Mining giant Freeport-McMoRan (FCX) said Tuesday that it will cut a quarter of its oil and gas workforce after posting a $4.2 billion first quarter net loss.
The company said the decision follows a formal process conducted during the first quarter “involving multiple third-party oil and gas industry and financial participants to evaluate alternatives” for its oil and gas business.
“Further weakening in oil and gas prices and negative credit and financing market conditions during first quarter had a significant unfavorable impact on the process,” the company said.
While the process did not identify a buyer for the entire oil and gas business, FCX said a number of parties have interest in select assets.
The company said it will continue to engage in discussions with parties who are interested in potential asset or joint venture transactions.
FCX said that, in the interim, it is taking immediate steps to reduce oil and gas costs further.
The Arizona-based company confirmed that it will cut its oil and gas workforce by 25 percent.
According to the Wall Street Journal, the headcount reduction plan will eliminate 325 jobs.
FCX expects to record a charge of $40 million in second quarter associated with workforce reductions and other restructuring costs.
The company is also implementing a new management structure for its oil and gas business.
“The newly structured oil and gas management team is actively engaged in managing costs and developing plans to preserve and enhance asset values,” the company said.
FCX’s cash production costs for its oil and gas operations fell to $15.85 per barrel of oil equivalent in the first quarter, down from $20.26 per BOE in first-quarter 2015 thanks to increased production from the deepwater Gulf of Mexico and ongoing cost reduction efforts.
FCX’s cash operating margin per BOE had realized revenues of $23.79 per , down from $43.71 per BOE in the year ago quarter.
Cash operating margin per BOE fell to $7.94 in the first quarter, down from $23.45 per BOE a year ago.
Capital expenditures for oil and gas operations in first quarter totaled $480 million in the United States, including $258 million incurred for deepwater GOM and $225 million associated with the change in capital expenditure accruals along with $43 million primarily associated with prior period costs in Morocco.
Capital expenditures for oil and gas operations for 2016 are estimated to total $1.5 billion, excluding $800 million in idle rig costs that are expected to reduce operating cash flows.
About 90 percent of the 2016 capital budget is expected to be directed to the GOM.
FCX booked a first quarter net loss attributable to common stock of $4.2 billion, or a loss of $3.35 per share.
After adjusting for net charges totaling $4 billion, or $3.19 per share, first quarter adjusted net loss attributable to common stock totaled $197 million, or $0.16 per share.
“We believe the quality and scale of our assets provide opportunities for significant debt reduction while retaining a substantial business with attractive low-cost, long-lived reserves and resources that will enable our shareholders to benefit from improved conditions in the future,” FCX president and CEO Richard C. Adkerson said.