July 23, 2015 / 12:46 PM / 3 years ago

UPDATE 2-Freeport-McMoRan profit beats expectations; shares slide

(Recasts with bigger-than-expected adjusted profit, adds analyst’s comment, year-earlier prices, capital spending plans)

By Susan Taylor

July 23 (Reuters) - Diversified U.S. miner and energy producer Freeport-McMoran Inc reported an unexpectedly strong adjusted profit on Thursday as sales of the metals and oil it produces rose, but its hefty debt load swelled and it also posted a big net loss.

The Phoenix, Arizona-based company’s net loss of $1.85 billion, or $1.78 per share, resulted from writedowns on its oil and gas properties. Freeport shares were down 3 percent at $14.58 on the New York Stock Exchange after an opening gain.

Excluding one-time charges of $2 billion, Freeport’s adjusted profit was 14 cents a share, well above analysts’ consensus expectation of 7 cents a share, according to Thomson Reuters I/B/E/S.

“The outperformance versus our estimate was due to higher copper, gold, and oil sales than expected, combined with lower copper net cash costs, partially offset by weaker realized oil and gas prices,” RBC Capital Markets analyst Fraser Phillips said in a note to clients. Phillips had expected adjusted earnings of 7 cents a share.

Debt notched higher to $20.9 billion at quarter’s end from $20.3 billion at the close of March. Freeport increased its debt in 2013 as it acquired two oil and natural gas producers, seeking to diversify from copper, gold and molybdenum mining.

The company said it will continue to squeeze costs and capital spending as it tries to improve the health of its balance sheet.

Freeport maintained its full-year sales forecast of 4.2 billion pounds of copper, 1.3 million ounces of gold, and 52.3 million barrels of oil equivalent. It trimmed its molybdenum output estimate to 93 million pounds from 98 million pounds.

The average realized copper price in the quarter was $2.71 a pound, down from $3.16 in the year-before quarter. Sales of 964 million pounds largely matched last year’s 968 million pounds.

Sales of 13.1 million barrels of oil equivalent were down from 16 million barrels a year earlier, and average prices fell to $67.61 a barrel from $95.50.

Gold production more than doubled to 352,000 ounces from 159,000 ounces, at an average price of $1,174 per ounce, down from $1,296.

Freeport maintained its 2015 capital spending estimate of $2.8 billion for its oil and gas unit and $2.5 billion for mining projects.

Cash totaled $466 million as of June 30, Freeport said.

Early this year, Freeport cut its dividend by 84 percent and gave up plans to reduce debt to $12 billion by end 2016. (Reporting by Susan Taylor; Editing by Franklin Paul, Bernadette Baum and Peter Galloway)

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