Freeport to Sell California Energy Assets for Up to $742 mln

Freeport-McMoRan Inc said on Friday it will sell onshore California oil and gas assets to Sentinel Peak Resources California for up to $742 million, part of the world's biggest listed copper miner's push to trim its multi-billion dollar debt.

Hard hit in recent years by a downturn in commodity prices, Phoenix-based Freeport is under pressure from activist investor Carl Icahn, its third-largest shareholder, to reduce net debt of $18.8 billion and boost valuation.

Under the transaction with private energy company Sentinel Peak, Freeport said it will receive $592 million in cash at closing and $50 million every year from 2018 to 2020 if the price per barrel of Brent crude oil averages $70 or more in the calendar year.

Net cash from the deal, backed by private equity firm Quantum Energy Partners, will be used to repay debt, said Freeport, which does not expect to record a material gain or loss on the transaction.

Freeport shares were up 2.5 percent at $9.88 after the announcement.

The transaction with Sentinel comes after Freeport Chief Executive Richard Adkerson said last month that the company had already made asset sales of more than $6 billion in 2016.

Freeport expects to reduce net debt to $10.5 billion-$13.2 billion by the end of 2017, Adkerson said in July, on asset sales and excess cash expected from higher mined volumes and metals prices.

Last month, Freeport announced the $2 billion sale of its deepwater Gulf of Mexico oil and natural gas assets to Anadarko Petroleum (APC).

That followed failed attempts to sell all or part of the oil and gas business, and withdrawal of a planned initial public offering of the unit.

Freeport debt ballooned with two ill-timed acquisitions of oil and natural gas producers in 2013, as it diversified its business beyond copper, gold and molybdenum mining.

In May, Freeport agreed to sell its prized majority stake in the Tenke copper mine in the Democratic Republic of Congo to China Molybdenum Co for $2.65 billion in cash.

After the Sentinel and Anadarko deals close, Freeport will have onshore oil and natural gas production in South Louisiana and on the Gulf of Mexico shelf, offshore oil production in California and natural gas production in Wyoming.

Last quarter, they produced an average 8.6 thousand barrels of oil and natural gas liquids and 78 million cubic feet of natural gas per day.

(By Susan Taylor, Additional reporting by Anet Josline Pinto in Bengaluru)