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Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc.

Freeport-Mcmoran Inc. · Jul 23, 2015 · 42 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 1
    2nd Quarter 2015 Earnings Conference Call July 23, 2015
  2. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 2
    2Q15 Highlights Strong Operating & Cost Performance in Mining and O&G Mining Oil & Gas Morenci Project at Full Rates Lucius Production Reached Full Capacity Cerro Verde More Than 87% Complete Positive Drilling Results at Holstein…
  3. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 3
    Financial Highlights Sales Data 2Q15 1H15 Copper Consolidated Volumes (mm lbs) 964 1,924 Average Realized Prices (per lb) 2.71 2.70 Site Production & Delivery Costs (per lb) 1.85 1.89 Unit Net Cash Costs (per lb) 1.50 1.57 Gold…
  4. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 4
    Copper Market Commentary Global Economic Uncertainty and Stronger U.S. Dollar China Economy Slowing - Requirements for Copper Growing in Absolute Terms U.S. Recovery Continues At Moderate Rate Gradual Recovery in Europe…
  5. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 5
    World Class Copper Discoveries Are Extremely Rare Recoverable Copper Reserves 2014e Copper Production Million metric tons Thousand metric tons 0 5 10 15 20 25 30 35 0 200 400 600 800 1000 1200 1400 1981 Escondida - 1981 Escondida…
  6. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 6
    Copper Markets Long-term Fundamentals Support Positive Outlook Total Copper Consumption 40 Assuming 2.4% Annual Global +7.6 mm 27% Growth* Over Next 10 Years, Copper 30 +5.2 mm Cu in mm tonnes 23% Market Expected to Grow by…
  7. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 7
    2Q 2015 Mining Operating Summary 2Q15 Unit Production Costs Cash Unit Costs North South (per pound of copper) America America Indonesia Africa Consolidated Site Production & Delivery 1.78 1.77 2.26 1.54 1.85 By-Product Credits…
  8. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 8
    Strong Project Execution Capital Incremental First Copper/ Construction Costs Copper Achieve Full Commenced ( bln) (mm lbs/yr) Rates Tenke Fungurume 2Q11 0.9 150 1Q13/1Q13 Phase II Expansion Morenci 1Q12 1.6 225 2Q14/2Q15 Mill…
  9. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 9
    Cerro Verde Mill Expansion View from Screening Plant to HPGR & Secondary Crushing Plant Detailed engineering & major procurement activities complete To become worlds largest concentrating facility Construction advancing on…
  10. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 10
    Positioned for Margin & Free Cash Flow Growth Growing Copper Sales Profile Declining Unit Net Cash Cost Profile (millions of lbs) 2.00 ( per lb) 1,500 1.64 1.50 1.50 1.49 1,350 1,250 1.25 1,225 1.00 1,000 1,035 960 964 0.50…
  11. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 11
    Indonesia Update Progressing Discussions with Government on Long-Term Operating Rights PT-FI Requirement for Assurance of Legal and Fiscal Terms to Support Major Investments GOI & PT-FI Focused on Developing a Mutually Satisfactory…
  12. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 12
    Grasberg BC & DMLZ Underground Mine Development Completed development of access to DMLZ Crusher underground ore bodies Expect DMLZ start-up in late 2015 & Grasberg BC in 2018 Key development activities include work on ore flow…
  13. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 13
    Significant Copper Resources & Potential billion lbs of copper Future Resource Indonesia 104 Development Opportunities America America Reserves* South Africa North El Abra Mineralized North America Sulfides…
  14. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 14
    2Q15 Oil & Gas Highlights Growth Momentum in Deepwater GOM Principally Focused on Lower Risk Drilling and Tieback Opportunities Drilling Success Since 2014: 10 for 10 on 100%-owned Wells in Producing Fields 3 Placed on Production in…
  15. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 15
    Advancing Deepwater GOM Subsea Tieback Development Strategy Drilled 10 Successful Wells Since 2014 3 Placed on Production; Others to Support Near-term Growth Holstein 100% Marlin 100% Horn Mtn. 100% Logged 3rd Successful Subsalt…
  16. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 16
    Benefits of FM O&Gs Subsea Tieback Strategy Lower Risk Drilling Near Existing Production Facilities Subsea Tiebacks Enhance Cycle Time Existing Infrastructure Provides Prospect Estimated TD to 1st Oil Competitive Advantage Dorado 3…
  17. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 17
    Lucius & Heidelberg Deepwater GOM Development Projects Lucius Achieved First Oil in January 2015 Reached Capacity of 80 MBbl/d in 2Q 2015 FM O&G Share of 2Q Sales: 19 MBOE/d 6 Subsea Wells Tied Back to Truss Spar FM O&G 25.1% WI…
  18. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 18
    Near-term Growth (MBOE/d) * Reflects Potential to Accelerate Certain Drilling and Completion Activities and Upside in Initial Flow Rates. 215 175 143 Potential * 173 151 2015e 2016e 2017e 2016e/2017e Projected to Benefit…
  19. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 19
    FM O&G Annual Indicative EBITDA at Various Production Rates, Excluding Hedging ( in billions) 3.3 2.8 2.7 2.3 2.3 2.2 1.8 1.9 1.8 1.5 1.4 1.1 Production Rate 150 175 200 225 150 175 200 225 150 175 200 225 (MBOE/d)…
  20. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 20
    Atwater Valley Area to Provide Longer Term Production Growth Vito Discovery Large, Deep Subsalt Miocene Discovery Made in 2009 FM O&G Acquired Rights in 2014 Development Options are Under Evaluation Operator Expected to Propose…
  21. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 21
    Attractive Deepwater GOM Inventory in Strategic Focus Areas 16 Prospects Identified by Seismic Imaging; Includes 154 Undeveloped Well Locations Projected Spud Year 2015 2016 2017 2018+ Horn Mtn. (MC Area) Horn Mtn. (MC Area) Horn…
  22. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 22
    2015e Outlook Sales Outlook Unit Cost Copper: 4.2 Billion lbs. 1.53/lb(2) of Copper Gold: 1.3 Million ozs. 19/BOE Molybdenum: 93 Million lbs. Oil Equivalents(1): 52.3 MMBOE (67% Oil) Operating Cash Flows (3) Capital…
  23. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 23
    Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 3 6 2 2.4 1.9 5.4 1 1.25 1.3 5.0 0 2014 2015e 2016e 2017e 4 4.2 Note: Consolidated gold sales include 123k ozs in 2014, 120k ozs in 2015e, 3.9 175k ozs in 2016e…
  24. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 24
    2015e Quarterly Sales Gold Sales (thousand ozs) Copper Sales (million lbs) 400 1,250 300 352 315 380 1,225 200 263 100 1,000 1,035 0 960 964 1Q15 2Q15 3Q15e 4Q15e Note: Consolidated gold sales include approximately 24k ozs in 1Q15,…
  25. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 25
    2015e Operating Estimates 2015e Unit Production Costs (per pound of copper) North South America America Indonesia Africa Consolidated Cash Unit Costs (1) Site Production & Delivery (2) 1.74 1.61 2.29 1.58 1.81 By-product Credits…
  26. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 26
    EBITDA and Cash Flow at Various Copper Prices Average EBITDA (1,200 Gold, 8 Molybdenum & 70 Oil) 15 (US billions) 10 5 2016e/2017e Average 0 Cu 2.50/lb Cu 3.00/lb Cu 3.50/lb Average Operating Cash Flow (excluding…
  27. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 27
    Sensitivities (US millions) 2016e/2017e Operating Change EBITDA Cash Flow Copper: +/- 0.10/lb 500 350 Molybdenum: +/- 1.00/lb 90 70 Gold: +/- 50/ounce 100 60 Oil Sales: +/- 5/bbl(1) 215 170 Oil Sales Net of Diesel…
  28. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 28
    Capital Expenditures (1) (US billions) 8 7.2 6.3 6 5.6 Oil & Gas 5.1 3.2 2.8 4 2.9 Major 2.9 Projects TOTAL 2.5 (2) 2 2.9 MINING 1.5 3.5 1.2 4.0 2.7 2.2 Other Mining 1.0 1.2 1.0 1.1 0 2014 2015e 2016e 2017e (1)…
  29. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 29
    Committed to Balance Sheet Management Strong Track Record Large Resource Base with Strong Cash 6/30/2015 Balances Flows and Capital Discipline ( in bns) Have Taken Steps to Reduce Cost & CAPEX, Complete Asset Sales and Reduce…
  30. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 30
    Key Priorities Strong Balance Sheet Manage Operations and CAPEX to Maximize Cash Flow in Weak Market Environment Obtain O&G Funding to Accelerate Growth Complete Near-term Mining Projects Generate Values from Large Resource…
  31. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 31
    Reference Slides
  32. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 32
    PT-FI Mine Plan PT-FIs Share of Metal Sales, 2015e-2022e 2015e 2019e PT-FI Share Total: 5.6 billion lbs copper Copper, billion lbs Annual Average: 1.12 billion lbs Gold, million ozs 2015e 2019e PT-FI Share Total: 7.6 million ozs…
  33. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 33
    PT Freeport Indonesia Grasberg Minerals District Life-of-Mine Production Sequencing* Plan View Grasberg Open Pit 179mm mt (includes stockpiled ore) 0.96% Cu & 1.06 g/t Au 146mm mt Grasberg & DOZ 0.54% Cu & 0.69 g/t Au Kucing…
  34. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 34
    Quarterly Oil & Gas Operating Summary 2Q 2015 Oil & Gas Margins by Region Haynesville/ Operating Margin Madden/ California Other GOM Consolidated Realized Revenue per BOE 48.30 16.15 47.82 50.04 Cash Production Costs per BOE 27.13…
  35. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 35
    Deepwater Gulf of Mexico Focus Areas Louisiana Dorado Marlin Viosca Knoll Horn Mountain Updip King Horn Mississippi Mountain Canyon Vito KO/QV Power Nap Green Canyon Holstein Deep Deep Sleep East Breaks Garden Banks…
  36. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 36
    Holstein Facility Holstein Deep Development M18 Sand Structure Phase 2 Logged 3rd Successful Subsalt Development Wells (M13) (M18) Miocene Well in July 2015 SS2 Development Results from 3-Well Program Well (M18) Established…
  37. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 37
    Horn Mountain Field Infill Development Program M2 Sand Structure HORN MOUNTAIN Mississippi Canyon 127 Cumulative Field Production 120 MMBOE Infill Program Will Target Undrained Compartments and Attic Potential Miocene J and M…
  38. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 38
    International Exploration - Morocco Spud MZ-1 Exploration Well in May 2015; Drilling in Progress Chevron Chariot FM O&G Morocco Mazagan Permit Area Kosmos, BP Kosmos, BP Agadir Chevron Kosmos, BP Genel Cairn Cairn,…
  39. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 39
    2015e Oil & Gas Operating Estimates Madden & Operating Cost: 2.10/Mcfe California Haynesville Pricing: NYMEX Operating Cost: 31/bbl Gulf of Mexico Operating Cost: 15/bbl Pricing: HLS/NYMEX 2015e Oil & Gas Sales by Region…
  40. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 40
    Oil & Gas Capital Expenditures ( in billions) 2015e 2016e Accelerated Plan DW GOM Near-term Development California/ 75% 75% & Tiebacks Other 15% 15% 10% 75% 10% 10% 15% Longer-term Growth in DW GOM 2.8 Bn 2.9 Bn 3.8…
  41. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 41
    Adjusted EBITDA Reconciliation (in millions) 12-Month Q2 2015 Trailing Net loss attributable to common stock (1,851) (6,625) Interest expense, net 149 600 Income tax benefit (687) (1,743) Depreciation, depletion and amortization 890…
  42. Q2 2015 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 42
    O&G Adjusted EBITDA Reconciliation (in millions) Q1 2015 Q2 2015 Net loss before income taxes (3,517) (2,983) Interest expense, net 38 40 Depreciation, depletion and amortization 530 485 Impairment of oil and gas properties 3,104…

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