SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1997
Commission File Number: 0-23870
McMoRan Oil & Gas Co.
Incorporated in Delaware 72-1266477
(IRS Employer Identification No.)
1615 Poydras Street, New Orleans, Louisiana 70112
Registrant's telephone number, including area code: (504) 582-4000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No
On June 30, 1997, there were issued and outstanding 14,076,539 shares
of the registrant's Common Stock, par value $0.01 per share.
<PAGE> 1
McMoRan Oil & Gas Co.
TABLE OF CONTENTS
Page
Part I. Financial Information
Financial Statements:
Condensed Balance Sheets 3
Statements of Operations 4
Statements of Cash Flow 5
Notes to Financial Statements 6
Remarks 7
Report of Independent Public Accountants 8
Management's Discussion and Analysis
of Financial Condition and Results of Operations 9
Part II. Other Information 13
Signature 14
Exhibit Index E-1
<PAGE> 2
McMoRan Oil & Gas Co.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
McMoRan Oil & Gas Co.
CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------- ----------
<S> (In Thousands)
ASSETS <C> <C>
Cash and cash equivalents $ 7,142 $ 10,500
Accounts receivable and other 4,163 2,249
---------- ----------
Total current assets 11,305 12,749
Oil and gas properties, net 19,322 18,231
---------- ----------
Total assets $ 30,627 $ 30,980
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued
liabilities $ 12,741 $ 9,411
Current portion of production loan 1,640 366
---------- ----------
Total current liabilities 14,381 9,777
Production loan, less current
portion 10,980 12,391
Other liabilities 641 566
Stockholders' equity 4,625 8,246
---------- ----------
Total liabilities and stockholders'
equity $ 30,627 $ 30,980
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 3
McMoRan Oil & Gas Co.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -----------------------
1997 1996 1997 1996
---------- ---------- ---------- ---------
<S> (In Thousands, Except Per Share Amounts)
Revenues: <C> <C> <C> <C>
Oil and gas sales $ 1,839 $ 540 $ 4,203 $ 1,204
Management fees 409 409 818 818
---------- ---------- ---------- ----------
Total revenues 2,248 949 5,021 2,022
---------- ---------- ---------- ----------
Costs and expenses:
Production and
delivery, including
depreciation and
amortization 3,352 404 5,312 802
Exploration
expenses 1,735 (604) 4,097 3,871
General and
administrative
expenses 642 731 1,353 1,384
Gain on sale of oil
and gas property (2,289) - (2,289) -
---------- ---------- ---------- ----------
Total costs and
expenses 3,440 531 8,473 6,057
---------- ---------- ---------- ----------
Operating income
(loss) (1,192) 418 (3,452) (4,035)
Interest expense (321) (7) (681) (7)
Other income, net 118 114 249 237
---------- ---------- ---------- ----------
Net income (loss) $ (1,395) $ 525 $ (3,884) $ (3,805)
========== ========== ========== ==========
Net income (loss)
per share $(0.10) $0.04 $(0.27) $(0.27)
====== ===== ====== ======
Average shares
outstanding 14,160 13,867 14,136 13,847
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 4
McMoRan Oil & Gas Co.
STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------
1997 1996
---------- ----------
<S> (In Thousands)
Cash flow from operating activities: <C> <C>
Net loss $ (3,884) $ (3,805)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation and amortization 4,822 343
Exploration expenses 4,097 3,871
Gain on sale of oil and gas
property (2,289) -
Decrease in working capital 1,427 766
---------- ----------
Net cash provided by operating
activities 4,173 1,175
---------- ----------
Cash flow from investing activities:
Exploration and development
expenditures (10,279) (11,105)
Proceeds from sale of oil and
gas interests 2,884 2,059
---------- ----------
Net cash used in investing
activities (7,395) (9,046)
---------- ----------
Cash flow from financing activities:
Borrowings under production loan 4,741 1,377
Repayments under production loan (4,877) -
---------- ----------
Net cash provided by (used in)
financing activities (136) 1,377
---------- ----------
Net decrease in cash and cash
equivalents (3,358) (6,494)
Cash and cash equivalents at
beginning of year 10,500 10,323
---------- ----------
Cash and cash equivalents at
end of period $ 7,142 $ 3,829
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 5
McMoRan Oil & Gas Co.
NOTES TO FINANCIAL STATEMENTS
1. PLAN OF RECAPITALIZATION
On July 14, 1997, McMoRan Oil & Gas Co. (MOXY) and Freeport-McMoRan
Resource Partners, Limited Partnership (FRP) entered into an agreement
pursuant to which, subject to completion of the Rights Offering (as
described below), MOXY will acquire the two producing oil and gas
properties (the Producing Properties) developed as part of MOXY's
exploratory drilling program (MOXY/MCN Program) with affiliates of MCN
Energy Group Inc. (MCN) for $26.0 million, subject to adjustment, and
repay all of the indebtedness incurred by MOXY under the MOXY/MCN
Program. Upon MOXY's acquisition of the Producing Properties, MOXY
and FRP have agreed to terminate the MOXY/MCN Program and enter into
an aggregate $200 million multi-year oil and gas exploration program
(MOXY/FRP Exploration Program) to explore and develop prospects
primarily offshore in the Gulf of Mexico and onshore in the Gulf Coast
area. In addition, MOXY and FRP will contribute their interest in the
seven offshore leases acquired earlier this year to the MOXY/FRP
Exploration Program. MOXY and FRP will fund 40% and 60%,
respectively, of the exploration costs and all revenues and other
costs will be shared equally.
In August 1997, FRP acquired MCN's interest in the MOXY/MCN
Program, which includes the Producing Properties and other exploratory
properties for $31.0 million, subject to adjustment, and an additional
amount equal to the amount loaned by MCN to MOXY.
To provide capital for these transactions, MOXY intends to
undertake a rights offering (Rights Offering) pursuant to which MOXY
anticipates issuing approximately 28.6 million shares of common stock
for an aggregate of approximately $100 million, inclusive of FRP's
standby purchase agreement. Through its standby purchase agreement
(Standby Commitment), FRP has agreed to purchase at the subscription
price all shares that are offered but not purchased pursuant to the
exercise of Rights. Additionally, if FRP does not acquire at least
30% of MOXY's outstanding common stock pursuant to its Standby
Commitment, it will have the option to purchase at the subscription
price up to a 30% ownership interest in MOXY after giving effect to
the Rights Offering, the Standby Commitment and the exercise of the
option.
The Rights Offering, the Standby Commitment, the acquisition of
the Producing Properties from FRP, the establishment of the MOXY/FRP
Exploration Program and the other transactions contemplated thereby
(the Recapitalization Transactions) are subject to approval by MOXY's
stockholders. A registration statement relating to the Rights
Offering has been filed with the Securities and Exchange Commission,
but has not yet been declared effective.
On July 28, 1997 Freeport-McMoRan Inc. (FTX), owner of 51.6% of
FRP, and IMC Global Inc. (IGL) announced entering into a letter of
intent to merge through an exchange of common shares, with IGL as the
surviving entity. Three new positions on the IGL Board of Directors
will be held by representatives of FTX management and shareholders.
The proposed merger is subject to negotiation of a definitive
agreement and appropriate approvals. The definitive merger agreement
is expected to be completed within approximately 30 days, with
completion of the merger transaction by the end of 1997. The merger
will have no effect on the proposed MOXY/FRP Exploration Program or
the other transactions between MOXY and FRP discussed above.
2. NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 128 (SFAS 128),
"Earnings Per Share," which simplifies the computation of earnings per
share. SFAS 128 is effective for financial statements issued for
periods ending after December 15, 1997 and requires restatement for
all prior period earnings per share data presented. Earnings per
share calculated in accordance with SFAS 128 would have been unchanged
for the periods presented.
In June 1997, the FASB issued SFAS 130, "Reporting Comprehensive
Income," and SFAS 131, "Disclosures About Segments of an Enterprise
and Related Information." SFAS 130 establishes standards for the
reporting and display of comprehensive income in the financial
statements. Comprehensive income is the total of net income and all
other non-owner changes in equity. SFAS 131 requires that companies
disclose segment data based on how management makes decisions about
allocating resources to segments and measuring their performance.
SFAS 130 and 131 are effective for 1998. Adoption of these standards
is not expected to have an effect on MOXY's financial statements,
financial position or results of operations.
-----------------
Remarks
The information furnished herein should be read in conjunction with
MOXY's financial statements contained in its 1996 Annual Report to
stockholders and included in its Annual Report on Form 10-K.
The information furnished herein reflects all adjustments which are,
in the opinion of management, necessary for a fair statement of the
results for the periods. All such adjustments are, in the opinion of
management, of a normal recurring nature.
<PAGE> 7
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of McMoRan Oil & Gas Co.:
We have reviewed the accompanying condensed balance sheet of McMoRan
Oil & Gas Co. a (Delaware corporation) as of June 30, 1997, and the
related statements of operations for the three-month and six-month
periods ended June 30, 1997 and 1996 and the statements of cash flow
for the six-month periods ended June 30, 1997 and 1996. These
financial statements are the responsibility of the company's
management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the financial statements referred to above for
them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet of McMoRan Oil & Gas Co. as of
December 31, 1996 (not presented herein), and, in our report dated
January 21, 1997, we expressed an unqualified opinion on that
statement. In our opinion, the information set forth in the
accompanying condensed balance sheet as of December 31, 1996, is
fairly stated, in all material respects, in relation to the balance
sheet from which it has been derived.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana,
July 22, 1997
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
OVERVIEW
McMoRan Oil & Gas Co. (MOXY) is an independent oil and gas company
engaged in the exploration, development and production of oil and
natural gas. MOXY commenced operations in May 1994 following the
distribution of its common stock to the stockholders of Freeport-
McMoRan Inc. (FTX) in order to carry on substantially all of the oil
and gas exploration activities previously conducted by FTX. MOXY and
its predecessors have conducted exploration, development and
production operations offshore in the Gulf and onshore in the Gulf
Coast and other areas for more than 25 years, which have provided MOXY
with an extensive geological and geophysical database and significant
technical and operational expertise. MOXY expects to continue to
concentrate its efforts in this selected geographic area where its
management team has significant exploration experience.
MOXY's business strategy is to create value for its stockholders
through the discovery of oil and gas reserves in its exploration and
development activities. Management believes that MOXY has significant
opportunities to discover meaningful oil and gas reserves and that
these opportunities can best be achieved through the use of advanced
3-D seismic technology, applied in conjunction with an expanded,
multi-year exploration program. Moreover, MOXY believes that its
recent and continuing acquisitions of 3-D seismic data will continue
to improve its ability to interpret subsurface geology and allow it to
develop a larger inventory of high-quality prospects which it can
pursue at offshore lease sales and through farm-in opportunities
offshore in the Gulf and onshore in the Gulf Coast areas.
CAPITAL RESOURCES AND LIQUIDITY
During 1995, MOXY established joint ventures with affiliates of
MCN Energy Group Inc. (MCN) and Phillips Petroleum Company (Phillips)
which provided MOXY with an inflow of funds. Thus far, MOXY has
interests in two producing fields in the Gulf, the Vermilion Block 160
and Vermilion Block 410 fields (the Producing Properties). MOXY will
have expended essentially all of its capital resources by the end of
1997 and requires significant additional capital to continue its
exploration activities. Moreover, MOXY believes that it is important
to obtain sufficient capital to enable it to participate in a broader
range of exploration prospects.
In mid-1996, with the pending completion of the exploration
portion of the MOXY/MCN Program, management began evaluating options
to obtain additional long-term funding for its planned exploration and
development activities, including entering into one or more new long-
term exploration joint ventures (MCN later indicated that it did not
wish to enter into a long-term exploration program), issuing
additional equity or undertaking a business combination with another
entity. MOXY ultimately decided to undertake the Rights Offering
(discussed below), which would allow it to recapitalize, to
restructure its current exploration and development operations, and to
engage in a significantly expanded and more diversified, multi-year
exploratory drilling program.
If MOXY shareholders approve the Recapitalization Transactions
(as described in Note 1), MOXY expects to raise net proceeds of
approximately $93 million pursuant to the Rights Offering to enable
MOXY to acquire MCN's interest in the Producing Properties and to
retire MOXY's debt incurred in connection with the MOXY/MCN Program
(both of which FRP recently purchased from MCN). Furthermore, the
remaining cash proceeds would provide MOXY with the funding necessary
to participate in the aggregate $200 million multi-year MOXY/FRP
Exploration Program (discussed below). MOXY would retain 100% of the
MOXY/MCN Program's interest in the Producing Properties and would
dedicate the exploration properties which were subject to the MOXY/MCN
Program to the MOXY/FRP Exploration Program.
MOXY and FRP plan to establish, subject to completion of the
Rights Offering, the MOXY/FRP Exploration Program to explore and
develop exploratory prospects primarily in the Gulf and onshore in the
Gulf Coast area. MOXY would manage the program, selecting all
prospects and drilling opportunities, and would serve as operator of
the MOXY/FRP Exploration Program. MOXY and FRP would commit $200
million for exploration expenditures to be incurred under the program,
which would be shared 40% by MOXY and 60% by FRP. All other costs and
revenues would be shared equally. The MOXY/FRP Exploration Program
would include the seven leases recently purchased by MOXY for $5.5
million at the
<PAGE> 9
OCS Lease Sale 166, held in March 1997 and the
exploration properties currently involved in the MOXY/MCN Program.
If the stockholders do not approve the Recapitalization
Transactions, the Rights Offering will not be completed and FRP will
retain MCN's interest in the MOXY/MCN Program, which includes MCN's
interest in the Producing Properties and all other exploratory
properties subject to the MOXY/MCN Program. FRP will have the
obligation to fund, and extend credit to MOXY to fund, any exploration
and development costs that may be committed under the amended MOXY/MCN
Program and any other amounts that may be borrowed by MOXY thereunder.
FRP will not be obligated to fund any other exploratory prospects. As
a result, MOXY will be forced to secure alternative sources of
financing to support its current operations and fund any future
exploration and development activities beyond the financing available
under the MOXY/MCN Program ($5.7 million available at June 30, 1997).
Such alternative sources could include additional equity or debt
financing, the sale of all or part of MOXY's assets (MOXY's share of
the net revenues generated from the Producing Properties is dedicated
to repay indebtedness incurred under the MOXY/MCN Program) or other
partnership or joint venture transactions. There can be no assurance
that alternative financing will be available on acceptable terms, if
at all, or that MOXY would be a viable business enterprise.
MOXY incurred $10.3 million of cash exploration and development
expenditures during the first six months of 1997, principally
consisting of $3.4 million for development at Vermilion Blocks 160 and
410, $2.2 million for lease acquisition costs, $1.0 million in
drilling and leasehold costs charged to expense and $3.1 million of
geological and geophysical costs. Exploration expenditures would be
expected to increase following the completion of the Rights Offering
and the initiation of the MOXY/FRP Exploration Program.
OPERATIONAL ACTIVITIES
MOXY's recent exploration activities in the Gulf of Mexico have been
conducted primarily through the MOXY/MCN Program in which MOXY
currently holds a 40% interest. As noted earlier, FRP acquired MCN's
interest in the MOXY/MCN Program in August 1997. Upon successful
completion of the Rights Offering, MOXY would purchase FRP's interest
in the Producing Properties and MOXY and FRP would dedicate all other
oil and gas properties subject to the MOXY/MCN Program to the new
MOXY/FRP Exploration Program. As noted earlier, if the stockholders
do not approve the Recapitalization Transactions, the Rights Offering
will not be completed, and FRP will retain its interest in the MCN
Properties.
Recent activities within the MOXY/MCN Program follow:
* During the fourth quarter of 1996, a development well at the
Vermilion Block 160 field discovered new reserves from eight gas sands
with approximately 215 feet of net pay. Drilling on this well was
completed in the first quarter of 1997, discovering an additional 47
feet of net gas pay. During the second quarter of 1997, a second
development well to develop the newly discovered reserves encountered
244 feet of net gas pay from six sands. A third development well is
currently drilling. The MOXY/MCN Program has a 28% net revenue
interest in this field which is subject to re-determination subsequent
to final development drilling. In addition, the interest in two of
the four blocks within the Vermilion Block 160 field unit is subject
to a 30% net profits interest. Daily gross production from the field
averaged approximately 10 million cubic feet (Mmcf) of natural gas and
380 barrels of condensate during the second quarter. Production from
the new development wells is expected to commence during the second
half of 1997.
* In late December 1996, installation of the production platforms
and related facilities at the Vermilion Block 410 field was completed
and production began from one of the two platforms. Production began
from the second platform in February 1997. The MOXY/MCN Program has a
28% net revenue interest in this field. Daily gross production
currently totals approximately 70 Mmcf of gas.
* MOXY has contracted for a jack-up drilling rig, which is expected
to be available in the third quarter of 1997, for drilling at West
Cameron Block 616/617. The initial discovery well on West Cameron
Block 616 encountered several gas-bearing zones with a total of 190
feet of net gas pay.
* During the second quarter of 1997, the MOXY/MCN Program acquired
a 50% working interest in Eugene Island Blocks 18/19 from Shell
Offshore Inc. (SOI) in exchange for a 50% working interest in
<PAGE> 10
the MOXY/MCN Program's West Cameron Block 492. SOI, as operator, is
currently drilling an exploratory well on Eugene Island Block 19.
* In July 1997, drilling commenced on the #2 exploratory well at
the MOXY/MCN Program's Vermilion Block 159 prospect. This prospect is
located at a remote location from the existing Vermilion Block 160
field. The MOXY/MCN Program has a 60% working interest and 42.3% net
revenue interest.
* In April 1997, the MOXY/MCN Program sold its interest in West
Cameron Block 503 for $7.2 million ($2.9 million net to MOXY) with
MOXY recognizing a $2.3 million gain. The proceeds were used to repay
borrowings from MCN.
* Drilling completed in August 1997 at Grand Isle Block 65 was
unsuccessful in discovering hydrocarbons in commercial quantities.
MOXY is currently evaluating its alternatives regarding this block.
MOXY's drilling activities in the onshore Gulf Coast region have taken
place through its 25% owned joint venture with Phillips and FRP, which
covers a project area in south Louisiana, as follows:
* In April 1997, MOXY completed drilling of an exploratory well on
the North Bay Junop prospect, the second of two high-risk, high-
potential prospects which have been drilled within the project area.
The well reached total depth but did not encounter commercial
hydrocarbons in the primary objective zones. MOXY completed the well
in a shallower zone with approximately 25 feet of net gas pay. The
well was flow tested at a rate of 5.3 Mmcf of gas and 93 barrels of
condensate per day. Because of the complexity of the salt dome
geology and potentially limited reservoir size, production performance
will be required to determine the reserve volumes associated with this
completion. The joint venture partners are assessing additional
prospects in the area which may result in future exploratory drilling.
Outside of MOXY's joint venture agreements, MOXY committed to a
one year contract for a jack-up rig capable of drilling in water
depths of up to 150 feet. In addition, MOXY signed a one-well
contract with an option for additional wells for a jack-up rig capable
of drilling in water depths of up to 350 feet.
RESULTS OF OPERATIONS
Second Quarter Six Months
------------------------ -----------------------
1997 1996 1997 1996
---------- ---------- ---------- ---------
(In Millions)
Oil and gas sales $ 1.8 $ 0.5 $ 4.2 $ 1.2
Management fees 0.4 0.4 0.8 0.8
---------- ---------- ---------- ----------
$ 2.2 $ 0.9 $ 5.0 $ 2.0
========== ========== ========== ==========
MOXY's oil and gas sales began in the first quarter of 1995 with
the commencement of production at the Vermilion Block 160 field. In
December 1996, production began from the first of two production
platforms at the MOXY/MCN Program's Vermilion Block 410 field, with
production from the second platform commencing in February 1997. As
noted above, upon successful completion of the Rights Offering, MOXY
intends to purchase the MCN interest in the Vermilion Block 160 and
410 fields.
Depreciation in 1997 reflects Vermilion Block 410 which began
production in late 1996 as discussed above. During the second quarter
of 1997, the proved reserves initially assigned to this property were
adjusted downward on the basis of production experience, and
additional depreciation of $1.0 million was recognized. Net
capitalized costs of this property approximate its undiscounted
estimated future net cash flows.
<PAGE> 11
Exploration expenses consisted of the following:
Second Quarter Six Months
------------------------ -----------------------
1997 1996 1997 1996
---------- ---------- ---------- ---------
(In Millions)
Geological and
geophysical $ 1.6 $ 1.5 $ 3.1 $ 3.0
Exploratory drilling
and leasehold costs 0.1 (2.1)a 1.0 0.9a
---------- ---------- ---------- ----------
$ 1.7 $ (0.6) $ 4.1 $ 3.9
========== ========== ========== ==========
a. Includes a $2.1 million reimbursement of previously expensed
costs.
Interest expense increased during the 1997 periods because of
higher average debt levels.
As a result of anticipated future exploration expenditures, MOXY
expects to continue to report operating losses for at least the near
future.
ENVIRONMENTAL
Although MOXY has no known environmental liabilities, increasing
emphasis on environmental matters could result in additional costs,
which would be charged against MOXY's operations in future periods.
Present and future environmental laws and regulations applicable to
MOXY's operations could require substantial capital expenditures or
could adversely affect its operations in other ways that cannot be
accurately predicted at this time.
CAUTIONARY STATEMENT
Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements. All
statements other than statements of historical fact included in this
report, including, without limitation, statements regarding plans and
objectives of MOXY's management for future operations and MOXY's
exploration and development activities are forward-looking statements.
Important factors that could cause actual results to differ
materially from MOXY's expectations include, without limitation,
economic and business conditions, general development risks such as
weather conditions and shortages of supplies and equipment and hazards
and risks inherent with the production of oil and gas, such as fires,
natural disasters, blowouts and the encountering of formations with
abnormal pressures, changes in laws or regulations and other factors,
many of which are beyond the control of MOXY. Further information
regarding these and other factors that may cause MOXY's future
performance to differ from that projected in the forward-looking
statements are described in more detail in MOXY's Form 10-K for the
year ended December 31, 1996.
_________________________
The results of operations reported and summarized above are not
necessarily indicative of future operating results.
<PAGE> 12
PART II--OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of Stockholders of the Company was held
on May 8, 1997 (the Annual Meeting). Proxies were solicited pursuant
to Regulation 14A under the Securities Exchange Act of 1934, as
amended.
(b) At the Annual Meeting, William B. Harrison, Jr. and J.
Taylor Wharton were elected to serve until the 2000 annual meeting of
stockholders. In addition to the directors elected at the Annual
Meeting, the terms of the following directors continued after the
Annual Meeting: Richard C. Adkerson, Robert W. Bruce III, Robert A.
Day, Bobby Lee Lackey, Gabrielle K. McDonald, James R. Moffett, George
Putnam and B. M. Rankin, Jr.
(c) At the Annual Meeting, holders of shares of the Company's
Common Stock elected two directors with the number of votes cast for
or withheld from each nominee as follows:
Name For Withheld
---- --- --------
William B. Harrison, Jr. 13,042,935 62,491
J. Taylor Wharton 13,036,498 68,928
With respect to the election of directors, there were no abstentions
or broker non-votes.
At the Annual Meeting, the stockholders also voted on and
approved a proposal to ratify the appointment of Arthur Andersen LLP
to act as the independent auditors to audit the financial statements
of the Company and its subsidiaries for the year 1997. Holders of
13,057,450 shares voted for, holders of 22,011 shares voted against
and holders of 25,965 shares abstained from voting on, such proposal.
There were no broker non-votes with respect to such proposal.
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits to this report are listed in the Exhibit Index
appearing on page E-1 hereof.
(b) During the quarter for which this report is filed, the registrant
filed one Current Report on Form 8-K on May 9, 1997 under Item 5.
<PAGE> 13
McMoRan Oil & Gas Co.
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 thereunto duly authorized.
McMoRan Oil & Gas Co.
By: /s/C. Donald Whitmire, Jr.
--------------------------
C. Donald Whitmire, Jr.
Controller
(authorized signatory and
Principal Accounting Officer)
Date: August 12, 1997
<PAGE> 14
McMoRan OIL & GAS CO.
EXHIBIT INDEX
Exhibit
Number
2.1 Distribution Agreement dated as of May 1, 1994 between
Freeport-McMoRan Inc. and the Company. Incorporated by reference to
Exhibit 2.1 to Amendment No. 2 to Form 10 as filed with the Commission
on May 16, 1994 ("Amendment No. 2").
3.1 Amended and Restated Certificate of Incorporation of the
Company. Incorporated by reference to Exhibit 3.1 to the Company's
Annual Report for the year ended December 31, 1994 on Form 10-K (the
"1994 10-K").
3.2 Bylaws of the Company. Incorporated by reference to
Exhibit 3.2 to the Company's 1994 10-K.
4.1 Form of the Company's Certificate of Designation of
Series A Participating Cumulative Preferred Stock. Incorporated by
reference to Exhibit 4.1 to Amendment No. 2.
4.2 Rights Agreement dated as of May 19, 1994 between the
Company and Mellon Securities Trust Company, as Rights Agent.
Incorporated by reference to Exhibit 4.2 to the Company's 1994 10-K.
10.1 Master Agreement dated July 14, 1997 between McMoRan Oil
& Gas Co. and Freeport-McMoRan Resource Partners, Limited Partnership.
Incorporated by reference to Exhibit 10.1 to the Company's Current
Report on Form 8-K dated as of July 14, 1997 (the "July 14, 1997 8-K").
10.2 Standby Purchase Agreement dated July 14, 1997 between
McMoRan Oil & Gas Co. and Freeport-McMoRan Resource Partners, Limited
Partnership. Incorporated by reference to Exhibit 10. 2 to the July
14, 1997 8-K.
10.3 Form of Stockholder Agreement between McMoRan Oil & Gas
Co. and Freeport-McMoRan Resource Partners, Limited Partnership.
Incorporated by reference to Exhibit 10.3 to the July 14, 1997 8-K.
10.4 Purchase and Sale Agreement dated July 11, 1997 by and
among FRP, MCNIC Oil & Gas Properties, Inc., MCN Investment
Corporation and MOXY. Incorporated by reference to Exhibit 10.4 to
the July 14, 1997 8-K.
10.5 Form of Participation Agreement between McMoRan Oil &
Gas Co. and Freeport-McMoRan Resource Partners, Limited Partnership.
Incorporated by reference to Exhibit 10.5 to the July 14, 1997 8-K.
10.6 Form of Amendment to the MOXY Participation and
Exploration Program Agreement dated as of July 1, 1995 between McMoRan
Oil & Gas Co., CoEnergy Central Exploration, Inc. and MCN Investment
Corporation. Incorporated by reference to Exhibit 10.6 to the July
14, 1997 8-K.
10.7 Amendment No. 1 dated July 14, 1997 to the Rights
Agreement dated as of May 19, 1994 between McMoRan Oil & Gas Co. and
Mellon Securities Trust Company, as Rights Agent. Incorporated by
reference to Exhibit 10.7 to the July 14, 1997 8-K.
10.8 1994 Stock Option Plan, as amended.
15.1 Letter dated July 22, 1997 from Arthur Andersen LLP
regarding unaudited interim financial statements.
27.1 Financial Data Schedule
<PAGE> 15
McMoRan OIL & GAS CO.
1994
STOCK
OPTION
PLAN
SECTION 1
Purpose. The purpose of the McMoRan Oil & Gas
Co. 1994 Stock Option Plan (the "Plan") is to motivate
and reward key personnel by giving them a proprietary
interest in the Company's continued success.
SECTION 2
Definitions. As used in the Plan, the
following terms shall have the meanings set forth below:
"Award" shall mean any Option, Stock
Appreciation Right, Limited Right or Other Stock-Based
Award.
"Award Agreement" shall mean any written
agreement, contract or other instrument or document
evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of
McMoRan Oil & Gas Co.
"Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
"Committee" shall mean a committee of the
Board designated by the Board to administer the Plan and
composed of not fewer than two directors, each of whom,
to the extent necessary to comply with Rule 16b-3 only,
is a "non-employee director" within the meaning of Rule
16b-3 and, to the extent necessary to comply with
Section 162(m) only, is an "outside director" under
Section 162(m). Until otherwise determined by the
Board, the Committee shall be the Corporate Personnel
Committee of the Board.
"Company" shall mean McMoRan Oil & Gas Co.
"Designated Beneficiary" shall mean the
beneficiary designated by the Participant, in a manner
determined by the Committee, to receive the benefits due
the Participant under the Plan in the event of the
Participant's death. In the absence of an effective
designation by the Participant, Designated Beneficiary
shall mean the Participant's estate.
"Employee" shall mean (i) any person providing
services as an officer of the Company or a Subsidiary,
whether or not employed by such entity, (ii) any
employee of the Company or a Subsidiary, including any
director who is also an employee of the Company or a
Subsidiary, (iii) any officer or employee of an entity
with which the Company has contracted to receive
management services who provides services to the Company
or a Subsidiary through such arrangement and (iv) any
person who has agreed in writing to become a person
described in clauses (i), (ii) or (iii) within not more
than 30 days following the date of grant of such
person's first Award under the Plan.
"Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to time.
"Incentive Stock Option" shall mean an option
granted under Section 6 of the Plan that is intended to
meet the
requirements of Section 422 of the Code or any successor
provision thereto.
"Limited Right" shall mean any right granted
under Section 8 of the Plan.
"Nonqualified Stock Option" shall mean an
option granted under Section 6 of the Plan that is not
intended to be an Incentive Stock Option.
"Offer" shall mean any tender offer, exchange
offer or series of purchases or other acquisitions, or
any combination of those transactions, as a result of
which any person, or any two or more persons acting as a
group, and all affiliates of such person or persons,
shall own beneficially more than 40% of the Shares
outstanding (exclusive of Shares held in the Company's
treasury or by the Company's Subsidiaries).
"Offer Price" shall mean the highest price per
Share paid in any Offer that is in effect at any time
during the period beginning on the ninetieth day prior
to the date on which a Limited Right is exercised and
ending on and including the date of exercise of such
Limited Right. Any securities or property that
comprise all or a portion of the consideration paid for
Shares in the Offer shall be valued in determining the
Offer Price at the higher of (i) the valuation placed on
such securities or property by the person or persons
making such Offer, or (ii) the valuation, if any, placed
on such securities or property by the Committee or the
Board.
"Option" shall mean an Incentive Stock Option
or a Nonqualified Stock Option.
"Other Stock-Based Award" shall mean any right
or award granted under Section 9 of the Plan.
"Participant" shall mean any Employee granted
an Award under the Plan.
"Person" shall mean any individual, corporation,
partnership, association, joint-stock company, trust,
unincorporated organization, government or political
subdivision thereof or other entity.
"Rule 16b-3" shall mean Rule 16b-3 promulgated
by the SEC under the Exchange Act, or any successor rule
or regulation thereto as in effect from time to time.
"SAR" shall mean any Stock Appreciation Right.
"SEC" shall mean the Securities and Exchange
Commission, including the staff thereof, or any
successor thereto.
"Section 162(m)" shall mean Section 162(m) of
the Code and all regulations promulgated thereunder as
in effect from time to time.
"Shares" shall mean the shares of common
stock, par value $0.01 per share, of McMoRan Oil & Gas
Co. (including any attached Preferred Stock Purchase
Rights), and such other securities of the Company or a
Subsidiary as the Committee may from time to time
designate.
"Stock Appreciation Right" shall mean any
right granted under Section 7 of the Plan.
"Subsidiary" shall mean (i) any corporation or
other
entity in which the Company possesses directly or
indirectly equity interests representing at least 50% of
the total ordinary voting power or at least 50% of the
total value of all classes of equity interests of such
corporation or other entity and (ii) any other entity in
which the Company has a direct or indirect economic
interest that is designated as a Subsidiary by the
Committee.
SECTION 3
Administration. The Plan shall be
administered by the Committee. Subject to the terms of
the Plan and applicable law, and in addition to other
express powers and authorizations conferred on the
Committee by the Plan, the Committee shall have full
power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted
to an eligible Employee; (iii) determine the number of
Shares to be covered by, or with respect to which
payments, rights or other matters are to be calculated
in connection with, Awards; (iv) determine the terms and
conditions of any Award; (v) determine whether, to what
extent, and under what circumstances Awards may be
settled or exercised in cash, whole Shares, other whole
securities, other Awards, other property or other cash
amounts payable by the Company upon the exercise of that
or other Awards, or cancelled, forfeited or suspended
and the method or methods by which Awards may be
settled, exercised, cancelled, forfeited or suspended;
(vi) determine whether, to what extent, and under what
circumstances cash, Shares, other securities, other
Awards, other property, and other amounts payable by the
Company with respect to an Award shall be deferred
either automatically or at the election of the holder
thereof or of the Committee; (vii) interpret and
administer the Plan and any instrument or agreement
relating to, or Award made under, the Plan; (viii)
establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem
appropriate for the proper administration of the Plan;
and (ix) make any other determination and take any other
action that the Committee deems necessary or desirable
for the administration of the Plan. Unless otherwise
expressly provided in the Plan, all designations,
determinations, interpretations and other decisions
under or with respect to the Plan or any Award shall be
within the sole discretion of the Committee, may be made
at any time and shall be final, conclusive and binding
upon all Persons, including the Company, any Subsidiary,
any Participant, any holder or beneficiary of any Award,
any stockholder of the Company and any Employee.
SECTION 4
Eligibility. Any Employee who is not a member
of the Committee shall be eligible to be granted an
Award.
SECTION 5
(a) Shares Available for Awards. Subject to
adjustment as provided in Section 5(b):
(i) Calculation of Number of Shares
Available. The number of Shares with respect to which
Awards may be granted under the Plan shall be 1,000,000.
If, after the effective date of the Plan, an Award
granted under the Plan expires or is exercised,
forfeited, cancelled or terminated without the delivery
of Shares, then the Shares covered by such Award or to
which such Award relates, or the number of Shares
otherwise counted against the aggregate number of Shares
with respect to which Awards may be granted, to the
extent of any such expiration, exercise,
forfeiture, cancellation or termination without the
delivery of Shares, shall again be, or shall become,
Shares with respect to which Awards may be granted.
(ii) Substitute Awards. Any Shares delivered
by the Company, any Shares with respect to which Awards
are made by the Company, or any Shares with respect to
which the Company becomes obligated to make Awards,
through the assumption of, or in substitution for,
outstanding awards previously granted by an acquired
company or a company with which the Company combines,
shall not be counted against the Shares available for
Awards under the Plan.
(iii) Sources of Shares Deliverable Under
Awards. Any Shares delivered pursuant to an Award may
consist of authorized and unissued Shares or of treasury
Shares, including Shares held by the Company or a
Subsidiary and acquired in the open market or otherwise
obtained by the Company or a Subsidiary.
(iv) Individual Limit. Any provision of the
Plan to the contrary notwithstanding, no individual may
receive in any year Awards under the Plan that relate to
more than 200,000 Shares.
(b) Adjustments. In the event that the
Committee determines that any dividend or other
distribution (whether in the form of cash, Shares,
Subsidiary securities, other securities or other
property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase or exchange of Shares
or other securities of the Company, issuance of warrants
or other rights to purchase Shares or other securities
of the Company, or other similar corporate transaction
or event affects the Shares such that an adjustment is
determined by the Committee to be appropriate to prevent
dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan,
then the Committee may, in its sole discretion and in
such manner as it may deem equitable, adjust any or all
of (i) the number and type of Shares (or other
securities or property) with respect to which Awards may
be granted, (ii) the number and type of Shares (or other
securities or property) subject to outstanding Awards,
and (iii) the grant or exercise price with respect to
any Award or, if deemed appropriate, make provision for
a cash payment to the holder of an outstanding Award or,
if deemed appropriate, adjust outstanding Awards to
provide the rights contemplated by Section 9(b) hereof;
provided, in each case, that with respect to Awards of
Incentive Stock Options no such adjustment shall be
authorized to the extent that such authority would cause
the Plan to violate Section 422(b)(1) of the Code or any
successor provision thereto and, with respect to all
Awards under the Plan, no such adjustment shall be
authorized to the extent that such authority would be
inconsistent with the requirements for full
deductibility under Section 162(m) of the Code and the
regulations thereunder; and provided further, that the
number of Shares subject to any Award denominated in
Shares shall always be a whole number.
SECTION 6
(a) Stock Options. Subject to the provisions
of the Plan, the Committee shall have sole and complete
authority to determine the Employees to whom Options
shall be granted, the number of Shares to be covered by
each Option, the option price therefor and the
conditions and limitations applicable to the exercise of
the Option. The Committee shall have the authority to
grant Incentive Stock Options, Nonqualified Stock
Options or both.
In the case of Incentive Stock Options, the terms and
conditions
of such grants shall be subject to and comply with such
rules as may be required by Section 422 of the Code, as
from time to time amended, and any implementing
regulations. Except in the case of an Option granted in
assumption of or substitution for an outstanding award
of a company acquired by the Company or with which the
Company combines, the exercise price of any Option
granted under this Plan shall not be less than 100% of
the fair market value of the underlying Shares on the
date of grant.
(b) Exercise. Each Option shall be
exercisable at such times and subject to such terms and
conditions as the Committee may, in its sole discretion,
specify in the applicable Award Agreement or thereafter,
provided, however, that in no event may any Option
granted hereunder be exercisable after the expiration of
10 years after the date of such grant. The Committee
may impose such conditions with respect to the exercise
of Options, including without limitation, any condition
relating to the application of Federal or state
securities laws, as it may deem necessary or advisable.
(c) Payment. No Shares shall be delivered
pursuant to any exercise of an Option until payment in
full of the option price therefor is received by the
Company. Such payment may be made in cash, or its
equivalent, or, if and to the extent permitted by the
Committee, by applying cash amounts payable by the
Company upon the exercise of such Option or other Awards
by the holder thereof or by exchanging whole Shares
owned by such holder (which are not the subject of any
pledge or other security interest), or by a combination
of the foregoing, provided that the combined value of
all cash, cash equivalents, cash amounts so payable by
the Company upon exercises of Awards and the fair market
value of any such whole Shares so tendered to the
Company, valued (in accordance with procedures
established by the Committee) as of the effective date
of such exercise, is at least equal to such option
price.
SECTION 7
(a) Stock Appreciation Rights. Subject to
the provisions of the Plan, the Committee shall have
sole and complete authority to determine the Employees
to whom Stock Appreciation Rights shall be granted, the
number of Shares to be covered by each Stock
Appreciation Right, the grant price thereof and the
conditions and limitations applicable to the exercise
thereof. Stock Appreciation Rights may be granted in
tandem with another Award, in addition to another Award,
or freestanding and unrelated to any other Award. Stock
Appreciation Rights granted in tandem with or in
addition to an Option or other Award may be granted
either at the same time as the Option or other Award or
at a later time. Stock Appreciation Rights shall not be
exercisable after the expiration of 10 years after the
date of grant. Except in the case of a Stock
Appreciation Right granted in assumption of or
substitution for an outstanding award of a company
acquired by the Company or with which the Company
combines, the grant price of any Stock Appreciation
Right granted under this Plan shall not be less than
100% of the fair market value of the Shares covered by
such Stock Appreciation Right on the date of grant or,
in the case of a Stock Appreciation Right granted in
tandem with a then outstanding Option or other Award, on
the date of grant of such related Option or Award.
(b) A Stock Appreciation Right shall entitle
the holder thereof to receive an amount equal to the
excess, if any, of the fair market value of a Share on
the date of exercise of the Stock Appreciation Right
over the grant price. Any Stock Appreciation Right
shall be settled in cash, unless the Committee shall
determine at the time of grant of a Stock Appreciation
Right that it shall or may be settled in cash, Shares or a
combination of cash and Shares.
SECTION 8
(a) Limited Rights. Subject to the
provisions of the Plan, the Committee shall have sole
and complete authority to determine the Employees to
whom Limited Rights shall be granted, the number of
Shares to be covered by each Limited Right, the grant
price thereof and the conditions and limitations
applicable to the exercise thereof. Limited Rights may
be granted in tandem with another Award, in addition to
another Award, or freestanding and unrelated to any
Award. Limited Rights granted in tandem with or in
addition to an Award may be granted either at the same
time as the Award or at a later time. Limited Rights
shall not be exercisable after the expiration of 10
years after the date of grant and shall only be
exercisable during a period determined at the time of
grant by the Committee beginning not earlier than one
day and ending not more than ninety days after the
expiration date of an Offer. Except in the case of a
Limited Right granted in assumption of or substitution
for an outstanding award of a company acquired by the
Company or with which the Company combines, the grant
price of any Limited Right granted under this Plan shall
not be less than 100% of the fair market value of the
Shares covered by such Limited Right on the date of
grant or, in the case of a Limited Right granted in
tandem with a then outstanding Option or other Award, on
the date of grant of such related Option or Award.
(b) A Limited Right shall entitle the holder
thereof to receive an amount equal to the excess, if
any, of the Offer Price on the date of exercise of the
Limited Right over the grant price. Any Limited Right
shall be settled in cash, unless the Committee shall
determine at the time of grant of a Limited Right that
it shall or may be settled in cash, Shares or a
combination of cash and Shares.
SECTION 9
(a) Other Stock-Based Awards. The Committee
is hereby authorized to grant to eligible Employees an
"Other Stock-Based Award", which shall consist of an
Award, the value of which is based in whole or in part
on the value of Shares, that is not an
instrument or Award specified in Sections 6 through 8 of
this Plan. Other Stock-Based Awards may be awards of
Shares or may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on
or related to, Shares (including, without limitation,
securities convertible or exchangeable into or
exercisable for Shares), as deemed by the Committee
consistent with the purposes of the Plan. The
Committee shall determine the terms
and conditions of any such Other Stock-Based Award.
Except in the case of an Other Stock-Based Award granted
in assumption of or in substitution for an outstanding
award of a company acquired by the Company or with which
the Company combines, the price at which securities may
be purchased pursuant to any Other Stock-Based Award
granted under this Plan, or the provision, if any, of
any such Award that is analogous to the purchase or exercise
price, shall not be less than 100% of the fair market value of
the securities to which such Award relates on the date of grant.
(b) Dividend Equivalents. In the sole and complete
discretion of the Committee, an Award, whether made as an Other
Stock-Based Award under this Section 9 or as an Award granted
pursuant to Sections 6 through 8 hereof, may provide the holder
thereof with dividends or dividend equivalents, payable in cash,
Shares, Subsidiary securities, other securities or other
property on a current or deferred basis.
SECTION 10
(a) Amendments to the Plan. The Board may amend,
suspend or terminate the Plan or any portion thereof at any
time, provided that no amendment shall be made without
stockholder approval if such approval is necessary to comply
with any tax or regulatory requirement. Notwithstanding
anything to the contrary contained herein, the Committee may
amend the Plan in such manner as may be necessary for the Plan
to conform with local rules and regulations in any jurisdiction
outside the United States.
(b) Amendments to Awards. The Committee may amend,
modify or terminate any outstanding Award with the holder's
consent at any time prior to payment or exercise in any manner
not inconsistent with the terms of the Plan, including without
limitation, (i) to change the date or dates as of which an Award
becomes exercisable, or (ii) to cancel an Award and grant a new
Award in substitution therefor under such different terms and
conditions as it determines in its sole and complete discretion
to be appropriate.
(c) Adjustment of Awards Upon the Occurrence of
Certain Unusual or Nonrecurring Events. The Committee is hereby
authorized to make adjustments in the terms and conditions of,
and the criteria included in, Awards in recognition of unusual
or nonrecurring events (including, without limitation, the
events described in Section 5(b) hereof) affecting the Company,
or the financial statements of the Company or any Subsidiary, or
of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such
adjustments are appropriate to prevent dilution or enlargement
of the benefits or potential benefits intended to be made
available under the Plan.
(d) Cancellation. Any provision of this Plan or any
Award Agreement to the contrary notwithstanding, the Committee
may cause any Award granted hereunder to be cancelled in
consideration of a cash payment or alternative Award made to the
holder of such cancelled Award equal in value to such cancelled
Award. The determinations of value under this subparagraph
shall be made by the Committee in its sole discretion.
SECTION 11
(a) Delegation. Subject to the terms of the Plan and
applicable law, the Committee may delegate to one or more
officers of the Company the authority, subject to such terms and
limitations as the Committee shall determine, to grant Awards
to, or to cancel, modify or waive rights with respect to, or to
alter, discontinue, suspend, or terminate Awards held by,
Employees who are not officers or directors of the Company for
purposes of Section 16 of the Exchange Act, or any successor
section thereto, or who are otherwise not subject to such
Section.
(b) Award Agreements. Each Award hereunder shall be
evidenced by a writing delivered to the Participant that shall
specify the terms and conditions thereof and any rules
applicable thereto, including but not limited to the effect on
such Award of the death, retirement or other termination of
employment of the Participant and the effect thereon, if any, of
a change in control of the Company.
(c) Withholding. A Participant may be required to
pay to the Company, and the Company shall have the right to
deduct from all amounts paid to a Participant (whether under the
Plan or otherwise), any taxes required by law to be paid or
withheld in respect of Awards hereunder to such Participant.
The Committee may provide for additional cash payments to
holders of Awards to defray or offset any tax arising from the
grant, vesting, exercise or payment of any Award.
(d) Transferability. No Awards granted hereunder may
be transferred, pledged, assigned or otherwise encumbered by a
Participant except: (i) by will; (ii) by the laws of descent and
distribution; (iii) pursuant to a domestic relations order, as
defined in the Code, if permitted by the Committee and so
provided in the Award Agreement or an amendment thereto; or (iv)
if permitted by the Committee and so provided in the Award Agreement
or an amendment thereto, Options and Limited Rights granted in
tandem therewith may be transferred or assigned (a) to Immediate
Family Members, (b) to a partnership in which Immediate Family
Members, or entities in which Immediate Family Members are the
owners, members or beneficiaries,
as appropriate, are the partners, (c) to a limited
liability company in which Immediate Family Members, or
entities in which Immediate Family Members are the
owners, members or beneficiaries, as appropriate, are
the members, or (d) to a trust for the benefit of
Immediate Family Members; provided, however, that no
more than a de minimus beneficial interest in a
partnership, limited liability company or trust
described in (b), (c) or (d) above may
be owned by a person who is not an Immediate Family
Member or by an entity that is not beneficially owned
solely by Immediate Family Members. "Immediate Family
Members" shall be defined as the spouse and natural or
adopted children or grandchildren of the Participant
and their spouses. To the extent that an Incentive
Stock Option is permitted to be transferred during the
lifetime of the Participant, it shall be treated
thereafter as a Nonqualified Stock Option. Any
attempted assignment, transfer, pledge, hypothecation
or other disposition of Awards, or levy of attachment
or similar process upon Awards not specifically
permitted herein, shall be null and void and without
effect. The designation of a Designated Beneficiary
shall not be a violation of this Section 11(d).
(e) Share Certificates. All certificates
for Shares or other securities delivered under the Plan
pursuant to any Award or the exercise thereof shall be
subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under
the Plan or the rules, regulations, and other
requirements of the SEC, any stock exchange upon which
such Shares or other securities are then listed, and
any applicable federal or state laws, and the Committee
may cause a legend or legends to be put on any such
certificates to make appropriate reference to such
restrictions.
(f) No Limit on Other Compensation
Arrangements. Nothing contained in the Plan shall
prevent the Company from adopting or continuing in
effect other compensation arrangements, which may, but
need not, provide for the grant of options, stock
appreciation rights and other types of Awards provided
for hereunder (subject to stockholder approval of any
such arrangement if approval is required), and such
arrangements may be either generally applicable or
applicable only in specific cases.
(g) No Right to Employment. The grant of
an Award shall not be construed as giving a Participant
the right to be retained in the employ of the Company
or any Subsidiary or in the employ of any other entity
providing services to the Company. The Company or any
Subsidiary or any such entity may at any time dismiss a
Participant from employment, free from any liability or
any claim under the Plan, unless otherwise expressly
provided in the Plan or in any Award Agreement. No Employee,
Participant or other person shall have any claim to be
granted any Award, and there is no obligation for
uniformity of treatment of Employees, Participants or
holders or beneficiaries of Awards.
(h) Governing Law. The validity,
construction, and effect of the Plan, any rules and
regulations relating to the Plan and any Award
Agreement shall be determined in accordance with the
laws of the State of Delaware.
(i) Severability. If any provision of the
Plan or any Award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction
or as to any Person or Award, or would disqualify the
Plan or any Award under any law deemed applicable by
the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it
cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall
be stricken as to such jurisdiction, Person or Award
and the remainder of the Plan and any such Award shall
remain in full force and effect.
(j) No Trust or Fund Created. Neither the
Plan nor any Award shall create or be construed to
create a trust or separate fund of any kind or a
fiduciary relationship between the Company and a
Participant or any other Person. To the extent that
any Person acquires a right to receive payments from
the Company pursuant to an Award, such right shall be
no greater than the right of any unsecured general
creditor of the Company.
(k) No Fractional Shares. No fractional
Shares shall be issued or delivered pursuant to the
Plan or any Award, and the Committee shall determine
whether cash, other securities or other property shall
be paid or transferred in lieu of any fractional Shares
or whether such fractional Shares or any rights thereto
shall be cancelled, terminated, or otherwise
eliminated.
(l) Headings. Headings are given to the
subsections of the Plan solely as a convenience to
facilitate reference. Such headings shall not be
deemed in any way material or relevant to the
construction or interpretation of the Plan or any
provision thereof.
SECTION 12
Effective Date of the Plan. The Plan shall
be effective as of the date of its approval by the
stockholder of the Company.
SECTION 13
Term of the Plan. No Award shall be granted
under the Plan after the tenth anniversary of the
effective date of the Plan; however, unless otherwise
expressly provided in the Plan or in an applicable
Award Agreement, any Award theretofore granted may, and
the authority of the Committee to amend, alter, adjust,
suspend, discontinue, or terminate any such Award or to
waive any conditions or rights under any such Award
shall, extend beyond such date.
Exhibit 15.1
July 22, 1997
McMoRan Oil & Gas Co.
1615 Poydras Street
New Orleans, LA 70112
Gentlemen:
We are aware that McMoRan Oil & Gas Co. has incorporated by reference
in its Registration Statements (File Nos. 33-82866, 33-99828, 33-
80369, 33-80371, and 333-31279) its Form 10-Q for the quarter ended
June 30, 1997, which includes our report dated July 22, 1997 covering
the unaudited interim financial information contained therein.
Pursuant to Regulation C of the Securities Act of 1993 (the Act), this
report is not considered a part of the registration statements
prepared or certified by our firm or a report prepared or certified by
our firm within the meaning of Sections 7 and 11 of the Act.
Very truly yours,
Arthur Andersen LLP
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<FISCAL-YEAR-END> DEC-31-1997
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0
0
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</TABLE>
