As contemplated by the Agreement and Plan of Merger, we and McMoRan entered into a
registration rights agreement and a stockholder agreement at the closing of the transaction. Under the
terms of the registration rights agreement, McMoRan filed a registration statement covering the
McMoRan shares within 60 days after closing. The registration rights agreement also gives us
piggyback registration rights and demand registration rights under certain circumstances. Under the
terms of the stockholder agreement, McMoRan expanded its board of directors and we have the right
to designate two board members for so long as we own at least 10% of the outstanding shares of
McMoRan. If our ownership falls below 10%, but is at least 5%, we will have the right to designate one
director. The stockholder agreement requires us to refrain from certain activities that could be
undertaken to acquire control of McMoRan and from transferring any McMoRan shares for one year
after closing (subject to certain exceptions). The one year restriction ended on December 30, 2011,
and we may now sell shares of McMoRan common stock pursuant to underwritten offerings, in periodic
sales under the shelf registration statement filed by McMoRan (subject to certain volume limitations),
pursuant to the exercise of piggyback registration rights or as otherwise permitted by applicable law.
Real Estate
We have surface development activities on the following tracts of real property, some of which are
used in our oil and gas operations
:
Property
Location
Approximate Acreage
(Net to Our Interest)
Montebello
Los Angeles County, California
497
Arroyo Grande San Luis Obispo County, California
1,080
Lompoc
Santa Barbara County, California
3,727
We have real estate consulting agreements with Cook Hill Properties, LLC. Under the terms of the
agreements, Cook Hill Properties will be responsible for creating a development plan and obtaining all
necessary permits for real estate development in an environmentally responsible manner on the
surface estates of our properties listed above. Cook Hill Properties is a 15% participant in the venture
and can earn an additional incentive on each property.
During 2011, we primarily focused our efforts on the Montebello property. Our objective relative to
the Montebello property is to take advantage of the positioning of this site as a potential significant
residential development project in the San Gabriel Valley region of Greater Los Angeles. The project is
located in southeastern Los Angeles County ten miles east of downtown Los Angeles. We are actively
pursuing the entitlement process for our Montebello property and are engaged in pre-entitlement
activities in Arroyo Grande and Lompoc. Our current development plans include master planned
communities with a range of housing from entry level to executive and estate homes, parks and
recreational land uses.
In the course of our business, certain of our properties may be subject to easements or other
incidental property rights and legal requirements that may affect the use and enjoyment of our
property. In 2011, we spent approximately $4 million on our real estate projects.
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