Freeport beats Street, looks at sales but in no rush

Reuters

By Allison Martell and Nicole Mordant

Oct 22 (Reuters) - Freeport-McMoRan Copper & Gold Inc reported better-than-expected third-quarter results onTuesday, lifting its shares 4 percent, and the company said itwas still looking at asset sales but was not under any pressureto do them quickly.

Freeport, the world's No. 1 publicly listed copper producer,repeated that it was considering ways to reduce its debt levels, through asset sales, joint ventures or adjusting capitalspending plans.

"We are in a position where we ... don't have to doanything," Chief Executive Officer Richard Adkerson said on aconference call. "Anything we do ... will be done in a way toenhance shareholder value."

The Phoenix, Arizona-based company has said it aims to cutits debt load to $12 billion over the next three years.

Debt levels spiked after Freeport earlier this year boughtenergy companies Plains Exploration & Production Co and McMoRanExploration Co for $9 billion. Total debt as of Sept. 30 was$21.1 billion, little changed from $21.2 billion as of June 30.

Freeport said in July that it had started a sale process forsome of its newly acquired oil and gas projects in the Gulf ofMexico.

Although the sale process was continuing, company officialssaid on Tuesday, it might make more sense to not immediatelysell some of these assets, such as conventional oil and gasassets on the shelf of the Gulf of Mexico.

"We are debating entirely whether we just might be better tocontinue to operate those fields for a while and get those bigwells on and sell some at a later date," said James Flores,chief executive and president of Freeport-McMoRan Oil & Gas.

A later date could be "within months" or "maybe next year,"he said.

GRASBERG AGREEMENT

Adkerson said Freeport overnight had signed a two-year laboragreement with workers at its massive Grasberg copper and goldcomplex in Indonesia. A tentative deal at Grasberg, the world'ssecond-biggest copper mine, was reached earlier thismonth.

"The good news with that is that we avoided any kind of workstoppage. The strike two years ago was a major negative for allthe stakeholders involved," Adkerson said. The company agreed toincrease base salaries by 10 percent in both 2013 and 2014, hesaid.

Adkerson said Freeport hoped that it could resolve byyear-end long-running contract talks with the Indonesiangovernment. Jakarta is pushing miners, especially foreign-ownedoperations like Freeport's unit, to add value to Indonesianexports by building smelters.

Freeport's current contract to operate Grasberg, in Papuaprovince, expires in 2021. Contract renegotiations have rumbledon for more than a year, with the government seeking biggerroyalty payments, commitments on domestic processing, and stakesales by foreign miners so as to increase domestic ownership.

EARNINGS BEAT

Freeport's third-quarter earnings beat came on the back of agood performance from its recently acquired oil and gasoperations and despite lower metals prices that weighed onprofits.

"A very big quarter for them," said Garrett Nelson, ananalyst with BB&T Capital Markets. "The beat was mainly drivenby the oil and gas segment, where sales, realizations andproduction costs all came in better than what we had estimated."

Sales of copper, gold and molybdenum rose in the quarter,but the prices of all three metals fell from a year earlier.

Net income slipped to $821 million, or 79 cents a share,from $824 million, or 86 cents, a year earlier. Revenue rose to$6.17 billion from $4.42 billion, boosted in part by the oil andgas acquisitions.

Analysts had expected earnings of 62 cents a share onrevenue of $5.7 billion, according to Thomson Reuters I/B/E/S.

Freeport kept its full-year sales forecasts unchanged at 4.1billion pounds of copper and 1.1 million ounces of gold.

Freeport shares were up $1.42 to $36.46 in afternoon tradeon the New York Stock Exchange.

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