How Will Freeport’s Recently Announced Asset Sales Impact Its Revenue & EBITDA Breakdown?

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Freeport-McMoRan announced the signing of an agreement to sell its Deepwater Gulf Of Mexico (GOM) oil and gas assets yesterday, as the company looks to lower its outstanding debt. [1] The agreement to sell the Deepwater GOM assets, which account for an estimated 54% of the Oil & Gas division’s revenue (73 MBOE production per day out of an average of 135 MBOE per day for the Oil & Gas division in the first half of 2016), would reduce the share of the company’s Oil and Gas division in the company’s overall revenue and EBITDA. [1] [2] Similarly, Freeport’s agreement to sell off its African copper mining operations, announced earlier in the year and also targeted at debt reduction, will also materially alter Freeport’s revenue and EBITDA breakdown. With both these transactions expected to close in Q4, the composition of Freeport’s 2017 revenue and EBITDA breakdown would change as shown below.

FCX 2017E Revenue & EBITDA Breakdown

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Freeport-McMoRan
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Notes:
  1. Freeport-McMoRan Announces Agreement to Sell its Deepwater Gulf of Mexico Properties, Freeport-McMoRan News Release [] []
  2. Freeport-McMoRan’s Q2 2016 10-Q, SEC []