Freeport-McMoRan Closes Acquisition of Apache's GOM Stakes - Analyst Blog


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Freeport-McMoRan Copper & Gold Inc. 's ( FCX ) subsidiary - Freeport-McMoRan Oil & Gas ("FM&OG") - announced that it has completed the acquisition of some of Apache Corporation 's ( APA ) interests in the Deepwater Gulf of Mexico ("GOM").

After the exercise of preferential purchase rights by other working interest owners in the Lucius project, FM O&G bought 51.2% of Apache's 11.7% working interest in the oil and gas development project, 100% of Apache's 12.5% working interest in the Heidelberg oil development project along with several exploration leases for $919 million in aggregate. FM O&G now owns about 25.1% working interest in Lucius.

The acquisition, which Freeport announced in May, was financed with proceeds from the sale of FM O&G's Eagle Ford Shale assets, which closed on Jun 20. According to Freeport, the estimated combined after-tax net proceeds from the transactions are roughly $1.8 billion.

In Apr 2014, Freeport reported earnings of 49 cents per share for first-quarter 2014, a decline of roughly 27.9% from the year-ago earnings of 68 cents. Profit fell 21.3% year over year to $510 million, hurt by lower copper and gold pricing.

The results include net non-cash mark-to-market gains of a penny per share associated with crude oil and natural gas derivative contracts. Barring that impact, earnings were 48 cents a share in the first quarter, surpassing the Zacks Consensus Estimate of 42 cents.

Revenues rose roughly 8.8% year over year to around $4.99 billion in the first quarter, but missed the Zacks Consensus Estimate of $5.12 billion.

Freeport currently retains a Zacks Rank #3 (Hold).

Other mining companies with favorable Zacks Rank include Thompson Creek Metals Company ( TC ) and Kazakhmys plc ( KZMYY ). Both the companies sport a Zacks Rank #2 (Buy).

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