In a research report issued Monday, Deutsche Bank analyst Chris Terry reiterated a Buy rating on shares of Freeport-McMoRan Inc (NYSE:FCX) with a price target of $12.50, following the news that the company has entered into an agreement with private energy company, Sentinel Peak Resources, to sell its onshore California assets for $592 million plus an additional consideration of up to $150 million payable in certain circumstances.

Terry commented, “While Freeport has given up oil price optionality, the company is simplifying its business to focus back on copper, which we view positively. We believe this will be the last major asset sale for 2016. The deal will further assist Freeport’s balance sheet repair process; we now forecast Net Debt of $10bn by YE17. Our $12.50/sh Price Target (NAV based) is unchanged and we retain a Buy rating on valuation, a balance sheet inflection point, and expected corporate cost savings now that the company has largely exited O&G.”

“We now forecast Net Debt reducing from $18.9bn at the end of 2Q16 to $10bn at YE17 through a combination of 1) $2.6bn free cash flow (post interest), 2) $4.8bn proceeds from Tenke, GOM and California sales (4Q16 guidance for all) and 3) $1.5bn ongoing equity raise in 2H16. With the market slowly becoming less concerned with debt, the equity outlook should improve,” the analyst added.