On Tuesday, Freeport-McMoRan announced “additional initiatives to accelerate its debt reduction plans.” Freeport-McMoRan advised investors that it “will continue to focus on cost and capital management and cash flow generation from its operations under the current weak commodity price environment and is taking further immediate actions to accelerate its debt reduction plans and enhance shareholder value through pursuing asset sales and joint venture transactions.”
The company stated that several initiatives are currently being advanced, including an evaluation of alternatives for the oil and gas business (FM O&G) as well as several transactions involving certain of its mining assets. Freeport-McMoRan expects to achieve progress on these initiatives during the first half of 2016.
During 2015, Freeport-McMoRan took “aggressive actions to enhance its financial position in response to market conditions, including significant reductions in capital spending, production curtailments at certain North and South America mines and actions to reduce operating, exploration and administrative costs.” These actions included:
- A 29 percent reduction in estimated 2016 capital expenditures, including idle rig costs (from $5.6 billion in July 2015 to $4.0 billion in January 2016)
- Reductions of 350 million pounds in annual copper production and 34 million pounds in annual molybdenum production to improve cash flow at low prices
- A 28 percent reduction in estimated average unit net cash costs for the year 2016 ($1.10 per pound of copper estimated for 2016, compared with $1.53 per pound in 2015)
- A 19 percent reduction in estimated oil and gas cash production costs for 2016 (approximately $15 per BOE estimated for 2016, compared with $18.59 per BOE in 2015)
- Suspension of FCX’s annual common stock dividend of $0.20 per share (an approximate $250 million in savings based on 1.25 billion common shares outstanding at December 31, 2015)
- Completion of approximately $2 billion in equity sales from at-the-market equity programs
Richard C. Adkerson, President and Chief Executive Officer, said, “As we enter 2016, our clear and immediate objective is to restore FCX’s balance sheet and position the Company appropriately to enhance shareholder value in the current market environment. We are responding swiftly and decisively to achieve this objective. Our high-quality asset base provides opportunities for significant debt reduction while retaining a substantial business with attractive low-cost, long-lived reserves and resources that will enable our shareholders to benefit from improved conditions in the future. We achieved several important operational milestones during the fourth quarter while taking aggressive actions to adjust our plans in response to the decline in prices for our primary products.”
SUMMARY FINANCIAL DATA
| Three Months Ended | Years Ended | |||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||
| (in millions, except per share amounts) | ||||||||||||||||||||
| Revenuesa,b | $ | 3,795 | $ | 5,235 | $ | 15,877 | $ | 21,438 | ||||||||||||
| Operating (loss) incomea,b | $ | (4,100 | ) | $ | (3,299 | ) | $ | (13,382 | ) | $ | 97 | |||||||||
| Net loss attributable to common stockb,c,d | $ | (4,081 | ) | $ | (2,852 | ) | $ | (12,236 | ) | $ | (1,308 | ) | ||||||||
| Diluted net loss per share of common stockb,c,d | $ | (3.47 | ) | $ | (2.75 | ) | $ | (11.31 | ) | $ | (1.26 | ) | ||||||||
| Diluted weighted-average common shares outstanding | 1,177 | 1,039 | 1,082 | 1,039 | ||||||||||||||||
| Operating cash flowse | $ | 612 | $ | 1,118 | $ | 3,220 | $ | 5,631 | ||||||||||||
| Capital expenditures | $ | 1,298 | $ | 1,800 | $ | 6,353 | $ | 7,215 | ||||||||||||
| At December 31: | ||||||||||||||||||||
| Cash and cash equivalents | $ | 224 | $ | 464 | $ | 224 | $ | 464 | ||||||||||||
| Total debt, including current portion | $ | 20,428 | $ | 18,849 | $ | 20,428 | $ | 18,849 | ||||||||||||