Freeport’s 3Q16 earnings call
Earlier, we looked at consensus estimates for Freeport-McMoRan’s (FCX) 3Q16 earnings. In this article, we’ll look at some key updates investors (DIA) should watch for in Freeport’s 3Q16 earnings call.
GOM asset sale
Freeport’s decision to sell its Deepwater Gulf of Mexico (or GOM) properties hasn’t gone over well with some market participants. According to a CNBC report, some analysts think Freeport’s GOM asset sale is “cheap.” CNBC’s report cites a Deutsche Bank research report, which says that the asset sale is of “low value.” Deutsche Bank values the property at $2.9 billion, while Freeport is selling the assets to Anadarko Petroleum (APC) for a cash consideration of $2 billion and up to $150 million in contingent payments.
It will be interesting to see what Freeport’s management thinks about its GOM asset sale. Freeport’s last two asset sales transactions have failed to excite investors.
Freeport must sign an amended work contract with the Indonesian government. The company needs assurance from the government so that it can proceed with an investment to convert its Grasberg mine into underground operations. Rio Tinto (RIO) (TRQ) is Freeport’s partner at the Grasberg mine.
According to Indonesian law, a new contract can’t be extended before 2019, two years before the current contract expires. During Freeport’s 3Q16 earnings call, investors should watch for updates on Freeport’s discussion with the Indonesian government. There are several issues that Freeport’s Indonesia operations face. Read What Issues Does Freeport Face in Indonesia? to find out more.
Don’t forget to check out our Copper page for Freeport’s 3Q16 post-earnings analysis. In the meantime, you can read Freeport-McMoRan’s 4Q16 Outlook: Can Its Stock Return to Life? to explore Freeport’s near-term outlook.