Company Update (NYSE:FCX): Freeport-McMoRan Inc Announces Significant Reduction in Oil and Gas

Freeport-McMoRan Inc (NYSE:FCX) provided an update on its progress in reducing costs and capital spending.

In response to current oil and gas market conditions, Freeport-McMoRan Oil and Gas (FM O&G) is deferring investments in several long-term projects. In addition, FM O&G has revised its estimate of the start-up of initial production from its recent drilling success in the Horn Mountain area to 2016 from the previously estimated start-up in 2017. This revised operating plan will allow FM O&G to continue to grow production and enhance cash flow in a weak oil and gas price environment.

The company announced the following revisions to its oil and gas capital expenditure and production outlook:

2015e 2016e 2017e
July 23, 2015 Forecast
Capital Expenditures ($ in billions) $ 2.8 $ 2.9 $ 2.9
Production (MBOE per day) 143 151 173
Revised Plan
Capital Expenditures ($ in billions) $ 2.8 $ 2.0 $ 2.0
Production (MBOE per day) 145 163 170
Capital Expenditures ($ in billions) $ $ (0.9 ) $ (0.9 )
Production (MBOE per day) 2 12 (3 )

The revised plans, together with the previously announced potential initial public offering of a minority interest in FM O&G and potential other actions, will be pursued as required to fund oil and gas capital spending within cash flow for 2016 and subsequent years.

FCX is also completing a review of operating plans at each of its global copper and molybdenum operations and will revise operating and capital plans to strengthen its financial position in a weak copper price environment. The revised plans will target lower operating and capital costs to achieve maximum cash flow under the current market conditions. Production at certain operations challenged by low commodity prices will be curtailed. The company expects to complete this review promptly and will report its revised plans during the third quarter of 2015.

In addition, FCX will continue to assess opportunities to partner with strategic investors potentially interested in investing capital with FCX in the development of its oil and gas and its mining properties. FCX has a broad set of assets with valuable infrastructure and associated resources with attractive long-term production and development potential.

James R. Moffett, FCX’s Chairman, Richard C. Adkerson, Vice Chairman and Chief Executive Officer and James C. Flores, Vice Chairman and FM O&G Chief Executive Officer, said, “The steps we are taking are necessary under current market conditions to strengthen our financial position and preserve our large resource base for improved future market conditions. Our high quality portfolio of long-lived assets, flexible operating structure and experienced management team position FCX for success. Our “leaner, longer” plan at FM O&G will enhance near-term cash flow while preserving long-term growth opportunities.” (Original Source)

Shares of Freeport-McMoRan yesterday at $11.04. FCX has a 1-year high of $37.53 and a 1-year low of $10.93. The stock’s 50-day moving average is $16.36 and its 200-day moving average is $18.99.

On the ratings front, Freeport-McMoRan has been the subject of a number of recent research reports. In a report issued on July 28, Morgan Stanley analyst Paretosh Misra maintained a Buy rating on FCX. Separately, on July 24, Cowen’s Anthony Rizzuto reiterated a Buy rating on the stock and has a price target of $20.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Paretosh Misra and Anthony Rizzuto have a total average return of -10.2% and -5.7% respectively. Misra has a success rate of 36.0% and is ranked #3494 out of 3724 analysts, while Rizzuto has a success rate of 39.3% and is ranked #3303.

Freeport-McMoRan Inc, formerly Freeport-McMoRan Copper & Gold, deals in the mining of copper, gold and molybdenum.

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