In a release on Tuesday, the company said it is considering spinning off its oil and gas business to shareholders.
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The source also said the company continues to “piss money away” on the oil and gas business’ deep shelf assets in the Gulf of Mexico that are Moffett’s legacy, including Blackbeard, Davey Jones and Lafitte, which could be pared or shut down completely.
Phoenix copper mining and oil and gas company Freeport-McMoRan Inc.
Freeport also said on Tuesday it has reduced the size of its board to nine from 16.
Five directors who left the board were appointed to the board of its oil and gas business, FM O&G, including James Flores as chairman and CEO as well as Robert Allison Jr., Alan Buckwalter III, Thomas Fry III and Charles Krulak.
The moves come after “constructive discussions” with “many of its biggest shareholders”, Freeport said.
Freeport-McMoRan is moving fast as it deals with activist investor Carl Icahn and any ideas he might have up his sleeve. In a filing first disclosing the stake, Mr. Icahn had said the board’s composition was a potential problem. Two other directors have retired from the Freeport-McMoRan board. Many have cut spending as a result.
Freeport shares were up 3.5 percent at $11.57 in premarket trading on Tuesday.
Freeport’s main value still lies in its massive copper reserves, say analysts and shareholders.
Freeport McMoRan has been mining copper, silver and gold at Grasberg in remote Indonesia since the 1970s.
Commodity prices have been slammed this year, including copper, which fell to the lowest level in six years. In the second quarter, Freeport reported an average price of $ 2.71 a pound for its copper, and an average unit cash cost of $1.50 a pound.
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“We believe a separation of the two businesses would be welcomed by the majority of investors we speak with”, Clarksons Platou analyst Jeremy Sussman said in a note, adding investors are not keen to see cash flow from the copper business paying for capital expenditures on the energy side. “The oil and gas company won’t be allowed to rob the piggy bank”.
