FCX Form 8-K/A 06/03/2013




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): June 3, 2013


FREEPORT-McMoRan COPPER & GOLD INC.
(Exact name of registrant as specified in its charter)


Delaware
 
001-11307-01
 
74-2480931
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(I.R.S. Employer Identification Number)

333 North Central Avenue
 
Phoenix, AZ
85004-2189
(Address of principal executive offices)
(Zip Code)

Registrant's telephone number, including area code: (602) 366-8100

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





On June 3, 2013, Freeport-McMoRan Copper & Gold Inc. ("FCX") filed a Form 8-K to report the May 31, 2013, completion of the transactions contemplated by the Agreement and Plan of Merger, dated as of December 5, 2012, by and among Plains Exploration & Production Company (“PXP”), FCX, and Freeport-McMoRan Oil & Gas LLC (a wholly owned subsidiary of FCX). This Form 8-K/A amends the Form 8-K filed on June 3, 2013, to include the financial statements and pro forma financial information required by Items 9.01(a) and 9.01(b) of Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

The unaudited consolidated balance sheet of PXP and its subsidiaries as of March 31, 2013, the related unaudited consolidated statements of income and cash flows for the three months ended March 31, 2013 and 2012, and the related unaudited consolidated statement of equity for the three months ended March 31, 2013, and the notes thereto, are incorporated herein by reference to Part I, Item 1. of PXP's Quarterly Report on Form 10-Q for the period ended March 31, 2013, as filed on May 6, 2013, Commission File No. 001-31470.

The audited consolidated balance sheets of PXP and its subsidiaries as of December 31, 2012 and 2011, and the related audited consolidated statements of income, cash flows and equity for each of the years in the three-year period ended December 31, 2012, and the notes thereto, are incorporated herein by reference to Part II, Item 8. of PXP's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, as filed on February 21, 2013, Commission File No. 001-31470. 

(b) Pro Forma Financial Information.

The following unaudited pro forma condensed combined financial statements (the “Pro Forma Financial Statements”) have been prepared to reflect the acquisition of PXP by FCX (the "merger"). The unaudited pro forma condensed combined balance sheet is presented as if the merger had occurred on March 31, 2013. The unaudited pro forma condensed combined statements of income for the year ended December 31, 2012, and the three months ended March 31, 2013, are presented as if the merger had occurred on January 1, 2012. The historical consolidated financial information has been adjusted to reflect factually supportable items that are directly attributable to the merger and, with respect to the statements of income only, expected to have a continuing impact on the combined results.

The Pro Forma Financial Statements have been prepared using the acquisition method of accounting for business combinations under accounting principles generally accepted in the United States (“US GAAP”), with FCX treated as the acquirer. The acquisition method of accounting is dependent upon certain valuations and other studies that have not yet been finalized. Accordingly, the pro forma adjustments are preliminary, have been made solely for the purpose of providing Pro Forma Financial Statements, and are subject to revision based on a final determination of fair values as of the date of the merger. Differences between these preliminary estimates and the final acquisition accounting may have a material impact on the accompanying Pro Forma Financial Statements and the combined company's future results of operations and financial position.

The Pro Forma Financial Statements do not give effect to (i) the costs of any integration activities or benefits that may result from the realization of future cost savings from operating efficiencies, or tax or other synergies that may result from the merger, (ii) changes in commodity and share prices, or (iii) the impact of the acquisition of McMoRan Exploration Co. ("MMR") by FCX, which was completed on June 3, 2013, and is a separate transaction.

The Pro Forma Financial Statements are provided for informational purposes only and do not purport to represent what the actual consolidated results of operations or the consolidated financial position of FCX would have been had the combination occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position. The Pro Forma Financial Statements should be read in conjunction with (i) the accompanying notes to the Pro Forma Financial Statements; (ii) the audited consolidated financial statements and accompanying notes of FCX and PXP contained in their respective Annual Reports on Form 10-K for the year ended December 31, 2012; and (iii) the unaudited condensed consolidated financial statements and accompanying notes of FCX and PXP contained in their respective Quarterly Reports on Form 10-Q for the quarterly period ended March 31, 2013.






FREEPORT-McMoRan COPPER & GOLD INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AT MARCH 31, 2013
(IN MILLIONS)
 
Historical(1)
 
Adjustments
 
Pro
 
 
 
 
 
Conform-
 
Pro
 
 
 
Forma
 
FCX
 
PXP
 
ing(2)
 
Forma(3)
 
Other (4)
 
Combined
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
    Cash and cash equivalents
$
9,595

 
$
54

 
$
—

 
$
(3,780
)
A
$
(3,325
)
D
$
2,497

 
 
 
 
 
 
 
 
 
(47
)
E
 
    Trade and other accounts receivable
1,769

 
563

 
—

 
—

 
—

 
2,332

    Inventories
4,809

 
34

 
—

 
—

 
—

 
4,843

    Other current assets
410

 
1,109

 
(771
)
 
102

C
—

 
850

         Total current assets
16,583

 
1,760

 
(771
)
 
(3,678
)
 
(3,372
)
 
10,522

Property, plant, equipment and development costs, net
21,689

 
165

 
(28
)
 
95

C
—

 
21,921

Oil and natural gas properties, net - full
  cost method:
 
 
 
 
 
 
 
 
 
 
 
    Subject to depletion
—

 
10,844

 
28

 
498

C
—

 
11,370

    Not subject to depletion
—

 
3,700

 
—

 
5,925

C
—

 
9,625

Long-term mill and leach stockpiles
2,081

 
—

 
—

 
—

 
—

 
2,081

Goodwill
—

 
535

 
—

 
(535
)
C
—

 
511

 
 
 
 
 
 
 
511

C
 
 
 
Investment in MMR
439

 
—

 
834

 
14

C
—

 
1,287

Other assets
1,796

 
186

 
—

 
(168
)
C
—

 
1,814

Total assets
$
42,588

 
$
17,190

 
$
63

 
$
2,662

 
$
(3,372
)
 
$
59,131

 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
    Accounts payable and accrued liabilities
$
3,017

 
$
906

 
$
(18
)
 
$
(47
)
C
$
—

 
$
3,858

    Current portion of debt
4

 
164

 
—

 
—

 
—


168

    Current portion of reclamation
      and environmental obligations
254

 
—

 
18

 
—

 
—

 
272

        Total current liabilities
3,275

 
1,070

 
—

 
(47
)
 
—

 
4,298

Long-term debt, less current portion
10,088

 
9,559

 
—

 
763

C
(3,325
)
D
17,085

Deferred income taxes
3,580

 
1,864

 
63

 
2,089

C
(114
)
F
7,482

Reclamation and environmental obligations, less current portion
2,130

 
579

 
—

 
189

C
—

 
2,898

Other liabilities
1,666

 
136

 
—

 
50

C
—

 
1,852

        Total liabilities
20,739

 
13,208

 
63

 
3,044

 
(3,439
)
 
33,615

 
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interest
—

 
—

 
442

 
304

C
—

 
746

 
 
 
 
 
 
 
 
 
 
 
 
Total stockholders' equity
17,940

 
3,540

 
—

 
(3,540
)
B
(47
)
E
20,861

 
 
 
 
 
 
 
2,854

A
114

F
 
Noncontrolling interests
3,909

 
442

 
(442
)
 
—

 
—

 
3,909

        Total equity
21,849

 
3,982

 
(442
)
 
(686
)
 
67

 
24,770

Total liabilities and equity
$
42,588

 
$
17,190

 
$
63

 
$
2,662

 
$
(3,372
)
 
$
59,131


See accompanying notes to the pro forma condensed combined balance sheet.




COMBINATION OF FCX AND PXP
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

(1)
Historical Financial Information
FCX's and PXP's historical financial information has been derived from their respective Quarterly Reports on Form 10-Q for the period ended March 31, 2013.

(2)
Conforming Adjustments
Certain of PXP's historical balances have been adjusted to conform to FCX's presentation, including the reclassification of (i) PXP's $834 million investment in MMR common stock as an equity method investment and the related deferred tax liability of $63 million to deferred income taxes, and (ii) Plains Offshore Operations Inc.'s 8% Convertible Perpetual Preferred Stock to redeemable noncontrolling interest because of changes to its terms subsequent to the merger.

(3)
Pro Forma Adjustments
A.
Purchase Price:
FCX acquired PXP for per-share consideration equivalent to 0.6531 shares of FCX common stock and $25.00 in cash. PXP shareholders had the right to elect to receive merger consideration in the form of cash or shares of FCX common stock, subject to the proration provisions of the merger agreement. Based on the final results of the merger consideration elections and as set forth in the merger agreement, FCX issued 91 million shares of its common stock and paid $3.8 billion in cash (which includes the value of a special dividend paid to PXP shareholders on May 31, 2013). Following is a summary of the $6.6 billion purchase price for PXP (in millions):
FCX stock consideration (i)
$
2,854

Cash consideration (ii)
 
3,780

Total purchase price
$
6,634


(i)
The value of FCX's common stock issued in the merger is as follows (in millions, except exchange offer ratio and closing share price):
Number of PXP common shares acquired
132.280
 
Exchange ratio of FCX common stock for each PXP share
 
0.6531

 
 
86.392

FCX common stock issued for PXP equity awards
   
 
4.769

Shares of FCX common stock issued
 
91.161

Closing share price of FCX common stock at May 31, 2013
$
31.05

 
$
2,831

Employee stock-based awards
 
23

FCX stock consideration
$
2,854


(ii)
Cash consideration primarily includes the payment of $25 in cash for each PXP common share ($3.3 billion) and the value of the $3 per share special cash dividend paid to PXP shareholders on May 31, 2013 ($411 million).

B.
Eliminations: Upon closing of the merger, PXP's historical shareholders' equity accounts are eliminated in FCX's consolidated financial statements.

C.
Acquisition Method Adjustments: The Pro Forma Financial Statements have been prepared based on the acquisition method of accounting for business combinations. Under the acquisition method of accounting, the purchase price is allocated on a preliminary basis to the assets acquired, the liabilities assumed and noncontrolling interests based on their estimated fair values. The acquisition method of accounting is dependent upon certain valuations and other studies that have not yet been finalized. Accordingly, the pro forma fair value adjustments are preliminary and have been made solely for the purpose of providing Pro Forma Financial Statements. The actual fair values of the assets acquired, liabilities assumed and noncontrolling interest may differ materially from the amounts presented in the below purchase price allocation as further analysis is completed. Accordingly, the final allocation of the purchase price may result




in different adjustments than those shown in the unaudited pro forma condensed combined statements of income, and these differences may have a material impact on the accompanying Pro Forma Financial Statements and the combined company's future results of operations and financial position.

Following are the pro forma adjustments to reflect the fair value of PXP's net reported assets as presented in the unaudited pro forma condensed combined balance sheet at March 31, 2013 (in millions):
PXP's net assets at March 31, 2013
$
3,540
 
Adjustment to fair value PXP's property, plant and equipment
 
95

Adjustment to fair value PXP's oil and gas properties:
 
 
    Subject to depletion(i)
 
498

    Not subject to depletion(ii)
 
5,925

Adjustment to eliminate PXP's predecessor basis goodwill
 
(535
)
Adjustment to fair value PXP's investment in MMR
 
14

Adjustment to fair value PXP's deferred financing charges
 
(168
)
Adjustment to fair value assumed PXP debt obligations
 
(763
)
Adjustment to deferred taxes to reflect fair value adjustments(iii)
 
(2,089
)
Adjustment to fair value PXP's asset retirement obligations
 
(189
)
Net adjustments to fair value PXP's derivatives
 
99

Adjustment to fair value PXP's noncontrolling interest
 
(304
)
Identifiable net assets at March 31, 2013
 
6,123

Residual goodwill(iv)
 
511

Total purchase price
$
6,634


(i)
PXP follows the full cost method of accounting for oil and gas properties whereby all costs associated with property acquisition, exploration and development activities are capitalized and amortized over total proved reserves, with capitalized costs subject to a full cost ceiling limitation. This adjustment reflects the estimated fair values of PXP's proved oil and gas properties based on after-tax, discounted cash flow estimates using oil and gas forward prices.

(ii)
PXP's unproved oil and gas properties are excluded from amortization until the properties are evaluated. Costs will be transferred into the amortization base as the properties are evaluated and proved reserves are established, or impairment is determined. This adjustment reflects the estimated fair value of PXP's unproved oil and gas properties based on risk-adjusted, after-tax discounted cash flow estimates using oil and gas forward prices. Transfers of these costs into the amortization base will impact future depreciation, depletion and amortization expense and the full cost ceiling limitation on capitalized costs.

(iii)
Deferred income taxes have been recognized based on the pro forma fair value adjustments to identifiable assets acquired and liabilities assumed using a 37.9 percent tax rate, which reflects the 35 percent federal statutory rate and a 2.9 percent effective state income tax rate.

(iv)
Residual goodwill recorded in connection with the merger will not be deductible for income tax purposes.





(4)
Financing and Other
D.
FCX was required to secure commitments to provide debt financing in connection with the merger. In March 2013, FCX issued $6.5 billion of senior notes for net proceeds of $6.489 billion in four tranches with a weighted-average interest rate of 3.9 percent. Borrowings under the senior notes were used to fund the cash portion of the PXP merger consideration and repay debt outstanding under PXP's amended credit facility, as the amended credit facility provided that a change of control is an event of default. Because the repayment of debt outstanding under PXP's amended credit facility is directly attributable to the transaction, the unaudited pro forma condensed combined balance sheet includes the following adjustments (in millions):
Repayment of PXP's amended credit facility:
 
 
  PXP revolving line of credit
$
(1,325
)
  PXP seven-year term loan due 2019
 
(1,250
)
  PXP five-year term loan due 2017
 
(750
)
 
$
(3,325
)

E.
Adjustment reflects $47 million in transaction costs, consisting primarily of financial advisory fees, legal and accounting fees, financial printing and other costs related to the merger.

F.
Adjustment to deferred income taxes reflects a decrease of $114 million to FCX's valuation allowance resulting from the determination that, as a direct result of the acquisition of PXP by FCX, the combined company would more likely than not realize certain of FCXs deferred tax assets, against which a valuation allowance has been provided.




FREEPORT-McMoRan COPPER & GOLD INC
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2012
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

 
Historical(1)
 
GOM Acquisition
 
 
 
Adjustments
 
 
 
FCX
 
PXP
 
Pro Forma Adjustments(2)
 
Pro Forma PXP
 
Conform-
ing (3)
 
Pro
Forma (4)
 
Pro Forma Combined
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
18,010

 
$
2,565

 
$
1,764

A
$
4,329

 
$
(3
)
 
$
—

 
$
22,336

Cost of sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
Production and delivery
10,382

 
632

 
242

B
874

 
17

 
(3
)
F
11,270

Depreciation, depletion and amortization
1,179

 
1,118

 
548

C
1,666

 
(31
)
 
52

G
2,866

Total cost of sales
11,561

 
1,750

 
790

 
2,540

 
(14
)
 
49

 
14,136

Other operating costs and expenses
635

 
199

 
(34
)
D
165

 
—

 
(17
)
H
783

Total costs and expenses
12,196

 
1,949

 
756

 
2,705

 
(14
)
 
32

 
14,919

Operating income
5,814

 
616

 
1,008

 
1,624

 
11

 
(32
)
 
7,417

Interest expense, net
(186
)
 
(298
)
 
—

 
(298
)
 
(14
)
 
(340
)
I
(757
)
 
 
 
 
 
 
 
 
 
 
 
81

J
 
Losses on early extinguishment of debt
(168
)
 
(8
)
 
—

 
(8
)
 
—

 
—

 
(176
)
Other income (expense), net
27

 
204

 
—

 
204

 
3

 
(207
)
K
27

Income before taxes and equity in affiliated companies' net earnings (loss)
5,487

 
514

 
1,008

 
1,522

 
—

 
(498
)
 
6,511

(Provision) benefit for income taxes
(1,510
)
 
(171
)
 
(377
)
E
(548
)
 
—

 
130

L
(1,928
)
Equity in affiliated companies' net earnings (losses)
3

 
—

 
—

 
—

 
—

 
(30
)
K
(27
)
Net income (loss)
3,980

 
343

 
631

 
974

 
—

 
(398
)
 
4,556

Net income attributable to noncontrolling interests
(939
)
 
(37
)
 
—

 
(37
)
 
—

 
—

 
(976
)
Net income (loss) attributable to common stockholders
$
3,041

 
$
306

 
$
631

 
$
937

 
$
—

 
$
(398
)
 
$
3,580

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per share attributable to common stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
3.20

 
$
2.36

 
 
 
 
 
 
 
 
 
$
3.44

Diluted
$
3.19

 
$
2.32

 
 
 
 
 
 
 
 
 
$
3.43

Weighted-average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
949

 
130

 
 
 
 
 
 
 
 
 
1,041

Diluted
954

 
132

 
 
 
 
 
 
 
 
 
1,045


See accompanying notes to the pro forma condensed combined statements of income.







FREEPORT-McMoRan COPPER & GOLD INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2013
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
 
Historical(1)
 
Adjustments
 
FCX
PXP
 
Conforming(3)
Pro Forma (4)
 
Combined
 
 
 
 
 
 
 
 
Revenues
$
4,583

$
1,232

 
$
(202
)
$
—

 
$
5,613

Cost of sales:
 
 
 
 
 
 
 
  Production and delivery
2,719

248

 
10

(1
)
F
2,976

  Depreciation, depletion and amortization
329

541

 
(17
)
(23
)
G
830

    Total cost of sales
3,048

789

 
(7
)
(24
)
 
3,806

 Other operating costs and expenses
180

46

 
—

(7
)
H
219

    Total costs and expenses
3,228

835

 
(7
)
(31
)
 
4,025

Operating income (loss)
1,355

397

 
(195
)
31

 
1,588

Interest expense, net
(57
)
(141
)
 
(7
)
(25
)
I
(200
)
 
 
 
 
 
30

J
 
Losses on early extinguishment of debt
(45
)
(18
)
 
—

45

M
(18
)
Other (expense) income, net
(3
)
(186
)
 
202

(16
)
K
(3
)
Income before taxes and equity in affiliated
  companies' net earnings
1,250

52

 
—

65

 
1,367

Provision for income taxes
(428
)
(20
)
 
—

(30
)
L
(478
)
Equity in affiliated companies' net earnings
2

—

 
—

20

K
22

Net income
824

32

 
—

55

 
911

Net income attributable to noncontrolling interests
(176
)
(9
)
 
—

—

 
(185
)
Net income attributable to common stockholders
$
648

$
23

 
$
—

$
55

 
$
726

 
 
 
 
 
 
 
 
Net income per share attributable to common
  stockholders:
 
 
 
 
 
 
 
      Basic
$
0.68

$
0.17

 
 
 
 
$
0.70

      Diluted
$
0.68

$
0.17

 
 
 
 
$
0.69

Weighted-average common shares outstanding:
 
 
 
 
 
 
 
      Basic
950

130

 
 
 
 
1,041

      Diluted
953

133

 
 
 
 
1,045


See accompanying notes to the pro forma condensed combined statements of income.













COMBINATION OF FCX AND PXP
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME

(1)
Historical Financial Information
FCX’s and PXP’s historical financial information has been derived from their respective Annual Reports on Form 10-K for the year ended December 31, 2012, and Quarterly Reports on Form 10-Q for the period ended March 31, 2013.

(2)
Pro Forma GOM Acquisition
On November 30, 2012, PXP completed the GOM Acquisition, which consisted of certain oil and gas interests in and near the Holstein, Diana, Hoover, Horn Mountain, Marlin, Dorado, King and Ram Powell Fields located in the Gulf of Mexico from BP Exploration & Production Inc. and BP America Production Company (collectively “BP”) and the 50 percent working interest in the Holstein Field located in the Gulf of Mexico from Shell Offshore Inc. (“Shell”). The following adjustments reflect the pro forma effects of the GOM Acquisition as if the transaction had occurred on January 1, 2012. As discussed in Note (4) D. to the pro forma condensed combined balance sheet, PXP’s amended credit facility related to the GOM Acquisition was repaid in connection with the merger. Therefore, PXP’s pro forma financing costs associated with the GOM Acquisition have not been reflected as part of these adjustments. These pro forma adjustments do not purport to represent what PXP’s actual consolidated results of operations would have been had the GOM Acquisition occurred on such date, nor are they necessarily indicative of PXP’s future consolidated results of operations.

A.
Adjustment reflects incremental revenues related to the GOM Acquisition.

B.
Adjustment reflects recurring production costs, including incremental insurance costs related to the GOM Acquisition and fiber optic service fees paid to BP (as per the fiber optic service agreement between PXP and BP), and also reflects an increase in the accretion of the asset retirement obligation attributable to the properties acquired in the GOM Acquisition.

C.
Adjustment reflects an increase in depreciation, depletion and amortization expense for updated reserve estimates and depletion rates for the oil and gas properties acquired in the GOM Acquisition. The pro forma depletion rate for these properties was $27.92 per barrel of oil equivalent ("BOE") for the year ended December 31, 2012.

D.
Adjustment to reverse PXP’s transaction costs related to the GOM Acquisition.

E.
The estimated income tax effect of the GOM Acquisition pro forma adjustments was recorded based on the U.S. federal statutory tax rate of 35 percent and a 2.4 percent weighted average of the applicable state statutory tax rates (net of federal benefit).

(3)
Conforming Adjustments
Certain of PXP’s historical balances have been adjusted to conform to FCX’s presentation, including the reclassification of PXP's gains and losses on mark-to-market oil and gas derivative contracts to revenues.

(4)
Pro Forma Adjustments
The following pro forma adjustments for the pro forma condensed combined statement of income for the year ended December 31, 2012, and three months ended March 31, 2013, are primarily based on the estimated fair value adjustments made to the assets acquired and liabilities assumed in the pro forma condensed combined balance sheet at March 31, 2013 (see Note (3) C. to the pro forma condensed combined balance sheet). The actual fair values of the assets acquired and liabilities assumed may differ materially from the amounts presented in the estimated pro forma purchase price allocation as further analysis is completed. Accordingly, the allocation of the purchase price may result in different adjustments in the unaudited pro forma condensed combined statements of income.

F.
Adjustments to accretion on assumed asset retirement obligations.

G.
Adjustments to depreciation, depletion and amortization expense primarily reflect updated reserve estimates and depletion rates for oil and gas properties subject to depletion. The pro forma depletion rate was $28.90 per BOE for the year 2012 and $32.32 per BOE for the three months ended March 31, 2013.





H.
Adjustment to reverse transaction costs related to the merger that were recorded in FCX’s and PXP’s historical results.

I.
Net adjustments to interest expense primarily relate to interest associated with the $6.5 billion of senior notes and the adjustment to fair value the assumed PXP debt obligations.

J.
Adjustments reflect pro forma capitalized interest related to the interest adjustments described above in Note I, and adjustments to oil and gas properties not subject to depletion (see Note (3) C. to the pro forma condensed combined balance sheet).

K.
PXP owned 51 million shares of MMR common stock and historically elected to measure this equity investment at fair value, with changes in fair value recognized as a component of other income (expense), net, in the statement of income. For purposes of the Pro Forma Financial Statements, FCX has recorded the equity investment in MMR under the equity method of accounting. Accordingly, adjustments were made to (i) reverse the income statement effects recorded by PXP under the fair value option and (ii) to record the equity in MMR losses under the equity method of accounting.

L.
The estimated income tax effect of the pro forma adjustments (except for net adjustments to interest expense) has been recorded based upon the U.S. federal statutory rate of 35 percent and a 2.9 percent weighted average of the applicable state statutory tax rates (net of federal benefit). The estimated tax rate of 25 percent applied to PXP’s historical interest expense and the pro forma adjustments to interest expense has been derived from a preliminary analysis of the applicable rules for interest cost allocation required by U.S. tax regulations. The effective rate will also be affected by any tax planning opportunities that may result from the combination of the companies after the transaction. The business combination is expected to be non-taxable to the respective companies, with PXP’s historical tax bases surviving for income tax reporting purposes.

M.
Adjustment to reverse losses on early extinguishment of debt that were recorded in FCX’s historical results associated with the termination of the bridge loan facilities.

(d) Exhibits.

The exhibits included as part of this Current Report on Form 8-K are listed in the attached Exhibit Index.



                                






SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FREEPORT-McMoRan COPPER & GOLD INC.


By: /s/ C. Donald Whitmire, Jr.
----------------------------------------
C. Donald Whitmire, Jr.
Vice President and Controller -
Financial Reporting
(authorized signatory and
Principal Accounting Officer)

Date: August 13, 2013





Freeport-McMoRan Copper & Gold Inc.
Exhibit Index

Exhibit
Number
 
Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm for Plains Exploration & Production Company.
 
 
 
 
Consent of Netherland, Sewell & Associates, Inc., independent reserve engineer for Plains Exploration & Production Company.