PHOENIX PHOENIX--(BUSINESS WIRE)--
Freeport-McMoRan Inc. (NYSE: FCX):
-
Net loss attributable to common stock totaled $4.2 billion,
$3.35 per share, for first-quarter 2016. After adjusting for net
charges totaling $4.0 billion, $3.19 per share, first-quarter 2016
adjusted net loss attributable to common stock totaled $197 million,
$0.16 per share.
-
Consolidated sales totaled 1.1 billion pounds of copper, 201
thousand ounces of gold, 17 million pounds of molybdenum and 12.1
million barrels of oil equivalents (MMBOE) for first-quarter 2016,
compared with 960 million pounds of copper, 263 thousand ounces of
gold, 23 million pounds of molybdenum and 12.5 MMBOE for first-quarter
2015.
-
The Cerro Verde expansion project reached full production
capacity in first-quarter 2016, and Cerro Verde is on track to produce
over 1 billion pounds of copper for the year 2016.
-
Consolidated sales for the year 2016 (adjusted for the
anticipated closing of the Morenci transaction in second-quarter 2016)
are expected to approximate 5.0 billion pounds of copper, 1.85 million
ounces of gold, 71 million pounds of molybdenum and 54.4 MMBOE,
including 1.15 billion pounds of copper, 195 thousand ounces of gold,
19 million pounds of molybdenum and 13.5 MMBOE for second-quarter 2016.
-
Average realized prices were $2.17 per pound for copper, $1,227
per ounce for gold and $29.06 per barrel for oil for first-quarter
2016.
-
Consolidated unit net cash costs averaged $1.38 per pound of
copper for mining operations and $15.85 per barrel of oil equivalents
(BOE) for oil and gas operations for first-quarter 2016. Consolidated
unit net cash costs for the year 2016 are expected to average $1.05
per pound of copper for mining operations and $15 per BOE for oil and
gas operations.
-
Operating cash flows totaled $740 million (including
$188 million in working capital sources and changes in other tax
payments) for first-quarter 2016. Based on current sales volume and
cost estimates and assuming average prices of $2.25 per pound for
copper, $1,250 per ounce for gold, $5 per pound for molybdenum and $45
per barrel for Brent crude oil for the remainder of 2016, operating
cash flows for the year 2016 are expected to approximate $4.8 billion
(including $0.8 billion in working capital sources and changes in
other tax payments).
-
Capital expenditures totaled $982 million for first-quarter
2016, consisting of $459 million for mining operations (including $350
million for major projects) and $523 million for oil and gas
operations. Capital expenditures are expected to approximate $3.3
billion for the year 2016, consisting of $1.8 billion for mining
operations (including $1.4 billion for major projects) and $1.5
billion for oil and gas operations.
-
At March 31, 2016, consolidated debt totaled $20.8 billion
and consolidated cash totaled $331 million. At March 31,
2016, FCX had $3.0 billion available under its $3.5 billion credit
facility.
-
During first-quarter 2016, FCX entered into agreements to sell an
additional 13 percent ownership in Morenci and to sell an
interest in the Timok exploration project in Serbia for aggregate
consideration of $1.3 billion. In addition, in April 2016, FCX entered
into an agreement to sell certain oil and gas royalty interests
for $0.1 billion. These transactions are expected to close in
second-quarter 2016.
-
FCX continues to advance discussions for the sale of certain
interests in its mining and oil and gas assets to accelerate its
debt reduction initiatives. FCX expects to achieve additional progress
during second-quarter 2016.
Freeport-McMoRan Inc. (NYSE: FCX) reported net losses attributable to
common stock of $4.2 billion, $3.35 per share, for first-quarter 2016,
compared with $2.5 billion, $2.38 per share, for first-quarter 2015.
FCX’s net losses attributable to common stock include net charges
totaling $4.0 billion, $3.19 per share, for first-quarter 2016 and $2.4
billion, $2.32 per share, for first-quarter 2015, primarily for the
reduction of the carrying value of oil and gas properties, idle rig
costs and other items described below.
Richard C. Adkerson, President and Chief Executive Officer, said,
"During the first quarter, we remained focused on executing our plans to
strengthen FCX’s balance sheet and to position the Company to enhance
shareholder value in a challenging market environment. Our global team
is successfully executing our plans, managing production efficiently and
reducing costs and capital spending. We also achieved progress on our
asset divestment program with $1.4 billion in announced transactions
since the beginning of the year and expect to report additional progress
in the second quarter. We believe the quality and scale of our assets
provide opportunities for significant debt reduction while retaining a
substantial business with attractive low-cost, long-lived reserves and
resources that will enable our shareholders to benefit from improved
conditions in the future."
SUMMARY FINANCIAL DATA
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2016
|
|
2015
|
|
|
|
(in millions, except per share amounts)
|
|
Revenuesa,b
|
|
$
|
3,527
|
|
|
$
|
4,153
|
|
c
|
Operating lossa,b,d,e
|
|
$
|
(3,876
|
)
|
|
$
|
(2,963
|
)
|
c,f
|
Net loss attributable to common stockb,d,e,g
|
|
$
|
(4,184
|
)
|
|
$
|
(2,474
|
)
|
c,f
|
Diluted net loss per share of common stockb,d,e,g
|
|
$
|
(3.35
|
)
|
|
$
|
(2.38
|
)
|
c,f
|
Diluted weighted-average common shares outstanding
|
|
1,251
|
|
|
1,040
|
|
|
Operating cash flowsh
|
|
$
|
740
|
|
|
$
|
717
|
|
|
Capital expenditures
|
|
$
|
982
|
|
|
$
|
1,867
|
|
|
At March 31:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
331
|
|
|
$
|
549
|
|
|
Total debt, including current portion
|
|
$
|
20,777
|
|
|
$
|
20,312
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
|
For segment financial results, refer to the supplemental
schedule, "Business Segments," beginning on page VIII, which is
available on FCX's website, "fcx.com."
|
b.
|
|
Includes favorable (unfavorable) adjustments to
provisionally priced concentrate and cathode copper sales
recognized in prior periods totaling $5 million ($3 million to net
loss attributable to common stock or less than $0.01 per share) in
first-quarter 2016 and $(106) million ($(59) million to net loss
attributable to common stock or $(0.06) per share) in
first-quarter 2015. For further discussion, refer to the
supplemental schedule, "Derivative Instruments," beginning on page
VII, which is available on FCX's website, "fcx.com."
|
c.
|
|
Includes net noncash mark-to-market losses associated with
crude oil derivative contracts totaling $48 million ($30 million
to net loss attributable to common stock or $0.03 per share). FCX
currently does not have any oil and gas derivative contracts in
place for 2016 or future years.
|
d.
|
|
Includes charges to reduce the carrying value of oil and
gas properties pursuant to full cost accounting rules of $3.8
billion ($3.8 billion to net loss attributable to common stock or
$3.03 per share) in first-quarter 2016 and $3.1 billion ($2.4
billion to net loss attributable to common stock or $2.31 per
share) in first-quarter 2015. As a result of the impairments to
oil and gas properties, FCX recorded tax charges of $1.4 billion
in first-quarter 2016 and $458 million in first-quarter 2015 to
establish valuation allowances against United States (U.S.)
federal and state deferred tax assets that will not generate a
future benefit. These tax charges have been reflected in the
after-tax impacts for the impairments of oil and gas properties.
|
e.
|
|
Includes charges at oil and gas operations totaling (i)
$165 million ($165 million to net loss attributable to common
stock or $0.13 per share) in first-quarter 2016 and $13 million
($8 million to net loss attributable to common stock or $0.01 per
share) in first-quarter 2015 for idle rig costs and (ii) $35
million ($35 million to net loss attributable to common stock or
$0.03 per share) in first-quarter 2016 and $4 million ($2 million
to net loss attributable to common stock or less than $0.01 per
share) in first-quarter 2015 primarily for inventory write downs.
|
f.
|
|
Includes a gain of $39 million ($25 million to net loss
attributable to common stock or $0.02 per share) associated with
the sale of FCX's one-third interest in the Luna Energy power
facility.
|
g.
|
|
FCX defers recognizing profits on intercompany sales until
final sales to third parties occur. For a summary of net impacts
from changes in these deferrals, refer to the supplemental
schedule, "Deferred Profits," on page VIII, which is available on
FCX's website, "fcx.com."
|
h.
|
|
Includes net working capital sources (uses) and changes in
other tax payments of $188 million in first-quarter 2016 and $(86)
million in first-quarter 2015.
|
|
|
|
DEBT REDUCTION INITIATIVES
During first-quarter 2016, FCX announced plans to strengthen its balance
sheet and accelerate its debt reduction initiatives. In addition to
reducing costs and capital expenditures to maximize cash flows from its
global business, FCX announced plans to sell assets to repay debt. FCX’s
large portfolio of mining and oil and gas assets provide opportunities
to generate significant proceeds while retaining a strong competitive
position within the global copper industry and a high-quality portfolio
of long-lived assets positioned to generate value as market conditions
improve. FCX is advancing discussions on additional transactions and
expects to achieve additional progress during second-quarter 2016.
|
Asset Sale Transactions To Date
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|
|
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|
|
Date of Agreement
|
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Consideration
|
|
Expected Closing
|
Morenci (13 percent interest)
|
|
February 15, 2016
|
|
$1.0 billion
|
|
Second-quarter 2016
|
Timok exploration project
|
|
March 3, 2016
|
|
0.3 billion
|
(1)
|
Second-quarter 2016
|
Oil and gas royalty interests
|
|
April 21, 2016
|
|
0.1 billion
|
|
Second-quarter 2016
|
|
|
|
|
$1.4 billion
|
|
|
|
|
|
|
|
|
|
(1) Includes $135 million payable at closing and $127.5
million payable to FCX in stages upon the achievement of defined
milestones.
|
|
During first-quarter 2016, FCX conducted a formal process involving
multiple third-party oil and gas industry and financial participants to
evaluate alternatives for the oil and gas business. Further weakening in
oil and gas prices and negative credit and financing market conditions
during first-quarter 2016 had a significant unfavorable impact on the
process. While the process did not identify a buyer for the entire oil
and gas business, a number of parties have interest in select assets,
and FCX continues to engage in discussions with parties interested in
potential asset or joint venture transactions.
In the interim, FCX is taking immediate steps to reduce oil and gas
costs further. In April 2016, FCX announced a new management structure
and is instituting an approximate 25 percent oil and gas workforce
reduction. The newly structured oil and gas management team is actively
engaged in managing costs and developing plans to preserve and enhance
asset values. FCX expects to record a charge of approximately $40
million in second-quarter 2016 associated with workforce reductions and
other restructuring costs.
SUMMARY OPERATING DATA
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|
|
|
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Three Months Ended
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|
|
|
March 31,
|
|
|
|
2016
|
|
2015
|
|
Copper (millions of recoverable pounds)
|
|
|
|
|
|
Production
|
|
1,097
|
|
|
915
|
|
|
Sales, excluding purchases
|
|
1,123
|
|
|
960
|
|
|
Average realized price per pound
|
|
$
|
2.17
|
|
|
$
|
2.72
|
|
|
Site production and delivery costs per pounda
|
|
$
|
1.51
|
|
|
$
|
1.93
|
|
|
Unit net cash costs per pounda
|
|
$
|
1.38
|
|
|
$
|
1.64
|
|
|
Gold (thousands of recoverable ounces)
|
|
|
|
|
|
Production
|
|
184
|
|
|
259
|
|
|
Sales, excluding purchases
|
|
201
|
|
|
263
|
|
|
Average realized price per ounce
|
|
$
|
1,227
|
|
|
$
|
1,186
|
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
|
Production
|
|
20
|
|
|
24
|
|
|
Sales, excluding purchases
|
|
17
|
|
|
23
|
|
|
Average realized price per pound
|
|
$
|
7.61
|
|
|
$
|
10.17
|
|
|
Oil Equivalents
|
|
|
|
|
|
Sales volumes
|
|
|
|
|
|
MMBOE
|
|
12.1
|
|
|
12.5
|
|
Thousand BOE (MBOE) per day
|
|
133
|
|
|
139
|
|
Cash operating margin per BOEb
|
|
|
|
|
|
Realized revenues
|
|
$
|
23.79
|
|
|
$
|
43.71
|
|
c
|
Cash production costs
|
|
(15.85
|
)
|
|
(20.26
|
)
|
|
Cash operating margin
|
|
$
|
7.94
|
|
|
$
|
23.45
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
|
Reflects per pound weighted-average production and
delivery costs and unit net cash costs (net of by-product credits)
for all copper mines, excluding net noncash and other costs. For
reconciliations of per pound unit costs by operating division to
production and delivery costs applicable to sales reported in
FCX's consolidated financial statements, refer to the supplemental
schedules, "Product Revenues and Production Costs," beginning on
page X, which are available on FCX's website, "fcx.com."
|
b.
|
|
Cash operating margin for oil and gas operations reflects
realized revenues less cash production costs. Cash production
costs exclude accretion and other costs. For reconciliations of
realized revenues and cash production costs per BOE to revenues
and production and delivery costs reported in FCX's consolidated
financial statements, refer to the supplemental schedules,
“Product Revenues and Production Costs,” beginning on page X,
which are available on FCX's website, “fcx.com.”
|
c.
|
|
Includes realized cash gains on crude oil derivative
contracts of $8.00 per BOE. FCX currently does not have any oil
and gas derivative contracts in place for 2016 or future years.
|
|
|
|
Consolidated Sales Volumes
First-quarter 2016 consolidated copper sales of 1.1 billion
pounds approximated the January 2016 estimate and were higher than
first-quarter 2015 sales of 960 million pounds, primarily reflecting
higher volumes from Cerro Verde.
First-quarter 2016 consolidated gold sales of 201 thousand ounces
approximated the January 2016 estimate, but were lower than
first-quarter 2015 sales of 263 thousand ounces, primarily reflecting
lower ore grades and recoveries.
First-quarter 2016 consolidated molybdenum sales of 17 million
pounds were lower than the January 2016 estimate of 19 million pounds
and first-quarter 2015 sales of 23 million pounds, primarily reflecting
lower demand and reduced volumes from the Henderson molybdenum mine.
First-quarter 2016 sales from oil and gas operations of 12.1 MMBOE,
including 8.3 million barrels (MMBbls) of crude oil, 19.6 billion
cubic feet (Bcf) of natural gas and 0.6 MMBbls of natural gas
liquids (NGLs), were slightly lower than first-quarter 2015 sales of
12.5 MMBOE and the January 2016 estimate of 12.4 MMBOE.
Consolidated sales for the year 2016 are expected to approximate 5.0
billion pounds of copper, 1.85 million ounces of gold, 71 million pounds
of molybdenum and 54.4 MMBOE, including 1.15 billion pounds of copper,
195 thousand ounces of gold, 19 million pounds of molybdenum and 13.5
MMBOE for second-quarter 2016. Projected consolidated copper sales have
been adjusted for the anticipated closing of the Morenci transaction in
second-quarter 2016. Anticipated higher grades from Grasberg in the
second half of 2016 are expected to result in approximately 55 percent
of consolidated copper sales and 80 percent of consolidated gold sales
to occur in the second half of the year.
Consolidated Unit Costs
Mining Unit Net Cash Costs. Consolidated average unit net cash
costs (net of by-product credits) for FCX's copper mines of $1.38 per
pound of copper in first-quarter 2016 were lower than unit net cash
costs of $1.64 per pound in first-quarter 2015, primarily reflecting
higher copper sales volumes in South America and the impact of ongoing
cost reduction initiatives.
Assuming average prices of $1,250 per ounce of gold and $5 per pound of
molybdenum for the remainder of 2016 and achievement of current sales
volume and cost estimates, consolidated unit net cash costs (net of
by-product credits) for copper mines are expected to average $1.05 per
pound of copper for the year 2016. The impact of price changes for the
remainder of 2016 on consolidated unit net cash costs would approximate
$0.015 per pound for each $50 per ounce change in the average price of
gold and $0.01 per pound for each $2 per pound change in the average
price of molybdenum. Quarterly unit net cash costs vary with
fluctuations in sales volumes and realized prices primarily for gold and
molybdenum.
Oil and Gas Cash Production Costs per BOE. Cash production costs
for oil and gas operations of $15.85 per BOE in first-quarter 2016 were
lower than cash production costs of $20.26 per BOE in first-quarter
2015, primarily reflecting increased production from the Deepwater Gulf
of Mexico (GOM) and ongoing cost reduction efforts.
Based on current sales volume and cost estimates, cash production costs
are expected to approximate $15 per BOE for the year 2016.
MINING OPERATIONS
North America Copper Mines. FCX operates seven open-pit copper
mines in North America - Morenci, Bagdad, Safford, Sierrita and Miami in
Arizona, and Chino and Tyrone in New Mexico. In addition to copper,
molybdenum concentrate and silver are also produced by certain of FCX's
North America copper mines.
All of the North America mining operations are wholly owned, except for
Morenci. FCX records its 85 percent joint venture interest in Morenci
using the proportionate consolidation method. In February 2016, FCX
entered into a definitive agreement to sell an additional 13 percent
joint venture interest in Morenci, which is expected to close in
second-quarter 2016.
Operating and Development Activities. FCX has significant
undeveloped reserves and resources in North America and a portfolio of
long-term development projects. In the near term, FCX is deferring
development of new projects as a result of current market conditions.
Future investments will be undertaken based on the results of economic
and technical feasibility studies, and market conditions.
During 2015, FCX's revised plans for its North America copper mines to
incorporate reductions in mining rates to reduce operating and capital
costs, including the suspension of mining operations at the Miami mine,
a transitioned suspension of production at the Sierrita mine, a 50
percent reduction in mining rates at the Tyrone mine and adjustments to
mining rates at other North America mines. The revised plans at each of
the operations incorporate the impacts of lower energy, acid and other
consumables, reduced labor costs and a significant reduction in capital
spending plans. These plans continue to be reviewed and additional
adjustments will be made as market conditions warrant.
Operating Data. Following is a summary of consolidated operating
data for the North America copper mines for the first quarters of 2016
and 2015:
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2016
|
|
2015
|
Copper (millions of recoverable pounds)
|
|
|
|
|
Production
|
|
487
|
|
|
452
|
|
Sales
|
|
503
|
|
|
472
|
|
Average realized price per pound
|
|
$
|
2.16
|
|
|
$
|
2.73
|
|
|
|
|
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
Productiona
|
|
8
|
|
|
9
|
|
|
|
|
|
|
Unit net cash costs per pound of copperb
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
$
|
1.40
|
|
|
$
|
1.81
|
|
By-product credits
|
|
(0.08
|
)
|
|
(0.18
|
)
|
Treatment charges
|
|
0.10
|
|
|
0.13
|
|
Unit net cash costs
|
|
$
|
1.42
|
|
|
$
|
1.76
|
|
|
|
|
|
|
|
|
|
|
a.
|
|
Refer to summary operating data on page 4 for FCX's
consolidated molybdenum sales, which includes sales of molybdenum
produced at the North America copper mines.
|
b.
|
|
For a reconciliation of unit net cash costs per pound to
production and delivery costs applicable to sales reported in
FCX's consolidated financial statements, refer to the supplemental
schedules, "Product Revenues and Production Costs," beginning on
page X, which are available on FCX's website, "fcx.com."
|
|
|
|
North America's consolidated copper sales volumes of 503 million pounds
in first-quarter 2016 were higher than first-quarter 2015 sales of 472
million pounds, primarily reflecting higher ore grades at Morenci and
Safford. North America copper sales (adjusted for the anticipated
closing of the Morenci transaction) are estimated to approximate 1.75
billion pounds for the year 2016, compared with 2.0 billion pounds in
2015.
Average unit net cash costs (net of by-product credits) for the North
America copper mines of $1.42 per pound of copper in first-quarter 2016
were lower than the unit net cash costs of $1.76 per pound in
first-quarter 2015, primarily reflecting the impact of cost reduction
initiatives and higher sales volumes, partly offset by lower by-product
credits.
Average unit net cash costs (net of by-product credits) for the North
America copper mines are expected to approximate $1.45 per pound of
copper for the year 2016, based on current sales volume and cost
estimates and assuming an average molybdenum price of $5 per pound for
the remainder of 2016. North America's average unit net cash costs would
change by approximately $0.013 per pound for each $2 per pound change in
the average price of molybdenum.
South America Mining. FCX operates two copper mines in South
America - Cerro Verde in Peru (in which FCX owns a 53.56 percent
interest) and El Abra in Chile (in which FCX owns a 51 percent
interest). These operations are consolidated in FCX's financial
statements. In addition to copper, the Cerro Verde mine produces
molybdenum concentrate and silver.
Operating and Development Activities. In September 2015, the
Cerro Verde expansion project commenced operations and achieved capacity
operating rates during first-quarter 2016. Cerro Verde's expanded
operations benefit from its large-scale, long-lived reserves and cost
efficiencies. The project expanded the concentrator facilities from
120,000 metric tons of ore per day to 360,000 metric tons of ore per day
and is on track to provide incremental annual production of
approximately 600 million pounds of copper and 15 million pounds of
molybdenum.
During 2015, FCX revised plans for its South America copper mines,
principally to reflect adjustments to the mine plan at El Abra to reduce
mining and stacking rates by approximately 50 percent to achieve lower
operating and labor costs, defer capital expenditures and extend the
life of the existing operations.
Operating Data. Following is a summary of consolidated operating
data for the South America mining operations for the first quarters of
2016 and 2015:
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2016
|
|
2015
|
Copper (millions of recoverable pounds)
|
|
|
|
|
Production
|
|
335
|
|
|
193
|
|
Sales
|
|
323
|
|
|
200
|
|
Average realized price per pound
|
|
$
|
2.19
|
|
|
$
|
2.71
|
|
|
|
|
|
|
Molybdenum (millions of recoverable pounds)
|
|
|
|
|
Productiona
|
|
5
|
|
|
2
|
|
|
|
|
|
|
Unit net cash costs per pound of copperb
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
$
|
1.23
|
|
|
$
|
1.75
|
|
By-product credits
|
|
(0.07
|
)
|
|
(0.08
|
)
|
Treatment charges
|
|
0.23
|
|
|
0.17
|
|
Royalty on metals
|
|
0.01
|
|
|
—
|
|
Unit net cash costs
|
|
$
|
1.40
|
|
|
$
|
1.84
|
|
|
|
|
|
|
|
|
|
|
a.
|
|
Refer to summary operating data on page 4 for FCX's
consolidated molybdenum sales, which includes sales of molybdenum
produced at Cerro Verde.
|
b.
|
|
For a reconciliation of unit net cash costs per pound to
production and delivery costs applicable to sales reported in
FCX's consolidated financial statements, refer to the supplemental
schedules, "Product Revenues and Production Costs," beginning on
page X, which are available on FCX's website, "fcx.com."
|
|
|
|
South America's consolidated copper sales volumes of 323 million pounds
in first-quarter 2016 were higher than first-quarter 2015 sales of 200
million pounds, primarily reflecting higher mining and milling rates at
Cerro Verde. Sales from South America mining are expected to approximate
1.37 billion pounds of copper for the year 2016, compared with 871
million pounds of copper in 2015.
Average unit net cash costs (net of by-product credits) for South
America mining of $1.40 per pound of copper in first-quarter 2016 were
lower than unit net cash costs of $1.84 per pound in first-quarter 2015,
primarily reflecting higher copper sales volumes associated with the
Cerro Verde expansion. Average unit net cash costs (net of by-product
credits) for South America mining are expected to approximate $1.43 per
pound of copper for the year 2016, based on current sales volume and
cost estimates and assuming average prices of $5 per pound of molybdenum
for the remainder of 2016.
Indonesia Mining. Through its 90.64 percent owned and
consolidated subsidiary PT-FI, FCX's assets include one of the world's
largest copper and gold deposits at the Grasberg minerals district in
Papua, Indonesia. PT-FI operates a proportionately consolidated joint
venture, which produces copper concentrates that contain significant
quantities of gold and silver.
Regulatory Matters. In October 2015, the Indonesian government
provided a letter of assurance to PT-FI indicating that it will approve
the extension of operations beyond 2021, and provide the same rights and
the same level of legal and fiscal certainty provided under its current
Contract of Work (COW). PT-FI continues to engage in discussions with
the Indonesian government to obtain extension of its long-term rights
available under the COW.
In connection with its COW negotiations and upon completion of
concluding an agreement to extend PT-FI's operations beyond 2021 on
acceptable terms, PT-FI has agreed to construct new smelter capacity in
Indonesia and to divest an additional 20.64 percent interest in PT-FI at
fair market value.
PT-FI is required to apply for renewal of export permits at six-month
intervals. On February 9, 2016, PT-FI's export permit was renewed
through August 8, 2016. The Indonesian government continues to impose a
5.0 percent export duty while it reviews PT-FI's smelter plans.
Operating and Development Activities. PT-FI has further revised
its plans to incorporate improved operational efficiencies, reductions
in input costs, supplies and contractor costs, foreign exchange impacts
and an approximate 20 percent deferral of capital expenditures that had
been planned for 2016.
PT-FI has several projects in progress in the Grasberg minerals district
related to the development of its large-scale, long-lived, high-grade
underground ore bodies. In aggregate, these underground ore bodies are
expected to produce large-scale quantities of copper and gold following
the transition from the Grasberg open pit, currently anticipated to
occur in late 2017. Production from the Deep Mill Level Zone commenced
during September 2015, and the Grasberg Block Cave mine is anticipated
to commence production in 2018.
From 2016 to 2020, estimated aggregate capital spending on these
projects is currently expected to average $1.0 billion per year ($0.8
billion per year net to PT-FI). Considering the long-term nature and
size of these projects, actual costs could vary from these estimates. In
response to market conditions and Indonesian regulatory uncertainty, the
timing of these expenditures continues to be reviewed.
Operating Data. Following is a summary of consolidated operating
data for the Indonesia mining operations for the first quarters of 2016
and 2015:
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2016
|
|
2015
|
Copper (millions of recoverable pounds)
|
|
|
|
|
Production
|
|
165
|
|
|
154
|
|
Sales
|
|
174
|
|
|
155
|
|
Average realized price per pound
|
|
$
|
2.20
|
|
|
$
|
2.74
|
|
|
|
|
|
|
Gold (thousands of recoverable ounces)
|
|
|
|
|
Production
|
|
178
|
|
|
255
|
|
Sales
|
|
195
|
|
|
260
|
|
Average realized price per ounce
|
|
$
|
1,228
|
|
|
$
|
1,186
|
|
|
|
|
|
|
Unit net cash costs per pound of coppera
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
$
|
2.24
|
|
|
$
|
2.84
|
|
Gold and silver credits
|
|
(1.52
|
)
|
|
(2.09
|
)
|
Treatment charges
|
|
0.31
|
|
|
0.29
|
|
Export duties
|
|
0.08
|
|
|
0.14
|
|
Royalty on metals
|
|
0.13
|
|
|
0.16
|
|
Unit net cash costs
|
|
$
|
1.24
|
|
|
$
|
1.34
|
|
|
|
|
|
|
|
|
|
|
a.
|
|
For a reconciliation of unit net cash costs per pound to
production and delivery costs applicable to sales reported in
FCX's consolidated financial statements, refer to the supplemental
schedules, "Product Revenues and Production Costs," beginning on
page X, which are available on FCX's website, "fcx.com."
|
|
|
|
Indonesia's first-quarter 2016 consolidated copper sales of 174 million
pounds were higher than first-quarter 2015 sales of 155 million pounds,
primarily reflecting higher copper ore grades. Indonesia's first-quarter
2016 gold sales of 195 thousand ounces were lower than first-quarter
2015 sales of 260 thousand ounces, primarily reflecting lower gold ore
grades and recoveries.
During first-quarter 2016, copper production was impacted by reduced
mill operating rates associated with unplanned equipment failures.
Temporary repairs to the mill were performed and a permanent repair is
scheduled in second-quarter 2016. As a result, second-quarter 2016 mill
rates are expected to approximate first-quarter 2016 mill rates. The
impact of the equipment failure and repairs is a reduction of 65 million
pounds of copper for the year 2016, compared with January 2016 estimates.
At the Grasberg mine, the sequencing of mining areas with varying ore
grades causes fluctuations in quarterly and annual production of copper
and gold. Consolidated sales volumes from Indonesia mining are expected
to approximate 1.4 billion pounds of copper and 1.85 million ounces of
gold for the year 2016, compared with 744 million pounds of copper and
1.2 million ounces of gold for the year 2015. PT-FI expects ore grades
to improve significantly beginning in the second half of 2016, with
approximately 70 percent of copper sales and 80 percent of gold sales
anticipated in the second half of the year.
A significant portion of PT-FI's costs are fixed and unit costs vary
depending on volumes and other factors. Indonesia's unit net cash costs
(including gold and silver credits) of $1.24 per pound of copper in
first-quarter 2016 were lower than unit net cash costs of $1.34 per
pound in first-quarter 2015, primarily reflecting higher copper sales
volumes and lower export duties, partly offset by lower gold and silver
credits.
Based on current sales volume and cost estimates, and assuming an
average gold price of $1,250 per ounce for the remainder of 2016, unit
net cash costs (net of gold and silver credits) for Indonesia mining are
expected to approximate $0.07 per pound of copper for the year 2016 and
$0.96 per pound for second-quarter 2016. Indonesia mining's unit net
cash costs for the year 2016 would change by approximately $0.06 per
pound for each $50 per ounce change in the average price of gold.
Because of the fixed nature of a large portion of Indonesia mining's
costs, unit costs vary from quarter to quarter depending on copper and
gold volumes. Higher anticipated ore grades from Grasberg in the second
half of 2016 are expected to result in lower unit net cash costs in the
second half of the year.
Africa Mining. Through its 56 percent owned and consolidated
subsidiary Tenke Fungurume Mining S.A. (TFM), FCX operates in the Tenke
minerals district in the Southeast region of the Democratic Republic of
Congo (DRC). In addition to copper, the Tenke mine produces cobalt
hydroxide.
Operating and Development Activities. During 2015, FCX revised
plans at Tenke to incorporate a 50 percent reduction in capital spending
for 2016 and various initiatives to reduce operating, administrative and
exploration costs.
TFM successfully commissioned a sulphuric acid plant in first-quarter
2016, which will reduce requirements for third-party acid purchases. FCX
continues to engage in exploration activities and metallurgical testing
to evaluate the potential of the highly prospective minerals district at
Tenke. Future development and expansion opportunities are being deferred
pending improved market conditions.
Operating Data. Following is a summary of consolidated operating
data for the Africa mining operations for the first quarters of 2016
and 2015:
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2016
|
|
2015
|
Copper (millions of recoverable pounds)
|
|
|
|
|
Production
|
|
110
|
|
|
116
|
|
Sales
|
|
123
|
|
|
133
|
|
Average realized price per pounda
|
|
$
|
2.10
|
|
|
$
|
2.66
|
|
|
|
|
|
|
Cobalt (millions of contained pounds)
|
|
|
|
|
Production
|
|
9
|
|
|
7
|
|
Sales
|
|
10
|
|
|
8
|
|
Average realized price per pound
|
|
$
|
6.32
|
|
|
$
|
8.72
|
|
|
|
|
|
|
Unit net cash costs per pound of copperb
|
|
|
|
|
Site production and delivery, excluding adjustments
|
|
$
|
1.64
|
|
|
$
|
1.57
|
|
Cobalt creditsc
|
|
(0.38
|
)
|
|
(0.37
|
)
|
Royalty on metals
|
|
0.05
|
|
|
0.06
|
|
Unit net cash costs
|
|
$
|
1.31
|
|
|
$
|
1.26
|
|
|
|
|
|
|
|
|
|
|
a.
|
|
Includes point-of-sale transportation costs as negotiated
in customer contracts.
|
b.
|
|
For a reconciliation of unit net cash costs per pound to
production and delivery costs applicable to sales reported in
FCX's consolidated financial statements, refer to the supplemental
schedules, "Product Revenues and Production Costs," beginning on
page X, which are available on FCX's website, "fcx.com."
|
c.
|
|
Net of cobalt downstream processing and freight costs.
|
|
|
|
TFM's copper sales of 123 million pounds in first-quarter 2016 were
lower than first-quarter 2015 copper sales of 133 million pounds,
primarily reflecting lower copper ore grades. TFM's sales are expected
to approximate 485 million pounds of copper and 35 million pounds of
cobalt for the year 2016, compared with 467 million pounds of copper and
35 million pounds of cobalt for the year 2015.
Africa mining's unit net cash costs (net of cobalt credits) of $1.31 per
pound of copper in first-quarter 2016 were higher than unit net cash
costs of $1.26 per pound of copper in first-quarter 2015, primarily
reflecting lower sales volumes. Unit net cash costs (net of cobalt
credits) for Africa mining are expected to approximate $1.32 per pound
of copper for the year 2016, based on current sales volume and cost
estimates and assuming an average cobalt price of $10 per pound for the
remainder of 2016. Africa mining's unit net cash costs for the year 2016
would change by approximately $0.065 per pound for each $2 per pound
change in the average price of cobalt.
Molybdenum Mines. FCX has two wholly owned molybdenum mines in
North America - the Henderson underground mine and the Climax open-pit
mine, both in Colorado. The Henderson and Climax mines produce
high-purity, chemical-grade molybdenum concentrate, which is typically
further processed into value-added molybdenum chemical products. The
majority of molybdenum concentrate produced at the Henderson and Climax
mines, as well as from FCX's North and South America copper mines, is
processed at FCX's conversion facilities.
Operating and Development Activities. The revised plans for the
Henderson molybdenum mine incorporate lower operating rates, resulting
in an approximate 65 percent reduction in Henderson's annual production
volumes. FCX also adjusted production plans at its by-product mines,
including reduced production at its Sierrita mine. Additionally, FCX
incorporated changes in the commercial pricing structure for its
chemicals products to promote continuation of chemical-grade production.
Production from the Molybdenum mines totaled 7 million pounds of
molybdenum in first-quarter 2016 and 13 million pounds in first-quarter
2015. Refer to summary operating data on page 4 for FCX's consolidated
molybdenum sales, which includes sales of molybdenum produced at the
Molybdenum mines, and from FCX's North and South America copper mines.
Average unit net cash costs for the Molybdenum mines of $7.43 per pound
of molybdenum in first-quarter 2016 were higher than average unit net
cash costs of $7.17 per pound in first-quarter 2015, primarily
reflecting lower volumes from the Henderson mine. Based on current sales
volume and cost estimates, unit net cash costs for the Molybdenum mines
are expected to average approximately $8.60 per pound of molybdenum for
the year 2016.
For a reconciliation of unit net cash costs per pound to production and
delivery costs applicable to sales reported in FCX's consolidated
financial statements, refer to the supplemental schedules, "Product
Revenues and Production Costs," beginning on page X, which are available
on FCX's website, "fcx.com."
Mining Exploration Activities. FCX's mining exploration
activities are generally associated with its existing mines focusing on
opportunities to expand reserves and resources to support development of
additional future production capacity. Exploration results continue to
indicate opportunities for significant future potential reserve
additions in North and South America, and in the Tenke minerals
district. Exploration spending continues to be constrained by market
conditions and is expected to approximate $50 million for the year 2016,
compared to $102 million in 2015.
OIL AND GAS OPERATIONS
Through its wholly owned oil and gas subsidiary, FM O&G, FCX's principal
oil and gas assets include significant oil production facilities and
growth potential in the Deepwater GOM and established oil production
facilities in California. During first-quarter 2016, 86 percent of FCX's
oil and gas revenues were from oil and NGLs.
Impairment of Oil and Gas Properties. FM O&G follows the full
cost method of accounting, whereby all costs associated with oil and gas
property acquisition, exploration and development activities are
capitalized and amortized to expense under the unit-of-production method
on a country-by-country basis using estimates of proved oil and gas
reserves relating to each country where such activities are conducted.
The costs of unproved oil and gas properties are excluded from
amortization until the properties are evaluated.
Under full cost accounting rules, a "ceiling test" is conducted each
quarter to review the carrying value of oil and gas properties for
impairment. The U.S. Securities and Exchange Commission (SEC) requires
the twelve-month average of the first-day-of-the-month historical
reference oil price be used in determining the ceiling test limitation.
Using West Texas Intermediate (WTI) as the reference oil price, the
average price was $46.26 per barrel at March 31, 2016, compared with
$50.28 per barrel at December 31, 2015. In addition, following a review
of alternatives for its oil and gas business and the current limitations
and cost of capital available for future drilling, FM O&G determined
that the carrying values of certain of its unevaluated properties were
impaired as of March 31, 2016. As a result, FM O&G transferred $3.1
billion of costs associated with unevaluated properties to the full cost
pool, mostly reflecting impairment of the carrying values of unevaluated
properties. Combined with the impact of the reduction in twelve-month
historical prices, net capitalized costs exceeded the ceiling test
limitation under full cost accounting rules, which resulted in the
recognition of a first-quarter 2016 impairment charge of $3.8 billion.
If the twelve-month historical average price remains below the March 31,
2016, twelve-month average of $46.26 per barrel, the ceiling test
limitation will decrease, potentially resulting in additional ceiling
test impairments of FCX's oil and gas properties. The WTI spot oil price
was $42.64 per barrel at April 25, 2016. In addition to a decline in the
trailing twelve-month average oil and gas prices, other factors that
could result in future impairment of FCX's oil and gas properties
include costs transferred from unevaluated properties to the full cost
pool without corresponding proved oil and gas reserve additions,
negative reserve revisions and the future capitalization of exploration,
development and production costs. At March 31, 2016, carrying costs for
unevaluated properties excluded from amortization totaled $1.7 billion.
These costs will be transferred into the full cost pool as the
properties are evaluated and proved reserves are established or if
impairment is determined. If these activities do not result in additions
to discounted future net cash flows from proved oil and gas reserves at
least equal to the related costs transferred (net of related tax
effects), additional ceiling test impairments may occur.
Financial and Operating Data. Following is a summary of financial
and operating data for the U.S. oil and gas operations for the first
quarters of 2016 and 2015:
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2016
|
|
2015
|
|
Financial Summary (in millions)
|
|
|
|
|
|
Realized revenuesa
|
|
$
|
289
|
|
|
$
|
547
|
|
|
Cash production costsa
|
|
(192
|
)
|
|
(254
|
)
|
|
Cash operating margin
|
|
$
|
97
|
|
|
$
|
293
|
|
|
Capital expendituresb
|
|
$
|
480
|
|
|
$
|
1,018
|
|
|
Sales Volumes
|
|
|
|
|
|
Oil (MMBbls)
|
|
8.3
|
|
|
8.4
|
|
|
Natural gas (Bcf)
|
|
19.6
|
|
|
21.8
|
|
|
NGLs (MMBbls)
|
|
0.6
|
|
|
0.5
|
|
|
MMBOE
|
|
12.1
|
|
|
12.5
|
|
|
Average Realized Pricesa
|
|
|
|
|
|
Oil (per barrel)
|
|
$
|
29.06
|
|
|
$
|
56.51
|
|
c
|
Natural gas (per million British thermal units, or MMBtu)
|
|
$
|
2.00
|
|
|
$
|
2.86
|
|
|
NGLs (per barrel)
|
|
$
|
14.83
|
|
|
$
|
23.06
|
|
|
Cash Operating Margin per BOEa
|
|
|
|
|
|
Realized revenues
|
|
$
|
23.79
|
|
|
$
|
43.71
|
|
c
|
Cash production costs
|
|
(15.85
|
)
|
|
(20.26
|
)
|
|
Cash operating margin
|
|
$
|
7.94
|
|
|
$
|
23.45
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
|
Cash operating margin for oil and gas operations reflects
realized revenues less cash production costs. Cash production
costs exclude accretion and other costs. For reconciliations of
realized revenues (including average realized prices for oil,
natural gas and NGLs) and cash production costs to revenues and
production and delivery costs reported in FCX's consolidated
financial statements, refer to the supplemental schedules,
“Product Revenues and Production Costs,” beginning on page X,
which are available on FCX's website, “fcx.com.”
|
b.
|
|
Excludes international oil and gas expenditures totaling
$43 million in first-quarter 2016 and $15 million in first-quarter
2015, primarily related to the Morocco oil and gas properties.
|
c.
|
|
Includes realized cash gains on crude oil derivative
contracts of $8.00 per BOE ($11.97 per barrel of oil). FCX
currently does not have any oil and gas derivative contracts in
place for 2016 or future years.
|
|
|
|
FM O&G's average realized price for crude oil was $29.06 per barrel in
first-quarter 2016 (83 percent of the average Brent crude oil price of
$35.21 per barrel). FM O&G's average realized price for natural gas was
$2.00 per MMBtu in first-quarter 2016, compared to the New York
Mercantile Exchange natural gas price average of $2.07 per MMBtu for the
January through March 2016 contracts.
Realized revenues for oil and gas operations of $23.79 per BOE in
first-quarter 2016 were below realized revenues of $43.71 per BOE in
first-quarter 2015, primarily reflecting lower oil prices and the impact
of realized cash gains on derivative contracts of $8.00 per BOE in
first-quarter 2015.
Cash production costs for oil and gas operations of $15.85 per BOE in
first-quarter 2016 were lower than cash production costs of $20.26 per
BOE in first-quarter 2015, primarily reflecting increased production
from the Deepwater GOM and cost reduction efforts.
Following is a summary of average oil and gas sales volumes per day by
region for the first quarters of 2016 and 2015:
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
Sales Volumes (MBOE per day)
|
|
2016
|
|
2015
|
GOMa
|
|
81
|
|
|
74
|
California
|
|
33
|
|
|
39
|
Haynesville/Madden/Other
|
|
19
|
|
|
26
|
Total oil and gas operations
|
|
133
|
|
|
139
|
|
|
|
|
|
|
a.
|
|
Includes sales from properties on the GOM Shelf and in the
Deepwater GOM, and the Inboard Lower Tertiary/Cretaceous natural
gas trend.
|
|
|
|
Daily sales volumes averaged 133 MBOE for first-quarter 2016, including
91 thousand barrels (MBbls) of crude oil, 216 million cubic feet (MMcf)
of natural gas and 6 MBbls of NGLs. Since year-end 2015, FM O&G has
commenced production from two 100-percent-owned Deepwater GOM wells and
plans to commence production from four additional Deepwater GOM wells by
mid-2016. Oil and gas sales volumes are expected to average 149 MBOE per
day for the year 2016, comprised of 73 percent oil, 22 percent natural
gas and 5 percent NGLs.
Based on current sales volume and cost estimates, cash production costs
are expected to approximate $15 per BOE for the year 2016.
Oil and Gas Exploration, Operating and Development Activities.
FCX's oil and gas business has significant proved, probable and possible
reserves with valuable infrastructure and associated resources with
long-term production and development potential.
Since commencing development activities in 2014 at its three
100-percent-owned production platforms in the Deepwater GOM, FM O&G has
drilled 14 wells in producing fields with positive results. Six of these
wells have been brought on production. FM O&G plans to complete and
place four additional wells on production in 2016.
FM O&G continues to take actions to reduce oil and gas costs and capital
expenditures, including undertaking a near-term deferral of exploration
and development activities. Past investments are expected to enable
production to be increased to average rates of 149 MBOE per day in 2016
and 2017, and cash production costs to decline to an average of
approximately $14 per BOE in 2016 and 2017.
Two drillships were fully idled in first-quarter 2016, and one drillship
was used for completion operations, including a completion that
commenced in March 2016 and is expected to be completed in May 2016.
Following this operation, the three drillships are expected to remain
idled. Under the existing drillship contracts, which expire in 2017, FM
O&G would incur idle rig costs totaling an estimated $0.8 billion in
2016 and $0.5 billion in 2017. FCX continues to discuss the terms of the
contracts with the drillship owners.
Oil and Gas Capital Expenditures. Capital expenditures for oil
and gas operations in first-quarter 2016 totaled $480 million in the
U.S. (including $258 million incurred for Deepwater GOM and $225 million
associated with the change in capital expenditure accruals) and $43
million primarily associated with prior period costs in Morocco.
Capital expenditures for oil and gas operations for the year 2016 are
estimated to total $1.5 billion, excluding $0.8 billion in idle rig
costs (which reduce operating cash flows). Approximately 90 percent of
the 2016 capital budget is expected to be directed to the GOM.
Deepwater GOM. FM O&G operates and owns 100-percent working
interests in the Holstein, Marlin and Horn Mountain deepwater production
platforms, which in total have processing capacity of 250 MBbls of oil
per day. In addition, FM O&G has interests in the Lucius, Heidelberg,
Ram Powell and Hoover producing oil fields and the Atwater Valley
undeveloped area.
The Lucius field in the Keathley Canyon area, which
commenced production in first-quarter 2015, continues to perform
well. During first-quarter 2016, production from six wells averaged 18
MBOE per day, net to FM O&G’s 25 percent working interest. Approximately
80 percent of FM O&G’s working interest is held through its consolidated
subsidiary Plains Offshore Operations Inc. (POI). Third parties hold a
preferred interest in POI and are entitled to receive preferred
dividends and have a liquidation preference which ranks above FM O&G’s
common equity in the subsidiary.
In January 2016, first oil production commenced in the Heidelberg
oil field in the Green Canyon area. Three wells began producing
during the initial phase. Heidelberg is a subsea development consisting
of five subsea wells tied back to a truss spar hull located in 5,300
feet of water. Heidelberg field was discovered in February 2009 and the
subsequent development project was sanctioned in early 2013. FM O&G has
a 12.5 percent working interest in Heidelberg.
At Holstein Deep, completion activities for the initial
three-well subsea tieback development program are progressing, and the
initial well commenced production in April 2016. Two additional wells
are expected to commence in second-quarter 2016. The Holstein Deep
development is located in Green Canyon Block 643, west of the
100-percent owned Holstein platform in 3,890 feet of water, with
production facilities capable of processing 113 MBbls of oil per day.
FM O&G’s 100-percent-owned Horn Mountain field is located in
the Mississippi Canyon area and has production facilities capable
of processing 75 MBbls of oil per day. To enhance recovery of remaining
oil in place, future development plans will target subsea tieback from
multiple stacked sands in the area. FM O&G is currently completing the Kilo/Oscar
well as a tieback to the Horn Mountain production platform. The Quebec/Victory
well is also expected to be tied back and commence production in 2016.
FM O&G’s well inventory also includes the Horn Mountain Deep
well, where successful drilling results in 2016 indicated the presence
of sand sections deeper than known pay sections in the field. These
positive results and geophysical data support the existence of Middle
Miocene reservoir potential for additional development opportunities in
the Horn Mountain Deep area, including five 100-percent-owned
exploration prospects with significant potential. FM O&G controls rights
to over 55,000 acres associated with these prospects.
FM O&G’s 100-percent-owned Marlin Hub is located in the
Mississippi Canyon area and has production facilities capable of
processing 60 MBbls of oil per day. FM O&G has drilled five successful
tieback opportunities in the area since 2014. The King D-12 and Dorado
wells commenced production in 2015, and the King D-13 well commenced
production in first-quarter 2016. The King D-9 and D-10 wells are
expected to be completed in future periods.
California. Sales volumes from California averaged 33 MBOE per
day for first-quarter 2016, compared with 39 MBOE per day for
first-quarter 2015. FM O&G’s position in California is located onshore
in the San Joaquin Valley and Los Angeles Basin, and offshore in the
Point Pedernales field.
CASH FLOWS, CASH and DEBT TRANSACTIONS
Operating Cash Flows. FCX generated operating cash flows of $740
million (including $188 million in working capital sources and changes
in other tax payments) for first-quarter 2016.
Based on current sales volume and cost estimates and assuming average
prices of $2.25 per pound of copper, $1,250 per ounce of gold, $5 per
pound of molybdenum and $45 per barrel of Brent crude oil for the
remainder of 2016, FCX's consolidated operating cash flows are estimated
to approximate $4.8 billion for the year 2016 (including $0.8 billion in
working capital sources and other tax payments). The impact of price
changes for the remainder of 2016 on operating cash flows would
approximate $340 million for each $0.10 per pound change in the average
price of copper, $45 million for each $50 per ounce change in the
average price of gold, $45 million for each $2 per pound change in the
average price of molybdenum and $100 million for each $5 per barrel
change in the average Brent crude oil price.
Capital Expenditures. Capital expenditures totaled $982 million
for first-quarter 2016, consisting of $459 million for mining operations
(including $350 million for major projects) and $523 million for oil and
gas operations. Capital expenditures are expected to approximate $3.3
billion for the year 2016, consisting of $1.8 billion for mining
operations (including $1.4 billion for major projects, primarily for
underground development activities at Grasberg and remaining costs for
the Cerro Verde expansion) and $1.5 billion for oil and gas operations.
Projected capital expenditures for the year 2016 exclude $0.8 billion
for idle rig cash costs, which reduce operating cash flows.
Cash. Following is a summary of the U.S. and international
components of consolidated cash and cash equivalents available to the
parent company, net of noncontrolling interests' share, taxes and other
costs at March 31, 2016 (in millions):
|
|
|
|
|
Cash at domestic companies
|
|
$
|
9
|
|
Cash at international operations
|
|
322
|
|
Total consolidated cash and cash equivalents
|
|
331
|
|
Noncontrolling interests' share
|
|
(84
|
)
|
Cash, net of noncontrolling interests' share
|
|
247
|
|
Withholding taxes and other
|
|
(15
|
)
|
Net cash available
|
|
$
|
232
|
|
|
|
|
|
|
Debt. FCX continues to focus on cost and capital management and
cash flow generation from its operations and is taking actions to reduce
debt by pursuing asset sales and joint venture transactions. Following
is a summary of total debt and the related weighted-average interest
rates at March 31, 2016 (in billions, except percentages):
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
Average
|
|
|
|
|
Interest Rate
|
FCX Senior Notes
|
|
$
|
11.9
|
|
|
3.8%
|
FCX Term Loan
|
|
3.0
|
|
|
2.9%
|
FM O&G LLC Senior Notes
|
|
2.5
|
|
|
6.6%
|
Cerro Verde Credit Facility
|
|
1.8
|
|
|
2.8%
|
FCX Revolving Credit Facilitya
|
|
0.5
|
|
|
2.9%
|
Other debt
|
|
1.1
|
|
|
4.3%
|
|
|
$
|
20.8
|
|
|
3.9%
|
|
|
|
|
|
|
|
a.
|
|
At March 31, 2016, FCX has $38 million in letters of
credit issued and availability of $3.0 billion under its revolving
credit facility.
|
|
|
|
In February 2016, FCX reached agreement with its bank group to amend its
revolving credit facility and term loan, which included modifications of
the maximum leverage ratio and minimum interest expense coverage ratio
to provide FCX with additional flexibility. Additionally, the commitment
under the revolving credit facility was reduced from $4.0 billion to
$3.5 billion.
A springing collateral and guarantee trigger was also added to the
revolving credit facility and term loan. Under this provision, if FCX
has not entered into definitive agreements for asset sales totaling $3.0
billion in aggregate by June 30, 2016, which are reasonably expected to
close by December 31, 2016, FCX will be required to secure the revolving
credit facility and term loan with a mutually acceptable collateral and
guarantee package. Additionally, many of the exceptions to the
subsidiary indebtedness and lien restrictions contained in the revolving
credit facility and term loan have been limited through March 31, 2017.
FINANCIAL POLICY
FCX intends to continue to seek to strengthen its financial position,
with a focus on significant debt reduction. In December 2015, FCX's
common stock dividends were suspended. FCX's Board of Directors will
continue to review its financial policy on an ongoing basis.
WEBCAST INFORMATION
A conference call with securities analysts to discuss FCX's
first-quarter 2016 results is scheduled for today at 10:00 a.m. Eastern
Time. The conference call will be broadcast on the Internet along with
slides. Interested parties may listen to the conference call live and
view the slides by accessing "fcx.com." A replay of the webcast will be
available through Friday, May 27, 2016.
-----------------------------------------------------------------------------------------------------------
FCX is a premier U.S.-based natural resources company with an
industry-leading global portfolio of mineral assets, significant oil and
gas resources and a growing production profile. FCX is the world's
largest publicly traded copper producer.
FCX's portfolio of assets includes the Grasberg minerals district
in Indonesia, one of the world's largest copper and gold deposits;
significant mining operations in the Americas, including the large-scale
Morenci minerals district in North America and the Cerro Verde operation
in South America; the Tenke Fungurume minerals district in the DRC; and
significant U.S. oil and natural gas assets principally in the Deepwater
GOM and in California. Additional information about FCX is available on
FCX's website at "fcx.com."
Cautionary Statement and Regulation G Disclosure: This
press release contains forward-looking statements in which FCX discusses
its potential future performance. Forward-looking statements are all
statements other than statements of historical facts, such as
projections or expectations relating to ore grades and milling rates,
production and sales volumes, unit net cash costs, cash production costs
per BOE, operating cash flows, capital expenditures, debt reduction
initiatives, exploration efforts and results, development and production
activities and costs, liquidity, tax rates, the impact of copper, gold,
molybdenum, cobalt, crude oil and natural gas price changes, the impact
of deferred intercompany profits on earnings, reserve estimates, future
dividend payments, and share purchases and sales. The words
“anticipates,” “may,” “can,” “plans,” “believes,” “estimates,”
“expects,” “projects,” "targets," “intends,” “likely,” “will,” “should,”
“to be,” ”potential" and any similar expressions are intended to
identify those assertions as forward-looking statements. Under its term
loan and revolving credit facility, as amended, FCX is not permitted to
pay dividends on common stock on or prior to March 31, 2017. The
declaration of dividends is at the discretion of the Board, subject to
restrictions under FCX's credit agreement, and will depend on FCX's
financial results, cash requirements, future prospects, and other
factors deemed relevant by the Board.
FCX cautions readers that forward-looking statements are not
guarantees of future performance and actual results may differ
materially from those anticipated, projected or assumed in the
forward-looking statements. Important factors that can cause FCX's
actual results to differ materially from those anticipated in the
forward-looking statements include supply of and demand for, and prices
of, copper, gold, molybdenum, cobalt, crude oil and natural gas, mine
sequencing, production rates, drilling results, potential effects of
cost and capital expenditure reductions and production curtailments on
financial results and cash flow, the outcome of FCX's debt reduction
initiatives, potential additional oil and gas property impairment
charges, potential inventory adjustments, potential impairment of
long-lived mining assets, the outcome of ongoing discussions with the
Indonesian government regarding PT-FI's COW, PT-FI's ability to obtain
renewal of its export license after August 8, 2016, the potential
effects of violence in Indonesia generally and in the province of Papua,
the resolution of administrative disputes in the DRC, industry risks,
regulatory changes, political risks, labor relations, weather- and
climate-related risks, environmental risks, litigation results and other
factors described in more detail under the heading “Risk Factors” in
FCX's Annual Report on Form 10-K for the year ended December 31, 2015,
filed with the U.S. Securities and Exchange Commission (SEC) as updated
by FCX's subsequent filings with the SEC.
Investors are cautioned that many of the assumptions upon which
FCX's forward-looking statements are based are likely to change after
the forward-looking statements are made, including for example commodity
prices, which FCX cannot control, and production volumes and costs, some
aspects of which FCX may not be able to control. Further, FCX may make
changes to its business plans that could affect its results. FCX
cautions investors that it does not intend to update forward-looking
statements more frequently than quarterly notwithstanding any changes in
its assumptions, changes in business plans, actual experience or other
changes, and FCX undertakes no obligation to update any forward-looking
statements.
This press release also contains certain financial measures such
as unit net cash costs per pound of copper and molybdenum, oil and gas
realized revenues, cash production costs and cash operating margin,
which are not recognized under U.S. generally accepted accounting
principles. As required by SEC Regulation G, reconciliations of these
measures to amounts reported in FCX's consolidated financial statements
are in the supplemental schedules of this press release, which are also
available on FCX's website, "fcx.com."
|
|
|
|
|
FREEPORT-McMoRan INC.
|
SELECTED MINING OPERATING DATA
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
Production
|
|
Sales
|
COPPER (millions of
recoverable pounds)
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
|
|
|
|
|
|
|
|
Morenci (85%)a
|
|
|
|
232
|
|
205
|
|
238
|
|
211
|
Bagdad (100%)
|
|
|
|
48
|
|
53
|
|
50
|
|
58
|
Safford (100%)
|
|
|
|
56
|
|
40
|
|
59
|
|
41
|
Sierrita (100%)
|
|
|
|
41
|
|
47
|
|
43
|
|
49
|
Miami (100%)
|
|
|
|
8
|
|
11
|
|
9
|
|
13
|
Chino (100%)
|
|
|
|
81
|
|
73
|
|
83
|
|
75
|
Tyrone (100%)
|
|
|
|
20
|
|
22
|
|
20
|
|
24
|
Other (100%)
|
|
|
|
1
|
|
1
|
|
1
|
|
1
|
Total North America
|
|
|
|
487
|
|
452
|
|
503
|
|
472
|
|
|
|
|
|
|
|
|
|
|
|
South America
|
|
|
|
|
|
|
|
|
|
|
Cerro Verde (53.56%)
|
|
|
|
272
|
|
107
|
|
256
|
|
110
|
El Abra (51%)
|
|
|
|
63
|
|
86
|
|
67
|
|
90
|
Total South America
|
|
|
|
335
|
|
193
|
|
323
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
Indonesia
|
|
|
|
|
|
|
|
|
|
|
Grasberg (90.64%)b
|
|
|
|
165
|
|
154
|
|
174
|
|
155
|
|
|
|
|
|
|
|
|
|
|
|
Africa
|
|
|
|
|
|
|
|
|
|
|
Tenke Fungurume (56%)
|
|
|
|
110
|
|
116
|
|
123
|
|
133
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
1,097
|
|
915
|
|
1,123
|
|
960
|
Less noncontrolling interests
|
|
|
|
221
|
|
157
|
|
222
|
|
168
|
Net
|
|
|
|
876
|
|
758
|
|
901
|
|
792
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated sales from mines
|
|
|
|
|
|
|
|
1,123
|
|
960
|
Purchased copper
|
|
|
|
|
|
|
|
27
|
|
40
|
Total copper sales, including purchases
|
|
|
|
|
|
|
|
1,150
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound
|
|
|
|
|
|
|
|
$
|
2.17
|
|
$
|
2.72
|
|
|
|
|
|
|
|
|
|
|
|
GOLD (thousands of recoverable
ounces)
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
North America (100%)
|
|
|
|
6
|
|
4
|
|
6
|
|
3
|
Indonesia (90.64%)b
|
|
|
|
178
|
|
255
|
|
195
|
|
260
|
Consolidated
|
|
|
|
184
|
|
259
|
|
201
|
|
263
|
Less noncontrolling interests
|
|
|
|
17
|
|
24
|
|
18
|
|
24
|
Net
|
|
|
|
167
|
|
235
|
|
183
|
|
239
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per ounce
|
|
|
|
|
|
|
|
$
|
1,227
|
|
$
|
1,186
|
|
|
|
|
|
|
|
|
|
|
|
MOLYBDENUM (millions of
recoverable pounds)
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
Henderson (100%)
|
|
|
|
2
|
|
7
|
|
N/A
|
|
N/A
|
Climax (100%)
|
|
|
|
5
|
|
6
|
|
N/A
|
|
N/A
|
North America copper mines (100%)a
|
|
|
|
8
|
|
9
|
|
N/A
|
|
N/A
|
Cerro Verde (53.56%)
|
|
|
|
5
|
|
2
|
|
N/A
|
|
N/A
|
Consolidated
|
|
|
|
20
|
|
24
|
|
17
|
|
23
|
Less noncontrolling interests
|
|
|
|
2
|
|
1
|
|
1
|
|
1
|
Net
|
|
|
|
18
|
|
23
|
|
16
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound
|
|
|
|
|
|
|
|
$
|
7.61
|
|
$
|
10.17
|
|
|
|
|
|
|
|
|
|
|
|
COBALT (millions of contained
pounds)
|
|
|
|
|
|
|
|
|
|
|
(FCX's net interest in %)
|
|
|
|
|
|
|
|
|
|
|
Consolidated - Tenke Fungurume (56%)
|
|
|
|
9
|
|
7
|
|
10
|
|
8
|
Less noncontrolling interests
|
|
|
|
4
|
|
3
|
|
4
|
|
3
|
Net
|
|
|
|
5
|
|
4
|
|
6
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
Average realized price per pound
|
|
|
|
|
|
|
|
$
|
6.32
|
|
$
|
8.72
|
|
|
|
|
|
|
|
|
|
|
|
a. Amounts are net of Morenci's 15 percent joint venture
partner's interest.
|
b. Amounts are net of Grasberg's joint venture partner's
interest, which varies in accordance with the terms of the joint
venture agreement.
|
|
|
|
|
|
|
FREEPORT-McMoRan INC.
|
SELECTED MINING OPERATING DATA (continued)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2016
|
|
2015
|
100% North America Copper Mines
|
|
|
|
|
|
|
Solution Extraction/Electrowinning
(SX/EW) Operations
|
|
|
|
|
|
|
Leach ore placed in stockpiles (metric tons per day)
|
|
|
|
833,400
|
|
915,100
|
Average copper ore grade (percent)
|
|
|
|
0.31
|
|
0.25
|
Copper production (millions of recoverable pounds)
|
|
|
|
302
|
|
247
|
|
|
|
|
|
|
|
Mill Operations
|
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
|
|
298,600
|
|
301,500
|
Average ore grades (percent):
|
|
|
|
|
|
|
Copper
|
|
|
|
0.50
|
|
0.48
|
Molybdenum
|
|
|
|
0.03
|
|
0.03
|
Copper recovery rate (percent)
|
|
|
|
84.7
|
|
85.4
|
Production (millions of recoverable pounds):
|
|
|
|
|
|
|
Copper
|
|
|
|
226
|
|
241
|
Molybdenum
|
|
|
|
8
|
|
9
|
|
|
|
|
|
|
|
100% South America Mining
|
|
|
|
|
|
|
SX/EW Operations
|
|
|
|
|
|
|
Leach ore placed in stockpiles (metric tons per day)
|
|
|
|
140,700
|
|
233,600
|
Average copper ore grade (percent)
|
|
|
|
0.41
|
|
0.41
|
Copper production (millions of recoverable pounds)
|
|
|
|
90
|
|
114
|
|
|
|
|
|
|
|
Mill Operations
|
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
|
|
339,400
|
|
119,300
|
Average ore grades:
|
|
|
|
|
|
|
Copper (percent)
|
|
|
|
0.43
|
|
0.44
|
Molybdenum (percent)
|
|
|
|
0.02
|
|
0.02
|
Copper recovery rate (percent)
|
|
|
|
86.2
|
|
79.6
|
Production (recoverable):
|
|
|
|
|
|
|
Copper (millions of pounds)
|
|
|
|
245
|
|
79
|
Molybdenum (millions of pounds)
|
|
|
|
5
|
|
2
|
|
|
|
|
|
|
|
100% Indonesia Mining
|
|
|
|
|
|
|
Ore milled (metric tons per day)a
|
|
|
|
|
|
|
Grasberg open pit
|
|
|
|
105,800
|
|
107,900
|
Deep Ore Zone underground mine
|
|
|
|
44,200
|
|
49,000
|
Deep Mill Level Zone (DMLZ) underground mineb
|
|
|
|
4,100
|
|
—
|
Grasberg Block Cave underground minec
|
|
|
|
2,300
|
|
—
|
Big Gossan underground minec
|
|
|
|
200
|
|
—
|
Total
|
|
|
|
156,600
|
|
156,900
|
Average ore grades:
|
|
|
|
|
|
|
Copper (percent)
|
|
|
|
0.69
|
|
0.57
|
Gold (grams per metric ton)
|
|
|
|
0.53
|
|
0.68
|
Recovery rates (percent):
|
|
|
|
|
|
|
Copper
|
|
|
|
89.3
|
|
90.5
|
Gold
|
|
|
|
80.6
|
|
84.5
|
Production (recoverable):
|
|
|
|
|
|
|
Copper (millions of pounds)
|
|
|
|
183
|
|
154
|
Gold (thousands of ounces)
|
|
|
|
190
|
|
255
|
|
|
|
|
|
|
|
100% Africa Mining
|
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
|
|
15,100
|
|
14,500
|
Average ore grades (percent):
|
|
|
|
|
|
|
Copper
|
|
|
|
3.97
|
|
4.36
|
Cobalt
|
|
|
|
0.48
|
|
0.35
|
Copper recovery rate (percent)
|
|
|
|
92.8
|
|
94.0
|
Production (millions of pounds):
|
|
|
|
|
|
|
Copper (recoverable)
|
|
|
|
110
|
|
116
|
Cobalt (contained)
|
|
|
|
9
|
|
7
|
|
|
|
|
|
|
|
100% Molybdenum Mines
|
|
|
|
|
|
|
Ore milled (metric tons per day)
|
|
|
|
33,700
|
|
40,600
|
Average molybdenum ore grade (percent)
|
|
|
|
0.22
|
|
0.19
|
Molybdenum production (millions of recoverable pounds)
|
|
|
|
7
|
|
13
|
|
|
|
|
|
|
|
a. Amounts represent the approximate average daily
throughput processed at PT-FI's mill facilities from each
producing mine and from development activities that result in
metal production.
|
b. Production from the DMLZ underground mine commenced in
September 2015.
|
c. Production from the Grasberg Block Cave underground
mine is expected to commence in 2018, and production from the Big
Gossan underground mine is expected to restart in the first half
of 2017.
|
|
|
|
|
|
|
FREEPORT-McMoRan INC.
|
SELECTED U.S. OIL AND GAS OPERATING DATA
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
Sales Volumes
|
|
Sales per Day
|
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Gulf of Mexico (GOM)a
|
|
|
|
|
|
|
|
|
|
|
|
Oil (thousand barrels or MBbls)
|
|
|
|
5,373
|
|
4,963
|
|
59
|
|
55
|
|
Natural gas (million cubic feet or MMcf)
|
|
|
|
8,898
|
|
7,355
|
|
98
|
|
82
|
|
Natural gas liquids (NGLs, in MBbls)
|
|
|
|
525
|
|
472
|
|
6
|
|
5
|
|
Thousand barrels of oil equivalents (MBOE)
|
|
|
|
7,382
|
|
6,661
|
|
81
|
|
74
|
|
Average realized price per BOEb
|
|
|
|
$
|
25.69
|
|
$
|
40.65
|
|
|
|
|
|
Cash production costs per BOEb
|
|
|
|
$
|
12.08
|
|
$
|
17.39
|
|
|
|
|
|
Capital expenditures (in millions)
|
|
|
|
$
|
277
|
|
$
|
705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CALIFORNIA
|
|
|
|
|
|
|
|
|
|
|
|
Oil (MBbls)
|
|
|
|
2,881
|
|
3,374
|
|
32
|
|
38
|
|
Natural gas (MMcf)
|
|
|
|
480
|
|
584
|
|
5
|
|
6
|
|
NGLs (MBbls)
|
|
|
|
36
|
|
42
|
|
—
|
d
|
1
|
|
MBOE
|
|
|
|
2,997
|
|
3,513
|
|
33
|
|
39
|
|
Average realized price per BOEb
|
|
|
|
$
|
25.97
|
|
$
|
38.74
|
|
|
|
|
|
Cash production costs per BOEb
|
|
|
|
$
|
28.27
|
|
$
|
31.70
|
|
|
|
|
|
Capital expenditures (in millions)
|
|
|
|
$
|
9
|
|
$
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HAYNESVILLE/MADDEN/OTHER
|
|
|
|
|
|
|
|
|
|
|
|
Oil (MBbls)
|
|
|
|
44
|
|
35
|
|
—
|
d
|
—
|
d
|
Natural gas (MMcf)
|
|
|
|
10,261
|
|
13,828
|
|
113
|
|
154
|
|
NGLs (MBbls)
|
|
|
|
13
|
|
10
|
|
—
|
d
|
—
|
d
|
MBOE
|
|
|
|
1,767
|
|
2,350
|
|
19
|
|
26
|
|
Average realized price per BOEb
|
|
|
|
$
|
12.19
|
|
$
|
17.18
|
|
|
|
|
|
Cash production costs per BOEb
|
|
|
|
$
|
10.49
|
|
$
|
11.29
|
|
|
|
|
|
Capital expenditures (in millions)
|
|
|
|
$
|
—
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL U.S. OIL AND GAS OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
Oil (MBbls)
|
|
|
|
8,298
|
|
8,372
|
|
91
|
|
93
|
|
Natural gas (MMcf)
|
|
|
|
19,639
|
|
21,767
|
|
216
|
|
242
|
|
NGLs (MBbls)
|
|
|
|
574
|
|
524
|
|
6
|
|
6
|
|
MBOE
|
|
|
|
12,146
|
|
12,524
|
|
133
|
|
139
|
|
Cash operating margin per BOE:b
|
|
|
|
|
|
|
|
|
|
|
|
Realized revenues
|
|
|
|
$
|
23.79
|
|
$
|
43.71
|
c
|
|
|
|
|
Less: cash production costs
|
|
|
|
15.85
|
|
20.26
|
|
|
|
|
|
Cash operating margin
|
|
|
|
$
|
7.94
|
|
$
|
23.45
|
|
|
|
|
|
Depreciation, depletion and amortization per BOE
|
|
|
|
$
|
20.97
|
|
$
|
42.30
|
|
|
|
|
|
Capital expenditures (in millions)
|
|
|
|
$
|
480
|
e
|
$
|
1,018
|
e
|
|
|
|
|
|
a. Reflects properties in the Deepwater GOM and on
the Shelf, including the Inboard Lower Tertiary/Cretaceous natural
gas trend.
|
b. Cash operating margin for oil and gas operations
reflects realized revenues less cash production costs. For
reconciliations of average realized price and cash production
costs per BOE to revenues and production and delivery costs
reported in FCX's consolidated financial statements, refer to the
supplemental schedules, “Product Revenues and Production Costs,”
beginning on page X, which are available on FCX's website, fcx.com.
|
c. Includes realized cash gains on crude oil
derivative contracts of $8.00 per BOE. These contracts were
managed on a consolidated basis; accordingly, the average realized
price per BOE by region did not reflect adjustments for crude oil
derivative contracts. FM O&G currently does not have any oil and
gas derivative contracts in place for 2016 or future years.
|
d. Rounds to less than 1 MBbl per day.
|
e. Consolidated capital expenditures for U.S. oil
and gas operations reflect total spending, which includes accrual
and other adjustments totaling $194 million for first-quarter 2016
and $263 million for first-quarter 2015 that are not specifically
allocated to the above regions. Excludes international oil and gas
capital expenditures totaling $43 million in first-quarter 2016
and $15 million for first-quarter 2015, primarily related to the
Morocco oil and gas properties.
|
|
|
|
|
|
|
FREEPORT-McMoRan INC.
|
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
(In millions, except per share amounts)
|
|
Revenuesa
|
|
|
|
$
|
3,527
|
|
|
$
|
4,153
|
|
b
|
Cost of sales:
|
|
|
|
|
|
|
|
Production and deliveryc
|
|
|
|
2,725
|
|
|
2,912
|
|
|
Depreciation, depletion and amortization
|
|
|
|
722
|
|
|
939
|
|
|
Impairment of oil and gas properties
|
|
|
|
3,787
|
|
|
3,104
|
|
|
Total cost of sales
|
|
|
|
7,234
|
|
|
6,955
|
|
|
Selling, general and administrative expenses
|
|
|
|
140
|
|
|
154
|
|
|
Mining exploration and research expenses
|
|
|
|
19
|
|
|
33
|
|
|
Environmental obligations and shutdown costs
|
|
|
|
10
|
|
|
13
|
|
|
Net gain on sale of assets
|
|
|
|
—
|
|
|
(39
|
)
|
|
Total costs and expenses
|
|
|
|
7,403
|
|
|
7,116
|
|
|
Operating loss
|
|
|
|
(3,876
|
)
|
|
(2,963
|
)
|
|
Interest expense, netd
|
|
|
|
(200
|
)
|
|
(146
|
)
|
|
Other income, net
|
|
|
|
38
|
|
|
7
|
|
|
Loss before income taxes and equity in affiliated companies' net
earnings
|
|
|
|
(4,038
|
)
|
|
(3,102
|
)
|
|
(Provision for) benefit from income taxese
|
|
|
|
(70
|
)
|
|
695
|
|
|
Equity in affiliated companies' net earnings
|
|
|
|
7
|
|
|
1
|
|
|
Net loss
|
|
|
|
(4,101
|
)
|
|
(2,406
|
)
|
|
Net income attributable to noncontrolling interests
|
|
|
|
(72
|
)
|
|
(58
|
)
|
|
Preferred dividends attributable to redeemable noncontrolling
interest
|
|
|
|
(11
|
)
|
|
(10
|
)
|
|
Net loss attributable to common stockholdersf
|
|
|
|
$
|
(4,184
|
)
|
|
$
|
(2,474
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share attributable to common
stockholders
|
|
|
|
$
|
(3.35
|
)
|
|
$
|
(2.38
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted-average common shares outstanding
|
|
|
|
1,251
|
|
|
1,040
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share of common stock
|
|
|
|
$
|
—
|
|
|
$
|
0.05
|
|
|
|
a. Includes favorable (unfavorable) adjustments to
provisionally priced concentrate and cathode copper sales
recognized in prior periods totaling $5 million ($3 million to net
loss attributable to common stock) in first-quarter 2016 and
$(106) million ($(59) million to net loss attributable to common
stock) in first-quarter 2015. For further discussion, refer to the
supplemental schedule, "Derivative Instruments," beginning on page
VII.
|
b. Includes net noncash mark-to-market losses
associated with crude oil derivative contracts totaling $48
million ($30 million to net loss attributable to common stock).
FCX currently does not have any oil and gas derivative contracts
in place for 2016 or future years.
|
c. Includes charges at oil and gas operations
totaling (i) $165 million ($165 million to net loss attributable
to common stock) in first-quarter 2016 and $13 million ($8 million
to net loss attributable to common stock) in first-quarter 2015
for idle rig costs and (ii) $35 million ($35 million to net loss
attributable to common stock) in first-quarter 2016 and $4 million
($2 million to net loss attributable to common stock) in
first-quarter 2015 primarily for inventory write downs.
|
d. Consolidated interest expense, excluding
capitalized interest, totaled $228 million in first-quarter 2016
and $210 million in first-quarter 2015.
|
e. As a result of the impairment to oil and gas
properties, FCX recorded net tax charges of $1.4 billion in
first-quarter 2016 and $458 million in first-quarter 2015 to
establish valuation allowances against U.S. federal and state
deferred tax assets that will not generate a future benefit. For a
summary of income taxes, refer to the supplemental schedule,
"Income Taxes," on page VII.
|
f. FCX defers recognizing profits on intercompany
sales until final sales to third parties occur. Changes in these
deferrals attributable to variability in intercompany volumes
resulted in net reductions to net loss attributable to common
stock of $2 million in first-quarter 2016 and $24 million in
first-quarter 2015. For further discussion, refer to the
supplemental schedule, "Deferred Profits," on page VIII.
|
|
|
|
|
|
|
FREEPORT-McMoRan INC.
|
CONSOLIDATED BALANCE SHEETS (Unaudited)
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
(In millions)
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
331
|
|
|
|
$
|
224
|
|
Trade accounts receivable
|
|
|
|
837
|
|
|
|
689
|
|
Income and other tax receivables
|
|
|
|
1,182
|
|
|
|
1,414
|
|
Other accounts receivables
|
|
|
|
122
|
|
|
|
174
|
|
Inventories:
|
|
|
|
|
|
|
|
Materials and supplies, net
|
|
|
|
1,714
|
|
|
|
1,869
|
|
Mill and leach stockpiles
|
|
|
|
1,644
|
|
|
|
1,724
|
|
Product
|
|
|
|
1,170
|
|
|
|
1,195
|
|
Other current assets
|
|
|
|
233
|
|
|
|
173
|
|
Total current assets
|
|
|
|
7,233
|
|
|
|
7,462
|
|
Property, plant, equipment and mining development costs, net
|
|
|
|
27,376
|
|
|
|
27,509
|
|
Oil and gas properties, net - full cost method:
|
|
|
|
|
|
|
|
Subject to amortization, less accumulated amortization and impairment
|
|
|
|
1,700
|
|
|
|
2,262
|
|
Not subject to amortization
|
|
|
|
1,743
|
|
|
|
4,831
|
|
Long-term mill and leach stockpiles
|
|
|
|
2,324
|
|
|
|
2,271
|
|
Other assets
|
|
|
|
2,288
|
|
|
|
2,242
|
|
Total assets
|
|
|
|
$
|
42,664
|
|
|
|
$
|
46,577
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
$
|
2,987
|
|
|
|
$
|
3,363
|
|
Current portion of debt
|
|
|
|
1,139
|
|
|
|
649
|
|
Current portion of environmental and asset retirement obligations
|
|
|
|
270
|
|
|
|
272
|
|
Accrued income taxes
|
|
|
|
30
|
|
|
|
23
|
|
Total current liabilities
|
|
|
|
4,426
|
|
|
|
4,307
|
|
Long-term debt, less current portion
|
|
|
|
19,638
|
|
|
|
19,779
|
|
Deferred income taxes
|
|
|
|
4,442
|
|
|
|
4,288
|
|
Environmental and asset retirement obligations, less current portion
|
|
|
|
3,762
|
|
|
|
3,739
|
|
Other liabilities
|
|
|
|
1,659
|
|
|
|
1,656
|
|
Total liabilities
|
|
|
|
33,927
|
|
|
|
33,769
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest
|
|
|
|
767
|
|
|
|
764
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
138
|
|
|
|
137
|
|
Capital in excess of par value
|
|
|
|
24,333
|
|
|
|
24,283
|
|
Accumulated deficit
|
|
|
|
(16,570
|
)
|
|
|
(12,387
|
)
|
Accumulated other comprehensive loss
|
|
|
|
(503
|
)
|
|
|
(503
|
)
|
Common stock held in treasury
|
|
|
|
(3,706
|
)
|
|
|
(3,702
|
)
|
Total stockholders' equity
|
|
|
|
3,692
|
|
|
|
7,828
|
|
Noncontrolling interests
|
|
|
|
4,278
|
|
|
|
4,216
|
|
Total equity
|
|
|
|
7,970
|
|
|
|
12,044
|
|
Total liabilities and equity
|
|
|
|
$
|
42,664
|
|
|
|
$
|
46,577
|
|
|
|
|
|
|
|
FREEPORT-McMoRan INC.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
(In millions)
|
Cash flow from operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$
|
(4,101
|
)
|
|
|
$
|
(2,406
|
)
|
Adjustments to reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
|
722
|
|
|
|
939
|
|
Impairment of oil and gas properties
|
|
|
|
3,787
|
|
|
|
3,104
|
|
Oil and gas inventory write downs
|
|
|
|
35
|
|
|
|
4
|
|
Net gain on sale of assets
|
|
|
|
—
|
|
|
|
(39
|
)
|
Net charges for environmental and asset retirement obligations,
including accretion
|
|
|
|
57
|
|
|
|
53
|
|
Payments for environmental and asset retirement obligations
|
|
|
|
(90
|
)
|
|
|
(42
|
)
|
Deferred income taxes
|
|
|
|
152
|
|
|
|
(709
|
)
|
Increase in long-term mill and leach stockpiles
|
|
|
|
(53
|
)
|
|
|
(82
|
)
|
Net gains on crude oil derivative contracts
|
|
|
|
—
|
|
|
|
(52
|
)
|
Other, net
|
|
|
|
43
|
|
|
|
33
|
|
Changes in working capital and other tax payments, excluding amounts
from disposition:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
93
|
|
|
|
316
|
|
Inventories
|
|
|
|
114
|
|
|
|
165
|
|
Other current assets
|
|
|
|
(68
|
)
|
|
|
(42
|
)
|
Accounts payable and accrued liabilities
|
|
|
|
9
|
|
|
|
(402
|
)
|
Accrued income taxes and changes in other tax payments
|
|
|
|
40
|
|
|
|
(123
|
)
|
Net cash provided by operating activities
|
|
|
|
740
|
|
|
|
717
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities:
|
|
|
|
|
|
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
North America copper mines
|
|
|
|
(34
|
)
|
|
|
(107
|
)
|
South America
|
|
|
|
(157
|
)
|
|
|
(445
|
)
|
Indonesia
|
|
|
|
(225
|
)
|
|
|
(225
|
)
|
Africa
|
|
|
|
(35
|
)
|
|
|
(39
|
)
|
Molybdenum mines
|
|
|
|
(1
|
)
|
|
|
(3
|
)
|
U.S. oil and gas operations
|
|
|
|
(480
|
)
|
|
|
(1,018
|
)
|
Other
|
|
|
|
(50
|
)
|
|
|
(30
|
)
|
Other, net
|
|
|
|
2
|
|
|
|
127
|
|
Net cash used in investing activities
|
|
|
|
(980
|
)
|
|
|
(1,740
|
)
|
|
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
Proceeds from debt
|
|
|
|
1,796
|
|
|
|
2,273
|
|
Repayments of debt
|
|
|
|
(1,442
|
)
|
|
|
(802
|
)
|
Net proceeds from sale of common stock
|
|
|
|
32
|
|
|
|
—
|
|
Cash dividends and distributions paid:
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
(4
|
)
|
|
|
(327
|
)
|
Noncontrolling interests
|
|
|
|
(18
|
)
|
|
|
(23
|
)
|
Stock-based awards net payments, including excess tax benefit
|
|
|
|
(4
|
)
|
|
|
(6
|
)
|
Debt financing costs and other, net
|
|
|
|
(13
|
)
|
|
|
(7
|
)
|
Net cash provided by financing activities
|
|
|
|
347
|
|
|
|
1,108
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
|
107
|
|
|
|
85
|
|
Cash and cash equivalents at beginning of year
|
|
|
|
224
|
|
|
|
464
|
|
Cash and cash equivalents at end of period
|
|
|
|
$
|
331
|
|
|
|
$
|
549
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160426005963/en/
Source: Freeport-McMoRan Inc.