Houston’s Plains Exploration & Production Co. is building a facility in Broussard, LA, to support its deepwater Gulf of Mexico (GOM) operations, according to the Lafayette Economic Development Authority (LEDA).
Plains, which has long had an anchor in the GOM’s shallow waters, last September paid a total of $6.1 billion to buy deepwater assets in separate transactions with Royal Dutch Shell plc and BP plc (see Daily GPI, Sept. 11, 2012). The asset purchase prompted the Broussard expansion, according to the company.
Plains now employs about 200 people in the Lafayette area and plans to increase the head count by about 400 new direct and contract jobs over the next five years, said LEDA CEO Gregg Gothreaux.
“We are committed to the Lafayette area for the long term,” said Plains exploration and production chief Doss Bourgeois.
A 120,000-square-foot warehouse is to store parts and equipment for offshore work. Another 8,00-square-foot office and conference facility, scheduled for completion by September, also is to be built.
The news comes ahead of a vote next Monday (May 20) by Plains shareholders regarding a friendly mega-merger with Freeport-McMoRan Copper & Gold Inc., which last December offered $6.9 billion for Plains and $2.1 billion net for affiliated company McMoRan Exploration Co. (see Daily GPI, Dec. 6, 2012). Freeport Chairman Jim Bob Moffatt co-chairs McMoRan with Freeport CEO Richard Adkerson. Plains holds a 31.5% stake in McMoRan (see Daily GPI, Sept. 21, 2010).
The Freeport transaction values Plains at about $25.00/share; on Monday it closed at $44.61. Freeport stated last week that it does not intend to increase its offer, calling it “best and final.”
Plains CEO Jim Flores in a letter to shareholders Monday urged that the deal be approved. Influential proxy advisers Institutional Shareholder Services (ISS) and Glass Lewis & Co. both recommended the plan not be approved.
“The strategic nature of the transaction, including the fact that the combination of the Plains, Freeport and McMoRan businesses is expected to create the largest diversified U.S.-based natural resource company with an enterprise value in the top five among global mining peers,” would “increase geographic diversification of the combined company within the U.S. and increase commodity diversification for the combined company,” Flores wrote.
The “scale of the company,” he said, would enable it to “compete more effectively” than on a standalone basis because of “increased cash flow and lower cost of capital investment in future development projects, exploration and acquisitions.”
Flores said the ISS and Glass Lewis analyses “represent superficial views based on hearsay. I urge investors not to rely on such reports, but on the opinion of third-party investment banks resulting from months of analysis by independent financial, engineering and geoscience experts…”
If the transaction is consummated under the agreement, Flores would gain about $150 million outright. He also would earn a base salary that would equal or exceed that of Moffett and Adkerson as the new chief in charge of running the combined oil and gas business. According to financial filings, Adkerson and Moffett each earned $18.45 million in direct compensation in 2011, including base salaries of $2.5 million.
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