UPDATE 2-Freeport-McMoRan eyes oil and gas unit IPO to fund growth

Thu Apr 23, 2015 2:52pm EDT
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(Recasts with possible oil and gas IPO, adds executive comment from conference call, growth outlook for oil and gas business)

By Susan Taylor

TORONTO, April 23 (Reuters) - Freeport-McMoRan Inc is mulling a public offering of its oil and gas business to help kick-start production growth for its energy business, along with joint ventures or asset sales, the diversified miner said on Thursday.

Despite a $2.4 billion writedown of its oil and gas properties in the first-quarter, contributing to a $2.5 billion net loss, Freeport said the outlook is promising due to strong drilling results, a deep exploration inventory, and low costs.

The Phoenix-based company said it would keep a majority stake in any spin-off, which could occur this autumn, if it proves the cheapest, most beneficial form of capital.

Weighted by a $20.3 billion debt load, Freeport has been studying several options to secure capital but found joint venture and private equity "very expensive", Chief Executive Richard Adkerson said.

"We're exploring the external option of the IPO - to accelerate that (oil and gas) business so it comes self-funding faster," he said on a conference call.

With no additional funding, Freeport expects oil and gas production to grow from about 143,000 barrels a day in 2015 to 173,000 in 2017. With capital, 2017 output could reach 217,000 barrels per day, it said.

Freeport's debt, up from $19 billion at the end of December, ballooned with its 2013 acquisition of two oil and natural gas producers, as it diversified its business beyond copper, gold and molybdenum mining.   Continued...