What Will Be The Impact Of Freeport’s Recently Announced Asset Sales On Its Indebtedness?
Freeport-McMoRan has announced the signing of an agreement to sell its Deepwater Gulf Of Mexico (GOM) oil and gas assets to Anadarko Petroleum, with debt reduction and a strategic realignment of the company’s business towards its copper mining operations the main reasons for the sale. [1] Freeport had entered the oil and gas business in 2013, hoping to diversify its business and benefit from participation in a market which at that time had robust near term growth prospects. However, given the extended downturn in both copper and oil prices, Freeport has been forced to reconsider its priorities, with the company’s heavy indebtedness amid a bleak business environment impacting its credit rating. [2] In an effort to lower its debt, a large proportion of which can be traced to the acquisition of the oil and gas business, the company completed a stake sale in its Morenci copper mine in May, in addition to announcing the sales of its African copper mining business and a part of its oil and gas business (Deepwater GOM assets). These asset sales could improve Freeport’s Net Debt/EBITDA by around 12%, as illustrated below.
Have more questions about Freeport-McMoRan? See the links below.
- What Is Freeport-McMoRan’s Fundamental Value Based On 2015 Results?
- What Is Freeport-McMoRan’s Revenue And EBITDA Breakdown?
- How Has Freeport-McMoRan’s Revenue Composition Changed Over The Last 5 Years?
- By What Percentage Did Freeport-McMoRan’s Revenue & EBITDA Decline Over The Last 5 Years?
- By What Percentage Can Freeport-McMoRan’s Revenue & EBITDA Change Over The Next 3 Years?
- How Will Freeport-McMoRan’s Revenue Composition Change by 2020?
- Why Have Copper Prices Declined Over The Past Year?
- Why Is China Important For The Global Copper Industry ?
Notes:
- Will Freeport Stock Recover To Pre-Inflation Shock Highs Of $52 Per Share?
- What To Expect From Freeport’s Q2 Results
- How Is Freeport Stock Faring Amid Volatile Copper Prices?
- Copper Prices Have Recovered A Bit. Is Freeport Stock Worth A Look?
- Lower Copper Prices Will Weigh On Freeport’s Q3 Results
- What’s Happening With Freeport-McMoRan Stock?
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Notes:- Freeport-McMoRan Announces Agreement to Sell its Deepwater Gulf of Mexico Properties, Freeport-McMoRan News Release [↩]
- Moody’s downgrades FCX’s ratings, assigns B1 CFR; outlook negative, Moody’s Investors Service [↩]