Natural gas and oil sales, primarily from the United States, beat expectations in the first quarter for conglomerate Freeport-McMoRan Copper & Gold Inc. (FCX).

The largest publicly traded copper producer isn’t seeing much love from the commodities from which it draws its name. Instead it is relying on recently replenished U.S. gas and oil acquisitions to help revive earnings. A year ago FCX completed its friendly purchases of Plains Exploration & Production Co. (PXP) and McMoRan Exploration Co., now collectively FM O&G (see Daily GPI, Jan. 23, 2013).

FM O&G has lifted some earnings pressure from FCX, which has seen its fortunes fall in international copper mines, particularly in Indonesia. FM O&G Co-CEO Jim Flores in January predicted that 2014 would be the year when all things came together for the exploration unit (see Daily GPI, Jan. 22).

The company’s oil and gas unit sold 16.1 million boe in the first quarter, beating a January forecast of 15.3 million boe, “primarily reflecting higher Eagle Ford production volumes, continued strong performance in the Gulf of Mexico and stable production from California,” Flores said Thursday.

Natural gas sales volumes totaled 19.5 Bcf at a realized average price of $4.67/MMBtu. Oil output was 11.8 million bbl, with liquids totaling 1.1 million bbl.

In the Gulf of Mexico (GOM), sales volumes totaled 70,000 boe/d, while in the Eagle Ford Shale, volumes were 53,000 boe/d. California output was 39,000 boe/d. In the Haynesville Shale, Madden and other areas, production totaled 17,000 boe. Sales volumes averaged 179,000 boe/d, including 131,000 b/d of crude oil, 216 MMcf/d of natural gas and 12,000 b/d of liquids.

“Based on current sales volume and cost estimates for the remainder of 2014, cash production costs are expected to approximate $19.00/boe for the year…which is lower than the January 2014 estimate primarily reflecting the impact of higher estimated volumes,” said Flores.

Volumes are expected to average 176,000 boe/d for the year, 71% weighted to oil, 23% to gas and 6% to liquids. Annual estimates are 10,000 boe/d higher than an earlier estimate.

The U.S. portfolio is vast and deep, with reserves and production from the deepwater, and the emerging shallow water natural gas trend on the Outer Continental Shelf and onshore South Louisiana. Active development is bringing more oil and liquids, as well as from established production facilities onshore and offshore California. Gas resources in the Haynesville and from the Madden area in central Wyoming also contribute. Today, more than 90% of FCX’s oil and gas revenues are from oil and natural gas liquids, Flores said.

In March, FM O&G was the apparent high bidder on 20 tracts in the Central GOM Lease Sale 231, with a total investment planned of $330 million net (see Daily GPI, March 19).

“The winning bids were primarily focused on high-impact, drillable targets in the Mississippi Canyon, Atwater Valley and Green Canyon areas to complement FM O&G’s existing infrastructure and production facilities and add several new exploration plays,” said Flores. “The blocks, which cover approximately 106,000 gross acres, range in water depths up to 6,000 feet.” Bids remain subject to final approval by the Bureau of Ocean Energy Management; notification is expected by the second half of 2014.

First quarter results reflected “solid operating performance” from North America, South America and Africa “and a meaningful contribution from our oil and gas business.” Those gains were offset partially by the reduced output from Indonesia and lower copper prices.

Because of the mega-deal in the United States, FCX has trimmed spending from 2013 and is culling some assets. It also is looking for joint venture partners in some plays, Flores said.

Capital expenditures (capex) for oil and gas operations approached $581 million from January through March, including $277 million incurred for GOM activity mostly in the deepwater, $127 million for Eagle Ford, $126 million for the the OCS natural gas trend and $53 million for California. Capex from the unit is slated to fund operating cash flows for the year, now projected at about $3 billion, with half directed to the deepwater, $400 million for the Eagle Ford and $300 million for the OCS.

FCX net income in 1Q2014 fell to $510 million (49 cents/share) from year-ago profits of $648 million (48 cents). Sales, however, climbed to $4.99 billion from $4.58 billion. FM O&G’s realized revenues totaled $1.2 billion ($77.22/boe), with production costs of $298 million ($18.51/boe).