven by opportunities and will be managed based on available cash and cash flows, including potential participation by new partners in projects.
Net abandonment expenditures, which include scheduled conventional and hurricane-related work, totaled $45.9 million for the twelve-months ended December 31, 2009 and are expected to approximate $100 million in 2010. To date, McMoRan has recorded gains totaling $24.6 million, including $5.9 million in the fourth quarter, associated with the 2008 hurricane events in the Gulf of Mexico and continues to pursue reimbursement of certain hurricane-related abandonment costs under its insurance programs.
During the fourth quarter of 2009, McMoRan financially settled swap positions hedging 1.1 Bcf of natural gas and 45,000 barrels of oil at average prices of $8.97 per Mcf and $71.16 per barrel, respectively. McMoRan received $4.9 million in cash for these natural gas positions and paid $0.2 million for these oil positions. McMoRan also financially settled 0.7 Bcf of natural gas put options with an average strike price
of $6.00 per Mcf. McMoRan received $1.5 million in cash for these positions. Put options totaling 29,000 barrels of oil expired with no benefit during the quarter.
At December 31, 2009, McMoRan's 2010 hedges include swap positions on 2.6 Bcf of natural gas at $8.63 per Mcf and 118,000 barrels of oil at $70.89 per barrel for the months covering January through June and November through December. McMoRan also had puts in place totaling 1.2 Bcf of natural gas with a floor price of $6.00 per Mcf and 50,000 barrels of oil with a floor price of $50.00 per barrel in 2010 for the months covering July through October.
These derivative contracts have not been designated as hedges for accounting purposes. Accordingly, these contracts are subject to mark-to-market fair value adjustments and unrealized gains and losses are recognized in our operating results. McMoRan's fourth-quarter 2009 results included a net gain of $0.8 million associated with our oil and gas derivative contracts, which includes mark-to-market
accounting adjustments associated with these contracts based on changes in their respective fair market values through December 31, 2009. McMoRan’s derivative contracts' fair value was a net asset of $7.5 million at December 31, 2009. McMoRan may consider additional derivative contracts for a portion of its future production.
- McMoRan Touts 'Sizable Reserves' at Sub-Salt, Ultra-Deep Trend (Feb 20)
- McMoRan Preps Davy Jones Well for Fracking Ops (Jan 31)
- McMoRan's Latest Efforts at Davy Jones Site Meet 'Limited Success' (Dec 28)