Wednesday, December 5, 2012

Freeport McMoRan the New BHP Billiton?

Today, Freeport McMoRan Copper and Gold (FCX) announced that it has agreed to purchase both Plains Exploration and Production (PXP) and McMoRan Exploration (MMR).  While FCX and MMR have similar lineage and some crossover management, they are separate companies.  Plains is a big player in the Haynesville Shale by virtue of its joint venture with Chesapeake Energy.  While the team has scaled back its drilling activities this year, it is the biggest producer in the play.

I'm not entirely sure of the benefits of the deal to FCX other than the belief that oil and gas is going to be a good business going forward.  (It's also a bit of a save for MMR, which has been having trouble bringing on its marquee ultradeep Davy Jones well in the Gulf of Mexico.)  I can't help but thinking that this deal puts FCX in the same ballpark as BHP Billiton, which combines energy with mining and related businesses.

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