Slide 1: FCX to Acquire PXP and MMR in Transactions Totaling $20 Billion
FCX to Acquire PXP and MMR in Transactions Totaling $20 Billion, Creating a Premier U.S. Based Natural Resource Company December 5, 2012 www.fcx.com CONNECTING THE FUTURE®
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-Looking Statements This press release contains forward-looking statements concerning the proposed transaction, its financial and business impact, management’s beliefs and objectives with respect thereto, and management’s current expectations for future operatin
Slide 3: Additional Information about the Proposed Transactions and Where to Find It
Additional Information about the Proposed Transactions and Where to Find It PXP Transaction In connection with the proposed transaction, FCX intends to file with the SEC a registration statement on Form S-4 that will include a proxy statement of PXP that also constitutes a prospectus of FCX. FCX and
Slide 4: Transaction Highlights
Transaction Highlights Creates A Premier U.S. Based Natural Resource Company Adds High Quality U.S. Oil & Gas Assets to World-Class Mining Portfolio Asset Quality Consistent with Characteristics Sought in Mining Business Large, Long Life, Low Cost, Expandable Enhances Exploration Leverage wi
Slide 5: Transaction Summary
Transaction Summary PXP MMR (1) Price FCX to acquire PXP for: 0.6531 shares of FCX common stock and $25.00 in cash, FCX to acquire MMR for: $14.75 cash plus 1.15 Ultra-Deep Royalty Trust equivalent to total consideration of $50.00 Units per MMR share per PXP share based on FCX closing price on D
Slide 6: A Premier U.S. Based Natural Resource Company
A Premier U.S. Based Natural Resource Company Pro forma FCX will be the 5th largest U.S. domiciled natural resource company and the 5th largest global mining company by enterprise value Top US Domiciled Resource Companies* Top Global Mining Companies** ($Bn) $402 $198 ($Bn) $150 $204 $150 $125 $125
Slide 7: Benefits of the Transactions
Benefits of the Transactions High Quality U.S. Resource Base Provides Exposure to Energy Market with Attractive Fundamentals - ~85% of Acquired Revenues from Oil (1) - Favorable Entry Point to Source of Low Cost, Long-term Gas Supply Significant Exploration Upside Strong Margins and Cash Flows
Slide 8: Enhanced Commodity Exposure to Long-term Global Growth Trends
Enhanced Commodity Exposure to Long-term Global Growth Trends Emerging Market Growth and Urbanization Will Continue to Drive Commodity Demand Global Energy Consumption Expected to Grow by >30% by 2035 (1) Global Refined Copper Consumption Expected to Grow by ~60% by 2025 (2) WTI Oil Price v. C
Slide 9: History & Corporate Relationships
History & Corporate Relationships FCX & MMR Spun out of Parent Company Freeport-McMoRan Inc. in Mid-90’s Parent had Long History in Natural Resources Business Including Minerals, Oil & Gas, Fertilizer Management has Significant Minerals and Oil & Gas Experience FCX Invested in MMR in 2010 Th
Slide 10: Proven Management Team
Proven Management Team Complementary Management Teams with Substantial Experience and Track Record of Success in Mining and Oil & Gas Exploration and Development Global Industry Leading Capabilities: - Operational Excellence - Major Project Development - Technological Innovation - Exploration/En
Slide 11: Phelps Dodge Case Study
Phelps Dodge Case Study Highly Successful Rapid Delevering Transformational Transaction ($ in bns) Asset & Geographic $20 Diversification $17.6 Significant Reserve Additions $15 • +46 billion lbs Cu* Developed World-Class Copper $10 Portfolio $7.2 • Recognized Industry Leader $5 $3.5 • Stron
Slide 12: Acquired Assets
jee /, | Acquired Assets
Slide 13: Acquired Asset Overview
Acquired Asset Overview PXP – Strong Current Cash Flows with Growth Onshore • Established California Oil Production • Growing Oil Production Profile in Eagle Ford • Large Natural Gas Resource Position in Haynesville Offshore • Quality Deepwater Portfolio • Established California Oil Production
Slide 14: High Quality U.S. Oil & Gas Portfolio
High Quality U.S. Oil & Gas Portfolio Proved Reserves (1) Natural Gas 575 MMBOE Oil Other 5% Haynesville 22% California 6% GOM 38% Shelf Deepwater GOM 4% 25% Eagle Ford 2013e Production by Region 175 MBOE/d 2013e Production Mix Other GOM 3% Shelf 11% Gas Deepwater 28% GOM California 33% 23% Oil 6% N
Slide 15: Oil & Gas Reserves & Resources
Oil & Gas Reserves & Resources (MMBOE) PXP(1) MMR(2) Total % Oil/Liquids Proved Reserves 538 37 575 64% Probable Reserves 337 11 348 44% Possible Reserves 646 12 658 29% Total 1,521 60 1,581 45% Near-term Resource Potential 1,353 4,981 6,334 Total Potential ~3,800 ~50 Tcfe 3Q12 Daily Production Rate
Slide 16: Enhanced Exploration Leverage with Multiple Near-term Catalysts
Enhanced Exploration Leverage with Multiple Near-term Catalysts Deepwater GOM Shallow Water Ultra-Deep Onshore U.S. Near-term Net Potential 3 Wells Drilling Eagle Ford – 71 MMBOE of 995 MMBOE Recent Positive Results on Haynesville – ~1 Tcfe • Phobos (~300 MMBOE) Lineham Creek Onshore Cal
Slide 17: Pro Forma Combined Company Profile
Pro Forma Combined Company Profile
Slide 18: FCX's Global Footprint
FCX’s Global Footprint Major Operations & Development Projects North America1 All major mining assets majority-controlled and operated Reserves Cu 40.6 bn lbs Mo 2.71 bn lbs Oil & Gas 575 mm bbls2 Copper Sales Copper/Gold/Silver Cu 1.45 bn lbs Molybdenum Mo 90 mm lbs3 Oil & Gas 175 MBOE/d Cobalt Gra
Slide 19: Combined Reserves and Resources
Combined Reserves and Resources (billion lbs of copper) (million barrels of oil equivalents) ~7,900 235 115 Mineralized Near-term billion Material (b) Potential: ~6,300 lbs (contained copper) 120 at $2.20 Cu price 923 Possible: 658 Reserves Probable: 348 at $2.00 Cu price Proved: 575 Reserves (a) Re
Slide 20: Highly Attractive Brownfield Copper Development Projects
Highly Attractive Brownfield Copper Development Projects Expansion Projects in Progress North America* Mill Expansions (t/d) Incr. Cu (mm lbs/yr) Capital* Achieve ($ blns) Full Rates • Morenci Expansion Cerro Verde (360K) 600 $4.4 2016 (225 mm lbs Cu) under way • Potential sulfide expansions Morenci
Slide 21: Diverse Production Profile with Strong Growth
Diverse Production Profile with Strong Growth Gold Sales (million ozs) Copper Sales (billion lbs) 2 1.8 1.8 5.0+ 1.4 5 1.0 4.5 1 4.3 4 0 3.6 2012e ____________________ 2013e 2014e 2015e Note: Consolidated gold sales include approximately 105k ozs in 2012e, 140k ozs in 2013e, 180k ozs in 2014e and 17
Slide 22: Pro Forma Combined Company Financials
Pro Forma Combined Company Financials
Slide 23: FCX Pro forma EBITDA, Cash Flows & Capital Expenditures
FCX Pro forma EBITDA, Cash Flows & Capital Expenditures EBITDA Operating Cash Flow* CAPEX $25 $20 ~45% $15 Increase 2015/ $ billions 2016 ~45% Avg. 2015/ Increase $10 2016 Avg. O&G 2013/ 40% $5 2013/ 35% 2014 52% 2014 Avg. Avg. Mining 60% 65% 48% $0 $3.00 $3.50 $4.00 $3.00 $3.50 $4.00 2013e 2014e 20
Slide 24: Focused and Disciplined Capital Allocation Philosophy
Focused and Disciplined Capital Allocation Philosophy Maintain Strong Balance Sheet & Credit Profile Ensure Establish Short, Allocate Capital to Focus on Potential Medium and Long Low Cost, Long-lived, Largest is Well Term Potential for Expandable Assets Resources Understood Primary Assets Technical
Slide 25: Capital Expenditures
Capital Expenditures (1) (2) Major Mining Projects Other Mining Oil & Gas (US$ billions) $8 $7.3 $7.1 $6.3 $6 2.5 2.9 3.3 $4 1.6 1.4 1.0 $2 3.0 3.0 (2) 2.0 $0 2013e 2014e 2015e (1) Capital expenditure estimates include projects in progress. Project spending will continue to be reviewed and revised s
Slide 26: Oil & Gas Cash Flows – Targeted to be Self-funding
Oil & Gas Cash Flows – Targeted to be Self-funding Operating Cash Flow CAPEX (US$ billions) $4.0 $3.0 $2.0 $1.0 $0.0 2013e 2014e 2015e NOTE: Assumes pricing of $100/bbl Brent crude for oil and $4.50/MMbtu for natural gas e= estimate. See Cautionary Statement. 26
Slide 27: Significant Debt Reduction
Significant Debt Reduction Year-End Net Debt at Varying Copper Prices (US$ billions) $20 $16.3 $15 $10 $7.7 $5 $2.0 $0 ($3.5) -$5 ’13-’16 Avg. Copper Price $3.00 $3.50 $4.00 9/30/12 Net Debt/’13-’16 Avg. EBITDA 0.6x 0.1x N/A Pro Forma Pro Forma YE 2016e Note: Sensitivity assumes $12 Molybdenum, $1,5
Slide 28: Financial Policy
Financial Policy Maintain Strong Balance Sheet & Liquidity Position Reduce Debt Incurred in Acquisitions Using Substantial Cash Flows Generated from Combined Business Invest in Projects with Strong Financial Returns/Capital Discipline Anticipate Continuing Current Common Stock Dividend Rate:
Slide 29: Combined Company Highlights
Combined Company Highlights Creates A Premier U.S. Based Natural Resources Producer World’s Largest Publicly Traded Copper Producer Significant Producer of Oil, Gold & Molybdenum Significant Long-term Natural Gas Resources Strong Margins & Cash Flows High Quality, Long-lived and Geograph
Slide 30: Appendix
Appendix
Slide 31: 2013e Oil & Gas Operating Estimates
2013e Oil & Gas Operating Estimates Rocky Mtns. & Operating Cost: $1.65/Mcfe California Haynesville Pricing: NYMEX Operating Cost: $27/bbl Pricing: Brent Based Gulf of Mexico Shelf/ Deepwater Operating Cost: $15/bbl Pricing: LLS Eagle Ford Operating Cost: $10/bbl Pricing: LLS/NYMEX 2013e Oil & Gas S
Slide 32: Sensitivities (US$ millions)
Sensitivities (US$ millions) 2013e/2014e Operating Change EBITDA Cash Flow Copper: -/+ $0.10/lb $405 $275 Molybdenum: -/+ $1.00/lb $80 $65 Gold: -/+ $50/ounce $75 $45 Oil Sales:(1) + $10/bbl (2) $340 $265 - $10/bbl (3) ($275) ($280) Oil Sales Net of Diesel Costs:(1,4) + $10/bbl $260 $205 - $10/bbl (
Slide 33: Oil & Natural Gas Hedging Positions
Oil & Natural Gas Hedging Positions Oil Indexed to Brent 2013 2014 2015 Puts Collars 25k bbls/d 5k bbls/d 75k bbls/d 30k bbls/d Swaps $90 floor $95 floor $100 floor $90 floor 40k bbls/d $80 limit $70 limit $70 limit $75 limit Unhedged @ $109.23 $124 Ceiling $126 Ceiling $5.74 ADP $6.09 ADP 43% Puts
Slide 34: Pro Forma Balance Sheet & Credit Statistics
Pro Forma Balance Sheet & Credit Statistics (US$ billions) Pro Forma September 30, 2012 Capitalization Amount % Cash and Cash Equivalents $ 3.7 -- Revolver (1) $ 0.0 0% FCX New Sr. Unsecured Notes 5.5 9% FCX New (Unsecured) Term Loans – (Refinance PXP Secured Debt) 4.0 7% FCX Sr. Unsecured Notes 3.0
Slide 35: FCX Pro Forma Debt Maturities 9/30/12
FCX Pro Forma Debt Maturities 9/30/12 (US$ millions) $12,000 Pro Forma Total Debt & Cash at 9/30/12 New FCX Debt (US$ billions) FCX Sr. Notes $10,600 New Term Loans $4.0 MMR Sr. Notes New FCX $10,000 New Notes 5.5 PXP Sr. Notes Sr. Notes Public Debt 10.3 Other Debt Other Debt 0.2 $8,000 Total Debt $
Slide 36: Royalty Trust Terms
Royalty Trust Terms 5% Gross Royalty Override on MMR's Ultra-Deep Exploration Portfolio 20-Year Term • Non-callable for First 5 Years • Callable at FCX’s Option in Years 6-20 at $10 per Unit Shares Risk/Upside Between FCX and MMR Shareholders MMR Shareholders Would Receive 1.15 Units per MMR