April 23, 2015 / 2:33 PM / 4 years ago

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

TORONTO (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.

Earlier this year, Freeport slashed its dividend by 84 percent, abandoned plans to reduce debt to $12 billion by the end of 2016 and said it was in talks to raise $900 million for oil projects through joint ventures.

Calling 2015 a “bridge year”, before spending slows and commodity production picks up, Freeport boosted its full-year capital spending on oil and gas operations by $500 million to $2.8 million and maintained a $2.5 billion budget for mining projects.

Full-year sales of copper are seen at 4.2 billion pounds, down from 4.3 billion pounds. Gold sales are seen at 1.3 million ounces, molybdenum at 95 million pounds, and oil at 52.3 million barrels of oil equivalent, down from 55.5 million barrels due to a production delay at Lucius and maintenance at Deepwater.

Excluding one-time charges, Freeport reported a loss of 6 cents a share. Analysts on average had expected a 7-cent loss, according to Thomson Reuters I/B/E/S.

Shares declined 1.8 percent to $20.19 on New York.

Reporting by Susan Taylor Editing by W Simon, Lisa Von Ahn and Andrew Hay

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below