Freeport Says Oil Decision Made to ‘Not Lose an Opportunity’
Freeport-McMoRan Copper & Gold Inc. (FCX), the largest publicly traded copper producer, said its foray into oil and natural gas is based on a “magnificent opportunity” rather than a reflection of copper’s prospects.
The company agreed to buy Plains Exploration & Production Co. (PXP) and McMoRan Exploration Co. (MMR) for $9 billion to “not lose an opportunity,” Javier Targhetta, senior vice president of marketing and sales, told reporters in Santiago, Chile today.
Freeport’s shares fell the most in four years on Dec. 5 when it announced an acquisition that marks the Phoenix-based company’s return to energy after 18 years. McMoRan was spun off from Freeport-McMoRan Inc. in 1994.
The board considered the deal “a magnificent opportunity to enter into the world of oil and gas,” Targhetta said today. The assets also offer a “natural hedge” for mining, he said.
Shares fell 0.3 percent to $33.66 at 12:02 p.m. in New York. The stock is down 12 percent since the deal was announced compared with a 1.6 percent decline by BHP Billiton Ltd. (BHP), the world’s biggest mining company.
Freeport, which mines in the U.S., Indonesia, Africa and Chile, expects annual demand for copper to increase 3.2 percent through 2025, led by China and other emerging markets, Targhetta said in a presentation today.
The company doesn’t see “a light at the end of the tunnel” yet for a European recovery, he said.
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