PXP_Deepwater_Facility

[Editor's Note: This story includes a comment Broussard Mayor Charlie Langlinais made after this story broke. Read an update that includes details on the deal here.]

ABiz has learned that Houston-based Plains Exploration & Production, the independent oil and gas producer Lafayette native Jim Flores has led since 2002, is in the midst of constructing a deepwater Gulf of Mexico warehouse and storage facility in Broussard. The facility, which will create hundreds of high-paying jobs and is at least an $18.4 million investment, is locating in the Lafayette Economic Development Authority’s LEDA Industrial Park on Bernard Road.

Contacted Wednesday afternoon, LEDA President and Chief Executive Officer Gregg Gothreaux confirmed that Plains' facility is under way but declined further comment. Gothreaux, who will make his annual State of the Economy presentation, an ABiz event, Thursday at noon, said additional details will be released later today.

According to construction contract documents obtained by ABiz, the $18.4 million facility is being built by The Lemoine Company. It was designed by architects Alton Ozenne and Lynn Guidry.

The expansion is likely related to Plains' September announcement that it was paying $6.1 billion (more than its market value at the time) for BP's and Royal Dutch Shell's stakes in a group of Gulf of Mexico oil fields, a move that doubled its crude production and, Bloomberg noted, marked Plains' biggest acquisition since 2007. BP got $5.5 billion in the deal, which closed in early December; the divestiture was part of the London-based oil and gas giant's ongoing sell of assets to pay for the Deepwater Horizon disaster.

“Jim Flores’s decision to locate this facility here in Broussard is a major addition to the oil and gas technology corridor we are building in this city and we look forward to working with Plains Exploration & Production for many years to come,” Broussard Mayor Charles Langlinais said in a press release issued after this story broke.

Publicly traded Plains (NYSE: PXP), commonly called PXP, has already been staffing up for the expansion, according to sources familiar with the project. The company’s Lafayette office is located in Park Tower at 400 Kaliste Saloom Road.   

Flores is best known locally as one of the founders of independent energy company Flores and Rucks, which changed its name to Ocean Energy in 1997. He is also well known for his financial support of LSU, where he earned dual bachelor of science degrees in petroleum land management and finance. In 1996, Flores and his wife, Cherie, made a generous donation to LSU's E. J. Ourso College of Business to endow the MBA program, which was renamed the Flores MBA Program in their honor.

Flores has been the chairman of the board and CEO of PXP since September 2002 and was named president in early 2004. According to his bio on Forbes, in December 2010 the board of directors of New Orleans-based McMoRan Exploration Co. (MMR) appointed him to serve as a director.

In December Phoenix-based Freeport McMoRan Copper & Gold (FCX), one of the world’s largest producers of these metals, announced that it would acquire PXP and MMR (a separate publicly traded company with which Freeport shares some management) for about $9 billion in cash and stock (the PXP portion is more than $6 billion). The move is part of Freeport McMoRan Copper & Gold's strategy to diversify its current mining business to include energy exploration.

The deal, which would be a financial bonanza for Flores, would make him vice chairman of Freeport and CEO of the combined company’s oil and gas operations, according to Reuters. But the transaction, which is unlikely to affect the Lafayette deepwater project, is running into significant resistance.

Citing an unnamed person with direct knowledge of the matter, Bloomberg reported Tuesday that Arrowgrass Capital Partners LLP, a large PXP shareholder, is opposing Freeport-McMoRan's takeover of the Houston company, claiming the offer is not high enough:

Arrowgrass, which owns about 4.6 million Plains shares, views the Freeport proposal as too low, said the person, who asked not to be named because the process is private. Investors are scheduled to vote on the takeover on May 20. Phoenix-based Freeport agreed in December to acquire Plains and McMoRan Exploration Co. (MMR) in a $9 billion cash and stock deal.
Read more here.

Then, on Wednesday, just as shareholder resistance was growing, Reuters reported that rival Proxy advisory firms Glass Lewis & Co. and ISS are recommending that their clients vote against the proposed takeover. 

In a report released on Wednesday, according to Reuters, Glass Lewis argues that the deal offers "little to no current premium" for Plains shareholders, noting that a decline in Freeport's share price has cut down the value of the deal.

Read the ISS story here.

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