Fourth-quarter earnings at Freeport-McMoRan Copper & Gold (NYSE:FCX) were tarnished by slumping copper and gold prices. However, one bright spot for the company was its recently acquired oil and gas business. Those deals continue to look smart as it's providing the company with a solid combination of cash flow and growth.

Producing cash today
Since Freeport-McMoRan acquired the oil and gas businesses seven months ago, the combined entity produced $1.8 billion worth of operating cash flow. That's well above the $1.45 billion in capital expenses that Freeport-McMoRan reinvested into the division. That cash flow is being fueled by strong production from oil rich assets in the Gulf of Mexico, California, and the Eagle Ford Shale of Texas.

Production is coming in even stronger than Freeport-McMoRan's own expectations as it was able to exceed its production guidance last quarter. The company had guided to average daily production of 175,000 barrels of oil equivalent, or BOE/d. However, it ended up delivering 181,000 BOE/d thanks in large part to better than expected results from the Eagle Ford Shale.

What's really interesting, here, is that Freeport-McMoRan is taking a different approach than most of its oil and gas peers like Anadarko Petroleum Corporation (NYSE:APC) when it comes to the Eagle Ford Shale. Anadarko Petroleum is using the Eagle Ford Shale to fuel production growth as it continues to drill new wells. It has no plans to slow down as the company sees significant future production growth as even more new wells are drilled. In fact, Anadarko Petroleum has already identified more than 2,500 future drill sites that it expects to drill. While it won't be able to keep up the triple-digit annual production growth pace it has been enjoying, the company's significant future inventory will continue to fuel production growth.

Freeport-McMoRan, on the other hand, is instead using the Eagle Ford to fuel cash flow growth. In fact, despite the oil-fueled growth it has enjoyed in the past, Freeport-McMoRan is reducing its rig count in the Eagle Ford Shale from the eight it had running in the middle of last year down to just two rigs in 2014. While that will cause production to decline, it will boost the company's cash flow that it plans on investing elsewhere, as well as reduce debt.

Producing growth tomorrow
Looking ahead, Freeport-McMoRan still sees a lot of oil-fueled growth in its future. In the near term, that growth will come from the Lucius field in the Gulf of Mexico. Freeport-McMoRan, along with partners Apache Corporation (NASDAQ:APA), Anadarko Petroleum, and others expect to see the project begin production in the second half of 2014. The peak capacity of the project will be 80,000 barrels of oil and 450 MMcf of natural gas per day. Given that Freeport-McMoRan's stake is 23.3%, the completion of this project will add significant production growth and cash flow for the company next year.

In addition to that, the company should begin to see results from several of its deep natural gas exploration prospects in the shallow waters of the Gulf of Mexico as well as onshore Louisiana. The company sees these emerging opportunities holding high-quality prospects that have the potential to be developed into long-term, low-cost natural gas. What could make these opportunities even more intriguing in the future is the growth of natural gas exports, as these prospects are ideally located in close proximity to many of the proposed export terminals.

Investor takeaway
Copper and gold still carries most of the weight at Freeport-McMoRan. However, the company's move into energy really is paying off. Overall, it has the potential to move the needle in both the short and long term, which will really help given that metal prices remain low. 

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