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How’s Freeport doing with its energy assets?


Mar. 10 2015, Updated 1:06 p.m. ET

Freeport is becoming a major oil and natural gas producer

In the last part of this series, we looked at Freeport-McMoRan’s (FCX) mining portfolio. Over the last couple of years, the company has turned into a major oil and natural gas producer. In this part, we’ll take a close look at Freeport’s energy assets.

ConocoPhilips (COP) is a leading energy producer in the United States. COP currently forms 4.56% of the Vanguard Energy ETF (VDE).

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Oil and gas assets

Freeport has oil production facilities in California, Louisiana, and the Gulf of Mexico. Its energy portfolio consists of onshore and offshore production facilities in California. It also has facilities in the Haynesville Shale play in Louisiana.

Almost 90% of Freeport’s oil and gas revenues are from oil and natural gas liquids. Teck Resources (TCK) has three oil sands projects in Alberta, Canada. Southern Copper Corp. (SCCO) has a portfolio of coal assets.

Over the last couple of years, Freeport has made significant investments in oil and natural gas exploration. Oil and gas exploration was expected to be a key driver of Freeport’s earnings growth. However, Freeport has shelved its capital expenditure plans for its energy assets. It’s worth noting that all major energy producers have cut their capital expenditure targets for 2015.

Lower crude prices

Lower crude oil prices have negatively impacted all energy producers in the United States. Crude oil prices recently fell to a five-year low, as you can see in the above chart.

Freeport’s revenues have also been negatively impacted by lower copper prices. We’ll take a look at the latest trends in Freeport-McMoRan’s revenues in the next part of this series.


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