Freeport McMoRan (NYSE:FCX) is under attack from activist investor Carl Icahn. Or, perhaps, activist investor Carl Icahn is pushing Freeport to do the right thing by shareholders.

Which one is it? At this point it's hard to tell, but a quick look at what Icahn has done at another commodity company may provide some clues.

It all started with oil
Truth be told, the problems at Freeport stem back to a single decision: the 2013 acquisition of McMoRan Exploration Co. and Plains Exploration for roughly $9 billion plus the assumption of around $11 billion of debt. In hindsight, that one move pushed the copper and gold miner in a new direction -- at exactly the wrong time, since oil prices started to crater in mid-2014.

Three Freeport oil rigs on the water. Source: Freeport McMoRan.

The big weight on Freeport from this transaction has been the roughly $20 billion in debt it took on to get the deal done. Before it bought its way into oil, debt was a far more modest $3.5 billion. To give you some perspective, debt as a percentage of the capital structure was 15% before the deal and around 60% at the end of the third quarter. Adding insult to injury, the oil business is eating cash flow much faster than any of the company's other divisions while not providing nearly as much revenue.

Cue the activists
This is where Icahn comes in. It's not hard to figure out the big problems at Freeport. Commodity markets are in a funk, and it needs to cut costs. It's been doing that. But with a huge debt overhang, some industry watchers have been looking for bigger moves -- such as jettisoning the oil business.

In late August, Icahn announced that he had taken a large stake in the company. Investors reacted favorably, sending the shares smartly higher on the news. Since that point, he's managed to get representation on the board, and Freeport appears to be getting more aggressive with its spending cuts. What's more -- and this is the important one -- it's taking a deeper dive into the troubled oil and gas business, though there haven't been any big announcements just yet.  

But what should you be expecting from here? If history is any guide, some big changes.   

Freeport working on shore. Source: Freeport McMoRan.

Shifting gears
Take, for example, Chesapeake Energy Corporation (OTC:CHKA.Q), another commodity company Icahn took an interest in after it ran into trouble. Icahn helped to oust the CEO and co-founder, who had put the company on an acquisition binge that left it heavily indebted. (That sounds a little familiar.) The new CEO came in and immediately started to sell assets to pay down debt and work toward improving efficiency.

Falling oil prices have been a big hindrance to Chesapeake's turnaround effort, but the change in direction appears to have been the right course of action. At the very least, it's put the oil and gas driller in a much better position to weather the energy downturn. So far, it looks as if Freeport is moving down a similar path. But the big question remains: What to do with the oil business?

Selling it will probably mean a big loss right now because of the troubles in the industry. Spinning it off means you could get stuck owning an asset you probably don't want. And retaining it means it remains a cash drain. The choices aren't that good, and it helps explain why management has been doing "nothing," probably hoping that oil prices recover and turn a bad situation into a less bad situation.

But Icahn isn't likely to sit around waiting for that to happen. Moreover, the top brass should probably be worried about their jobs right now if Icahn's moves at Chesapeake are any indication.

In the end, Icahn appears to have caused Freeport to press a little harder on the gas pedal as it works to fix what ails it. That's a very good thing, but it suggests an entrenched management team that may have lost its way. Don't be surprised if there's a leadership change in the near future. Unfortunately, though, it looks as if the fixes available to solve the biggest problem, an ill-fated oil acquisition, aren't all that great right now.

So while Icahn's prodding is getting results, you may still be left with assets you don't want even as Freeport's business starts to improve. And while an outright sale of the division would mean admitting defeat, it would also mean an end to the drain and, presumably, help to reduce the debt load. That said, if there's a spinoff, at least you can make your own choice about whether to own the oil business.

Is Icahn good or bad for Freeport and its investors? That's still up in the air and will remain so until there's a decision on the oil business. But at least he's gotten the company to start paying closer attention to what ails it, that's one thing investors should be thankful for. Don't stop watching this slow-moving drama, however, because it could get exciting fast.