Investopedia: Freeport McMoRan Announces A Real Doozy

Shareholders of copper giant Freeport-McMoRan (NYSE:FCX) had been waiting a while for the company to "do something," and they certainly got their wish on Wednesday, though almost certainly not in the fashion they were expecting. While many analysts and investors had been looking for Freeport-McMoRan to announce a big move with its capital, either a sizable buyback/special dividend or further diversification in mining, almost nobody expected the big move into energy that the company announced Wednesday morning.

Not only does the sheer size of the transactions make this a risky move for Freeport-McMoRan, but so too do the details. In buying Plains Exploration & Production (NYSE:PXP) and McMoRan Exploration (NYSE:MMR), Freeport is buying two companies that are not exactly non-controversial assets in their own right. Consequently, this looks like a pretty high-risk/high-reward transaction for this copper mining giant.

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Investopedia: Chesapeake Making The Best Of A Tough Situation

Here's a question for natural gas investors to ponder: How much growth do you really want? Natural gas prices are still low and reserves are a limited asset, so does it really make sense for these companies to cash out a meaningful amount of these assets too cheaply? Certainly, these companies need to fund their operations and establish enough production to hold valuable leases, but production at below-trend prices is a mixed blessing. 


Chesapeake Energy (NYSE:CHK), one of the largest independent natural gas producers, continues to walk that tightrope while remaining very highly leveraged to future rises in natural gas. (For more, see Natural Gas Industry: An Investment Guide.)


Decent Q1 Performance
Chesapeake reported over 6% sequential production growth for the first quarter, with realized prices up about 2%. Within those numbers, the company reported strong growth in its oil and liquids production - up nearly 9% on a sequential basis and up 56% from last year. 



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Foreigners Agree: Eagle Ford Shale Is The Place To Be

The Eagle Ford Shale area in Texas is a hot area for energy development that just keeps getting hotter. As two more deals from Monday highlight, companies from around the world are willing to pay up to get a piece of this potentially significant oil and gas resource in south Texas. 

CNOOC and Chesapeake
China National Offshore Oil Corporation (NYSE:CEO), or CNOOC as it is more commonly known, is shelling out potentially as much as $2.2 billion for a one-third stake in Chesapeake Energy's (NYSE:CHK) Eagle Ford acreage. Chesapeake's holdings total about 600,000 acres and appear to be relatively oil-rich - not an insignificant detail considering the considerable price differences between natural gas and oil these days.

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