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Having diversified into oil drilling like at this ultra-deepwater site in the Gulf of Mexico, resource company Freeport-McMoRan has seen performance wane. Image source: Freeport-McMoRan.

Buying up Plains Exploration and McMoRan Exploration in 2013 had seemed like such a prescient purchase for copper and gold miner Freeport-McMoRan (NYSE:FCX), even if it did cause the debt on its balance sheet to become bloated. When its mining operations at the massive Grasberg mine in Indonesia were put on hold soon after the purchases due to a spate of accidents, it was the energy component of its operations that had kept revenues flowing into its coffers.

And the subsequent bursting of the commodities price bubble causing the value of precious metals to tumble made Freeport's diversification into oil and gas appear smart and far-sighted. After all, oil was looking fairly resilient in comparison.

Unfortunately, even the energy industry is getting crushed by dramatically lower prices and Freeport-McMoRan is being dragged down by its twin anchors of Plains Exploration and McMoRan Exploration. It's already written off over $5 billion related to its investments in them, almost $2 billion of which is being assigned to goodwill, an admission it overpaid for the drillers. Shares of Freeport are down 70% over the past year.

So news that billionaire activist investor Carl Icahn has taken a big stake in resource and energy play is rightly creating a stir.

Icahn disclosed last week that he had established an 8.5% position in Freeport worth almost $1 billion, making him one of the company's biggest shareholders. His filing with the SEC says he wants to discuss with management and the board of directors Freeport's "capital expenditures, executive compensation practices and capital structure as well as curtailment of the Issuer's high-cost production operations."

Should investors think this means they're about to see the two energy plays spun out again? Could be.

Freeport bought Plains and McMoRan in 2013 for around $9 billion and the assumption of some $11 billion in debt, a move that angered a lot of stock owners who had bought into a mining operation, not an oil driller. The cozy relationship between the three companies also didn't sit well with investors: Not only was McMoRan's CEO also Freeport's chairman, but Plains also owned a third of McMoRan's stock. Directors who sat on both boards reaped a $131 million windfall from the transaction, Freeport Chairman James Moffett got $73 million, and Plains Chairman James Flores, who was also a McMoRan director, got a $200 million payout.

For all that money paid out, investors haven't gotten much in return, and it explains why Icahn is focusing on Freeport's capital expenditures.

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The massive Grasberg mine in Indonesia has been both a source of revenue for Freeport-McMoRan and expense. Image source: Freeport-McMoRan.

While Freeport spent more than half of its capital investments on mining activities, or $4 billion worth, some $3.2 billion also went into its oil producing capabilities, draining its bank account and leaving just of $460 million in cash. At the end of fiscal 2013, it had nearly $2 billion in the bank. It's gotten so bad, even Freeport itself is talking about spinning off at least part of the oil business to keep financing the mining operations. It's also said it is cutting its capex budget by 25% this year to $4 billion, down from its prior estimate of $5.6 billion, which was already below the current year budget of $6.3 billion.

It would represent the second time Freeport has spun off McMoRan.

Back in the early 1990s, McMoRan's oil assets were actually part of Freeport's fold, but it wanted to focus on its core mining activities instead, so it spun off the oil and gas driller. The promise that Freeport saw in McMoRan was its ultra-deepwater reserves locked deep beneath the Gulf of Mexico salt geology at depths of 25,000-35,000 feet. At the time, McMoRan had said it expected to hit reserves of multi-trillion cubic feet.

Reuniting with its former progeny wasn't the first time a miner had pursued such a strategy, as BHP Billiton had pursued a similar dual track, but McMoRan was a much riskier bet because going to such depths as it proposed is not easy or cheap.

With Carl Icahn on board, it's become clear there are opportunities for dramatic cost savings, and while Freeport-McMoRan says it welcomes the chance for a dialogue with any of its investors, management is going to be hard-pressed to justify how it's conducted business thus far. Breaking up the resource and energy company into its constituent parts may become the first order of business.

Rich Duprey has no position in any stocks mentioned. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.