| Freeport-McMoRan Reports 1Q15 Loss as Crude Oil Tumbles | |
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Freeport Reports 1Q15 Earnings: Key Takeaways for Investors (Part 3 of 5) (Continued from Part 2) Freeport’s 1Q results
Freeport-McMoRan (FCX) reported an adjusted loss of $0.06 per share in 1Q15. The company also incurred charges of $2.3 billion since it has written off the carrying value of its energy assets. In 2013, Freeport acquired Plains Exploration & Production Company for $16.2 billion. It was a major investment by Freeport in oil and gas production. Freeport also acquired Moran Exploration Company for $2.2 billion the same year.
Crude oil tumbles
As you can see in the above chart, crude oil prices have declined substantially since Freeport acquired these assets. Lower crude oil prices negatively impact companies engaged in oil and gas exploration. ConocoPhillips (COP), Petróleo Brasileiro (PBR), and SandRidge Energy (SD) are some of the leading energy companies. The iShares U.S. Energy ETF (IYE) tracks the American energy sector. ExxonMobil (XOP) is the largest holding of IYE, forming 21.8% of its portfolio.
Oil production down
Freeport produced 12.4 MMBOE (million barrels of oil equivalent) in 1Q15, down 22% on a year-over-year (or YoY) basis. Its realized revenues also fell 43% over this period. To add to Freeport’s woes, its unit cash production costs increased ~10% compared to 1Q14. Freeport’s revenues in 1Q15 are down 16% YoY, primarily due to lower energy sales.
Energy exploration business is capital-intensive in nature, and Freeport’s current leverage ratios don’t provide it the flexibility to borrow more. Apparently, it had to slash its dividend by 84% in a bid to control cash outflow. Freeport has also scaled back its debt reduction plan as commodity prices have corrected.
However, Freeport is looking at alternate ways to raise cash for its business. We’ll discuss some of these in the next part.
Continue to Part 4 Browse this series on Market Realist:
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Freeport McMoRan Copper and Gold Inc.
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PRODUCER |
CODE : FCX |
ISIN : US35671D8570 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Freeport McMoran is a gold and copper producing company based in United states of america. Freeport McMoran produces gold, copper, cobalt, molybdenum and silver in Chile, in Congo Dem. Rep. of, in Indonesia and in Peru, develops copper in Peru, and holds various exploration projects in Chile. Its main assets in production are CANDELARIA, EL ABRA, CHINO - MILL, HENDERSON, MIAMI - ROM LEACH, MORENCI - MILL, OJOS DEL SALADO, MORENCI and MORENCI - ROM LEACH in Chile, GRASBERG, SIERRITA and BAGDAD in Indonesia, TENKE FUNGURUME and TYRONE in Congo Dem. Rep. of and CERRO VERDE in Peru, its main asset in development is SAFFORD in Peru and its main exploration properties are BAGDAD - ROM LEACH and CHINO - ROM LEACH in Peru and CERRO VERDE - MILL, CERRO VERDE - CRUSHED LEACH, CERRO VERDE - ROM LEACH, EL ABRA - ROM LEACH and CLIMAX in Chile. Freeport McMoran is listed in Germany and in United States of America. Its market capitalisation is US$ 69.5 billions as of today (€ 65.2 billions). Its stock quote reached its lowest recent point on March 06, 2020 at US$ 10.00, and its highest recent level on April 23, 2024 at US$ 47.99. Freeport McMoran has 1 448 000 000 shares outstanding. |