Freeport-McMoRan's (FCX 2.23%) shares were in a bull mode for several months. The company's recent quarterly report confirms that Freeport-McMoRan is going in the right direction. More importantly, its stock is still attractively valued despite the fact it has gained 16% this year. So, should you consider adding Freeport-McMoRan to your portfolio?

Leading copper producer
Freeport-McMoRan produced 472 thousands of tons of copper in the third quarter. Its copper production was up 14% sequentially. Unlike most other metals' prices, copper prices were relatively stable in the second part of this year. Year to date, copper is down just 10%. Freeport-McMoRan states that demand from China is stronger than expected, and this supports the price.

Copper production of another leading producer, BHP Billiton (BHP -1.36%), has dropped 13% from the second quarter. More importantly, BHP Billiton actually sold its Pinto Valley mine for $650 million this month. Although BHP Billiton states that its copper production is expected to recover, the company is unlikely to become a leader in copper production.

Rio Tinto's (RIO 0.68%) copper production was up 11% sequentially and reached 162 thousand tons of copper. Rio Tinto has the right to receive production from Freeport's Grasberg mine in Indonesia if the production exceeds a predefined limit. However, Rio Tinto is not expecting any production from Grasberg this year, as mining is going through areas with lower grades.

Strong oil assets
Freeport-McMoRan also produces oil and natural gas. Following the acquisitions of Plains Exploration & Production and McMoRan Exploration, the company received oil and gas assets in the Eagle Ford and Haynesville plays, as well as the Gulf of Mexico.

90% of Freeport's oil and gas revenue comes from liquids, which is important in the current price environment. Natural gas prices have been low for several years, and currently there are no drivers that would push them higher in the near term.

On the contrary, oil prices are stable at comfortable levels. Freeport-McMoRan oil sales are exposed to LLS and Brent prices. It is a big advantage, as WTI crude has been volatile and stayed lower this year, and the spread between Brent and WTI is widening once again.

Debt reduction
The only thing that an investor should not forget about is Freeport's debt, almost half of which was amassed due to recent acquisitions. The debt stood at $21.1 billion at the end of the third quarter. The company has stated that it targets to reduce the debt to $12 billion in three years.

Freeport-McMoRan plans to do this while continuing its $1.25 per share annual dividend payment. This is important for income investors, as the company currently yields 3.41% and could certainly be a part of an income-oriented portfolio.

In the pursuit of this goal, Freeport-McMoRan would have to divest some of its freshly acquired assets. The company states that it is also looking at the opportunity for a master limited partnership involving some of its oil and gas assets. However, you shouldn't expect any drastic movements in the near term.

Bottom line
So, here's why Freeport-McMoRan is a good candidate for your portfolio. It's a diversified resource company with attractive assets that trades at less than twelve times future earnings. Copper is the least beaten down metal, and is likely to remain in this position or even rebound. Oil prices are stable, and Freeport-McMoRan is in a perfect position to profit from it. Debt management should not be a problem if there are no major shocks on the resource market. In addition, the stock provides a steady source of income.

All in all, I think that Freeport-McMoRan is worth a look at current levels.