McMoRan posts loss as failed well tests add to costs
(Reuters) - McMoRan Exploration Co MMR.N reported its fourth straight quarterly loss on higher costs resulting from repeated failures to launch a key gas well, a delay that has prompted bidder Freeport-McMoRan Copper & Gold Inc (FCX.N) to lower its offer.
Freeport-McMoRan cut its bid for McMoRan by about 5 percent to $14.75 days before announcing plans to buy the oil and gas company on December 5, prompted by poor test results at McMoRan's Davy Jones No.1 well, according to a regulatory filing.
McMoRan's exploration costs shot up 80 percent to $5.2 million in the fourth quarter. The company has sunk in nearly $1 billion in the 29,000-foot Davy Jones No.1 well.
The company is evaluating plans to pump a mixture of fluids including proppants, used to hold open fissures in wells, to facilitate movement of gas into the well bore, the company said on Friday.
McMoRan holds a 63.4 percent working interest in Davy Jones field. Energy XXI (Bermuda) Ltd (EXXI.O), Japan's JX Nippon Oil Exploration (Gulf) Ltd and oil and gas tycoon William "Tex" Moncrief Jr's Moncrief Offshore LLC own the rest.
The company said recent operations confirmed that perforations were open. Mineral deposits clogging the well had delayed the flow-test by more than a year, adding to the company's costs and straining its balance sheet before Freeport-McMoRan stepped in with its bid.
Freeport-McMoRan unveiled its deal to buy McMoRan and Plains Exploration & Production Co PXP.N for $9 billion in early December. Plains owns nearly a third of McMoRan.
A deal would reunite Freeport-McMoRan and McMoRan Exploration after more than two decades. Freeport-McMoRan and the company now known as McMoRan Exploration Co were spun off in the 1980s and 1990s from the former Freeport-McMoRan Inc.
McMoRan shares have risen about 8 percent since the deal was announced on December 5.
McMoRan reported net loss of $1.2 million, or 1 cent per share, in the fourth quarter, compared with a profit of $28.4 million, or 16 cents per share, a year earlier.
Revenue fell 31 percent to $84.2 million.
Fourth-quarter production fell 30 percent to average 119 million cubic feet of natural gas equivalent per day.
(Corrects second paragraph to say Freeport-McMoRan cut its bid for McMoRan before announcing the deal on December 5, not on December 28 as mentioned)
(Reporting by Swetha Gopinath in Bangalore; Editing by Don Sebastian)