Freeport-mcmoran, Inc. · NYSE:FCX

Freeport-mcmoran — 5th Annual Deutsche Bank Global Industrials and Basic Materials Conference 2014

32 slides from Freeport-mcmoran's conference presentation, Jun 4, 2014

  1. Slide 1: 5th Annual Global Industrials and Basic Materials Conference

    5th Annual Global Industrials and Basic Materials Conference Kathleen L. Quirk Executive Vice President & CFO www.fcx.com June 4, 2014

  2. Slide 2: Cautionary Statement Regarding Forward-Looking Statements

    Cautionary Statement Regarding Forward-Looking Statements This presentation 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 relati

  3. Slide 3: FCX – A Premier U.S. Based Natural Resource Company

    FCX – A Premier U.S. Based Natural Resource Company  World’s Largest Publicly Traded Copper Producer  Long-lived Reserves with Large Incremental Resources  High-Quality U.S. Based Oil & Gas Assets  Strong Margins & Cash Flows  Growing Production Profile Through Brownfield Expansion  Experience

  4. Slide 4: FCX's Global Footprint

    FCX’s Global Footprint Major Operations & Development Projects North America1 All major mining assets majority-controlled and operated Reserves Cu 36.2 bn lbs Mo 2.55 bn lbs Copper Oil & Gas 861 MMBOE2 Sales Copper/Gold/Silver Cu 1.7 bn lbs Molybdenum Mo 97 mm lbs3 Grasberg (90.64%) Oil & Gas 176 MB

  5. Slide 5: Geographic & Commodity Mix

    Geographic & Commodity Mix (1) 2014e EBITDA North Mining America 68% 56% South America 17% Africa Oil & Gas 7% Indonesia 32% 20% (1) Based on 2014e EBITDA of ~$9.7 bn assuming annual pricing of $3.00/lb Cu, $1,300/oz Au, $10/lb Mo, $105/Bbl Oil (Brent) and $4.25/MMbtu natural gas for the remaining n

  6. Slide 6: Visible Organic Growth

    Visible Organic Growth Mining Oil & Gas  Targeting 5+ Billion Pounds  Growing Production Profile in Annual Cu Production by 2015 Established Basins (37% Increase from 2012)  Substantial Production Capacity  Advanced Stage Brownfield from Existing Deepwater Development Infrastructure to Benefit -

  7. Slide 7: May 2014 Oil & Gas Transactions

    May 2014 Oil & Gas Transactions  $3.1 Bn Sale of Eagle Ford Shale Interests to Encana  $1.4 Bn Acquisition of Deepwater GOM Interests, Including: − Lucius Development (11.7% WI) − Heidelberg Development (12.5% WI) − Complementary Exploration Leases  Value Accretive  Refocus O&G Portfolio to Stra

  8. Slide 8: Deepwater Gulf of Mexico Focus Areas

    Deepwater Gulf of Mexico Focus Areas Louisiana Texas Marlin Ram Powell Viosca Knoll Horn Mountain Mississippi Canyon Green Canyon Atwater Valley East Breaks Garden Banks Holstein Heidelberg Copper (2014) Diana Puma/Parmer Hoover Silverfox Lucius Alaminos Canyon Keathley Canyon Offset Facilities Walk

  9. Slide 9: Copper Market Commentary

    Copper Market Commentary  Fundamental Demand in China Remains Healthy - Supported by Consumer and Infrastructure Investment - Scarcity of Scrap and Cathode Exports Creating Tightness in Domestic Market  U.S. Demand Improving - Consumer Confidence at a 6-Year High - Automotive and Construction Key

  10. Slide 10: Copper Markets

    Copper Markets Total Copper Consumption 40  Assuming 2.3% Global Growth +7.3Mt Over Next 10 Years, Copper 30 +5.6Mt 26% 25% Market Expected to Grow by Cu in Mt +7.3Mt (26%) 20 Mature Markets 10 Emerging  Over Same Period, Production Markets from Existing Mines Expected 0 China 2004 2014 2024 to De

  11. Slide 11: World Class Copper Discoveries Are Extremely Rare

    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 0 200 400 600 800 1000 1200 1400 Escondida - 1979 Escondida - 1979 Grasberg Complex - 1988 1988 Chuquicamata - 1910 Collahuasi - 1979 1979

  12. Slide 12: FCX − Portfolio of World Scale Mines

    FCX − Portfolio of World Scale Mines Positive Exploration Results – “Big Mines Get Bigger” Mines with Potential Capacity for 1 billion lbs of copper per annum* Morenci Grasberg Tenke Cerro Verde Fungurume El Abra * Grasberg capable of producing over 1 bln lbs/annum, Morenci (100%) & Cerro Verde in d

  13. Slide 13: Copper Reserves & Mineralized Material

    Copper Reserves & Mineralized Material billion lbs of copper as of 12/31/13 12/31/13 226 Mineralized Material (b) by Geographical Region Mineralized 115 Material (b) billion North (contained copper) lbs 111 at $2.20 Cu price America 50% Indonesia South 19% America Reserves 20% 11% at $2.00 Cu price

  14. Slide 14: Brownfield Development Projects

    Brownfield Development Projects Cerro Verde Mill Expansion Morenci Mill Expansion $4.6 billion $1.6 billion • Commenced construction in 1Q13 • Construction in advanced stage • Achievement of substantial earthworks; • Commissioning & start-up expected in 2Q14 initiating steel erection • Completion ex

  15. Slide 15: PT Freeport Indonesia

    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 54mm mt open pit 2.22% Cu & 0.97 g/t Au DMLZ 526mm mt Deep MLZ 0.83% Cu & 0.

  16. Slide 16: Current PT-FI Operating Status

    Current PT-FI Operating Status  No Export Shipments Since Mid-January  Aligning Current Production Levels with PT Smelting Operations − Mill Operating at Half Capacity − 1Q14 Impact: Deferred Sales of 125mm lbs Copper and 140,000 ozs Gold − Negative Financial Impacts to Both FCX and Government  P

  17. Slide 17: Long-term Positive Partnership with Indonesia

    Long-term Positive Partnership with Indonesia  Successful Operations for Over 40 Years  Contributed Over $60 Billion to National GDP in GOI Direct Benefits Total Since 1992 Last 5 Years (2009 – 2013) (2)  Currently Over 90% of Local GDP, ~40% of Papua ($ in billions) GDP and 0.8% of National GDP

  18. Slide 18: Oil & Gas Operating Assets

    Oil & Gas Operating Assets 861 MMBOE Proved, Probable & Possible Reserves as of 12/31/13 California GOM Deepwater • Long Established Oil • Significant Current Production Production History with Upside • Strong Margins and Cash Flows • Large Scale Infrastructure • Brent Based Pricing California • HLS

  19. Slide 19: Deepwater Gulf of Mexico

    Deepwater Gulf of Mexico 1Q 2014 Production of 58 MBOE/d Holstein Marlin Horn Mountain Capacity ~12% Utilization Capacity ~40% Utilization Capacity ~12% Utilization • 113,500 BOPD • 60,000 BOPD • 75,000 BOPD • 142,300 MCFD • 235,000 MCFD • 72,000 MCFD Truss SPAR Tension Leg Platform: Dry Truss SPAR

  20. Slide 20: Lucius – Deepwater GOM Development Project

    Lucius – Deepwater GOM Development Project  World Class Reservoir Quality and Deliverability  Development on Track; Production Anticipated in 2H 2014  Topside Facilities Lifted into Place in 1Q14  Subsea Infrastructure Currently Being Installed  300+ MMBOE Gross Resource Potential  Processing

  21. Slide 21: Inboard Lower Tertiary/Cretaceous Activities

    Inboard Lower Tertiary/ Cretaceous Activities Favorable Reservoir Industry Leader in Emerging New Trend Characteristics Highlander Judge Digby Field Cretaceous Discovery Type Log Tuscaloosa Trend Cumulative Production 3.1 TCF, 121 mmbc Tuscaloosa LOUISIANA Trend Tusc 1 Farthest Gate West Tusc 2 Line

  22. Slide 22: Sales Profile

    Sales Profile Copper Sales (billion lbs) Gold Sales (million ozs) 3 6 3.0 2 5.7 1 1.6* 1.4 1.2 5.0 0 2013 2014e 2015e 2016e 4 4.1 4.3* Note: Consolidated gold sales include 123k ozs in 2013, 160k ozs in 2014e, 140k ozs in 2015e and 290k ozs in 2016e for noncontrolling interest. Molybdenum Sales (mil

  23. Slide 23: EBITDA and Cash Flow at Various Copper Prices

    EBITDA and Cash Flow at Various Copper Prices Average EBITDA ($1,200 Gold, $10 Molybdenum & $105 Oil) (US$ billions) $20 $15 $10 $5 2015e/2016e Average $0 Cu $3.00/lb Cu $3.50/lb Cu $4.00/lb Average Operating Cash Flow (excluding Working Capital changes) ($1,200 Gold, $10 Molybdenum & $105 Oil) $15

  24. Slide 24: Capital Expenditures

    Capital Expenditures (1) (US$ billions) $8 $7.1 $7.3 $6.6 $6 Oil & Gas 3.5 3.0 4.0 $4 Major Projects (2) TOTAL 2.6 3.1 MINING $2 3.8 1.4 4.1 2.6 Other Mining 1.2 1.2 1.0 $0 2014e 2015e 2016e (1) Capital expenditure estimates include projects in progress. Project spending will continue to be reviewed

  25. Slide 25: Committed to Balance Sheet Management

    Committed to Balance Sheet Management Strong Track Record  YE 2016 Debt Target: $12 Billion 3/31/2014 Balances* ($ in bns)  Large Resource Base with Strong Cash Flows and Capital Discipline  Anticipate Continuing Current $20.2 $18.9 Common Stock Dividend: $1.25/Share per Annum  Review of Divesti

  26. Slide 26: Summary

    Summary A Strong & Focused Organization Executing The Strategy Maximize Total Shareholder Returns Strong Management of the Base  Operational Excellence  Achieve Production Targets  Effective Cost and Capital Management  Manage HS&E and Other Inherent Risks Return Driven Growth  Prioritize Highe

  27. Slide 27: Reference Slides

    = FREEPORT-MicMoRAN STRENGTH IN RESOURCES Reference Slides

  28. Slide 28: 1Q 2014 Financial Highlights

    1Q 2014 Financial Highlights Sales Data 1Q14 1Q13 (1) Copper Consolidated Volumes (mm lbs) 871 954 Average Realization (per lb) $3.14 $3.51 Site Production & Delivery Unit Costs (per lb) $1.89 $1.94 Unit Net Cash Costs (per lb) $1.54 $1.57 Gold Consolidated Volumes (000’s ozs) 187 214 Average Realiz

  29. Slide 29: 2014e Operating Estimates

    2014e Operating Estimates 2014e Unit Production Costs (per pound of copper) North South America America Indonesia(2) Africa Consolidated(2) Cash Unit Costs (1) Site Production & Delivery (3) $1.84 $1.61 $2.46 $1.54 $1.88 By-product Credits (0.21) (0.24) (2.13) (0.39) (0.65) Treatment Charges 0.12 0.

  30. Slide 30: 2014e Oil & Gas Operating Estimates

    2014e Oil & Gas Operating Estimates Madden & Operating Cost: $2/Mcfe California Haynesville Pricing: NYMEX Operating Cost: $34/bbl Pricing: Brent Based Gulf of Mexico Operating Cost: $14/bbl Eagle Ford Pricing: LLS Operating Cost: $16/bbl Pricing: HLS/NYMEX 2014e Oil & Gas Sales by Region California

  31. Slide 31: Sensitivities (US$ millions)

    Sensitivities (US$ millions) 2015e/2016e Operating Change EBITDA Cash Flow Copper: +/- $0.10/lb $525 $375 Molybdenum: +/- $1.00/lb $90 $70 Gold: +/- $50/ounce $100 $60 Oil Sales: +/- $5/bbl (1) $245 $200 Oil Sales Net of Diesel Costs:(1,2) +/- $5/bbl $200 $165 Natural Gas: +/- $0.50/Mcf $55 $45 Curr

  32. Slide 32: Oil & Natural Gas Hedging Positions

    Oil & Natural Gas Hedging Positions Oil Hedges Indexed to Brent 2Q-4Q 2014 2015 Puts 75k Bbls/d 30k Bbls/d Unhedged $90 floor $95 floor $70 limit $75 limit 34% $5.74 ADP $6.09 ADP Puts 5k Bbls/d $100 floor 84k Bbls/d $80 limit $90 floor $7.11 ADP $70 limit $6.89 ADP Unhedged 10% 122 MBbls/d* 127 MBb

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