A Quick Look at What Fueled Freeport's Earningshttp://www.fool.com/investing/general/2013/07/23/a-quick-look-at-what-fueled-freeports-earnings.aspx Matt DiLallo
July 23, 2013
Shares of newly minted global resource company, Freeport-McMoRan (NYSE: FCX), are up over 3% after the company reported its second-quarter earnings. The company beat Wall Street's earnings estimate, though its revenue was a little light. Let's take a quick look at what went down in the quarter.
Fueling the numbers
In one word: oil. Freeport's $19 billion acquisition of a pair of oil and gas companies added $265 million in net income and $0.27 per share to its profits for the quarter. These results only include about a month's worth for both companies because the two deals didn't close until early June. If Freeport didn't make these big bets, then the quarter would have been much worse.
Instead, high oil prices this past June helped pad Freeport's bottom line. Freeport was able to realize $97.42 per barrel of oil produced, which was about 94% of the price of Brent crude that month. When adding back natural gas and liquids, the company was able to realize revenue of $74.37 per barrel of oil equivalent against low production costs of just $16.58 per barrel oil equivalent, leading Freeport to pocket the difference as a very nice profit.