Phoenix, Arizona-based minerals company Freeport-McMoRan (FCX) may be done with its foray into the oil and gas sector, nearly three years after the journey began.
On Tuesday, the company announced that in consideration of spinning off its oil and gas business, five directors related to Freeport-McMoRan Oil & Gas (FM O&G) have left the company’s board of directors. The news comes just after it announced in late August that it intends to cut FM O&G's capital expenditures for 2016 and 2017, reducing to US$2 billion per year.
The company said on Tuesday that it came to this decision to weigh its options on the oil and gas division in order to “enhance value to FCX shareholders and achieve self-funding of the oil and gas business from its cash flows and resources.” The company’s strategy will be to focus on its position in the copper industry, where it remains “confident” about the longer term outlook of copper prices.
“FM O&G’s high quality asset base, substantial underutilized deepwater Gulf of Mexico infrastructure, large inventory of low risk development opportunities and talented and experienced personnel and management team provide alternatives to generate value,” the company said. “The previously announced potential public offering of a minority interest in FCX’s oil and gas business remains an alternative for future consideration, the timing of which is subject to market conditions.”
The company says other alternatives currently under consideration include joint venture arrangements and further spending reductions.
Before the price of oil hit its new low, FCX was pretty positive on the oil and gas industry, and over the last several years made strides to buy new assets. In 2014, FM O&G purchased Apache’s non-operated interests in the deepwater Gulf of Mexico for US$1.4 billion. At the time, Apache itself was urged by investors to leave LNG projects off Australia, Canada, and jettison its holdings the US Gulf, in order to focus on its US onshore business.
In late 2012, FCX acquired Plains Exploration & Production Co., itself a fast-growing newcomer in the Gulf of Mexico player, and McMoRan Exploration Co., a then-subsidiary of the company, for a combined $9 billion. The $6.9 billion acquisition of Plains was noteworthy at the time because the news came just days after Plains closed on deals then-worth a combined $6.1 billion with BP and Shell for portions of their Gulf of Mexico acreage.
At the time of the sale, FCX CEO Richard C. Adkerson said: “The oil and gas assets being acquired possess the asset quality characteristics that we seek in our mining business - large scale assets with long lives, low cost and geologic potential to support growth through exploration and development.”
Read more
Freeport-McMoRan makes major cuts
Subscribe
