Has anyone noticed the price of copper lately? It’s down 23% year-over-year, and 35% since the mega-minerals miner Freeport-McMoRan Inc. absorbed two oil and gas producers, Plains Exploration and McMoRan Oil & Gas, in a single $20-billion day to become a well-rounded “natural resources” producer.

Oh, then there’s the price of oil, down 50% over the same period. Want to change your mind about that diversifying bolt-on?

That’s precisely what Freeport-McMoRan is contemplating.

At the time of the simultaneous deal announcements in December 2012, Freeport-McMoRan, the partial namesake of its chairman and oil and gas icon Jim Bob Moffett, projected combined company Ebitda to reach $12 billion based on assumed prices of $3.50 per pound for copper, $1,500 per ounce for gold, $12 per pound for molybdenum, $100 per barrel for Brent crude and $4.50 per MMBtu for natural gas. Instead, today’s prices for those produced natural resources register at $2.40 for copper, $1,150 for gold, $4.85 for molybdenum, $50 for Brent oil, and $2.54 for gas—down significantly across the board.

Rather than putting $12 billion in the coffers, this year through the second half Freeport watched $5 billion evaporate in operating losses, largely attributed to its oil and gas division.

Like other oil and gas producers facing sub-$50 oil, Freeport cut capex to its oil and gas operations and focused on its most profitable assets. It slashed distributions to preserve cash. In June, it filed an S-1 to IPO up to 20% of its interest in its oil and gas business, looking to raise money to fund further drilling.

Then Carl Icahn came knocking at the front door.

In late August, the legendary billionaire investor who likes to rock the boats of companies to quickly increase shareholder value, revealed he had acquired an 8.8% stake in FCX, less than a month after buying a similar stake in LNG exporter Cheniere Energy. A month later, Freeport’s board had been reconfigured with fewer members and two of those being Icahn posse. The oil and gas division, led by former Plains CEO Jim Flores, following “constructive discussions with many of its largest shareholders,” was laid out for “a review of strategic alternatives,” including a potential spin-off.

Would Jim Bob, under pressure from Icahn, jettison his oil and gas biz?

Freeport-McMoRan took on some $20 billion in debt with the Plains/McMoRan acquisitions that many of the mineral company investors saw as a sweet deal for Plains at a 42% premium. It didn’t help perceptions that Moffett and Flores were chums. The roll-up of Moffett’s own McMoRan Oil & Gas, itself once peeled off of Freeport-McMoRan in the 1990s, was viewed as a white knight deal, as it was hemorrhaging under deep-gas drilling costs at the time.

It might have turned out all right had oil prices stayed above $100, but now the debt weighs on the mineral giant like a deepwater wet blanket.

In its recent press release, Freeport-Mac showed its tack: the company will focus on its leading position in copper, more bullish on that commodity over oil, with a primary objective to significantly reduce its current debt level.

And what better way to carve out $20 billion in debt than with an outright Freeport-McMoRan Oil & Gas IPO? After all, oil and gas represents just 20% of company revenue, and most of its debt.

Indeed, the stage is set. Five former Freeport board members have been appointed to the FM O&G board, with Flores as chairman, in preparation for a separation. Moffett, who remains as chairman of miner Freeport-McMoRan, was not one of them, indicating it’s just a matter of time before FM O&G is cast away to sail on its own. The question is, how much of the parent’s debt burden will the new oil and gas company be laden with?

The good news is Icahn must see value in the potential oil and gas entity to insist on having two representative board members there as well.

The bad news is FM O&G will continue to bleed cash until commodity prices improve or new production can be brought on. The company has moved to scuttle long-term projects to conserve cash, and to accelerate first production from its Gulf of Mexico Horn Mountain discovery to enhance cash flow.

It only makes sense to split oil and gas from copper, as the two don’t share synergies. But don’t make hydrocarbons the scapegoat for unloading the debt burden. We’ll see if Icahn succeeds at raising shareholder value for both.

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