FCX Freeport McMoRan Inc

By John W. Miller And Tess Stynes 

Freeport-McMoRan Inc. posted a big third-quarter loss tied to its flailing oil and gas operations and stated bluntly that it sees its future in mining copper around the world.

Phoenix-based Freeport, the U.S.'s biggest mining company, has been in turmoil as falling energy prices have exposed a disastrous investment in oil and gas drilling. The fallout of that investment kept biting in the third quarter, with Freeport reporting a loss of $3.8 billion, or $3.58 a share, compared with a year-earlier profit of $552 million, or 53 cents a share. A write-down of $3.5 billion on the oil and gas division accounted for the majority of the red ink.

The company is under increased scrutiny following a buy-in by activist investor Carl Icahn, who first disclosed an 8.5% stake in Freeport in August. Freeport managed to pre-empt Mr. Icahn's initial round of criticism, by almost simultaneously announcing that it would slash 2016 capital spending by 29%, cut expected copper production by 150 million pounds, and eliminate about 10% of its U.S. workforce of roughly 15,600. But Mr. Icahn has secured two board seats and is agitating for more change.

At the top of the to-do list is Freeport's oil and gas business, which it significantly expanded in 2013 when it bought McMoRan Exploration Co. and Plains Exploration & Production Co. for a total of $9 billion. The purchase, which saddled the company with a heavy debt load, also came just ahead of the oil-price rout. For the first six months of 2015, Freeport took a $4.24 billion charge related to depreciating oil and gas reserves.

On Thursday, it reiterated that options for the energy assets included an initial public offering, a joint venture, a spinoff, and "further spending reductions."

Write to Tess Stynes at tess.stynes@wsj.com

More clearly than ever, Freeport said Thursday that its strategy is to focus on copper, which it digs up at massive mines in Arizona, Peru, Chile, Indonesia and the Democratic Republic of Congo. The orange-tinted metal is used to make pipes and wiring, and, despite a 33% fall in copper prices in the past two years, is still a profitable enterprise, considered less prone to oversupply than iron ore, aluminum or coal.

The company is bullish on copper "based on the global demand and supply fundamentals." The copper market has suffered due to waning demand from China's the world's biggest consumer of the metal. But Freeport said it believes it is well positioned to cash in on copper's recovery due to "its established reserves and large-scale current production base, its significant portfolio of undeveloped resources, and its global organization of highly qualified dedicated workers and management."

Meanwhile, Freeport will continue to scale back operations, cutting 2015 copper production forecasts to 4.2 billion tons from 4.1 billion, and won't make any new investments, "until the market dictates," Chief Executive Richard Adkerson said on a call with analysts.

Write to John W. Miller at john.miller@wsj.com and Tess Stynes at tess.stynes@wsj.com

(END) Dow Jones Newswires

October 22, 2015 16:05 ET (20:05 GMT)

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