McMoRan Sells Certain Oil & Gas Assets
McMoRan Exploration Co. has signed a definitive agreement to sell three of its oil and gas properties to a third party for $60 million. McMoRan will use the proceeds from this transaction to repay outstanding borrowings under its oil and gas bank credit facility, which totaled $50.7 million as of January 25, 2002, and for other general corporate purposes. In connection with the transaction closing, expected in February 2002, McMoRan Oil & Gas LLC will terminate its existing bank credit facility and is pursuing new financing arrangements.
The properties are being sold subject to a reversionary interest after "payout," which would occur at the point at which the purchaser receives aggregate cumulative revenues from the properties of $60 million plus an agreed upon rate of return. After payout, 75 percent of the interests sold revert to McMoRan.
The transaction will be effective January 1, 2002. Following the transaction, McMoRan estimates its average net daily production not attributed to the properties sold will approximate 30 million cubic feet of natural gas equivalent (mmcfe) during the first quarter of 2002. In addition, McMoRan estimates its average net daily production to approximate 3,000 barrels of oil from Main Pass 299.
McMoRan will continue its active deep gas exploration program in the shallow waters on the shelf of the Gulf of Mexico, where it holds approximately 500,000 gross acres of offshore exploration leases.