PXP Declares 6% Special Dividend

Plains Exploration & Production Company (PXP) announced that PXP’s Board of Directors has declared a special one-time cash dividend of $3.00 per share, payable to PXP stockholders as of May 30, 2013, the dividend record date.  The dividend is conditioned upon and will be paid immediately prior to or upon the completion of PXP’s merger with Freeport-McMoRan Copper & Gold Inc. (FCX) . The merger is expected to close on May 31, 2013, subject to the satisfaction of all conditions to closing.

The special dividend has a current dividend yield of 6.13% based on the most recent PXP closing price.

Meanwhile, Freeport-McMoRan’s board intends to declare a supplemental$1dividend immediately following the closing of its Plains acquisition.  The FCX dividend has a current dividend yield of 3.3%.

Plains Exploration & Production Co.’s shareholders Monday (5/20/2013) approved a $ 6.5 billion merger with Freeport-McMoRan Copper & Gold Inc., overcoming earlier pressure to reject the deal.

The deal gives Phoenix-based mining company Freeport-McMoRan sizeable assets in the booming U.S. oil and natural gas production business. But market analysts questioned whether the companies could successfully merge two disparate businesses and wondered if Plains Exploration shareholders sold their stakes too cheaply.

Possible shareholder jitters forced Plains Exploration to sweeten the deal earlier Monday by announcing a special dividend of$3a share if the acquisition went through.

Plains Exploration’s dividend was “understandable as pressure had been mounting in recent weeks to vote against the deal,” said analysts with Tudor, Pickering, Holt & Co.

Freeport-McMoRan agreed in December to pay the cash-and-stock equivalent of$ 50a share for Plains Exploration, while also unveiling plans to acquire McMoRan Exploration Co. (MMR) for$3.4 billionin cash.

Freeport-McMoRan’s intentions to acquire the two oil explorers came under fire from investors who say the tie-up is riddled with conflicts of interest as six directors will have overlapping roles at Freeport and McMoRan. At the same time, Freeport shares have declined sharply since the offer was unveiled in December. But Freeport said earlier this month it wouldn’t increase its offer, ending speculation the deal might be boosted.

Plains on Monday said the special dividend will be paid immediately prior to the completion of its merger with Freeport-McMoRan, which has also approved the payout.

Freeport-McMoRan also said it plans to complete$1.5 billionin asset sales from the combined company and will reduce its capital-spending plans.

PXP is an independent oil and gas company primarily engaged in the activities of acquiring, developing, exploring and producing oil and gas in California, Texas, Louisiana and the Deepwater Gulf of Mexico. PXP is headquartered in Houston, Texas.