Gulf of Mexico operator McMoRan Exploration Co. on Friday reported a big loss in the final three months of 2012 because of impairments and a sharp revenue decrease related in part to its gassy shallow-water operations.

The operator in December agreed to a $2.1 billion buyout by Freeport-McMoRan Copper & Gold Inc., which is run by the same management teams (see Daily GPI, Dec. 6, 2012). Freeport, which also is buying Plains Exploration & Production Co. for $6.9 billion, is set to report 4Q2012 results on Tuesday (Jan. 22).

“The geologic data from our drilling results on seven wells associated with the ultra-deep subsalt trend indicate significant resource potential on the shelf of the Gulf of Mexico and onshore in the Gulf Coast area,” stated Co-Chairmen Jim Bob Moffett and Richard Adkerson. Moffett is chairman of Freeport. “These results, combined with advances in proprietary technologies required to develop and produce these large structures, establish a multi-year program to unlock a significant long-term natural gas resource.

“Through the proposed acquisition transaction, McMoRan shareholders will receive cash compensation for the value potential of this emerging new trend and an ongoing participation through the distribution of royalty trust units.”

Subsidiary Freeport-McMoRan Energy LLC and United LNG are negotiating to use McMoRan’s Main Pass Energy Hub (MPEH) as a potential deepwater port to receive and store U.S. natural gas for export. The deepwater hub is 37 miles east of Venice, LA, on Main Pass Block 299. It was approved as a deepwater port to import and regasify liquified natural gas (LNG) in 2007 (see Daily GPI, March 2, 2004). Modifying the facilties to accomodate exports would require additional permit approvals, McMoRan noted.

Under the export plan proposed in September, natural gas would be received by pipeline at MPEH, processed, and then transferred for liquefaction to on-site floating vessels (see Daily GPI, Sept. 19, 2012). The LNG then would be offloaded to transport vessels. Earlier this month the Department of Energy (DOE) authorized MPEH to export up to 24 million metric tons/day (3.2 Bcf/d) from its proposed port for 30 years.

McMoRan and United LNG “are engaged in studies to define the project and related permitting requirements and are developing commercial arrangements required to support the significant capital investments involved in the project.” An application to export to countries without free trade agreements (FTA) with the United States is being developed; the DOE approval was for FTA countries only.

The New Orleans-based explorer in 4Q2012 lost $1.2 million (minus 1 cent/share), compared with profits of $28.4 million (16 cents) in the year-ago period. Revenue plunged to $84.2 million from $121.9 million. For full-year 2012 losses totaled $145.6 million (minus 90 cents/share), versus year-earlier losses of $58.8 million (minus 37 cents). Revenue for the year fell by almost one-third to $376.9 million from $555.4 million.

Operating cash flow in 4Q2012 was in the loss category at minus $28.9 million, which included $31 million in working capital and $28.4 million in abandonment spending. Operating cash for the year totaled $33.7 million. Capital spending totaled $89.5 million in the final three months; it was $505.1 million for the year. Cash at the end of 2012 was $114.9 million.

Production averaged 118 MMcfe/d net in 4Q2012; it was 137 MMcfe/d on average for the year. Year-end proved reserves were 206.9 Bcfe.

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