Energy takeover is a clear sign of the metals-to-energy shift

Freeport-McMoran announced a $6.9B takeover of Plains Exploration, an oil company.

Both companies are based in the US, so there are no direct FX implications but an copper/gold mining giant investing its free cash flow in the oil industry is telling.

It bodes well for takeovers/investment in Canada’s oil industry and the US bakken fields. It’s also another sign that the Australian mining boom is over.

Author: Adam Button

Adam Button is the managing editor of ForexLive™. He was previously the chief currency strategist at XForex and has also worked with Intermarket Strategy. Adam believes there's an edge in knowing every tidbit of news. He was formerly the head of the markets team at the Canadian Economic Press and is a graduate of Ryerson University. Adam lives in Montreal, follow him on Twitter: @FX_Button.

4 Comments

  1. I am building AUD Shorts and was scratching head since yesterday about the behavior of A/U after the rate cut. However, this explanation makes sense…
    [QUOTE]The Aussie rose after the Reserve Bank of Australia (RBA) lowered interest rates to 3.00% as widely expected. The central bank did not give forward guidance on future rate cuts, leading some market commentators to conclude that this may
    be the last rate cut in awhile[UNQUOTE]
    Ref: http://www.dbs.com/TreasuresPrivateClient/Documents/PDF/NewEngSnapshot05Dec.pdf

  2. On a different tack, I would assume that mining companies spend a fair bit on fuel to run their plants and machinery. Maybe getting in at source level is a way to reduce costs as well a the potential new revenue stream.

  3. That’s a bit fanciful HMR. Plains has 292 million barrels of reserves. A company could never use that much fuel.

  4. I meant that a by-product of buying an oil company is a possible reduction in fuel costs for your core business.

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