| Understanding Freeport-McMoRan’s Energy Strategy | |
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Freeport-McMoRan’s 2Q15 Earnings: An Investor's Guide (Continued from Prior Part) Freeport McMoRan’s energy strategy
Previously, we looked at Freeport-McMoRan’s (FCX) 2Q15 earnings. We also explored some of the major growth opportunities Freeport is pursuing in the copper business. Now we’ll take a look at Freeport-McMoRan’s energy strategy. The company continues to make capital investments in its oil and gas business despite lower energy prices.
Lower crude oil prices
The above graph shows the recent movement in WTI (West Texas Intermediate) crude oil prices. Falling prices have prompted energy exploration companies (XOP), including ConocoPhillips (COP) and Suncor Energy (SU), to rethink their business plans. Freeport has reduced its capital expenditure budget for its energy business and even sold some assets last year.
However, the company continues to invest in select growth projects. Freeport’s current strategy is to invest in lower-risk drilling and tieback opportunities. In tieback opportunities, Freeport looks for lower-risk drilling facilities near its existing production facilities. This arrangement requires lower capital than a Greenfield development project, since Freeport’s existing infrastructure provides it with a competitive advantage.
Increase in production
As we’ve already seen, Freeport has managed to reduce its cash production costs in 2Q15. Freeport expects to further increase its energy (XLE) output over the next couple of years. This would lead to economies of scale as the fixed costs get spread out. This would also bring down unit production costs.
Lower unit production costs would help Freeport make some money even if crude oil hovers around $50 per barrel.
In its 2Q15 earnings conference call, Freeport said it’s looking at several opportunities. But does the current market scenario leave Freeport many alternatives? We’ll explore that in the next part of this series.
Continue to Next Part Browse this series on Market Realist:
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VanEck Vectors Global Alternative Energy ETF
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PRODUCTEUR |
CODE : FCX |
ISIN : US35671D8570 |
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ProfilIndicateurs de MarchéVALEUR : Projets & res.Communiqués de PresseRapport annuelRISQUE : Profile actifsContactez la cie |
Freeport McMoran est une société de production minière de cuivre et d'or basée aux Etats-Unis D'Amerique. Freeport McMoran est productrice de cuivre, d'or, d'argent, de cobalt et de molybdène au Chili, au Perou, en Indonesie et en Republique Democratique Du Congo, en développement de projets de cuivre au Perou, et détient divers projets d'exploration au Chili. Ses principaux projets en production sont CANDELARIA, EL ABRA, CHINO - MILL, HENDERSON, MIAMI - ROM LEACH, MORENCI - MILL, OJOS DEL SALADO, MORENCI et MORENCI - ROM LEACH au Chili, GRASBERG, SIERRITA et BAGDAD en Indonesie, TENKE FUNGURUME et TYRONE en Republique Democratique Du Congo et CERRO VERDE au Perou, son principal projet en développement est SAFFORD au Perou et ses principaux projets en exploration sont BAGDAD - ROM LEACH et CHINO - ROM LEACH au Perou et CERRO VERDE - MILL, CERRO VERDE - CRUSHED LEACH, CERRO VERDE - ROM LEACH, EL ABRA - ROM LEACH et CLIMAX au Chili. Freeport McMoran est cotée aux Etats-Unis D'Amerique et en Allemagne. Sa capitalisation boursière aujourd'hui est 2,1 milliards (1,9 milliards €). La valeur de son action a atteint son plus bas niveau récent le 06 mars 2020 à 10,00 , et son plus haut niveau récent le 18 septembre 2024 à 43,92 . Freeport McMoran possède 47 442 200 actions en circulation. |