Freeport-McMoran (FCX) Outlook Raised to Stable by S&P; Sees Steady Operating Performance Over Next 24 Months

Standard & Poor's Ratings Services said today it affirmed its 'BBB' corporate credit rating on Phoenix-based Freeport-McMoRan Inc. (NYSE: FCX). At the same time, we revised the rating outlook to stable from negative.

The ratings affirmation reflects Freeport's unchanged "satisfactory" business risk and "intermediate" financial risk profiles.

"The stable outlook reflects our view that Freeport-McMoRan Inc.'s operating performance will remain steady over the next 24 months, given our view that copper and oil and gas prices will be relatively stable," said Standard & Poor's credit analyst William Ferara.

We expect Freeport will produce debt to EBITDA of about 2x in 2014, with debt leverage roughly in this area irrespective of most reasonable commodity price and volume conditions.

We could lower the ratings if commodity prices dropped significantly and remained depressed, causing the company's financial ratios to deteriorate. Specifically, we could lower the ratings if debt to EBITDA rose and stayed above 3.5x and FFO to total debt remained less than 30% without any clear prospects for improvement. Higher-risk investments in the oil and gas business could also lead to a downgrade.

We could revise the outlook to positive if the company sustained debt leverage notably below 1.5x under most reasonable commodity price and volume conditions, maintained a less aggressive capital spending program, and had a lower proportion of cash flows from the oil and gas business.

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