Friday, April 24, 2015

Freeport considers energy spinoff two years after diversifying

Freeport considers energy spinoff two years after diversifying: "Arizona (Bloomberg) -- Freeport McMoRan Inc. is considering spinning off energy assets two years after agreeing to acquire them for $9 billion as it tries to finance development plans amid lower commodity prices. The assets were picked up when Phoenix-based Freeport bought McMoRan Exploration Co. and Plains Exploration & Production Co., re-entering the energy business after more than a decade. At the time of the deals, crude was trading at over $80/bbl. Oil fell to less than $44 this year, while the price of copper, which Freeport mines, has also dropped. “The markets have a funny way of turning on you,” Jim Bob Moffett, Freeport’s 76-year-old cofounder and chairman, said Thursday on the company’s earnings conference call. Freeport said it may hold an initial public offering for a minority stake in the oil and gas business. Doing so would go some way to undoing a diversification into energy that, at the time, was criticized by shareholder BlackRock Inc. for being unnecessary. Freeport shares are down 48% since it announced in December 2012 it was buying Plains and McMoRan Exploration. “If this is the path that Freeport ultimately chooses, it clearly indicates that management’s quest to find a strategic investor in its energy business has not worked,” Christopher LaFemina, an analyst at Jefferies Group LLC in New York, said in a note. Freeport is seeking to optimize its funding of the oil and gas projects it’s developing, which include wells in the Gulf of Mexico, Chief Executive Officer Richard Adkerson said on Thursday’s call."

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