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4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc.

Freeport-Mcmoran Inc. · Jan 27, 2015 · 44 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. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 1
    4th Quarter 2014 Earnings Conference Call January 27, 2015 www.fcx.com
  2. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 2
    4Q14 Highlights Advanced Important Projects for Profitable Future Growth - Morenci Expansion Expected to Reach Full Rates in 1Q15 - Cerro Verde Expansion More than 50% Complete 2016 Startup - Lucius (GOM) Achieved 1st Oil in January…
  3. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 3
    Financial Highlights Sales Data 4Q14 2014 Copper Consolidated Volumes (mm lbs) 972 3,888 Average Realization (per lb) 2.95 3.09 Site Production & Delivery Unit Costs (per lb) 1.87 1.90 Unit Net Cash Costs (per lb) (1) 1.47 1.51…
  4. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 4
    Business Update Copper Business Oil & Gas Business Cerro Verde Project on Track for Continued Strong Operational Performance Completion by Year-end 2015 Substantial Resources Identified Tenke and Morenci Completed Significant Lower…
  5. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 5
    Protecting the Balance Sheet Completed 5 Bn in Asset Sales (4.3 Bn Net of Tax) Actions Significant Reduction in Capital Budget to Date 4Q14 Financings Prepaid 2015 Maturities & Higher Coupon Debt Ongoing Assessment of Markets/Further…
  6. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 6
    2015 Capital & Other Cost Reductions/Deferrals CAPEX Reductions Operating & Other Costs Mining Cost Reductions Oil & Gas (energy) 1.2 0.4 Mining Minerals 0.3 Exploration 0.1 1.5 Billion 0.5 Billion 7
  7. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 7
    Strength in Assets Long-lived Reserves Diverse Portfolio of High Quality, World Scale Copper Assets Strategic GOM Oil Position with Existing Infrastructure Valuable Resource Potential Copper (Bn lbs) Oil Equivalents (3) (MMBOE)…
  8. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 8
    Copper Market Commentary Impact of Commodity Trading Activities Global Macroeconomic Demand Uncertainty China Addressing Slowing Growth Rate with Economic Stimulus U.S. Growing at Moderate Rate Supply Side Challenges Persist -…
  9. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 9
    Copper Markets Long-term Fundamentals Support Positive Outlook Total Copper Consumption 40 Assuming 2.5% Global Growth +7.6 mm Over Next 10 Years, Copper 30 +5.2 mm 28% Cu in mm tonnes 23% Market Expected to Grow by +7.6 mm…
  10. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 10
    4Q 2014 Mining Operating Summary 4Q14 Unit Production Costs Cash Unit Costs North South (per pound of copper) America America Indonesia Africa Consolidated Site Production & Delivery 1.81 1.68 2.37 1.69 1.87 By-Product Credits…
  11. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 11
    Cerro Verde Mill Expansion Detailed engineering & major procurement activities complete HPGR & Secondary Flotation Crushing Plant To become worlds largest concentrating facility Construction advancing on schedule & more than 50%…
  12. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 12
    Indonesian Matters Engaged in Active Discussions with Government to Amend COW Positive Long-term Partnership Economic Engine for Development of Papua Operations Provide Significant Benefits to Indonesian Economy All Rights Under…
  13. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 13
    Grasberg BC & DMLZ Underground Mine Development Completed development on access to Grasberg BC Service Shaft at underground ore bodies the 2,500 meter elevation Completed 123 km of development in Grasberg BC & 90 km in DMLZ Key…
  14. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 14
    Brownfield Development Studies El Abra Bagdad Large sulfide resource 0.4% Cu Large sulfide resource 0.3% Cu supports 260 mt/d mill Resource supports potential to Potential incremental production more than double mill capacity* 750…
  15. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 15
    2014 FM O&G Highlights 2014 FM O&G Financial Highlights ( in billions) Realized Revenues 4.1 Cash Operating Margin 2.9 Sales (MMBOE) 56.8 Continued Strong Operational Performance Positioned Portfolio for Long-Term Growth in…
  16. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 16
    Oil Market Commentary 150 Brent and HLS Pricing per Bbl 125 100 75 50 (/bbl except differentials) 2013* 4Q14 2014 Brent Average 109 77 99 25 HLS Average 107 75 96 Realization before Hedges 100 70 93 Differential to…
  17. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 17
    4Q 2014 Oil & Gas Operating Summary & 2015 Oil Hedge Positions 4Q 2014 Margin Contribution 4Q 2014 Highlights Continued Steady Production GOM 70% Performance from California Completed Maintenance at Marlin in California Deepwater…
  18. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 18
    Responding to Market Conditions Significant Reduction in Capital Budget 2015 Reduced by 1.2 Billion (34%) 2016 Reduced by 1.7 Billion (43%) Defer Discretionary Spending Focus on Highest Priority Projects (80% in GOM) Slow…
  19. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 19
    Lucius Case Study FM O&G Acquired Rights in September 2009 (Oil was 70/bbl) Discovery Well Drilled by Operator in December 2009 Identified +300 MMBOE Resource Potential Lucius Structure Map FM O&G Arranged Funding For its…
  20. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 20
    Deepwater GOM Progress Report Positive Drilling Results 1st Delineation Well Logged 234 of net oil pay Holstein Deep 2nd Delineation Well Currently Drilling; 3rd Well Planned Increased Resource Potential to over 250 MMBOE Exploration…
  21. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 21
    Inboard Lower Tertiary/ Cretaceous Update Highlander Flow Test Status Report Highlander Successful Flow Test of Tuscaloosa sands in December 2014 43.5 MMcf/d on 22/64th Choke Flowing Tubing Pressure of 11,880 PSI First production…
  22. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 22
    2015e Outlook Sales Outlook Unit Cost Copper: 4.3 Billion lbs. 1.53/lb(2) of Copper Gold: 1.3 Million ozs. 18/BOE Molybdenum: 95 Million lbs. Oil Equivalents(1): 55.5 MMBOE (70% Oil) Operating Cash Flows (3) Capital…
  23. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 23
    Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 3 6 2 2.5 5.4 1.9 1 1.25 1.3 5.0 0 4 4.3 2014 2015e 2016e 2017e 3.9 Note: Consolidated gold sales include 123k ozs in 2014, 120k ozs in 2015e, 170k ozs in 2016e…
  24. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 24
    2015e Quarterly Sales Gold Sales (thousand ozs) Copper Sales (million lbs) 400 380 350 1,250 300 330 1,220 200 225 100 1,000 1,065 1,035 0 1Q15e 2Q15e 3Q15e 4Q15e 950 Note: Consolidated gold sales include approximately 20k ozs in…
  25. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 25
    2014 and 2015e Sales by Region 2014 Sales by Region North America South America Indonesia Africa 1,664 1,135 95(1) 664 1.2 80 425 30 Cu Mo Au Au Au Co mm lbs mm lbs k ozs mm mmozs ozs mm lbs 2015e Sales by Region North…
  26. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 26
    2014 and 2015e Unit Production Costs by Region 2014 (per pound of copper) North South America America Indonesia Africa Consolidated Cash Unit Costs Site Production & Delivery (1) 1.85 1.62 2.76 1.56 1.90 By-product Credits (0.24)…
  27. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 27
    EBITDA and Cash Flow at Various Copper Prices Average EBITDA (1,300 Gold, 10 Molybdenum & 65 Oil) (US billions) 15 10 5 2016e/2017e Average 0 Cu 2.50/lb Cu 3.00/lb Cu 3.50/lb Average Operating Cash Flow (excluding…
  28. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 28
    Sensitivities (US millions) 2016e/2017e Operating Change EBITDA Cash Flow Copper: +/- 0.10/lb 500 350 Molybdenum: +/- 1.00/lb 100 80 Gold: +/- 50/ounce 100 60 Oil Sales: +/- 5/bbl(1) 190 150 Oil Sales Net of Diesel…
  29. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 29
    Capital Expenditures (1) (US billions) 8 7.2 6.0 6 Oil & Gas 5.1 4.8 3.2 2.3 4 2.3 Major 2.4 Projects TOTAL 2.5 (2) 2 2.9 MINING 3.7 1.7 1.4 4.0 2.8 2.4 Other Mining 1.2 1.1 1.0 1.1 0 2014 2015e 2016e 2017e (1)…
  30. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 30
    Committed to Balance Sheet Management Strong Track Record Large Resource Base with Strong Cash 12/31/2014 Balances Flows and Capital Discipline ( in bns) 2014 Asset Sales 5 bn in Gross Proceeds (4.3 bn net of tax and…
  31. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 31
    Key Priorities Protect Balance Sheet & Liquidity Manage Operations and CAPEX to Maximize Cash Flow in Weak Market Environment Fund O&G Investments Within Cash Flows and 3rd Party Investments Complete Near-term Mining Projects…
  32. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 32
    Reference Slides
  33. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 33
    PT-FI Mine Plan PT-FIs Share of Metal Sales, 2015e-2022e 2015e 2019e PT-FI Share Total: 5.9 billion lbs copper Copper, billion lbs Annual Average: 1.2 billion lbs Gold, million ozs 2015e 2019e PT-FI Share Total: 8.0 million ozs…
  34. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 34
    PT Freeport Indonesia Grasberg Minerals District Life-of-Mine Production Sequencing* Plan View 206mm mt Grasberg Open Pit 0.95% Cu & 1.08 g/t Au 152mm mt Grasberg & DOZ 0.56% Cu & 0.73 g/t Au Kucing Liar Grasberg Big Gossan…
  35. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 35
    Preliminary Reserves at 12/31/14 Consolidated Proven & Probable Reserves Copper Molybdenum Gold billion lbs billion lbs million ozs Reserves 12/31/13 (1) 111.2 3.26 31.3 12/31/14 Divestiture* (3.7) -- (1.0) Copper Reserves…
  36. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 36
    Copper Reserves & Mineralized Material as of 12/31/14 billion lbs of copper 12/31/14 Mineralized Material (b) 207 by Geographical Region Mineralized Material (b) North (contained copper) America 104 at 2.20 Cu price 47%…
  37. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 37
    Deepwater Gulf of Mexico Focus Areas Development/Exploration Project Inventory Net Unrisked Louisiana Resource Potential Asset Area (Billion BOE) Green Canyon Area 1.9 Marlin/Horn Mountain Area 0.6 Dorado Marlin Vito Area 1.0…
  38. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 38
    Quarterly Oil & Gas Operating Summary 4Q 2014 Oil & Gas Margins by Region Haynesville/ Operating Margin Madden/ California Other GOM Consolidated Realized Revenue per BOE 62.34 22.89 60.97 59.95 Cash Production Costs per BOE 34.12…
  39. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 39
    2015e Oil & Gas Operating Estimates Madden & Operating Cost: 2.15/Mcfe California Haynesville Pricing: NYMEX Operating Cost: 32/bbl Pricing: Brent Based Gulf of Mexico Operating Cost: 13/bbl Pricing: HLS/NYMEX 2015e Oil &…
  40. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 40
    Preliminary SEC Oil & Gas Proved Reserves 390 MMBOE as of 12/31/14 Excludes Positive Results from Highlander & Holstein Deep Achieved in Late 2014* By Commodity By Category By Region 6:1 Ratio PDNP 13% Oil 71% GOM California…
  41. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 41
    Reserves & Resource Potential Year-end 2014 Proved Reserves & Net Unrisked Resource Potential 4.7 3.3 12.2 5.0 0.4 0.15 0.14 (2) N/A (2) 0.4 N/A Reserves Resource Reserves Resource Reserves Resource Reserves Resource…
  42. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 42
    FCX Debt Maturities as of 12/31/14 (US billions) 10 Total Debt & Cash at 12/31/14 (US billions) FCX Term Loan 3.1 8 FCX Sr. Notes 12.0 FM O&G Senior Notes 2.6 6.9 Other 1.3 FM O&G 6.875% Total Debt 19.0 6 Sr. Notes Consolidated…
  43. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 43
    Adjusted EBITDA Reconciliation (in millions) Q4 2014 Year 2014 Net loss attributable to common stock (2,852) (1,308) Interest expense, net 147 630 Provision for income taxes (710) 324 Depreciation, depletion and amortization 939…
  44. 4th Quarter 2014 Earnings Conference Call – Freeport-Mcmoran Inc. – slide 44
    Site Operating Costs by Category Consolidated Materials 36% 35% Manpower 31% 32% Other 7% 11% Energy 6% 16% 6% 20% Acid 2014 2015e Note: e = estimate. See Cautionary Statement. 45

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