EX-99.1 2 a4q2016exhibit991.htm EXHIBIT 99.1 Exhibit


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333 North Central Avenue Phoenix, AZ 85004
Financial Contacts:
 
 
 
Media Contact:
 
Kathleen L. Quirk (602) 366-8016
 
David P. Joint
(504) 582-4203
 
Eric E. Kinneberg (602) 366-7994
Freeport-McMoRan
Reports Fourth-Quarter and Year Ended December 31, 2016 Results
 
 
 
 
 
▪
Net income attributable to common stock totaled $292 million, $0.21 per share, for fourth-quarter 2016. After adjusting for net charges totaling $59 million, $0.04 per share, fourth-quarter 2016 adjusted net income attributable to common stock totaled $351 million, $0.25 per share.
▪
Consolidated sales (including volumes from Tenke Fungurume (Tenke) through November 16, 2016) totaled 1.2 billion pounds of copper, 405 thousand ounces of gold and 22 million pounds of molybdenum for fourth-quarter 2016 and 4.65 billion pounds of copper, 1.1 million ounces of gold and 74 million pounds of molybdenum for the year 2016.
▪
Consolidated sales for the year 2017 are expected to approximate 4.1 billion pounds of copper, 2.2 million ounces of gold and 92 million pounds of molybdenum, including 1.0 billion pounds of copper, 460 thousand ounces of gold and 23 million pounds of molybdenum for first-quarter 2017. (*)
▪
Average realized prices were $2.47 per pound for copper, $1,174 per ounce for gold and $8.27 per pound for molybdenum for fourth-quarter 2016.
▪
Average unit net cash costs were $1.20 per pound of copper for fourth-quarter 2016 and $1.26 per pound of copper for the year 2016. Unit net cash costs are expected to average $1.06 per pound of copper for the year 2017. (*)
▪
Operating cash flows totaled $1.1 billion (net of $406 million in working capital uses and changes in other tax payments) for fourth-quarter 2016 and $3.7 billion (including $57 million in working capital sources and changes in other tax payments) for the year 2016. Based on current sales volume and cost estimates and assuming average prices of $2.50 per pound for copper, $1,200 per ounce for gold and $7.00 per pound for molybdenum, operating cash flows for the year 2017 are expected to approximate $4.3 billion (including $1.0 billion in working capital sources and changes in other tax payments). (*)
▪
Capital expenditures totaled $504 million (including $405 million for mining operations) for fourth-quarter 2016 and $2.8 billion (including $1.6 billion for mining operations) for the year 2016. Capital expenditures for the year 2017 are expected to approximate $1.8 billion. (*)
▪
During fourth-quarter 2016, FCX completed $5.2 billion in asset sale transactions, including the sale of its interest in TF Holdings Limited (TFHL), through which FCX held an interest in the Tenke mine, and the sales of the Deepwater Gulf of Mexico (GOM) and onshore California oil and gas properties. During 2016, FCX completed its asset divestment program, which generated $6.6 billion in aggregate proceeds.
▪
In November 2016, FCX completed its registered at-the-market (ATM) offering of common stock announced in July 2016, which raised $1.5 billion in gross proceeds through the sale of 116.5 million shares of FCX common stock.
▪
At December 31, 2016, consolidated debt totaled $16.0 billion and consolidated cash totaled $4.2 billion, compared with consolidated debt of $20.3 billion and consolidated cash of $177 million at December 31, 2015. FCX had no borrowings and $3.5 billion available under its $3.5 billion revolving credit facility at year-end 2016.

(*) Projections for 2017 and forward looking statements in this release assume normal operating levels at PT Freeport Indonesia (PT-FI). Refer to page 8 for discussion of recent regulatory changes in Indonesia, which may impact future results.

 
 
 
Freeport-McMoRan
 
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PHOENIX, AZ, January 25, 2017 - Freeport-McMoRan Inc. (NYSE: FCX) reported net income attributable to common stock of $292 million ($0.21 per share) for fourth-quarter 2016 and net losses attributable to common stock of $4.2 billion ($3.16 per share) for the year 2016, $4.1 billion ($3.47 per share) for fourth-quarter 2015 and $12.2 billion ($11.31 per share) for the year 2015. FCX’s net income attributable to common stock for fourth-quarter 2016 includes net charges of $59 million ($0.04 per share) primarily reflecting estimated losses on assets held for sale and oil and gas restructuring-related charges, partly offset by a gain on redeemable noncontrolling interest. Fourth-quarter 2015 net loss attributable to common stock included net charges of $4.1 billion ($3.45 per share) primarily for the reduction of the carrying value of oil and gas properties. For further discussion of these amounts and net charges impacting the years 2016 and 2015, refer to the supplemental schedules, "Adjusted Net Income (Loss)," beginning on page IX, which is available on FCX's website, "fcx.com."

Richard C. Adkerson, President and Chief Executive Officer, said, "During 2016, we took aggressive actions in response to market conditions to restore our balance sheet strength. I am pleased to report that we were successful in reducing our net debt by over $8 billion during the year while completing a major expansion at our world class Cerro Verde mine. I am proud of our global team for their accomplishments in "Proving our Mettle." As we enter 2017, we are enthusiastic about opportunities to generate future values for shareholders through our portfolio of high-quality, long-lived copper resources. We remain focused on generating significant cash flows to complete our debt reduction plan and to build long-term values for shareholders."

SUMMARY FINANCIAL DATA
 
Three Months Ended
 
Years Ended
 
 
December 31,
 
December 31,
 
 
2016
 
2015
 
2016
 
2015
 
 
(in millions, except per share amounts)
 
Revenuesa,b
$
4,377

 
$
3,516

 
$
14,830

 
$
14,607

 
Operating income (loss)a
$
703

 
$
(4,097
)
 
$
(2,792
)
 
$
(13,512
)
 
Net income (loss) from continuing operations
$
202

 
$
(4,090
)
 
$
(3,832
)
 
$
(12,180
)
 
Net (loss) income from discontinued operationsc
$
(2
)
 
$
(4
)
 
$
(193
)
 
$
91

 
Net income (loss) attributable to common stockd,e
$
292

 
$
(4,081
)
 
$
(4,154
)
 
$
(12,236
)
 
Diluted net income (loss) per share of common stock:
 
 
 
 
 
 
 
 
Continuing operations
$
0.22

 
$
(3.46
)
 
$
(2.96
)
 
$
(11.32
)
 
Discontinued operations
(0.01
)
 
(0.01
)
 
(0.20
)
 
0.01

 
 
$
0.21

 
$
(3.47
)
 
$
(3.16
)
 
$
(11.31
)
 
Diluted weighted-average common shares outstanding
1,410

 
1,177

 
1,318

 
1,082

 
Operating cash flowsf
$
1,135

 
$
612

 
$
3,729

 
$
3,220

 
Capital expenditures
$
504

 
$
1,298

 
$
2,813

 
$
6,353

 
At December 31:
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
4,245

 
$
177

 
$
4,245

 
$
177

 
Total debt, including current portion
$
16,027

 
$
20,324

 
$
16,027

 
$
20,324

 
 
 
 
 
 
 
 
 
 
a.
For segment financial results, refer to the supplemental schedules, "Business Segments," beginning on page XII, which are 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 $129 million ($57 million to net income attributable to common stock from continuing operations or $0.04 per share) in fourth-quarter 2016, $(70) million ($(37) million to net loss attributable to common stock from continuing operations or $(0.03) per share) in fourth-quarter 2015, $5 million ($2 million to net loss attributable to common stock from continuing operations or less than $0.01 per share) for the year 2016 and $(100) million ($(50) million to net loss attributable to common stock from continuing operations or $(0.05) per share) for the year 2015. For further discussion, refer to the supplemental schedule, "Derivative Instruments," beginning on page XI, which is available on FCX's website, "fcx.com."
c.
Reflects the results of TFHL through November 16, 2016, and includes charges for allocated interest expense associated with the portion of the FCX term loan that was required to be repaid as a result of the sale of FCX's interest in TFHL. The

 
 
 
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fourth-quarter and year 2016 also include a net charge for the loss on disposal. For a summary of the components of net (loss) income from discontinued operations, refer to supplemental schedules on pages XXVIII to XXXI, which are available on FCX's website, "fcx.com."
d.
Includes net charges totaling $59 million ($0.04 per share) in fourth-quarter 2016, $4.1 billion ($3.45 per share) in fourth-quarter 2015, $4.5 billion ($3.39 per share) for the year 2016 and $12.1 billion ($11.22 per share) for the year 2015, which are described in the supplemental schedules, "Adjusted Net Income (Loss)," beginning on page IX, which is available on FCX's website, "fcx.com."
e.
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 XII, which is available on FCX's website, "fcx.com."
f.
Includes net working capital (uses) sources and changes in other tax payments of $(406) million for fourth-quarter 2016, $31 million for fourth-quarter 2015, $57 million for the year 2016 and $373 million for the year 2015.

DEBT REDUCTION INITIATIVES
During 2016, FCX took actions to restore its balance sheet strength through a combination of asset sale transactions, cash flow from operations and capital market transactions. During the year, FCX completed $6.6 billion in asset sale transactions (including $5.2 billion in fourth-quarter 2016) and $1.5 billion in ATM sales of its common stock. Consolidated debt, net of cash, was reduced by $8.4 billion during the year.
The following table summarizes FCX's completed asset sales (in billions):
 
 
 
Cash
 
 
 
Consideration
a 
Oil and gas transactions
 
$
2.78

b,c 
TFHL
 
2.65

c 
Morenci (13 percent interest)
 
1.00

 
Timok exploration project in Serbia
 
0.13

c 
Other land sales
 
0.06

 
Total, excluding contingent consideration
 
$
6.62

 
a.
Reflects aggregate cash consideration, before purchase price adjustments.
b.
Includes $2.6 billion for the sales of the Deepwater GOM and onshore California oil and gas properties that were completed in December 2016. In connection with the Deepwater GOM transaction, FCX also settled a preferred stock obligation at its Plains Offshore Operations Inc. subsidiary for $582 million, which is not reflected in the aggregate cash consideration above.
c.
Excludes contingent consideration of up to $527 million, consisting of (i) up to $150 million related to the Deepwater GOM transaction, which is payable to FCX as the buyer realizes future cash flows in connection with a third-party production handling agreement, (ii) up to $150 million related to the onshore California transaction, consisting of $50 million per year for 2018, 2019 and 2020, if the price of Brent crude oil averages over $70 per barrel in that calendar year, (iii) up to $120 million related to the TFHL transaction, consisting of $60 million if the average copper price exceeds $3.50 per pound and $60 million if the average cobalt price exceeds $20 per pound, both for the 24-month period ending December 31, 2019, and (iv) up to $107 million related to the Timok transaction, which is payable to FCX in stages based upon achievement of defined development milestones.
During 2016, FCX agreed to negotiate exclusively with China Molybdenum Co., Ltd. (CMOC) until February 28, 2017, to enter into a definitive agreement to sell its interests in Freeport Cobalt for $100 million and the Kisanfu exploration project in the Democratic Republic of Congo (DRC) for $50 million in separate transactions.
The following table summarizes the change in FCX's consolidated debt, net of cash, during 2016 (in millions):
 
 
December 31, 2015
 
(Decrease) Increase
 
December 31, 2016
 
Total debt
$
20,324

 
$
(4,297
)
 
$
16,027

 
Less: cash and cash equivalents
177

 
4,068

 
4,245

 
 
$
20,147

 
$
(8,365
)
 
$
11,782

 
 
 
 
 
 
 
 

 
 
 
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FCX has a manageable debt maturity schedule, with maturities of $1.2 billion in 2017 and $1.5 billion in 2018 (excluding scheduled amortization of $0.8 billion in 2018 for the Cerro Verde credit facility).
FCX continues to manage production, exploration and administrative costs and capital spending and expects to generate cash flows for further debt reduction during 2017.
FCX has retained a high-quality portfolio of long-lived copper assets positioned to generate long-term values. In addition to debt reduction plans, FCX is pursuing opportunities to enhance net present values, and continues to advance studies for future development of its copper resources, the timing of which will be dependent on market conditions.

SUMMARY OPERATING DATA
 
 
Three Months Ended
 
Years Ended
 
 
 
December 31,
 
December 31,
 
 
 
2016
 
2015
 
2016
 
2015
 
Copper (millions of recoverable pounds)a
 
 
 
 
 
 
 
 
 
Production
 
1,200

 
1,122

 
4,647

 
4,017

 
Sales, excluding purchases
 
1,186

 
1,145

 
4,651

 
4,070

 
Average realized price per pound
 
$
2.47

 
$
2.18

 
$
2.27

 
$
2.42

 
Site production and delivery costs per poundb
 
$
1.44

 
$
1.64

 
$
1.44

 
$
1.78

 
Unit net cash costs per poundb
 
$
1.20

 
$
1.45

 
$
1.26

 
$
1.53

 
Gold (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
 
Production
 
430

 
350

 
1,088

 
1,257

 
Sales, excluding purchases
 
405

 
338

 
1,079

 
1,247

 
Average realized price per ounce
 
$
1,174

 
$
1,067

 
$
1,238

 
$
1,129

 
Molybdenum (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
22

 
20

 
80

 
92

 
Sales, excluding purchases
 
22

 
20

 
74

 
89

 
Average realized price per pound
 
$
8.27

 
$
6.94

 
$
8.33

 
$
8.70

 
Oil Equivalents
 
 
 
 
 
 
 
 
 
Sales volumes
 
 
 
 
 
 
 
 
 
Million barrels of oil equivalents (MMBOE)
 
10.5

c 
13.2

 
47.1

 
52.6

 
Thousand barrels of oil equivalents per day (MBOE)
 
114

c 
144

 
128

 
144

 
Cash operating margin per BOEd
 
 
 
 
 
 
 
 
 
Realized revenuese
 
$
39.88

 
$
37.49

 
$
32.59

 
$
43.54

 
Cash production costs
 
(14.62
)
 
(16.17
)
 
(15.19
)
 
(18.59
)
 
Cash operating margin
 
$
25.26

 
$
21.32

 
$
17.40

 
$
24.95

 
 
 
 
 
 
 
 
 
 
 
a.
Includes production and sales volumes from the Tenke mine through November 16, 2016. Copper sales from Tenke totaled 59 million pounds in fourth-quarter 2016, 117 million pounds in fourth-quarter 2015, 424 million pounds for the year 2016 and 467 million pounds for the year 2015. Average realized copper prices (excluding Tenke) were $2.48 per pound in fourth-quarter 2016, $2.19 per pound in fourth-quarter 2015, $2.28 per pound for the year 2016 and $2.42 per pound for the year 2015.
b.
Reflects per pound weighted-average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, before net noncash and other costs. Excluding Tenke, mining unit net cash costs averaged $1.21 per pound in fourth-quarter 2016, $1.47 per pound in fourth-quarter 2015, $1.26 per pound for the year 2016 and 1.57 per pound for the year 2015. 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 XV, which are available on FCX's website, "fcx.com."
c.
Includes 8.7 MMBOE (94 MBOE per day) from the Deepwater GOM and onshore California oil and gas properties that were sold in December 2016.
d.
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

 
 
 
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schedules, “Product Revenues and Production Costs,” beginning on page XV, which are available on FCX's website, “fcx.com.”
e.
Includes realized cash gains on oil derivative contracts of $0.57 per BOE in fourth-quarter 2016, $7.76 per BOE in fourth-quarter 2015, $0.13 per BOE for the year 2016 and $7.72 per BOE for the year 2015. FCX does not have any oil and gas derivative contracts in place for future periods.
Consolidated Sales Volumes
Fourth-quarter 2016 copper sales (including sales from Tenke through November 16, 2016) of 1.2 billion pounds were lower than the October 2016 estimate of 1.3 billion pounds principally reflecting lower volumes from PT-FI and the impact of the November 2016 Tenke sale. Excluding the impact associated with the earlier than forecasted completion of the Tenke sale, copper sales volumes were approximately seven percent below the October 2016 estimates, reflecting lower mining and milling rates at PT-FI. Fourth-quarter 2016 copper sales were higher than fourth-quarter 2015 sales of 1.1 billion pounds, primarily reflecting higher volumes from Cerro Verde and PT-FI, partly offset by lower sales from North America primarily associated with reduced mining rates and lower ore grades, and the impact of the November 2016 Tenke sale.
Fourth-quarter 2016 gold sales of 405 thousand ounces were lower than the October 2016 estimate of 590 thousand ounces primarily reflecting lower mining and milling rates at PT-FI, but were higher than fourth-quarter 2015 sales of 338 thousand ounces primarily reflecting higher mining and milling rates and higher ore grades at PT-FI.
Fourth-quarter 2016 molybdenum sales of 22 million pounds were slightly higher than the October 2016 estimate of 21 million pounds and fourth-quarter 2015 sales of 20 million pounds.
Sales volumes for the year 2017 are expected to approximate 4.1 billion pounds of copper, 2.2 million ounces of gold and 92 million pounds of molybdenum, including 1.0 billion pounds of copper, 460 thousand ounces of gold and 23 million pounds of molybdenum in first-quarter 2017. Estimated sales volumes assume the resumption of concentrate exports by PT-FI in February 2017 and the renewal of PT Smelting's export license. For each month of delay in obtaining approval to export, PT-FI's share of production is projected to be reduced by approximately 70 million pounds of copper and 100 thousand ounces of gold. Refer to page 8 for discussion of recent regulatory changes in Indonesia, which may have a significant impact on future results.
Consolidated Unit Costs
Consolidated average unit net cash costs (net of by-product credits) for FCX's copper mines (including Tenke) of $1.20 per pound of copper in fourth-quarter 2016 were lower than unit net cash costs of $1.45 per pound in fourth-quarter 2015, primarily reflecting higher by-product credits and higher sales volumes from Cerro Verde and PT-FI.
Assuming average prices of $1,200 per ounce of gold and $7.00 per pound of molybdenum for 2017 and achievement of current sales volume and cost estimates (including normal operations at PT-FI), consolidated unit net cash costs (net of by-product credits) for copper mines are expected to average $1.06 per pound of copper for the year 2017. The impact of price changes on 2017 consolidated unit net cash costs would approximate $0.025 per pound for each $50 per ounce change in the average price of gold and $0.025 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.
    
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, gold 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 72 percent undivided joint venture interest in Morenci using the proportionate consolidation method.
Operating and Development Activities. FCX has significant undeveloped reserves and resources in North America and a portfolio of potential long-term development projects. Future investments will be undertaken based on the results of economic and technical feasibility studies, and market conditions.

 
 
 
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In response to market conditions, beginning in the second half of 2015 FCX took actions to reduce operating and capital costs and adjusted production to reflect market conditions. These operating plans will continue to be reviewed and additional adjustments may be made as market conditions warrant.
Operating Data. Following is summary consolidated operating data for the North America copper mines for the fourth quarters and years ended 2016 and 2015:
 
 
Three Months Ended
 
Years Ended
 
 
 
December 31,
 
December 31,
 
 
 
2016
 
2015
 
2016
 
2015
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
420

 
527

 
1,831

 
1,947

 
Sales, excluding purchasesa
 
416

 
547

 
1,841

 
1,988

 
Average realized price per pound
 
$
2.45

 
$
2.22

 
$
2.24

 
$
2.47

 
 
 
 
 
 
 
 
 
 
 
Molybdenum (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Productionb
 
8

 
9

 
33

 
37

 
 
 
 
 
 
 
 
 
 
 
Unit net cash costs per pound of copperc
 
 
 
 
 
 
 
 
 
Site production and delivery, excluding adjustments
 
$
1.46

 
$
1.49

 
$
1.42

 
$
1.68

 
By-product credits
 
(0.13
)
 
(0.07
)
 
(0.12
)
 
(0.13
)
 
Treatment charges
 
0.11

 
0.11

 
0.11

 
0.12

 
Unit net cash costs
 
$
1.44

 
$
1.53

 
$
1.41

 
$
1.67

 
 
 
 
 
 
 
 
 
 
 
a.
The impact of the May 2016 sale of a 13 percent undivided interest in Morenci was a decrease of 34 million pounds of copper for fourth-quarter 2016, compared with fourth-quarter 2015, and 84 million pounds of copper for the year 2016, compared with the year 2015.
b.
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.
c.
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 XV, which are available on FCX's website, "fcx.com."
North America's consolidated copper sales volumes of 416 million pounds in fourth-quarter 2016 were lower than fourth-quarter 2015 sales of 547 million pounds, primarily reflecting reduced mining rates, lower ore grades and the impact of the May 2016 sale of a portion of FCX's interest in Morenci. North America copper sales are estimated to approximate 1.5 billion pounds for the year 2017, compared with 1.8 billion pounds in 2016.
Average unit net cash costs (net of by-product credits) for the North America copper mines of $1.44 per pound of copper in fourth-quarter 2016 were lower than unit net cash costs of $1.53 per pound in fourth-quarter 2015, primarily reflecting higher by-product credits and cost reduction initiatives.
Average unit net cash costs (net of by-product credits) for the North America copper mines are expected to approximate $1.55 per pound of copper for the year 2017, based on achievement of current sales volume and cost estimates and assuming an average molybdenum price of $7.00 per pound. North America's average unit net cash costs for the year 2017 would change by approximately $0.04 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. The Cerro Verde expansion project commenced operations in September 2015 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

 
 
 
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molybdenum. Cerro Verde's copper production totaled 1.1 billion pounds for the year 2016, compared with 545 million pounds for the year 2015.
In response to market conditions, in the second half of 2015 FCX adjusted operations at its El Abra mine 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.
FCX continues to evaluate a potential large-scale milling operation at El Abra to process additional sulfide material and to achieve higher recoveries. Exploration results in recent years at El Abra indicate a significant sulfide resource, which could potentially support a major mill project. Future investments will depend on technical studies, economic factors and market conditions.
Operating Data. Following is summary consolidated operating data for the South America mining operations for the fourth quarters and years ended 2016 and 2015:
 
 
Three Months Ended
 
Years Ended
 
 
 
December 31,
 
December 31,
 
 
 
2016
 
2015
 
2016
 
2015
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
342

 
284

 
1,328

 
869

 
Sales
 
359

 
286

 
1,332

 
871

 
Average realized price per pound
 
$
2.50

 
$
2.16

 
$
2.31

 
$
2.38

 
 
 
 
 
 
 
 
 
 
 
Molybdenum (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Productiona
 
7

 
2

 
21

 
7

 
 
 
 
 
 
 
 
 
 
 
Unit net cash costs per pound of copperb
 
 
 
 
 
 
 
 
 
Site production and delivery, excluding adjustments
 
$
1.35

 
$
1.43

 
$
1.26

 
$
1.60

 
By-product credits
 
(0.10
)
 
(0.04
)
 
(0.10
)
 
(0.05
)
 
Treatment charges
 
0.25

 
0.21

 
0.24

 
0.19

 
Royalty on metals
 
0.01

 
0.01

 
0.01

 
—

 
Unit net cash costs
 
$
1.51

 
$
1.61

 
$
1.41

 
$
1.74

 
 
 
 
 
 
 
 
 
 
 
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 XV, which are available on FCX's website, "fcx.com."
South America's consolidated copper sales volumes of 359 million pounds in fourth-quarter 2016 were higher than fourth-quarter 2015 sales of 286 million pounds, reflecting Cerro Verde's expanded operations. Sales from South America mining are expected to approximate 1.3 billion pounds of copper for the year 2017, compared with 1.3 billion pounds of copper in 2016.
Average unit net cash costs (net of by-product credits) for South America mining of $1.51 per pound of copper in fourth-quarter 2016 were lower than unit net cash costs of $1.61 per pound in fourth-quarter 2015, primarily reflecting higher copper sales volumes and efficiencies associated with the Cerro Verde expansion and higher by-product credits. Average unit net cash costs (net of by-product credits) for South America mining are expected to approximate $1.61 per pound of copper for the year 2017, based on current sales volume and cost estimates and assuming an average price of $7.00 per pound of molybdenum.


 
 
 
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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. PT-FI continues to engage with Indonesian government officials regarding its long-term operating rights under its Contract of Work (COW), and its rights to export concentrate without restriction.
In July 2014, PT-FI and the Indonesian government entered into a Memorandum of Understanding (MOU), in which subject to concluding an agreement to extend PT-FI's operations beyond 2021 on acceptable terms, PT-FI 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 also agreed to pay higher royalties and to pay export duties until certain smelter development milestones were met. In January 2015, the MOU was extended to July 25, 2015, and it expired on that date. The increased royalty rates, export duties and smelter assurance bond have remained in effect.
In October 2015, the Indonesian government provided a letter of assurance to PT-FI indicating that it would revise regulations allowing it to 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 COW.
In January 2017, the Indonesian government issued new regulations to address exports of unrefined metals, including copper concentrates and anode slimes, and other matters related to the mining sector. The new regulations permit the continuation of copper concentrate exports for a five year period through January 2022, subject to various conditions, including conversion from a contract of work to a special operating license (an IUPK), commitment to completion of smelter construction in five years and payment of export duties to be determined by the Ministry of Finance. In addition, the new regulations enable application for extension of operating rights five years before expiration of the IUPK and require foreign IUPK holders to divest 51 percent to Indonesian interests no later than the tenth year of production. Export licenses would be valid for one-year periods, subject to review every six months, depending on smelter construction progress.
The January 2017 regulations permit the export of anode slimes, which is necessary for PT Smelting (PT-FI’s 25 percent owned copper smelter and refinery located in Gresik, Indonesia) to continue operating. PT Smelting is engaged in discussions with the Indonesian government related to the renewal of its anode slimes export license.
Following the issuance of the January 2017 regulations and discussions with the government, PT-FI advised the Indonesian government that it would convert its COW to an IUPK, subject to obtaining an investment stability agreement providing the same rights and the same level of legal and fiscal certainty enumerated under its COW. PT-FI also committed to constructing a new smelter during a five year timeframe after approval of the extension of its operating rights. The COW would remain in effect until it is replaced by a mutually satisfactory alternative.
PT-FI has requested that concentrate exports be permitted while the new license and stability agreement are negotiated. PT-FI is discussing the applicability of export duties and divestment requirements with the Indonesian government. Under its COW, PT-FI is not required to pay export duties on concentrate or to conduct further divestments.
As of January 25, 2017, PT-FI has not obtained approval to export concentrate. PT-FI has advised the Indonesian government that if it is prohibited from exporting copper concentrate it would be required to reduce production to match available capacity at PT Smelting or approximately 40 percent of PT-FI's capacity (assuming that PT Smelting's export license is approved). Under this scenario, PT-FI would be required to take near-term actions to reduce its workforce, significantly reduce costs and suspend future investments on its underground development projects and new smelter.
Under its COW, PT-FI has rights to export copper concentrate without restriction or payment of export duties. If necessary, PT-FI may consider legal action to enforce its contractual rights should it fail to reach a mutually satisfactory agreement with the Indonesian government.
In January 2017, the Indonesia Tax Court issued a ruling against PT-FI with respect to assessments from the local regional tax authority in Papua, Indonesia, for additional taxes and penalties related to surface water taxes for the period from January 2011 through July 2015 in the amount of $376 million (based on exchange rates at December 31, 2016, and including $227 million in penalties). The aggregate amount of assessments received from August 2015 through December 2016 was an additional $93 million, including penalties. No amounts have been

 
 
 
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recorded at this time for these assessments because PT-FI's COW exempts it from these payments. PT-FI has the right to contest these assessments by appeal to the Indonesia Supreme Court and/or institute dispute resolution proceedings under the COW. Under Indonesian law, payment is required approximately 30 days after written receipt of the ruling. PT-FI expects to challenge this decision and is evaluating its options.
Operating and Development Activities. PT-FI is currently mining the final phase of the Grasberg open pit, which contains high copper and gold ore grades. PT-FI expects to mine high-grade ore over the next several quarters prior to transitioning to the Grasberg Block Cave underground mine during 2018.
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. From 2017 to 2021, 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 summary consolidated operating data for the Indonesia mining operations for the fourth quarters and years ended 2016 and 2015:
 
 
Three Months Ended
 
Years Ended
 
 
 
December 31,
 
December 31,
 
 
 
2016
 
2015
 
2016
 
2015
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
369

 
201

 
1,063

 
752

 
Sales
 
352

 
195

 
1,054

 
744

 
Average realized price per pound
 
$
2.48

 
$
2.14

 
$
2.32

 
$
2.33

 
 
 
 
 
 
 
 
 
 
 
Gold (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
 
Production
 
424

 
345

 
1,061

 
1,232

 
Sales
 
401

 
333

 
1,054

 
1,224

 
Average realized price per ounce
 
$
1,174

 
$
1,066

 
$
1,237

 
$
1,129

 
 
 
 
 
 
 
 
 
 
 
Unit net cash costs per pound of coppera
 
 
 
 
 
 
 
 
 
Site production and delivery, excluding adjustments
 
$
1.50

 
$
2.40

 
$
1.63

 
$
2.39

 
Gold and silver credits
 
(1.34
)
 
(1.87
)
 
(1.30
)
 
(1.91
)
 
Treatment charges
 
0.27

 
0.31

 
0.28

 
0.31

 
Export duties
 
0.09

 
0.10

 
0.09

 
0.15

 
Royalty on metals
 
0.13

 
0.15

 
0.13

 
0.15

 
Unit net cash costs
 
$
0.65

 
$
1.09

 
$
0.83

 
$
1.09

 
 
 
 
 
 
 
 
 
 
 
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 XV, which are available on FCX's website, "fcx.com."
Indonesia's consolidated sales of 352 million pounds of copper and 401 thousand ounces of gold in fourth-quarter 2016 were higher than fourth-quarter 2015 sales of 195 million pounds of copper and 333 thousand ounces of gold, primarily reflecting higher ore grades.
Indonesia's fourth-quarter 2016 sales were below October 2016 estimates by approximately 120 million pounds of copper and 190 thousand ounces of gold, principally reflecting lower mining rates in the Grasberg open pit, which affected the timing of its copper and gold production resulting in a deferral of volumes to future periods. Various initiatives are under way to improve productivity levels in the open pit.
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 operations (assuming normal operations, including the resumption of concentrate exports in February 2017 and the renewal of PT Smelting's export license) are expected to approximate 1.3 billion pounds of copper and 2.2 million ounces of

 
 
 
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gold for the year 2017, compared with 1.05 billion pounds of copper and 1.05 million ounces of gold for the year 2016. For each month of delay in obtaining approval to export, PT-FI's share of production is projected to be reduced by approximately 70 million pounds of copper and 100 thousand ounces of gold.
A significant portion of PT-FI's costs are fixed and unit costs vary depending on production volumes and other factors. Indonesia's unit net cash costs (including gold and silver credits) of $0.65 per pound of copper in fourth-quarter 2016 were lower than unit net cash costs of $1.09 per pound in fourth-quarter 2015, primarily reflecting higher sales volumes.
Anticipated higher ore grades from the Grasberg mine are expected to result in lower unit net cash costs in 2017. Assuming an average gold price of $1,200 per ounce for 2017 and achievement of current sales volume and cost estimates (assuming normal operations), unit net cash credits (net of gold and silver credits) for Indonesia mining are expected to approximate $0.03 per pound of copper for the year 2017. Indonesia mining's unit net cash credits for the year 2017 would change by approximately $0.075 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's costs, unit costs vary from quarter to quarter depending on copper and gold volumes.
Indonesia mining's projected sales volumes are dependent on a number of factors, including operational performance, the timing of shipments and its ability to continue to export copper concentrate.
Africa Mining. In November 2016, FCX completed the sale of its interest in TFHL, through which FCX held an effective 56 percent interest in the Tenke copper and cobalt mining concessions in the Southeast region of the DRC. In accordance with accounting guidelines, the operating results of Africa mining have been separately reported as discontinued operations in FCX’s consolidated statements of operations for all periods presented.
The fourth-quarter 2016 loss on disposal of discontinued operations of $16 million includes a charge of $33 million for FCX's share of the settlement agreement entered into with La Générale des Carrières et des Mines (Gécamines), which is wholly owned by the DRC government, resulting in a resolution of all claims brought by Gécamines against FCX, including the action brought before the International Chamber of Commerce (ICC) International Arbitration Court, related to the sale of FCX's interest in TFHL to CMOC. The parties to the settlement are FCX, CMOC, Lundin Mining Corporation, TFHL, Tenke Fungurume Mining S.A., BHR Newwood Investment Management Limited and Gécamines. Partly offsetting this charge is a gain of $13 million recognized for the fair value of contingent consideration, which in accordance with accounting guidelines will continue to be adjusted through December 31, 2019.
Operating Data. Following is summary consolidated operating data for the Africa mining operations for the fourth quarters and years ended 2016 and 2015:
 
 
Three Months Ended
 
Years Ended
 
 
 
December 31,
 
December 31,
 
 
 
2016a
 
2015
 
2016a
 
2015
 
Copper (millions of recoverable pounds)
 
 
 
 
 
 
 
 
 
Production
 
69

 
110

 
425

 
449

 
Sales
 
59

 
117

 
424

 
467

 
Average realized price per poundb
 
$
2.31

 
$
2.13

 
$
2.10

 
$
2.42

 
 
 
 
 
 
 
 
 
 
 
Cobalt (millions of contained pounds)
 
 
 
 
 
 
 
 
 
Production
 
4

 
10

 
32

 
35

 
Sales
 
4

 
9

 
33

 
35

 
Average realized price per pound
 
$
8.66

 
$
6.47

 
$
7.45

 
$
8.21

 
 
 
 
 
 
 
 
 
 
 
Unit net cash costs per pound of copperc
 
 
 
 
 
 
 
 
 
Site production and delivery, excluding adjustments
 
$
1.42

 
$
1.58

 
$
1.58

 
$
1.58

 
Cobalt creditsd
 
(0.41
)
 
(0.28
)
 
(0.39
)
 
(0.42
)
 
Royalty on metals
 
0.05

 
0.05

 
0.05

 
0.05

 
Unit net cash costs
 
$
1.06

 
$
1.35

 
$
1.24

 
$
1.21

 
 
 
 
 
 
 
 
 
 
 
a.
Includes the results of Tenke through November 16, 2016.
b.
Includes point-of-sale transportation costs as negotiated in customer contracts.

 
 
 
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c.
For a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in net (loss) income from discontinued operations in FCX's consolidated financial statements, refer to the supplemental schedules, "Product Revenues and Production Costs," beginning on page XV, which are available on FCX's website, "fcx.com."
d.
Net of cobalt downstream processing and freight costs.

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. In response to market conditions, the Henderson molybdenum mine operated at reduced rates during 2016, resulting in an approximate 65 percent reduction in its annual production volumes. During 2016, FCX incorporated changes in the commercial pricing structure for its chemical products to enable continuation of chemical-grade production.
Production from the Molybdenum mines totaled 7 million pounds of molybdenum in fourth-quarter 2016, 9 million pounds in fourth-quarter 2015, 26 million pounds in the year 2016 and 48 million pounds in the year 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 $8.26 per pound of molybdenum in fourth-quarter 2016 were higher than $7.15 per pound in fourth-quarter 2015, primarily reflecting lower volumes. Based on current sales volume and cost estimates, unit net cash costs for the Molybdenum mines are expected to average approximately $7.75 per pound of molybdenum for the year 2017.
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 XV, 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. Exploration spending continues to be constrained by market conditions and is expected to approximate $47 million for the year 2017, compared to $44 million in 2016.

Preliminary Recoverable Proven and Probable Mineral Reserves. FCX has significant reserves, resources and future development opportunities within its portfolio of mining assets. FCX's preliminary estimated consolidated recoverable proven and probable reserves from its mines at December 31, 2016, include 86.8 billion pounds of copper, 26.1 million ounces of gold and 2.95 billion pounds of molybdenum, which were determined using long-term average prices of $2.00 per pound for copper, $1,000 per ounce for gold and $10.00 per pound for molybdenum. The preliminary recoverable proven and probable mining reserves presented in the table below represent the estimated metal quantities from which FCX expects to be paid after application of estimated metallurgical recovery rates and smelter recovery rates, where applicable. Recoverable reserve volumes are those which FCX estimates can be economically and legally extracted or produced at the time of the reserve determination.
 
Preliminary Recoverable Proven and Probable Mineral Reserves
 
 
Estimated at December 31, 2016
 
 
Copper
 
Gold
 
Molybdenum
 
 
(billion pounds)
 
(million ounces)
 
(billion pounds)
 
North America
30.4

 
0.3

 
2.31

 
South America
29.5

 
—

 
0.64

 
Indonesia
26.9

 
25.8

 
—

 
Consolidated basisa
86.8

 
26.1

 
2.95

 
 
 
 
 
 
 
 
Net equity interestb
70.5

 
23.7

 
2.65

 
 
 
 
 
 
 
 

 
 
 
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a.
Consolidated reserves represent estimated metal quantities after reduction for joint venture partner interests at the Morenci mine in North America and the Grasberg minerals district in Indonesia. Excluded from the table above were FCX’s estimated recoverable proven and probable reserves of 281.8 million ounces of silver, which was determined using a long-term average price of $15 per ounce.
b.
Net equity interest reserves represent estimated consolidated metal quantities further reduced for noncontrolling interest ownership. Excluded from the table above were FCX’s estimated recoverable proven and probable reserves of 226.0 million ounces of silver.
The following table summarizes changes in FCX's preliminary estimated consolidated recoverable proven and probable copper, gold and molybdenum reserves during 2016:
 
Copper
 
Gold
 
Molybdenum
 
 
(billions of lbs)
 
(millions of ozs)
 
(billions of lbs)
 
Reserves at December 31, 2015
99.5

 
27.1

 
3.05

 
Net additions
0.5

 
0.1

 
—

 
Production
(4.6
)
a 
(1.1
)
 
(0.08
)
 
Sale of Tenke
(6.8
)
 
—

 
—

 
Sale of 13 percent undivided interest in Morenci
(1.8
)
 
—

 
(0.02
)
 
Reserves at December 31, 2016
86.8

 
26.1

 
2.95

 
 
 
 
 
 
 
 
a. Includes copper production of 0.4 billion pounds from the Tenke mine.
In addition to the preliminary consolidated recoverable proven and probable reserves, FCX's preliminary estimated mineralized material (assessed using a long-term average copper price of $2.20 per pound for copper) totaled 102 billion pounds of incremental contained copper as of December 31, 2016. FCX continues to pursue opportunities to convert this material into reserves, future production volumes and cash flow.

OIL AND GAS OPERATIONS
In December 2016, FCX completed the sales of the Deepwater GOM and onshore California oil and gas properties for $2.6 billion (before closing adjustments) and contingent consideration. FCX has the right to receive additional proceeds of up to $300 million, including (i) $150 million for contingent payments related to the Deepwater GOM sale, which will be payable to FCX as the buyer realizes future cash flows in connection with a third-party production handling agreement, and (ii) $150 million related to the onshore California sale, which is based on the average price of Brent crude oil for the years 2018, 2019 and 2020. In connection with the Deepwater GOM transaction, FCX also settled a preferred stock obligation at its Plains Offshore Operations Inc. subsidiary for $582 million (at September 30, 2016, this preferred stock obligation was recorded at $774 million on FCX's consolidated balance sheet).
In January 2017, FCX entered into an agreement to sell its property interests in the Madden area for cash consideration of $20 million. The transaction has an effective date of January 1, 2017, and is expected to close in first-quarter 2017. Following the completion of the Madden transaction, FCX’s portfolio of oil and gas assets would include oil and natural gas production onshore in South Louisiana and on the GOM Shelf and oil production offshore California, which had oil and gas sales volumes of 1.5 MMBOE in fourth-quarter 2016.
CASH FLOWS, CASH, DEBT and EQUITY TRANSACTIONS
Operating Cash Flows. FCX generated operating cash flows of $1.1 billion (net of $406 million in working capital uses and changes in other tax payments) in fourth-quarter 2016 and $3.7 billion (including $57 million in working capital sources and changes in other tax payments) for the year 2016.
Based on current sales volume and cost estimates and assuming average prices of $2.50 per pound of copper, $1,200 per ounce of gold and $7.00 per pound of molybdenum, FCX's consolidated operating cash flows are estimated to approximate $4.3 billion for the year 2017 (including $1.0 billion in working capital sources and other tax payments). The impact of price changes during 2017 on operating cash flows would approximate $385 million for each $0.10 per pound change in the average price of copper, $95 million for each $50 per ounce change in the average price of gold and $100 million for each $2 per pound change in the average price of molybdenum. Projections for 2017 assume normal operating levels at PT-FI. Refer to page 8 for discussion of recent regulatory changes in Indonesia, which may have a significant impact on future results.

 
 
 
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Capital Expenditures. Capital expenditures totaled $504 million for fourth-quarter 2016, consisting of $405 million for mining operations (including $285 million for major projects) and $99 million for oil and gas operations. Capital expenditures for the year 2016 totaled $2.8 billion, consisting of $1.6 billion for mining operations (including $1.2 billion for major projects) and $1.2 billion for oil and gas operations.
Capital expenditures are expected to approximate $1.8 billion for the year 2017, including $1.1 billion for major mining projects, primarily related to the development of underground mines by PT-FI. Refer to page 8 for discussion of recent regulatory changes in Indonesia, which may impact future investment in PT-FI's underground development projects.
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 December 31, 2016 (in millions):
Cash at domestic companies
$
3,908

 
Cash at international operations
337

 
Total consolidated cash and cash equivalents
4,245

 
Noncontrolling interests' share
(95
)
 
Cash, net of noncontrolling interests' share
4,150

 
Withholding taxes and other
(22
)
 
Net cash available
$
4,128

 
 
 
 
Debt. FCX continues to focus on cost and capital management and cash flow generation from its operations and has taken actions to improve its balance sheet through asset sales, available cash flows and other transactions. Following is a summary of total debt and the related weighted-average interest rates at December 31, 2016 (in billions, except percentages):
 
 
 
Weighted-
 
 
 
 
Average
 
 
 
 
Interest Rate
 
Senior Notes
$
14.4

 
4.4%
 
Cerro Verde Credit Facility
1.4

 
2.7%
 
Other FCX debt
0.2

 
3.1%
 
Total debt
$
16.0

 
4.2%
 
 
 
 
 
 
During fourth-quarter 2016, FCX repaid the $2.5 billion balance of its Term Loan with proceeds from recent asset sales transactions and purchased $38 million of its senior notes in open-market transactions. Additionally, in December 2016, FCX completed an exchange offer and consent solicitation associated with the Freeport-McMoRan Oil & Gas LLC (FM O&G) senior notes. Holders representing 89 percent of the outstanding FM O&G senior notes tendered their notes and were issued new FCX notes. Each series of newly issued FCX senior notes have an interest rate and maturity date that is identical to the interest rate and maturity date of the applicable series of FM O&G senior notes. The newly issued FCX senior notes are senior unsecured obligations of FCX and rank equally in right of payment with all other existing and future senior unsecured indebtedness of FCX.
At December 31, 2016, FCX had no borrowings, $43 million in letters of credit issued and availability of $3.5 billion under its $3.5 billion revolving credit facility.
FCX's debt maturities, total $1.2 billion in 2017 and $1.5 billion in 2018 (excluding scheduled amortization of $0.8 billion in 2018 for the Cerro Verde credit facility).
Equity. In November 2016, FCX completed its registered ATM offering of common stock announced in July 2016, which raised $1.5 billion in gross proceeds through the sale of 116.5 million shares of FCX common stock. At December 31, 2016, FCX had 1.44 billion common shares outstanding.


 
 
 
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FINANCIAL POLICY
FCX intends to continue to seek to strengthen its financial position, with a focus on debt reduction. In December 2015, FCX's common stock dividend was 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 fourth-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, February 24, 2017.
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FCX is a leading international mining company with headquarters in Phoenix, Arizona. FCX operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. 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; and significant mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America. 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, 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 and molybdenum 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 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 FCX's Board of Directors (Board), subject to restrictions under FCX's credit agreements, and will depend on FCX's financial results, cash requirements, future prospects, and other factors deemed relevant by the Board. This press release also includes forward-looking statements regarding mineralized material not included in reserves. The mineralized material described will not qualify as reserves until comprehensive engineering studies establish their feasibility. Accordingly, no assurance can be given that the estimated mineralized material not included in reserves will become proven and probable reserves.
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 and molybdenum, mine sequencing, production rates, 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, FCX's ability to secure regulatory approvals, potential inventory adjustments, potential impairment of long-lived mining assets, the outcome of ongoing discussions with the Indonesian government regarding PT Freeport Indonesia's (PT-FI) Contract of Work (COW), the potential effects of violence in Indonesia generally and in the province of Papua, industry risks, regulatory changes, political risks, labor relations, weather- and climate-related risks, environmental risks, litigation results (including the final disposition of the recent unfavorable Indonesian Tax Court ruling relating to surface water taxes) 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. With respect to FCX's operations in Indonesia, such factors include whether PT-FI will be able to resume exporting its copper concentrate directly and indirectly through PT Smelting (PT-FI's 25 percent-owned Indonesian smelting unit), which depends upon the satisfactory resolution of complex regulatory matters in Indonesia. PT-FI's inability to export copper concentrate itself and through PT Smelting for any extended period of time would lead to the suspension of all of FCX's production in Indonesia.
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."


 
 
 
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FREEPORT-McMoRan INC.
SELECTED MINING OPERATING DATA
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
 
Production
 
Sales
 
COPPER (millions of recoverable pounds)
2016
 
2015
 
2016
 
2015
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
North America
 
 
 
 
 
 
 
 
Morenci (72%)a
190

 
246

 
188

 
255

 
Bagdad (100%)
38

 
53

 
39

 
56

 
Safford (100%)
57

 
66

 
56

 
66

 
Sierrita (100%)
40

 
49

 
39

 
50

 
Miami (100%)
5

 
10

 
6

 
11

 
Chino (100%)
69

 
83

 
69

 
87

 
Tyrone (100%)
20

 
19

 
18

 
21

 
Other (100%)
1

 
1

 
1

 
1

 
Total North America
420

 
527

 
416

 
547

 
 
 
 
 
 
 
 
 
 
South America
 
 
 
 
 
 
 
 
Cerro Verde (53.56%)
293

 
211

 
307

 
209

 
El Abra (51%)
49

 
73

 
52

 
77

 
Total South America
342

 
284

 
359

 
286

 
 
 
 
 
 
 
 
 
 
Indonesia
 
 
 
 
 
 
 
 
Grasberg (90.64%)b
369

 
201

 
352

 
195

 
Consolidated - continuing operations
1,131

 
1,012

 
1,127

c 
1,028

c 
Discontinued operations - Tenke Fungurume (Tenke) (56%)d
69

 
110

 
59

 
117

 
Total
1,200

 
1,122

 
1,186

 
1,145

 
Less noncontrolling interests
225

 
201

 
227

 
204

 
Net
975

 
921

 
959

 
941

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average realized price per pound (continuing operations)
 
 
 
 
$
2.48

 
$
2.19

 
Average realized price per pound (including Tenke)
 
 
 
 
$
2.47

 
$
2.18

 
 
 
 
 
 
 
 
 
 
GOLD (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
North America (100%)
6

 
5

 
4

 
5

 
Indonesia (90.64%)b
424

 
345

 
401

 
333

 
Consolidated
430

 
350

 
405

 
338

 
Less noncontrolling interests
40

 
32

 
38

 
31

 
Net
390

 
318

 
367

 
307

 
 
 
 
 
 
 
 
 
 
Average realized price per ounce
 
 
 
 
$
1,174

 
$
1,067

 
 
 
 
 
 
 
 
 
 
MOLYBDENUM (millions of recoverable pounds)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
Henderson (100%)
3

 
4

 
N/A

 
N/A

 
Climax (100%)
4

 
5

 
N/A

 
N/A

 
North America copper mines (100%)a
8

 
9

 
N/A

 
N/A

 
Cerro Verde (53.56%)
7

 
2

 
N/A

 
N/A

 
Consolidated
22

 
20

 
22

 
20

 
Less noncontrolling interests
3

 
1

 
2

 
1

 
Net
19

 
19

 
20

 
19

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
8.27

 
$
6.94

 
 
 
 
 
 
 
 
 
 
a. Amounts are net of Morenci's undivided joint venture partner's interest; effective May 31, 2016, FCX's undivided interest in Morenci was prospectively reduced from 85 percent to 72 percent.
 
 
 
 
 
 
 
 
 
b. Amounts are net of Grasberg's joint venture partner's interest, which varies in accordance with the terms of the joint venture agreement.
 
 
 
 
 
 
 
 
 
c. Consolidated sales volumes exclude purchased copper of 57 million pounds in fourth-quarter 2016 and 29 million pounds in fourth-quarter 2015.
 
 
 
 
 
 
 
 
 
d. On November 16, 2016, FCX completed the sale of its interest in the Tenke mine.


I

FREEPORT-McMoRan INC.
SELECTED MINING OPERATING DATA (continued)
 
 
 
 
 
 
 
 
 
 
Years Ended December 31,
 
 
Production
 
Sales
 
COPPER (millions of recoverable pounds)
2016
 
2015
 
2016
 
2015
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
North America
 
 
 
 
 
 
 
 
Morenci (72%)a
848

 
902

 
855

 
915

 
Bagdad (100%)
177

 
210

 
180

 
222

 
Safford (100%)
230

 
202

 
229

 
198

 
Sierrita (100%)
162

 
189

 
162

 
196

 
Miami (100%)
25

 
43

 
27

 
46

 
Chino (100%)
308

 
314

 
308

 
319

 
Tyrone (100%)
76

 
84

 
75

 
89

 
Other (100%)
5

 
3

 
5

 
3

 
Total North America
1,831

 
1,947

 
1,841

 
1,988

 
 
 
 
 
 
 
 
 
 
South America
 
 
 
 
 
 
 
 
Cerro Verde (53.56%)
1,108

 
545

 
1,105

 
544

 
El Abra (51%)
220

 
324

 
227

 
327

 
Total South America
1,328

 
869

 
1,332

 
871

 
 
 
 
 
 
 
 
 
 
Indonesia
 
 
 
 
 
 
 
 
Grasberg (90.64%)b
1,063

 
752

 
1,054

 
744

 
Consolidated - continuing operations
4,222

 
3,568

 
4,227

c 
3,603

c 
Discontinued operations - Tenke (56%)d

425

 
449

 
424

 
467

 
Total
4,647

 
4,017

 
4,651

 
4,070

 
Less noncontrolling interests
909

 
680

 
910

 
688

 
Net
3,738

 
3,337

 
3,741

 
3,382

 
 
 
 
 
 
 
 
 
 
Average realized price per pound (continuing operations)
 
 
 
 
$
2.28

 
$
2.42

 
Average realized price per pound (including Tenke)
 
 
 
 
$
2.27

 
$
2.42

 
 
 
 
 
 
 
 
 
 
GOLD (thousands of recoverable ounces)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
North America (100%)
27

 
25

 
25

 
23

 
Indonesia (90.64%)b
1,061

 
1,232

 
1,054

 
1,224

 
Consolidated
1,088

 
1,257

 
1,079

 
1,247

 
Less noncontrolling interests
99

 
115

 
99

 
115

 
Net
989

 
1,142

 
980

 
1,132

 
 
 
 
 
 
 
 
 
 
Average realized price per ounce
 
 
 
 
$
1,238

 
$
1,129

 
 
 
 
 
 
 
 
 
 
MOLYBDENUM (millions of recoverable pounds)
 
 
 
 
 
 
 
 
(FCX's net interest in %)
 
 
 
 
 
 
 
 
Henderson (100%)
10

 
25

 
N/A

 
N/A

 
Climax (100%)
16

 
23

 
N/A

 
N/A

 
North America (100%)a
33

 
37

 
N/A

 
N/A

 
Cerro Verde (53.56%)
21

 
7

 
N/A

 
N/A

 
Consolidated
80

 
92

 
74

 
89

 
Less noncontrolling interests
9

 
3

 
6

 
4

 
Net
71

 
89

 
68

 
85

 
 
 
 
 
 
 
 
 
 
Average realized price per pound
 
 
 
 
$
8.33

 
$
8.70

 
 
 
 
 
 
 
 
 
 
a. Amounts are net of Morenci's undivided joint venture partner's interest; effective May 31, 2016, FCX's undivided interest in Morenci was prospectively reduced from 85 percent to 72 percent.
 
 
 
 
 
 
 
 
 
b. Amounts are net of Grasberg's joint venture partner's interest, which varies in accordance with the terms of the joint venture agreement.
 
 
 
 
 
 
 
 
 
c. Consolidated sales volumes exclude purchased copper of 188 million pounds for the year 2016 and 121 million pounds for the year 2015.

 
 
 
 
 
 
 
 
 
d. On November 16, 2016, FCX completed the sale of its interest in the Tenke mine.


II

FREEPORT-McMoRan INC.
 
SELECTED MINING OPERATING DATA (continued)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Years Ended December 31,
 
 
2016
 
2015
 
2016
 
2015
 
100% North America Copper Mines
 
 
 
 
 
 
 
 
Solution Extraction/Electrowinning (SX/EW) Operations
 
 
 
 
 
 
 
 
Leach ore placed in stockpiles (metric tons per day)
662,700

 
906,500

 
739,200

 
909,900

 
Average copper ore grade (percent)
0.30

 
0.26

 
0.31

 
0.26

 
Copper production (millions of recoverable pounds)
303

 
326

 
1,224

 
1,134

 
 
 
 
 
 
 
 
 
 
Mill Operations
 
 
 
 
 
 
 
 
Ore milled (metric tons per day)
302,300

 
319,300

 
300,500

 
312,100

 
Average ore grades (percent):
 
 
 
 
 
 
 
 
Copper
0.44

 
0.50

 
0.47

 
0.49

 
Molybdenum
0.03

 
0.03

 
0.03

 
0.03

 
Copper recovery rate (percent)
83.0

 
84.8

 
85.5

 
85.4

 
Production (millions of recoverable pounds):
 
 
 
 
 
 
 
 
Copper
193

 
244

 
854

 
972

 
Molybdenum
8

 
9

 
33

 
37

 
 
 
 
 
 
 
 
 
 
100% South America Mining
 
 
 
 
 
 
 
 
SX/EW Operations
 
 
 
 
 
 
 
 
Leach ore placed in stockpiles (metric tons per day)
132,400

 
113,800

 
151,600

 
193,900

 
Average copper ore grade (percent)
0.43

 
0.49

 
0.41

 
0.44

 
Copper production (millions of recoverable pounds)
78

 
100

 
328

 
430

 
 
 
 
 
 
 
 
 
 
Mill Operations
 
 
 
 
 
 
 
 
Ore milled (metric tons per day)
366,500

 
240,100

 
353,400

 
152,100

 
Average ore grades:
 
 
 
 
 
 
 
 
Copper (percent)
0.43

 
0.47

 
0.43

 
0.46

 
Molybdenum (percent)
0.02

 
0.02

 
0.02

 
0.02

 
Copper recovery rate (percent)
85.1

 
85.1

 
85.8

 
81.5

 
Production (millions of recoverable pounds):
 
 
 
 
 
 
 
 
Copper
264

 
184

 
1,000

 
439

 
Molybdenum
7

 
2

 
21

 
7

 
 
 
 
 
 
 
 
 
 
100% Indonesia Mining
 
 
 
 
 
 
 
 
Ore milled (metric tons per day):a
 
 
 
 
 
 
 
 
Grasberg open pit
126,900

 
108,400

 
119,700

 
115,900

 
Deep Ore Zone underground mine
36,000

 
43,000

 
38,000

 
43,700

 
Deep Mill Level Zone (DMLZ) underground mineb
2,500

 
3,500

 
4,400

 
2,900

 
Grasberg Block Cave underground mineb
3,000

 
—

 
2,700

 
—

 
Big Gossan underground mineb
1,500

 
—

 
900

 
—

 
Total
169,900

 
154,900

 
165,700

 
162,500

 
Average ore grades:
 
 
 
 
 
 
 
 
Copper (percent)
1.08

 
0.75

 
0.91

 
0.67

 
Gold (grams per metric ton)
0.97

 
0.92

 
0.68

 
0.79

 
Recovery rates (percent):
 
 
 
 
 
 
 
 
Copper
92.0

 
90.9

 
91.0

 
90.4

 
Gold
83.7

 
84.1

 
82.2

 
83.4

 
Production (recoverable):
 
 
 
 
 
 
 
 
Copper (millions of pounds)
326

 
201

 
1,062

 
752

 
Gold (thousands of ounces)
397

 
345

 
1,061

 
1,232

 
 
 
 
 
 
 
 
 
 
100% Africa Mining (Discontinued Operations)c
 
 
 
 
 
 
 
 
Ore milled (metric tons per day)
14,100

 
15,900

 
15,200

 
14,900

 
Average ore grades (percent):
 
 
 
 
 
 
 
 
Copper
4.53

 
3.64

 
4.18

 
4.00

 
Cobalt
0.42

 
0.51

 
0.44

 
0.43

 
Copper recovery rate (percent)
93.3

 
94.0

 
93.6

 
94.0

 
Production (millions of pounds):
 
 
 
 
 
 
 
 
Copper (recoverable)
69

 
110

 
425

 
449

 
Cobalt (contained)
4

 
10

 
32

 
35

 
 
 
 
 
 
 
 
 
 
100% Molybdenum Mines
 
 
 
 
 
 
 
 
Ore milled (metric tons per day)
20,000

 
25,900

 
18,300

 
34,800

 
Average molybdenum ore grade (percent)
0.18

 
0.20

 
0.21

 
0.20

 
Molybdenum production (millions of recoverable pounds)
7

 
9

 
26

 
48

 
 
 
 
 
 
 
 
 
 
a. Amounts represent the approximate average daily throughput processed at PT Freeport Indonesia's (PT-FI) mill facilities from each producing mine and from development activities that result in metal production.
 
b. Targeted production rates once the DMLZ underground mine reaches full capacity are expected to approximate 80,000 metric tons of ore per day in 2021; production from the Grasberg Block Cave underground mine is expected to commence in 2018, and production from the Big Gossan underground mine has restarted.

 
c. On November 16, 2016, FCX completed the sale of its interest in the Tenke mine.

III

FREEPORT-McMoRan INC.
SELECTED U.S. OIL AND GAS OPERATING DATA
 
 
 
 
Three Months Ended December 31,
 
 
Sales Volumes
 
Sales per Day
 
 
2016
 
2015
 
2016
 
2015
 
Gulf of Mexico (GOM)a
 
 
 
 
 
 
 
 
Oil (thousand barrels or MBbls)
5,436

 
5,796

 
59

 
63

 
Natural gas (million cubic feet or MMcf)
10,370

 
9,731

 
113

 
106

 
Natural gas liquids (NGLs, in MBbls)
42

 
576

 
1

 
6

 
Thousand barrels of oil equivalents (MBOE)
7,207

 
7,994

 
78

 
87

 
Average realized price per BOEb
$
39.75

 
$
32.65

 
 
 
 
 
Cash production costs per BOEb
$
11.38

 
$
11.94

 
 
 
 
 
Capital expenditures (in millions)
$
38

 
$
619

 
 
 
 
 
 
 
 
 
 
 
 
 
 
CALIFORNIAa
 
 
 
 
 
 
 
 
Oil (MBbls)
2,836

 
3,162

 
31

 
34

 
Natural gas (MMcf)
456

 
490

 
5

 
5

 
NGLs (MBbls)
34

 
38

 
—

c 
1

 
MBOE
2,947

 
3,282

 
32

 
36

 
Average realized price per BOEb
$
42.88

 
$
32.44

 
 
 
 
 
Cash production costs per BOEb
$
22.01

 
$
30.53

 
 
 
 
 
Capital expenditures (in millions)
$
9

 
$
18

 
 
 
 
 
 
 
 
 
 
 
 
 
 
HAYNESVILLE/MADDEN/OTHERd
 
 
 
 
 
 
 
 
Oil (MBbls)
1

 
38

 
—

c 
1

 
Natural gas (MMcf)
2,026

 
11,317

 
22

 
123

 
NGLs (MBbls)
—

 
11

 
—

c 
—

c 
MBOE
338

 
1,935

 
4

 
21

 
Average realized price per BOEb
$
16.13

 
$
13.11

 
 
 
 
 
Cash production costs per BOEb
$
19.24

 
$
9.37

 
 
 
 
 
Capital expenditures (in millions)
$
—

 
$
(1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL U.S. OIL AND GAS OPERATIONS
 
 
 
 
 
 
 
 
Oil (MBbls)
8,273

 
8,996

 
90

 
98

 
Natural gas (MMcf)
12,852

 
21,538

 
140

 
234

 
NGLs (MBbls)
76

 
625

 
1

 
7

 
MBOE
10,492

e 
13,211

 
114

e 
144

 
Cash operating margin per BOE:b
 
 
 
 
 
 
 
 
Realized revenue
$
39.88

f 
$
37.49

f 
 
 
 
 
Less: cash production costs
14.62

 
16.17

 
 
 
 
 
Cash operating margin
$
25.26

 
$
21.32

 
 
 
 
 
Depreciation, depletion and amortization per BOE
$
16.51

 
$
25.61

 
 
 
 
 
Capital expenditures (in millions)
$
99

g 
$
518

g 
 
 
 
 
a.
In December 2016, FCX completed the sales of the Deepwater GOM and onshore California properties.
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 XV, which are available on FCX's website, “www.fcx.com.”
c.
Rounds to less than 1 MBbl per day.
d.
In July 2016, FCX completed the sale of its Haynesville shale assets. In January 2017, FCX entered into an agreement to sell its interests in the Madden area, which is expected to close first-quarter 2017.
e.
Includes sales of 8.7 MMBOE (94 MBOE per day) from the Deepwater GOM and onshore California oil and gas properties that were sold in December 2016.
f.
Includes realized cash gains on oil and gas derivative contracts of $0.57 per BOE for fourth-quarter 2016 and $7.76 per BOE for fourth-quarter 2015. FCX entered into the 2016 contracts as part of the terms to sell the onshore California properties; these contracts were assumed by the buyer at the completion of the sale. The 2015 contracts were managed on a consolidated basis; accordingly, fourth-quarter 2015 average realized prices per BOE by region do not reflect adjustments for crude oil derivative contracts.
g.
Consolidated capital expenditures for U.S. oil and gas operations reflect total spending, which includes accrual and other adjustments totaling $52 million for fourth-quarter 2016 and $(118) million for fourth-quarter 2015, that are not specifically allocated to the above regions. Excludes international oil and gas capital expenditures, primarily related to Morocco, totaling $19 million for fourth-quarter 2015.

IV

FREEPORT-McMoRan INC.
SELECTED U.S. OIL AND GAS OPERATING DATA (continued)
 
 
 
 
Years Ended December 31,
 
 
Sales Volumes
 
Sales per Day
 
 
2016
 
2015
 
2016
 
2015
 
GOMa
 
 
 
 
 
 
 
 
Oil (MBbls)
22,906

 
22,161

 
63

 
61

 
Natural gas (MMcf)
39,004

 
35,878

 
107

 
98

 
NGLs (MBbls)
1,680

 
2,209

 
5

 
6

 
MBOE
31,087

 
30,350

 
85

 
83

 
Average realized price per BOEb
$
34.09

 
$
39.81

 
 
 
 
 
Cash production costs per BOEb
$
12.20

 
$
15.46

 
 
 
 
 
Capital expenditures (in millions)
$
595

 
$
2,630

 
 
 
 
 
 
 
 
 
 
 
 
 
 
CALIFORNIAa
 
 
 
 
 
 
 
 
Oil (MBbls)
11,382

 
12,935

 
31

 
35

 
Natural gas (MMcf)
1,779

 
2,154

 
5

 
6

 
NGLs (MBbls)
138

 
166

 
—

c 
1

 
MBOE
11,817

 
13,460

 
32

 
37

 
Average realized price per BOEb
$
35.52

 
$
39.92

 
 
 
 
 
Cash production costs per BOEb
$
24.43

 
$
30.66

 
 
 
 
 
Capital expenditures (in millions)
$
31

 
$
90

 
 
 
 
 
 
 
 
 
 
 
 
 
 
HAYNESVILLE/MADDEN/OTHERd
 
 
 
 
 
 
 
 
Oil (MBbls)
83

 
158

 
—

c 
—

c 
Natural gas (MMcf)
24,302

 
51,626

 
66

 
142

 
NGLs (MBbls)
21

 
50

 
—

c 
—

c 
MBOE
4,154

 
8,812

 
11

 
24

 
Average realized price per BOEb
$
12.98

 
$
15.77

 
 
 
 
 
Cash production costs per BOEb
$
11.26

 
$
11.02

 
 
 
 
 
Capital expenditures (in millions)
$
2

 
$
28

 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL U.S. OIL AND GAS OPERATIONS
 
 
 
 
 
 
 
 
Oil (MBbls)
34,371

 
35,254

 
94

 
96

 
Natural gas (MMcf)
65,085

 
89,658

 
178

 
246

 
NGLs (MBbls)
1,839

 
2,425

 
5

 
7

 
MBOE
47,058

 
52,622

 
128

 
144

 
Cash operating margin per BOE:b
 
 
 
 
 
 
 
 
Realized revenue
$
32.59

e 
$
43.54

e 
 
 
 
 
Less: cash production costs
15.19

 
18.59

 
 
 
 
 
Cash operating margin
$
17.40

 
$
24.95

 
 
 
 
 
Depreciation, depletion and amortization per BOE
$
18.47

 
$
34.28

 
 
 
 
 
Capital expenditures (in millions)
$
1,127

f 
$
2,948

f 
 
 
 
 
a.
In December 2016, FCX completed the sales of its Deepwater GOM and onshore California properties.
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 XV, which are available on FCX's website, “www.fcx.com.”
c.
Rounds to less than 1 MBbl per day.
d.
In July 2016, FCX completed the sale of its Haynesville shale assets. In January 2017, FCX entered into an agreement to sell its interests in the Madden area, which is expected to close first-quarter 2017.
e.
Includes realized cash gains on oil and gas derivative contracts of $0.13 per BOE for the year 2016 and $7.72 per BOE for the year 2015. FCX entered into the 2016 contracts as part of the terms to sell the onshore California properties; these contracts were assumed by the buyer at the completion of the sale. The 2015 contracts were managed on a consolidated basis; accordingly, the year 2015 average realized prices per BOE by region do not reflect adjustments for crude oil derivative contracts.
f.
Consolidated capital expenditures for U.S. oil and gas operations reflect total spending, which includes changes in capital expenditure accruals and other adjustments totaling $499 million for the year ended 2016, and $200 million for the year ended 2015 that are not specifically allocated to the above regions. Excludes international oil and gas capital expenditures totaling $47 million for the year 2016 and $100 million for the year 2015, primarily related to the Morocco oil and gas properties.

V


FREEPORT-McMoRan INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Years Ended
 
 
December 31,
 
December 31,
 
 
2016
 
2015
 
2016
 
2015
 
 
(In Millions, Except Per Share Amounts)
 
Revenuesa
$
4,377

 
$
3,516

 
$
14,830

 
$
14,607

 
Cost of sales:
 
 
 
 
 
 
 
 
Production and deliveryb
2,740

 
2,831

 
10,697

 
10,693

 
Depreciation, depletion and amortization
593

 
718

 
2,530

 
3,240

 
Impairment of oil and gas properties
—

 
3,702

 
4,317

 
13,144

 
Metals inventory adjustments
9

 
184

 
36

 
338

 
Total cost of sales
3,342

 
7,435

 
17,580

 
27,415

 
Selling, general and administrative expenses
199

c 
137

 
607

c 
558

 
Mining exploration and research expenses
18

 
24

 
64

 
107

 
Environmental obligations and shutdown costs
2

 
17

 
20

 
78

 
Net loss (gain) on sales of assets
113

d 
—

 
(649
)
d 
(39
)
 
Total costs and expenses
3,674

 
7,613

 
17,622

 
28,119

 
Operating income (loss)
703

 
(4,097
)
 
(2,792
)
 
(13,512
)
 
Interest expense, nete
(181
)
 
(179
)
 
(755
)
 
(617
)
 
Net (loss) gain on exchanges and early extinguishment of debt
(25
)
 
—

 
26

 
—

 
Other (expense) income, net
(5
)
 
(1
)
 
49

 
1

 
Income (loss) from continuing operations before income taxes and equity in affiliated companies' net earnings (losses)
492

 
(4,277
)
 
(3,472
)
 
(14,128
)
 
(Provision for) benefit from income taxesf
(292
)
 
189

 
(371
)
 
1,951

 
Equity in affiliated companies' net earnings (losses)
2

 
(2
)
 
11

 
(3
)
 
Net income (loss) from continuing operations
202

 
(4,090
)
 
(3,832
)
 
(12,180
)
 
Net (loss) income from discontinued operationsg
(2
)
 
(4
)
 
(193
)
 
91

 
Net income (loss)
200

 
(4,094
)
 
(4,025
)
 
(12,089
)
 
Net (income) loss attributable to noncontrolling interests:
 
 
 
 
 
 
 
 
Continuing operations
(81
)
 
34

 
(227
)
 
(27
)
 
Discontinued operations
(19
)
 
(11
)
 
(63
)
 
(79
)
 
Gain on redemption and preferred dividends attributable to redeemable noncontrolling interest
192

 
(10
)
 
161

 
(41
)
 
Net income (loss) attributable to FCX common stockh
$
292

 
$
(4,081
)
 
$
(4,154
)
 
$
(12,236
)
 
 
 
 
 
 
 
 
 
 
Basic and diluted net income (loss) per share attributable to common stockholders:
 
 
 
 
 
 
 
 
Continuing operations
$
0.22

 
$
(3.46
)
 
$
(2.96
)
 
$
(11.32
)
 
Discontinued operations
(0.01
)
 
(0.01
)
 
(0.20
)
 
0.01

 
 
$
0.21

 
$
(3.47
)
 
$
(3.16
)
 
$
(11.31
)
 
 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
1,403

 
1,177

 
1,318

 
1,082

 
Diluted
1,410

 
1,177

 
1,318

 
1,082

 
 
 
 
 
 
 
 
 
 
Dividends declared per share of common stock
$
—

 
$
—

 
$
—

 
$
0.2605

 
 
 
 
 
 
 
 
 
 
a.
Revenues include (i) adjustments to provisionally priced concentrate and cathode copper sales recognized in prior periods, which are summarized in the supplemental schedule, "Derivative Instruments" beginning on page XI, and (ii) net noncash mark-to-market losses associated with oil derivative contracts, which are summarized in the supplemental schedule, "Adjusted Net Income (Loss)," beginning on page IX.
b.
Includes net charges (i) at oil and gas operations associated with contract termination costs, drillship settlements/idle rig costs, inventory adjustments, asset impairments and other net charges and (ii) at mining operations for asset retirement/impairment, restructuring and other net charges. Refer to the supplemental schedule, "Adjusted Net Income (Loss)," beginning on page IX for a summary of these charges.
c.
Includes restructuring charges at oil and gas operations, which are summarized in the supplemental schedule, "Adjusted Net Income (Loss)," beginning on page IX.
d.
Includes gains totaling $183 million for (i) contingent payments associated with the sale of the Deepwater GOM oil and gas properties and (ii) the fair value of contingent consideration associated with the sale of the onshore California oil and gas properties, which in accordance with accounting guidelines will continue to be adjusted through December 31, 2020.
e.
Consolidated interest expense, excluding capitalized interest, totaled $207 million in fourth-quarter 2016, $210 million in fourth-quarter 2015, $854 million for the year 2016 and $832 million for the year 2015.
f.
Refer to the supplemental schedule, "Income Taxes," on page XI for a summary of FCX's (provision for) benefit from income taxes.
g.
Reflects the results of TF Holdings Limited (TFHL) through November 16, 2016, and includes charges for allocated interest expense associated with FCX's term loan that was required to be repaid as a result of the sale of FCX's interest in TFHL. The fourth quarter and year 2016 also include a loss on disposal. For a summary of the components of net (loss) income from discontinued operations, refer to the supplemental schedules on pages XXVIII to XXXI.
h.
FCX defers recognizing profits on intercompany sales until final sales to third parties occur. Refer to the supplemental schedule, "Deferred Profits," on page XII for a summary of net impacts from changes in these deferrals.

VI


FREEPORT-McMoRan INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
 
 
 
 
 
 
December 31,
 
 
2016
 
2015
 
 
(In Millions)
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
$
4,245

 
$
177

 
Trade accounts receivable
1,126

 
645

 
Income and other tax receivables
879

 
1,332

 
Other accounts receivable
89

 
152

 
Inventories:
 
 
 
 
Mill and leach stockpiles
1,338

 
1,539

 
Materials and supplies, net
1,306

 
1,575

 
Product
998

 
961

 
Other current assets
110

 
161

 
Held for sale
344

 
920

 
Total current assets
10,435

 
7,462

 
Property, plant, equipment and mine development costs, net
23,219

 
23,986

 
Oil and gas properties - full cost method:
 
 
 
 
Subject to amortization, less accumulated amortization
74

 
2,262

 
Not subject to amortization
—

 
4,831

 
Long-term mill and leach stockpiles
1,633

 
1,663

 
Other assets
1,956

 
1,987

 
Held for sale
—

 
4,386

 
Total assets
$
37,317

 
$
46,577

 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable and accrued liabilities
$
2,393

 
$
3,232

 
Current portion of debt
1,232

 
649

 
Current portion of environmental and asset retirement obligations
369

 
272

 
Accrued income taxes
66

 
23

 
Held for sale
205

 
131

 
Total current liabilities
4,265

 
4,307

 
Long-term debt, less current portion
14,795

 
19,675

 
Deferred income taxes
3,768

 
3,567

 
Environmental and asset retirement obligations, less current portion
3,487

 
3,714

 
Other liabilities
1,745

 
1,641

 
Held for sale
—

 
865

 
Total liabilities
28,060

 
33,769

 
 
 
 
 
 
Redeemable noncontrolling interest
—

 
764

 
 
 
 
 
 
Equity:
 
 
 
 
FCX stockholders' equity:
 
 
 
 
Common stock
157

 
137

 
Capital in excess of par value
26,690

 
24,283

 
Accumulated deficit
(16,540
)
 
(12,387
)
 
Accumulated other comprehensive loss
(548
)
 
(503
)
 
Common stock held in treasury
(3,708
)
 
(3,702
)
 
Total FCX stockholders' equity
6,051

 
7,828

 
Noncontrolling interests
3,206

 
4,216

 
Total equity
9,257

 
12,044

 
Total liabilities and equity
$
37,317

 
$
46,577

 
 
 
 
 
 


VII


FREEPORT-McMoRan INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 
 
 
 
 
 
 
 
 
 
Years Ended December 31,
 
 
 
2016
 
2015
 
 
 
(In Millions)
 
Cash flow from operating activities:
 
 
 
 
 
Net loss
 
$
(4,025
)
 
$
(12,089
)
 
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
 
 
Depreciation, depletion and amortization
 
2,610

 
3,497

 
Impairment of oil and gas properties
 
4,317

 
13,144

 
Non-cash drillship settlements and other contract terminations
 
689

 
—

 
Metals inventory adjustments
 
36

 
338

 
Asset impairments, inventory adjustments, restructuring and other
 
134

 
256

 
Net gain on sales of assets
 
(649
)
 
(39
)
 
Stock-based compensation
 
86

 
85

 
Net charges for environmental and asset retirement obligations, including accretion
 
191

 
209

 
Payments for environmental and asset retirement obligations
 
(242
)
 
(198
)
 
Net gain on exchanges and early extinguishment of debt
 
(26
)
 
—

 
Deferred income taxes
 
239

 
(2,039
)
 
Loss on disposal of discontinued operations
 
198

 
—

 
Decrease (increase) in long-term mill and leach stockpiles
 
10

 
(212
)
 
Net loss (gain) on oil and gas derivative contracts
 
35

 
(87
)
 
Other, net
 
69

 
(18
)
 
Changes in working capital and other tax payments, excluding amounts from dispositions:
 
 
 
 

 
Accounts receivable
 
(175
)
 
813

 
Inventories
 
117

 
379

 
Other current assets
 
37

 
97

 
Accounts payable and accrued liabilities
 
(28
)
 
(217
)
 
Accrued income taxes and changes in other tax payments
 
106

 
(699
)
 
Net cash provided by operating activities
 
3,729

 
3,220

 
 
 
 
 
 
 
Cash flow from investing activities:
 
 
 
 
 
Capital expenditures:
 
 
 
 
 
North America copper mines
 
(102
)
 
(355
)
 
South America
 
(382
)
 
(1,722
)
 
Indonesia
 
(1,025
)
 
(901
)
 
Molybdenum mines
 
(2
)
 
(13
)
 
U.S. oil and gas operations
 
(1,127
)
 
(2,948
)
 
Other
 
(175
)
 
(414
)
 
Proceeds from sales of:
 
 
 
 
 
Deepwater GOM and onshore California oil and gas properties
 
2,272

 
—

 
Interest in TFHL
 
2,664

 
—

 
Additional interest in Morenci
 
996

 
—

 
Other assets
 
423

 
160

 
Other, net
 
8

 
(53
)
 
Net cash provided by (used in) investing activities
 
3,550

 
(6,246
)
 
 
 
 
 
 
 
Cash flow from financing activities:
 
 
 
 
 
Proceeds from debt
 
3,681

 
8,272

 
Repayments of debt
 
(7,625
)
 
(6,677
)
 
Net proceeds from sale of common stock
 
1,515

 
1,936

 
Cash dividends and distributions paid:
 
 
 
 
 
Common stock
 
(6
)
 
(605
)
 
Noncontrolling interests, including redemption
 
(693
)
 
(120
)
 
Stock-based awards net payments, including excess tax benefit
 
(6
)
 
(4
)
 
Debt financing costs and other, net
 
(32
)
 
(16
)
 
Net cash (used in) provided by financing activities
 
(3,166
)
 
2,786

 
Net increase (decrease) in cash and cash equivalents
 
4,113

 
(240
)
 
(Increase) decrease in cash and cash equivalents in assets held for sale
 
(45
)
 
119

 
Cash and cash equivalents at beginning of year
 
177

 
298

 
Cash and cash equivalents at end of year
 
$
4,245

 
$
177

 
 
 
 
 
 
 



VIII


FREEPORT-McMoRan INC.
ADJUSTED NET INCOME (LOSS)

Adjusted net income (loss) is intended to provide investors and others with information about FCX's recurring operating performance. This information differs from net income (loss) attributable to common stock determined in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. FCX's adjusted net income (loss) follows, which may not be comparable to similarly titled measures reported by other companies (in millions, except per share amounts).
 
Three Months Ended December 31,
 
 
2016
 
2015
 
 
Pre-tax
 
After-tax
 
Per Share
 
Pre-tax
 
After-tax
 
Per Share
 
Net income (loss) attributable to common stock
N/A

 
$
292

 
$
0.21

 
N/A

 
$
(4,081
)
 
$
(3.47
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net noncash mark-to-market losses on oil derivative contracts
$
(41
)
a 
$
(41
)
 
$
(0.03
)
 
$
(102
)
 
$
(63
)
 
$
(0.05
)
 
Impairment of oil and gas properties
—

 
—

 
—

 
(3,702
)
 
(3,743
)
 
(3.18
)
 
Other oil and gas (charges) credits:
 
 
 
 
 
 
 
 
 
 
 
 
Drillship settlements/idle rig and contract termination costs
(103
)
b 
(103
)
 
(0.07
)
 
(13
)
 
(8
)
 
(0.01
)
 
Inventory adjustments, asset impairment and other net credits (charges)
8

 
8

 
0.01

 
(116
)
 
(73
)
 
(0.06
)
 
Net restructuring charges
(47
)
 
(47
)
 
(0.03
)
 
—

 
—

 
—

 
Mining charges:
 
 
 
 
 
 
 
 
 
 
 
 
Metals inventory adjustments
(9
)
 
(9
)
 
(0.01
)
 
(184
)
 
(118
)
 
(0.10
)
 
Asset impairment, restructuring and other net charges
(16
)
 
(6
)
 
—

 
(53
)
 
(34
)
 
(0.03
)
 
Charges for executive retirement benefits
—

 
—

 
—

 
(18
)
 
(12
)
 
(0.01
)
 
Adjustments to environmental obligations and related litigation reserves
5

 
5

 
—

 
(7
)
 
(5
)
 
—

 
Net loss on sales of assets
(113
)
c 
(108
)
 
(0.08
)
 
—

 
—

 
—

 
Net loss on exchanges and early extinguishment of debt
(25
)
 
(25
)
 
(0.02
)
 
—

 
—

 
—

 
Net tax credits
N/A

 
84

d 
0.06

 
N/A

 
—

 
—

 
Loss on disposal of discontinued operations
(16
)
e 
(16
)
 
(0.01
)
 
—

 
—

 
—

 
Gain on redemption of redeemable
    noncontrolling interest
199

f 
199

 
0.14

 
—

 
—

—

—

 
 
$
(158
)
 
$
(59
)
 
$
(0.04
)
 
$
(4,195
)
 
$
(4,056
)
 
$
(3.45
)
g 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted net income (loss) attributable to common stock
N/A
 
$
351

 
$
0.25

 
N/A
 
$
(25
)
 
$
(0.02
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
As part of the terms to sell the onshore California oil and gas properties, FCX entered into derivative contracts for a portion of projected oil sales; these contracts were assumed by the buyer at completion of the sale.
b.
Includes $5 million for fair value adjustments of contingent payments related to drillship settlements, which in accordance with accounting guidelines will continue to be adjusted through June 30, 2017.
c.
Primarily reflects estimated losses associated with the potential Freeport Cobalt and Kisanfu transactions. Also includes gains totaling $183 million for contingent consideration associated with the oil and gas transactions, including (i) $150 million for contingent payments related to the Deepwater GOM sale, which is payable to FCX as the buyer realizes future cash flows in connection with a third-party production handling agreement, and (ii) $33 million for the fair value of the potential $150 million in contingent consideration related to the onshore California sale, which in accordance with accounting guidelines will continue to be adjusted through December 31, 2020.
d.
For further discussion of net tax credits impacting fourth-quarter 2016, refer to "Income Taxes," on page XI.
e.
Primarily reflects a charge of $33 million associated with the settlement agreement entered into with La Générale des Carrières et des Mines (Gécamines) resulting in a resolution of all claims brought by Gécamines against FCX, partly offset by a gain of $13 million for the fair value of the potential $120 million in contingent consideration, which in accordance with accounting guidelines will continue to be adjusted through December 31, 2019.
f.
Represents a gain on the settlement of FCX's preferred stock obligation at its Plains Offshore Operations Inc. subsidiary.
g.
Per share amounts do not foot down because of rounding.


IX


FREEPORT-McMoRan INC.
ADJUSTED NET INCOME (LOSS) (continued)
 
Years Ended December 31,
 
 
2016
 
2015
 
 
Pre-tax
 
After-tax
 
Per Share
 
Pre-tax
 
After-tax
 
Per Share
 
Net loss attributable to common stock
N/A

 
$
(4,154
)
 
$
(3.16
)
 
N/A

 
$
(12,236
)
 
$
(11.31
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net noncash mark-to-market losses on oil derivative contracts
$
(41
)
a 
$
(41
)
 
$
(0.03
)
 
$
(319
)
 
$
(198
)
 
$
(0.18
)
 
Impairment of oil and gas properties
(4,317
)
 
(4,317
)
 
(3.28
)
 
(13,144
)
 
(11,598
)
 
(10.72
)
 
Other oil and gas charges:
 
 
 
 
 
 
 
 
 
 
 
 
Drillship settlements/idle rig and contract termination costs
(926
)
b 
(926
)
 
(0.70
)
 
(26
)
 
(16
)
 
(0.01
)
 
Inventory adjustments, asset impairment and other net charges
(111
)
 
(111
)
 
(0.08
)
 
(162
)
 
(101
)
 
(0.10
)
 
Net restructuring charges
(85
)
 
(85
)
 
(0.06
)
 
—

 
—

 
—

 
Mining net charges:
 
 
 
 
 
 
 
 
 
 
 
 
Metals inventory adjustments
(36
)
 
(36
)
 
(0.03
)
 
(338
)
 
(217
)
 
(0.20
)
 
Asset retirement/impairment, restructuring and other net charges
(33
)
 
(14
)
 
(0.01
)
 
(145
)
 
(90
)
 
(0.08
)
 
Charges for executive retirement benefits
—

 
—

 
—

 
(18
)
 
(12
)
 
(0.01
)
 
Adjustments to environmental obligations and related litigation reserves
16

 
16

 
0.01

 
(43
)
 
(28
)
 
(0.03
)
 
Net gain on sales of assets
649

c 
649

 
0.49

 
39

 
25

 
0.02

 
Net gain on exchanges and early extinguishment of debt
26

 
26

 
0.02

 
—

 
—

 
—

 
Gain on shareholder derivative litigation settlement
—

 
—

 
—

 
92

 
92

 
0.09

 
Net tax credits
N/A

 
374

d 
0.28

 
N/A

 
—

 
—

 
Loss on disposal of discontinued operations
(198
)
e 
(198
)
 
(0.15
)
 
—

 
—

 
—

 
Gain on redemption of redeemable
    noncontrolling interest
199

f 
199

 
0.15

 
—

 
—

 
—

 
 
$
(4,857
)
 
$
(4,464
)
 
$
(3.39
)
 
$
(14,064
)
 
$
(12,143
)
 
$
(11.22
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted net income (loss) attributable to common stock
N/A
 
$
310

 
$
0.23

 
N/A
 
$
(93
)
 
$
(0.09
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
As part of the terms to sell the onshore California oil and gas properties, FCX entered into derivative contracts for a portion of projected oil sales; these contracts were assumed by the buyer at completion of the sale.
b.
Includes $23 million for the fair value of contingent payments related to drillship settlements, which in accordance with accounting guidelines will continue to be adjusted through June 30, 2017.
c.
Primarily reflects gains associated with the Morenci and Timok transactions, partly offset by estimated losses associated with the potential Freeport Cobalt and Kisanfu transactions. Also includes gains totaling $183 million for contingent consideration associated with the oil and gas transactions, including (i) $150 million for contingent payments related to the Deepwater GOM sale, which is payable to FCX as the buyer realizes future cash flows in connection with a third-party production handling agreement and (ii) $33 million for the fair value of the potential $150 million in contingent consideration related to the onshore California sale, which in accordance with accounting guidelines will continue to be adjusted through December 31, 2020.
d.
For further discussion of the net tax credits impacting the year 2016, refer to "Income Taxes," on page XI.
e.
Includes (i) a charge of $33 million associated with the settlement agreement entered into with Gécamines resulting in a resolution of all claims brought by Gécamines against FCX, and (ii) a gain of $13 million for the fair value of the potential $120 million in contingent consideration, which in accordance with accounting guidelines will continue to be adjusted through December 31, 2019.
f.
Represents a gain on the settlement of FCX's preferred stock obligation at its Plains Offshore Operations Inc. subsidiary.




X


FREEPORT-McMoRan INC.
INCOME TAXES
Following is a summary of the approximate amounts used in the calculation of FCX's consolidated income tax (provision) benefit for the fourth quarters and years ended 2016 and 2015 (in millions, except percentages):
 
Three Months Ended December 31,
 
 
2016
 
2015
 
 
 
 
 
 
Income Tax
 
 
 
 
 
Income Tax
 
 
Income
 
Effective
 
(Provision)
 
Income
 
Effective
 
(Provision)
 
 
(Loss)a
 
Tax Rate
 
Benefit
 
(Loss)a
 
Tax Rate
 
Benefit
 
U.S.
$
(249
)
 
26%
 
$
65

b 
$
(593
)
 
48%
 
$
285

 
South America
211

 
48%
 
(102
)
c 
(116
)
 
24%
 
28

 
Indonesia
514

 
45%
 
(230
)
 
103

 
49%
 
(50
)
 
Impairment of oil and gas properties
—

 
N/A
 
—

 
(3,702
)
 
37%
 
1,387

 
Valuation allowance, netd
—

 
N/A
 
—

 
—

 
N/A
 
(1,428
)
 
Eliminations and other
16

 
N/A
 
(24
)
 
31

 
N/A
 
(46
)
 
Rate adjustmente
—

 
N/A
 
(1
)
 
—

 
N/A
 
13

 
Continuing operations
$
492

 
59%
 
$
(292
)
 
$
(4,277
)
 
4%
 
$
189

 
 
Years Ended December 31,
 
 
2016
 
2015
 
 
 
 
 
 
Income Tax
 
 
 
 
 
Income Tax
 
 
Income
 
Effective
 
(Provision)
 
Income
 
Effective
 
(Provision)
 
 
(Loss)a
 
Tax Rate
 
Benefit
 
(Loss)a
 
Tax Rate
 
Benefit
 
U.S.
$
(865
)
 
41%
 
$
357

b 
$
(1,626
)
f 
44%
 
$
720

 
South America
501

 
43%
 
(216
)
c 
(40
)
 
(10)%
 
(4
)
 
Indonesia
1,058

 
42%
 
(442
)
 
430

 
45%
 
(195
)
 
Impairment of oil and gas properties
(4,317
)
 
38%
 
1,632

 
(13,144
)
 
37%
 
4,884

 
Valuation allowance, netd
—

 
N/A
 
(1,632
)
 
—

 
N/A
 
(3,338
)
 
Eliminations and other
151

 
N/A
 
(70
)
 
252

 
N/A
 
(116
)
 
Continuing operations
$
(3,472
)
 
(11)%
g 
$
(371
)
 
$
(14,128
)
 
14%
 
$
1,951

 
a.
Represents income (loss) from continuing operations by geographic location before income taxes and equity in affiliated companies' net earnings (losses).
b.
Includes net tax credits of $67 million in fourth-quarter 2016 and $357 million for the year 2016 associated with alternative minimum tax credits, changes to valuation allowances and net operating loss carryback claims.
c.
Includes a net tax credit of $13 million ($17 million net of noncontrolling interests) related to changes in Peruvian tax rules.
d.
As a result of the impairment to U.S. oil and gas properties, FCX recorded tax charges to establish valuation allowances against U.S. federal and state deferred tax assets that will not generate a future benefit.
e.
In accordance with applicable accounting rules, FCX adjusts its interim provision for income taxes equal to its consolidated tax rate.
f.
Includes a gain of $92 million related to net proceeds received from insurance carriers and other third parties related to the shareholder derivative litigation settlement for which there was no related tax provision.
g.
The consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which FCX operates. Accordingly, variations in the relative proportions of jurisdictional income result in fluctuations to FCX's consolidated effective income tax rate. Assuming achievement of current sales volume and cost estimates and average prices of $2.50 per pound for copper, $1,200 per ounce for gold and $7.00 per pound for molybdenum, FCX estimates its consolidated effective tax rate for the year 2017 will approximate 46 percent and would decrease with higher prices.

DERIVATIVE INSTRUMENTS
Provisional Pricing. For the year 2016, FCX's mined copper (excluding volumes from Tenke) was sold 58 percent in concentrate, 21 percent as cathode and 21 percent as rod from North America operations. Under the long-established structure of sales agreements prevalent in the industry, copper contained in concentrates and cathodes is provisionally priced at the time of shipment. The provisional prices are finalized in a contractually specified future month (generally one to four months from the shipment date) primarily based on quoted monthly average spot copper prices on the London Metal Exchange (LME). Because a significant portion of FCX's copper concentrate and cathode sales in any quarterly period usually remain subject to final pricing, the quarter-end forward price is a major determinant of recorded revenues and the average recorded copper price for the period. LME spot copper prices averaged $2.39 per pound during fourth-quarter 2016, compared to FCX's average realized price (excluding Tenke) of $2.48 per pound.

XI


FREEPORT-McMoRan INC.
DERIVATIVE INSTRUMENTS (continued)
Following is a summary of the favorable (unfavorable) impacts of net adjustments to prior periods' provisionally priced copper sales for the fourth quarters and years ended 2016 and 2015 (in millions, except per share amounts):
 
Three Months Ended
 
Years Ended
 
December 31,
 
December 31,
 
2016
 
2015
 
2016
 
2015
Revenues
$
129

 
$
(70
)
 
$
5

 
$
(100
)
Net income attributable to common stock (continuing operations)
$
57

 
$
(37
)
 
$
2

 
$
(50
)
Net income per share of common stock (continuing operations)
$
0.04

 
$
(0.03
)
 
$
—

 
$
(0.05
)
At December 31, 2016, FCX had provisionally priced copper sales at its copper mining operations totaling 466 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $2.51 per pound, subject to final pricing over the next several months. FCX estimates that each $0.05 change in the price realized from the December 31, 2016, provisional price recorded would have an approximate $15 million effect on 2017 net income attributable to common stock. The LME spot copper price closed at $2.67 per pound on January 24, 2017.

DEFERRED PROFITS
FCX defers recognizing profits on sales from its mining operations to Atlantic Copper and on 25 percent of PT Freeport Indonesia's (PT-FI) sales to PT Smelting (PT-FI's 25 percent-owned Indonesian smelting unit) until final sales to third parties occur. Changes in these deferrals attributable to variability in intercompany volumes resulted in net (reductions) additions to net income attributable to common stock totaling $(15) million in fourth-quarter 2016, $4 million in fourth-quarter 2015, $(8) million for the year 2016 and $42 million for the year 2015. FCX's net deferred profits on its inventories at Atlantic Copper and PT Smelting to be recognized in future periods' net income attributable to common stock totaled $43 million at December 31, 2016. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices will result in variability in FCX's net deferred profits and quarterly earnings.

BUSINESS SEGMENTS
FCX has organized its mining operations into four primary divisions – North America copper mines, South America mining, Indonesia mining and Molybdenum mines, and operating segments that meet certain thresholds are reportable segments. For oil and gas operations, FCX determines its operating segments on a country-by-country basis. Separately disclosed in the following tables are FCX's reportable segments, which include the Morenci, Cerro Verde and Grasberg copper mines, the Rod & Refining operations and the U.S. Oil & Gas operations.
FCX’s reportable segments previously included Africa mining, which consisted of the Tenke mine. On November 16, 2016, FCX completed the sale of its effective interest in Tenke, which has been removed from continuing operations and reported as discontinued operations for all periods presented.
On May 31, 2016, FCX completed the sale of an additional 13 percent undivided joint venture interest in the Morenci unincorporated joint venture. As a result, FCX’s undivided interest in Morenci was prospectively reduced from 85 percent to 72 percent.
Intersegment sales between FCX’s mining operations are based on similar arms-length transactions with third parties at the time of the sale. Intersegment sales may not be reflective of the actual prices ultimately realized because of a variety of factors, including additional processing, timing of sales to unaffiliated customers and transportation premiums. In addition, intersegment sales from Tenke to FCX's other consolidated subsidiaries have been eliminated in discontinued operations.
FCX allocates certain operating costs, expenses and capital expenditures to its operating divisions and individual segments. However, not all costs and expenses applicable to an operation are allocated. U.S. federal and state income taxes are recorded and managed at the corporate level (included in Corporate, Other & Eliminations), whereas foreign income taxes are recorded and managed at the applicable country level. In addition, most mining exploration and research activities are managed on a consolidated basis, and those costs along with some selling, general and administrative costs are not allocated to the operating divisions or individual segments. Accordingly, the following segment information reflects management determinations that may not be indicative of what the actual financial performance of each operating division or segment would be if it was an independent entity.


XII


FREEPORT-McMoRan INC.
BUSINESS SEGMENTS (continued)
(In millions)
Mining Operationsa
 
 
 
 
 
 
 
North America Copper Mines
 
South America
 
Indonesia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic
 
Other
 
 
 
 
 
Corporate,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Molyb-
 
 
 
Copper
 
Mining
 
 
 
U.S.
 
Other
 
 
 
 
 
Other
 
 
 
Cerro
 
Other
 
 
 
 
 
denum
 
Rod &
 
Smelting
 
& Elimi-
 
Total
 
Oil & Gas
 
& Elimi-
 
FCX
 
Morenci
 
Mines
 
Total
 
Verde
 
Mines
 
Total
 
Grasberg
 
Mines
 
Refining
 
& Refining
 
nations
 
Mining
 
Operations
 
nations
 
Total
Three Months Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers
$
88

 
$
29

 
$
117

 
$
756

 
$
131

 
$
887

 
$
1,219

b 
$
—

 
$
1,013

 
$
465

 
$
295

c 
$
3,996

 
$
381

d 
$
—

 
$
4,377

Intersegment
392

 
585

 
977

 
32

 
—

 
32

 
3

 
50

 
7

 
2

 
(1,071
)
 
—

 
—

 
—

 
—

Production and delivery
256

 
429

 
685

 
424

e 
94

 
518

 
566

 
52

 
1,016

 
437

 
(826
)
 
2,448

 
274

f 
18

 
2,740

Depreciation, depletion and amortization
47

 
76

 
123

 
124

 
27

 
151

 
100

 
17

 
3

 
7

 
16

 
417

 
173

 
3

 
593

Metals inventory adjustments
—

 
(5
)
 
(5
)
 
—

 
—

 
—

 
—

 
3

 
—

 
—

 
11

 
9

 
—

 
—

 
9

Selling, general and administrative expenses
—

 
1

 
1

 
3

 
—

 
3

 
30

 
—

 
—

 
4

 
6

 
44

 
93

g 
62

 
199

Mining exploration and research expenses
—

 
1

 
1

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
17

 
18

 
—

 
—

 
18

Environmental obligations and shutdown costs
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
2

 
2

 
—

 
—

 
2

Net loss on sales of assets
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
105

 
105

 
8

 
—

 
113

Operating income (loss)
177

 
112

 
289

 
237

 
10

 
247

 
526

 
(22
)
 
1

 
19

 
(107
)
 
953

 
(167
)
 
(83
)
 
703

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
1

 
—

 
1

 
19

 
—

 
19

 
—

 
—

 
—

 
4

 
20

 
44

 
103

 
34

 
181

Provision for (benefit from) income taxes
—

 
—

 
—

 
96

 
6

 
102

 
230

 
—

 
—

 
—

 
—

 
332

 
—

 
(40
)
 
292

Total assets at December 31, 2016
2,863

 
4,448

 
7,311

 
9,076

 
1,533

 
10,609

 
10,954

 
1,934

 
220

 
658

 
1,444

h 
33,130

 
467

 
3,720

 
37,317

Capital expenditures
6

 
9

 
15

 
50

 
—

 
50

 
319

 
—

 
—

 
5

 
16

i 
405

 
99

 
—

 
504

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers
$
107

 
$
86

 
$
193

 
$
384

 
$
169

 
$
553

 
$
648

b 
$
—

 
$
1,028

 
$
482

 
$
212

c 
$
3,116

 
$
400

 
$
—

 
$
3,516

Intersegment
437

 
587

 
1,024

 
4

 
—

 
4

 
(1
)
 
50

 
9

 
3

 
(1,089
)
 
—

 
—

 
—

 
—

Production and deliverye
406

 
526

 
932

 
275

 
159

 
434

 
497

 
65

 
1,032

 
451

 
(926
)
 
2,485

 
354

f 
(8
)
 
2,831

Depreciation, depletion and amortization
60

 
92

 
152

 
85

 
31

 
116

 
55

 
20

 
2

 
10

 
21

 
376

 
339

 
3

 
718

Impairment of oil and gas properties
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
3,710

 
(8
)
j 
3,702

Metals inventory adjustments

—

 
76

 
76

 
—

 
73

 
73

 
—

 
5

 
—

 
—

 
30

 
184

 
—

 
—

 
184

Selling, general and administrative expenses
1

 
1

 
2

 
1

 
—

 
1

 
29

 
—

 
—

 
3

 
4

 
39

 
48

 
50

 
137

Mining exploration and research expenses
—

 
1

 
1

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
23

 
24

 
—

 
—

 
24

Environmental obligations and shutdown costs
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
17

 
17

 
—

 
—

 
17

Operating income (loss)
77

 
(23
)
 
54

 
27

 
(94
)
 
(67
)
 
66

 
(40
)
 
3

 
21

 
(46
)
 
(9
)
 
(4,051
)
 
(37
)
 
(4,097
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
—

 
1

 
1

 
15

 
—

 
15

 
—

 
—

 
—

 
2

 
18

 
36

 
57

 
86

 
179

Provision for (benefit from) income taxes
—

 
—

 
—

 
13

 
(41
)
 
(28
)
 
50

 
—

 
—

 
—

 
—

 
22

 
—

 
(211
)
 
(189
)
Total assets at December 31, 2015
3,567

 
4,878

 
8,445

 
9,445

 
1,661

 
11,106

 
9,357

 
1,999

 
219

 
612

 
6,417

h 
38,155

 
8,141

 
281

 
46,577

Capital expenditures
29

 
18

 
47

 
378

 
5

 
383

 
250

 
3

 
2

 
5

 
71

i 
761

 
518

k 
19

 
1,298

a.
Excludes the results of Tenke, which is reported as discontinued operations. Net loss from discontinued operations totaled $2 million in fourth-quarter 2016 and $4 million in fourth-quarter 2015. Refer to the supplemental schedules on pages XXVIII and XXIX for a summary of the components of net income (loss) from discontinued operations.
b.
Includes PT-FI's sales to PT Smelting totaling $490 million in fourth-quarter 2016 and $350 million in fourth-quarter 2015.
c.
Includes revenues from FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North and South America copper mines.
d.
Includes net losses of $35 million associated with oil derivative contracts that were entered into as part of the terms to sell the onshore California properties.
e.
Fourth-quarter 2016 includes charges of $16 million at Cerro Verde for social commitments. Fourth-quarter 2015 includes asset impairments and restructuring charges totaling $53 million, consisting of $24 million at North America copper mines, $2 million at South America mines, $5 million at Molybdenum mines, $3 million at Rod & Refining, $18 million at Other Mining & Eliminations and $1 million at Corporate, Other & Eliminations.
f.
Includes net charges for totaling $93 million in fourth-quarter 2016 and $129 million in fourth-quarter 2015, primarily for idle rig and contract termination costs, inventory adjustments and asset impairment and other net charges, which are summarized in the supplemental schedule, "Adjusted Net Income (Loss)," on page IX.
g.
Includes $47 million for net restructuring charges.
h.
Includes assets held for sale totaling $344 million at December 31, 2016, primarily associated with Freeport Cobalt and the Kisanfu exploration project, and $5.3 billion at December 31, 2015, which also includes the Tenke disposal group.
i.
Includes $3 million in fourth-quarter 2016 and $63 million in fourth-quarter 2015 associated with discontinued operations.
j.
Primarily reflects adjustments to the third-quarter 2015 impairment of the Morocco oil and gas properties
k.
Excludes international oil and gas capital expenditures totaling $19 million, primarily related to the Morocco oil and gas properties, which are included in Corporate, Other & Eliminations.


XIII


FREEPORT-McMoRan INC.
BUSINESS SEGMENTS (continued)
(In millions)
Mining Operationsa
 
 
 
 
 
 
 
North America Copper Mines
 
South America
 
Indonesia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Atlantic
 
Other
 
 
 
 
 
Corporate,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Molyb-
 
 
 
Copper
 
Mining
 
 
 
U.S.
 
Other
 
 
 
 
 
Other
 
 
 
Cerro
 
Other
 
 
 
 
 
denum
 
Rod &
 
Smelting
 
& Elimi-
 
Total
 
Oil & Gas
 
& Elimi-
 
FCX
 
Morenci
 
Mines
 
Total
 
Verde
 
Mines
 
Total
 
Grasberg
 
Mines
 
Refining
 
& Refining
 
nations
 
Mining
 
Operations
 
nations
 
Total
Year Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers
$
444

 
$
240

 
$
684

 
$
2,241

 
$
510

 
$
2,751

 
$
3,233

b 
$
—

 
$
3,833

 
$
1,825

 
$
991

c 
$
13,317

 
$
1,513

d 
$
—

 
$
14,830

Intersegment
1,511

 
2,179

 
3,690

 
187

 
—

 
187

 
62

 
186

 
29

 
5

 
(4,159
)
 
—

 
—

 
—

 
—

Production and delivery
1,169

 
1,763

 
2,932

 
1,351

e 
407

 
1,758

 
1,794

e 
199

 
3,836

 
1,712

 
(3,388
)
 
8,843

 
1,801

f 
53

 
10,697

Depreciation, depletion and amortization
217

 
313

 
530

 
443

 
110

 
553

 
384

 
68

 
10

 
29

 
73

 
1,647

 
869

 
14

 
2,530

Impairment of oil and gas properties
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
4,299

 
18

g 
4,317

Metals inventory adjustments

—

 
1

 
1

 
—

 
—

 
—

 
—

 
15

 
—

 
—

 
20

 
36

 
—

 
—

 
36

Selling, general and administrative expenses
2

 
3

 
5

 
8

 
1

 
9

 
90

 
—

 
—

 
17

 
15

 
136

 
254

h 
217

 
607

Mining exploration and research expenses
—

 
3

 
3

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
61

 
64

 
—

 
—

 
64

Environmental obligations and shutdown costs
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
19

 
19

 
—

 
1

 
20

Net (gain) loss on sales of assets
(576
)
 
—

 
(576
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(67
)
 
(643
)
 
1

 
(7
)
 
(649
)
Operating income (loss)
1,143

 
336

 
1,479

 
626

 
(8
)
 
618

 
1,027

 
(96
)
 
16

 
72

 
99

 
3,215

 
(5,711
)
 
(296
)
 
(2,792
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
3

 
1

 
4

 
82

 
—

 
82

 
—

 
—

 
—

 
15

 
80

 
181

 
369

 
205

 
755

Provision for (benefit from) income taxes
—

 
—

 
—

 
222

 
(6
)
 
216

 
442

 
—

 
—

 
—

 
—

 
658

 
—

 
(287
)
 
371

Capital expenditures
77

 
25

 
102

 
380

 
2

 
382

 
1,025

 
2

 
1

 
17

 
109

i 
1,638

 
1,127

j 
48

 
2,813

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaffiliated customers
$
558

 
$
351

 
$
909

 
$
1,065

 
$
808

 
$
1,873

 
$
2,617

b 
$
—

 
$
4,125

 
$
1,955

 
$
1,133

c 
$
12,612

 
$
1,994

d 
$
1

 
$
14,607

Intersegment
1,646

 
2,571

 
4,217

 
68

 
(7
)
k 
61

 
36

 
348

 
29

 
15

 
(4,706
)
 
—

 
—

 
—

 
—

Production and deliverye
1,523

 
2,276

 
3,799

 
815

 
623

 
1,438

 
1,808

 
312

 
4,129

 
1,848

 
(3,851
)
 
9,483

 
1,211

f 
(1
)
 
10,693

Depreciation, depletion and amortization
217

 
343

 
560

 
219

 
133

 
352

 
293

 
97

 
9

 
39

 
72

 
1,422

 
1,804

 
14

 
3,240

Impairment of oil and gas properties
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
12,980

 
164

g 
13,144

Metals inventory adjustments

—

 
142

 
142

 
—

 
73

 
73

 
—

 
11

 
—

 
—

 
112

 
338

 
—

 
—

 
338

Selling, general and administrative expenses
3

 
3

 
6

 
3

 
1

 
4

 
103

 
—

 
—

 
16

 
20

 
149

 
188

 
221

 
558

Mining exploration and research expenses
—

 
7

 
7

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
100

 
107

 
—

 
—

 
107

Environmental obligations and shutdown costs
—

 
3

 
3

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
74

 
77

 
—

 
1

 
78

Net gain on sales of assets
—

 
(39
)
 
(39
)
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(39
)
 
—

 
—

 
(39
)
Operating income (loss)
461

 
187

 
648

 
96

 
(29
)
 
67

 
449

 
(72
)
 
16

 
67

 
(100
)
 
1,075

 
(14,189
)
 
(398
)
 
(13,512
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
2

 
2

 
4

 
16

 
—

 
16

 
—

 
—

 
—

 
10

 
75

 
105

 
186

 
326

 
617

Provision for (benefit from) income taxes
—

 
—

 
—

 
13

 
(9
)
 
4

 
195

 
—

 
—

 
—

 
—

 
199

 
—

 
(2,150
)
 
(1,951
)
Capital expenditures
253

 
102

 
355

 
1,674

 
48

 
1,722

 
901

 
13

 
4

 
23

 
277

i 
3,295

 
2,948

j 
110

 
6,353

a.
Excludes the results of Tenke, which is reported as discontinued operations. Net (loss) income from discontinued operations totaled $(193) million in 2016 and $91 million in 2015. Refer to the supplemental schedules on pages XXX and XXXI for a summary of the components of net (loss) income from discontinued operations.
b.
Includes PT-FI's sales to PT Smelting totaling $1.4 billion in 2016 and $1.1 billion in 2015.
c.
Includes revenues from FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North and South America copper mines.
d.
Includes net (losses) gains of $(35) million in 2016 and $87 million in 2015 associated with oil derivative contracts. The 2016 oil derivative contracts were entered into as part of the terms to sell the onshore California properties.
e.
The year 2016 includes charges of $16 million at Cerro Verde for social commitments and $17 million at Indonesia for asset retirement. The year 2015 includes asset impairments and restructuring charges totaling $145 million, including $99 million at other North America copper mines, and restructuring charges totaling $13 million at other South America mines, $7 million at Molybdenum mines, $3 million at Rod & Refining, $20 million at Other Mining & Eliminations and $3 million at Corporate, Other & Eliminations.
f.
Includes net charges totaling $1.0 billion in 2016 and $188 million in 2015, primarily for drillship settlements/idle rig and contract termination costs, inventory adjustments and other asset impairments and net charges, which are summarized in the supplemental schedule, "Adjusted Net Income (Loss)," on page X.
g.
Reflects impairment charges for international oil and gas properties primarily in Morocco.
h.
Includes $85 million for net restructuring charges.
i.
Includes $73 million for 2016 and $229 million for 2015 associated with discontinued operations.
j.
Excludes international oil and gas expenditures totaling $47 million in 2016 and $100 million in 2015, primarily related to the Morocco oil and gas properties, which are included in Corporate, Other & Eliminations.
k.
Reflects net reductions for provisional pricing adjustments to prior year open sales.

XIV

FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS

Mining Product Revenues and Unit Net Cash Costs. Unit net cash costs per pound of copper and molybdenum are measures intended to provide investors with information about the cash-generating capacity of FCX's mining operations expressed on a basis relating to the primary metal product for the respective operations. FCX uses this measure for the same purpose and for monitoring operating performance by its mining operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although FCX's measures may not be comparable to similarly titled measures reported by other companies.

FCX presents gross profit per pound of copper in the following tables using both a “by-product” method and a “co-product” method. FCX uses the by-product method in its presentation of gross profit per pound of copper because (i) the majority of its revenues are copper revenues, (ii) it mines ore, which contains copper, gold, molybdenum and other metals, (iii) it is not possible to specifically assign all of FCX's costs to revenues from the copper, gold, molybdenum and other metals it produces, (iv) it is the method used to compare mining operations in certain industry publications and (v) it is the method used by FCX's management and Board to monitor mining operations. In the co-product method presentations, shared costs are allocated to the different products based on their relative revenue values, which will vary to the extent FCX's metals sales volumes and realized prices change.

FCX shows revenue adjustments for prior period open sales as a separate line item. Because these adjustments do not result from current period sales, these amounts have been reflected separately from revenues on current period sales. Noncash and other costs, which are removed from site production and delivery costs in the calculation of unit net cash costs, consist of items such as stock-based compensation costs, start-up costs, inventory adjustments, long-lived asset impairments, restructuring and/or unusual charges. As discussed above, gold, molybdenum and other metal revenues at copper mines are reflected as credits against site production and delivery costs in the by-product method. The following schedules are presentations under both the by-product and co-product methods together with reconciliations to amounts reported in FCX's consolidated financial statements.

U.S. Oil & Gas Product Revenues and Cash Production Costs per Unit. Realized revenues and cash production costs per unit are measures intended to provide investors with information about the cash operating margin of FCX's oil and gas operations. FCX uses this measure for the same purpose and for monitoring operating performance by its oil and gas operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. FCX's measures may not be comparable to similarly titled measures reported by other companies.

Accretion, charges for asset retirement obligations and other costs, such as drillship settlements/idle rig and contract termination costs, inventory adjustments, asset impairments and/or unusual charges, are removed from production and delivery costs in the calculation of cash production costs per BOE. Additionally, during fourth-quarter 2016, FCX entered into oil and gas derivative contracts as part of the terms to sell the onshore California properties (these derivative contracts were assumed by the buyer at completion of the sale) and in 2015, FCX had crude oil derivative contracts. FCX shows adjustments from these derivative contracts as separate line items. Because these adjustments did not result from oil and gas sales, gains and losses have been reflected separately from revenues on current period sales. The following schedules include calculations of oil and gas product revenues and cash production costs together with a reconciliation to amounts reported in FCX's consolidated financial statements.


XV


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
Three Months Ended December 31, 2016
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Molybdenuma
 
Otherb
 
Total
 
Revenues, excluding adjustments
 
$
1,016

 
$
1,016

 
$
58

 
$
18

 
$
1,092

 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
605

 
570

 
45

 
12

 
627

 
By-product credits
 
(54
)
 
—

 
—

 
—

 
—

 
Treatment charges
 
45

 
44

 
—

 
1

 
45

 
Net cash costs
 
596

 
614

 
45

 
13

 
672

 
Depreciation, depletion and amortization (DD&A)
 
123

 
116

 
5

 
2

 
123

 
Metals inventory adjustments
 
(5
)
 
(5
)
 
—

 
—

 
(5
)
 
Noncash and other costs, net
 
18

 
17

 
1

 
—

 
18

 
Total costs
 
732

 
742

 
51

 
15

 
808

 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
 
 
on prior period open sales
 
6

 
6

 
—

 
—

 
6

 
Gross profit
 
$
290

 
$
280

 
$
7

 
$
3

 
$
290

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
415

 
415

 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)a
 
 
 
 
 
8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/molybdenum:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.45

 
$
2.45

 
$
6.63

 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.46

 
1.37

 
5.14

 
 
 
 
 
By-product credits
 
(0.13
)
 
—

 
—

 
 
 
 
 
Treatment charges
 
0.11

 
0.11

 
—

 
 
 
 
 
Unit net cash costs
 
1.44

 
1.48

 
5.14

 
 
 
 
 
DD&A
 
0.29

 
0.28

 
0.59

 
 
 
 
 
Metals inventory adjustments
 
(0.01
)
 
(0.01
)
 
—

 
 
 
 
 
Noncash and other costs, net
 
0.04

 
0.04

 
0.06

 
 
 
 
 
Total unit costs
 
1.76

 
1.79

 
5.79

 
 
 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
 
 
on prior period open sales
 
0.01

 
0.01

 
—

 
 
 
 
 
Gross profit per pound
 
$
0.70

 
$
0.67

 
$
0.84

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
Metals
 
 
 
 
 
 
 
Production
 
 
 
Inventory
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
Adjustments
 
 
 
Totals presented above
 
$
1,092

 
$
627

 
$
123

 
$
(5
)
 
 
 
Treatment charges
 
—

 
45

 
—

 
—

 
 
 
Noncash and other costs, net
 
—

 
18

 
—

 
—

 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
 
 
on prior period open sales
 
6

 
—

 
—

 
—

 
 
 
Eliminations and other
 
(4
)
 
(5
)
 
—

 
—

 
 
 
North America copper mines
 
1,094

 
685

 
123

 
(5
)
 
 
 
Other mining & eliminationsc
 
2,902

 
1,763

 
294

 
14

 
 
 
Total mining
 
3,996

 
2,448

 
417

 
9

 
 
 
U.S. oil & gas operations
 
381

 
274

 
173

 
—

 
 
 
Corporate, other & eliminations
 
—

 
18

 
3

 
—

 
 
 
As reported in FCX's consolidated financial statements
 
$
4,377

 
$
2,740

 
$
593

 
$
9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Reflects sales of molybdenum produced by certain of the North America copper mines to FCX's molybdenum sales company at market-based pricing.
b.
Includes gold and silver product revenues and production costs.
c.
Represents the combined total for all other mining operations and the related eliminations, as presented in the supplemental schedule "Business Segments," beginning on page XII.


XVI


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
 
 
 
 
 
 
Three Months Ended December 31, 2015
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Molybdenuma
 
Otherb
 
Total
 
Revenues, excluding adjustments
 
$
1,213

 
$
1,213

 
$
43

 
$
19

 
$
1,275

 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
814

 
790

 
36

 
10

 
836

 
By-product credits
 
(40
)
 
—

 
—

 
—

 
—

 
Treatment charges
 
62

 
60

 
—

 
2

 
62

 
Net cash costs
 
836

 
850

 
36

 
12

 
898

 
DD&A
 
152

 
146

 
4

 
2

 
152

 
Metals inventory adjustments
 
76

 
75

 
1

 
—

 
76

 
Noncash and other costs, net
 
63

c 
58

 
4

 
1

 
63

 
Total costs
 
1,127

 
1,129

 
45

 
15

 
1,189

 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(29
)
 
(29
)
 
—

 
—

 
(29
)
 
Gross profit (loss)
 
$
57

 
$
55

 
$
(2
)
 
$
4

 
$
57

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
546

 
546

 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)a
 
 
 
 
9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit (loss) per pound of copper/molybdenum:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.22

 
$
2.22

 
$
5.03

 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.49

 
1.44

 
4.26

 
 
 
 
 
By-product credits
 
(0.07
)
 
—

 
—

 
 
 
 
 
Treatment charges
 
0.11

 
0.11

 
—

 
 
 
 
 
Unit net cash costs
 
1.53

 
1.55

 
4.26

 
 
 
 
 
DD&A
 
0.28

 
0.27

 
0.44

 
 
 
 
 
Metals inventory adjustments
 
0.14

 
0.14

 
0.14

 
 
 
 
 
Noncash and other costs, net
 
0.12

c 
0.11

 
0.38

 
 
 
 
 
Total unit costs
 
2.07

 
2.07

 
5.22

 
 
 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(0.05
)
 
(0.05
)
 
—

 
 
 
 
 
Gross profit (loss) per pound
 
$
0.10

 
$
0.10

 
$
(0.19
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
Metals
 
 
 
(In millions)
 
 
 
Production
 
 
 
Inventory
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
Adjustments
 
 
 
Totals presented above
 
$
1,275

 
$
836

 
$
152

 
76

 
 
 
Treatment charges
 
—

 
62

 
—

 
—

 
 
 
Noncash and other costs, net
 
—

 
63

 
—

 
—

 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(29
)
 
—

 
—

 
—

 
 
 
Eliminations and other
 
(29
)
 
(29
)
 
—

 
—

 
 
 
North America copper mines
 
1,217

 
932

 
152

 
76

 
 
 
Other mining & eliminationsd
 
1,899

 
1,553

 
224

 
108

 
 
 
Total mining
 
3,116

 
2,485

 
376

 
184

 
 
 
U.S. oil & gas operations
 
400

 
354

 
339

 
—

 
 
 
Corporate, other & eliminations
 
—

 
(8
)
 
3

 
—

 
 
 
As reported in FCX's consolidated financial statements
 
$
3,516

 
$
2,831

 
$
718

 
$
184

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Reflects sales of molybdenum produced by certain of the North America copper mines to FCX's molybdenum sales company at market-based pricing.
b.
Includes gold and silver product revenues and production costs
c.
Includes $24 million ($0.04 per pound) for asset impairment, restructuring and other net charges.
d.
Represents the combined total for all other mining operations and the related eliminations, as presented in the supplemental schedule "Business Segments," beginning on page page XII.


XVII


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Year Ended December 31, 2016
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Molybdenuma
 
Otherb
 
Total
 
Revenues, excluding adjustments
 
$
4,113

 
$
4,113

 
$
213

 
$
94

 
$
4,420

 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
2,613

 
2,474

 
166

 
58

 
2,698

 
By-product credits
 
(222
)
 
—

 
—

 
—

 
—

 
Treatment charges
 
193

 
185

 
—

 
8

 
193

 
Net cash costs
 
2,584

 
2,659

 
166

 
66

 
2,891

 
DD&A
 
527

 
496

 
20

 
11

 
527

 
Metals inventory adjustments
 
1

 
1

 
—

 
—

 
1

 
Noncash and other costs, net
 
87

 
84

 
2

 
1

 
87

 
Total costs
 
3,199

 
3,240

 
188

 
78

 
3,506

 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(1
)
 
(1
)
 
—

 
—

 
(1
)
 
Gross profit
 
$
913

 
$
872

 
$
25

 
$
16

 
$
913

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
1,836

 
1,836

 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)a
 
 
 
 
 
33

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/molybdenum:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.24

 
$
2.24

 
$
6.34

 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.42

 
1.35

 
4.93

 
 
 
 
 
By-product credits
 
(0.12
)
 
—

 
—

 
 
 
 
 
Treatment charges
 
0.11

 
0.10

 
—

 
 
 
 
 
Unit net cash costs
 
1.41

 
1.45

 
4.93

 
 
 
 
 
DD&A
 
0.29

 
0.27

 
0.60

 
 
 
 
 
Metals inventory adjustments
 
—

 
—

 
—

 
 
 
 
 
Noncash and other costs, net
 
0.05

 
0.05

 
0.06

 
 
 
 
 
Total unit costs
 
1.75

 
1.77

 
5.59

 
 
 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
 
 
on prior period open sales
 
—

 
—

 
—

 
 
 
 
 
Gross profit per pound
 
$
0.49

 
$
0.47

 
$
0.75

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
Metals
 
 
 
 
 
 
 
Production
 
 
 
Inventory
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
Adjustments
 
 
 
Totals presented above
 
$
4,420

 
$
2,698

 
$
527

 
$
1

 
 
 
Treatment charges
 
—

 
193

 
—

 
—

 
 
 
Noncash and other costs, net
 
—

 
87

 
—

 
—

 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(1
)
 
—

 
—

 
—

 
 
 
Eliminations and other
 
(45
)
 
(46
)
 
3

 
—

 
 
 
North America copper mines
 
4,374

 
2,932

 
530

 
1

 
 
 
Other mining & eliminationsc
 
8,943

 
5,911

 
1,117

 
35

 
 
 
Total mining
 
13,317

 
8,843

 
1,647

 
36

 
 
 
U.S. oil & gas operations
 
1,513

 
1,801

 
869

 
—

 
 
 
Corporate, other & eliminations
 
—

 
53

 
14

 
—

 
 
 
As reported in FCX's consolidated financial statements
 
$
14,830

 
$
10,697

 
$
2,530

 
$
36

 
 
 
 
a.
Reflects sales of molybdenum produced by certain of the North America copper mines to FCX's molybdenum sales company at market-based pricing.
b.
Includes gold and silver product revenues and production costs.
c.
Represents the combined total for all other mining operations and the related eliminations, as presented in the supplemental schedule "Business Segments" beginning on page XII.

XVIII


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Year Ended December 31, 2015
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Molybdenuma
 
Otherb
 
Total
 
Revenues, excluding adjustments
 
$
4,907

 
$
4,907

 
$
261

 
$
102

 
$
5,270

 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
3,339

 
3,161

 
209

 
71

 
3,441

 
By-product credits
 
(261
)
 
—

 
—

 
—

 
—

 
Treatment charges
 
240

 
233

 
—

 
7

 
240

 
Net cash costs
 
3,318

 
3,394

 
209

 
78

 
3,681

 
DD&A
 
558

 
528

 
20

 
10

 
558

 
Metals inventory adjustments
 
142

 
139

 
2

 
1

 
142

 
Noncash and other costs, net
 
233

c 
225

 
6

 
2

 
233

 
Total costs
 
4,251

 
4,286

 
237

 
91

 
4,614

 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(28
)
 
(28
)
 
—

 
—

 
(28
)
 
Gross profit
 
$
628

 
$
593

 
$
24

 
$
11

 
$
628

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
1,985

 
1,985

 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)a
 
 
 
 
 
37

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/molybdenum:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.47

 
$
2.47

 
$
7.02

 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.68

 
1.59

 
5.61

 
 
 
 
 
By-product credits
 
(0.13
)
 
—

 
—

 
 
 
 
 
Treatment charges
 
0.12

 
0.12

 
—

 
 
 
 
 
Unit net cash costs
 
1.67

 
1.71

 
5.61

 
 
 
 
 
DD&A
 
0.28

 
0.27

 
0.53

 
 
 
 
 
Metals inventory adjustments
 
0.07

 
0.07

 
0.07

 
 
 
 
 
Noncash and other costs, net
 
0.12

c 
0.11

 
0.16

 
 
 
 
 
Total unit costs
 
2.14

 
2.16

 
6.37

 
 
 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(0.01
)
 
(0.01
)
 
—

 
 
 
 
 
Gross profit per pound
 
$
0.32

 
$
0.30

 
$
0.65

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
Metals
 
 
 
(In millions)
 
 
 
Production
 
 
 
Inventory
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
Adjustments
 
 
 
Totals presented above
 
$
5,270

 
$
3,441

 
$
558

 
$
142

 
 
 
Treatment charges
 
—

 
240

 
—

 
—

 
 
 
Noncash and other costs, net
 
—

 
233

 
—

 
—

 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(28
)
 
—

 
—

 
—

 
 
 
Eliminations and other
 
(116
)
 
(115
)
 
2

 
—

 
 
 
North America copper mines
 
5,126

 
3,799

 
560

 
142

 
 
 
Other mining & eliminationsd
 
7,486

 
5,684

 
862

 
196

 
 
 
Total mining
 
12,612

 
9,483

 
1,422

 
338

 
 
 
U.S. oil & gas operations
 
1,994

 
1,211

 
1,804

 
—

 
 
 
Corporate, other & eliminations
 
1

 
(1
)
 
14

 
—

 
 
 
As reported in FCX's consolidated financial statements
 
$
14,607

 
$
10,693

 
$
3,240

 
$
338

 
 
 
 
a.
Reflects sales of molybdenum produced by certain of the North America copper mines to FCX's molybdenum sales company at market-based pricing.
b.
Includes gold and silver product revenues and production costs.
c.
Includes $99 million ($0.05 per pound) for asset impairment, restructuring and other net charges.
d.
Represents the combined total for all other mining operations and the related eliminations, as presented in the supplemental schedule "Business Segments" beginning on page XII.


XIX


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
South America Mining Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
Three Months Ended December 31, 2016
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
Method
 
Copper
 
Othera
 
Total
Revenues, excluding adjustments
 
$
898

 
$
898

 
$
47

 
$
945

Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
and other costs shown below
 
485

 
463

 
33

 
496

By-product credits
 
(36
)
 
—

 
—

 
—

Treatment charges
 
90

 
90

 
—

 
90

Royalty on metals
 
2

 
2

 
—

 
2

Net cash costs
 
541

 
555

 
33

 
588

DD&A
 
151

 
144

 
7

 
151

Noncash and other costs, net
 
23

 
22

 
1

 
23

Total costs
 
715

 
721

 
41

 
762

Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
on prior period open sales
 
67

 
67

 
—

 
67

Gross profit
 
$
250

 
$
244

 
$
6

 
$
250

 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
359

 
359

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper:
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.50

 
$
2.50

 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
and other costs shown below
 
1.35

 
1.29

 
 
 
 
By-product credits
 
(0.10
)
 
—

 
 
 
 
Treatment charges
 
0.25

 
0.25

 
 
 
 
Royalty on metals
 
0.01

 
0.01

 
 
 
 
Unit net cash costs
 
1.51

 
1.55

 
 
 
 
DD&A
 
0.42

 
0.40

 
 
 
 
Noncash and other costs, net
 
0.07

 
0.06

 
 
 
 
Total unit costs
 
2.00

 
2.01

 
 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
on prior period open sales
 
0.19

 
0.19

 
 
 
 
Gross profit per pound
 
$
0.69

 
$
0.68

 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
Production
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
Totals presented above
 
$
945

 
$
496

 
$
151

 
 
Treatment charges
 
(90
)
 
—

 
—

 
 
Royalty on metals
 
(2
)
 
—

 
—

 
 
Noncash and other costs, net
 
—

 
23

 
—

 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
on prior period open sales
 
67

 
—

 
—

 
 
Eliminations and other
 
(1
)
 
(1
)
 
—

 
 
South America mining
 
919

 
518

 
151

 
 
Other mining & eliminationsb
 
3,077

 
1,930

 
266

 
 
Total mining
 
3,996

 
2,448

 
417

 
 
U.S. oil & gas operations
 
381

 
274

 
173

 
 
Corporate, other & eliminations
 
—

 
18

 
3

 
 
As reported in FCX's consolidated financial statements
 
$
4,377

 
$
2,740

 
$
593

 
 
 
 
 
 
 
 
 
 
 
a. Includes silver sales of 981 thousand ounces ($18.23 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing.
b. Represents the combined total for all other mining operations and the related eliminations, as presented in the supplemental schedule, "Business Segments" beginning on page XII.


XX


Three Months Ended December 31, 2015
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Othera
 
Total
 
Revenues, excluding adjustments
 
$
618

 
$
618

 
$
17

 
$
635

 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
410

 
401

 
14

 
415

 
By-product credits
 
(12
)
 
—

 
—

 
—

 
Treatment charges
 
61

 
61

 
—

 
61

 
Royalty on metals
 
1

 
1

 
—

 
1

 
Net cash costs
 
460

 
463

 
14

 
477

 
DD&A
 
116

 
113

 
3

 
116

 
Metals inventory adjustments
 
73

 
73

 
—

 
73

 
Noncash and other costs, net
 
20

 
20

 
—

 
20

 
Total costs
 
669

 
669

 
17

 
686

 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(15
)
 
(15
)
 
—

 
(15
)
 
Gross loss
 
$
(66
)
 
$
(66
)
 
$
—

 
$
(66
)
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
286

 
286

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross loss per pound of copper:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.16

 
$
2.16

 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.43

 
1.40

 
 
 
 
 
By-product credits
 
(0.04
)
 
—

 
 
 
 
 
Treatment charges
 
0.21

 
0.21

 
 
 
 
 
Royalty on metals
 
0.01

 
0.01

 
 
 
 
 
Unit net cash costs
 
1.61

 
1.62

 
 
 
 
 
DD&A
 
0.40

 
0.39

 
 
 
 
 
Metals inventory adjustments
 
0.26

 
0.26

 
 
 
 
 
Noncash and other costs, net
 
0.07

 
0.07

 
 
 
 
 
Total unit costs
 
2.34

 
2.34

 
 
 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(0.05
)
 
(0.05
)
 
 
 
 
 
Gross loss per pound
 
$
(0.23
)
 
$
(0.23
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
Metals
 
(In millions)
 
 
 
Production
 
 
 
Inventory
 
 
 
Revenues
 
and Delivery
 
DD&A
 
Adjustments
 
Totals presented above
 
$
635

 
$
415

 
$
116

 
$
73

 
Treatment charges
 
(61
)
 
—

 
—

 
—

 
Royalty on metals
 
(1
)
 
—

 
—

 
—

 
Noncash and other costs, net
 
—

 
20

 
—

 
—

 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(15
)
 
—

 
—

 
—

 
Eliminations and other
 
(1
)
 
(1
)
 
—

 
—

 
South America mining
 
557

 
434

 
116

 
73

 
Other mining & eliminationsb
 
2,559

 
2,051

 
260

 
111

 
Total mining
 
3,116

 
2,485

 
376

 
184

 
U.S. oil & gas operations
 
400

 
354

 
339

 
—

 
Corporate, other & eliminations
 
—

 
(8
)
 
3

 
—

 
As reported in FCX's consolidated financial statements
 
$
3,516

 
$
2,831

 
$
718

 
$
184

 
 
 
 
 
 
 
 
 
 
 
a. Includes silver sales of 784 thousand ounces ($14.32 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing.
b. Represents the combined total for all other mining operations and the related eliminations, as presented in the supplemental schedule, "Business Segments" beginning on page XII.



XXI


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Year Ended December 31, 2016
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
Method
 
Copper
 
Othera
 
Total
Revenues, excluding adjustments
 
$
3,077

 
$
3,077

 
$
176

 
$
3,253

Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
and other costs shown below
 
1,681

 
1,601

 
120

 
1,721

By-product credits
 
(136
)
 
—

 
—

 
—

Treatment charges
 
320

 
320

 
—

 
320

Royalty on metals
 
7

 
6

 
1

 
7

Net cash costs
 
1,872

 
1,927

 
121

 
2,048

DD&A
 
552

 
523

 
29

 
552

Noncash and other costs, net
 
40

 
38

 
2

 
40

Total costs
 
2,464

 
2,488

 
152

 
2,640

Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
on prior period open sales
 
11

 
11

 
—

 
11

Gross profit
 
$
624

 
$
600

 
$
24

 
$
624

 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
1,332

 
1,332

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper:
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.31

 
$
2.31

 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
and other costs shown below
 
1.26

 
1.20

 
 
 
 
By-product credits
 
(0.10
)
 
—

 
 
 
 
Treatment charges
 
0.24

 
0.24

 
 
 
 
Royalty on metals
 
0.01

 
—

 
 
 
 
Unit net cash costs
 
1.41

 
1.44

 
 
 
 
DD&A
 
0.41

 
0.39

 
 
 
 
Noncash and other costs, net
 
0.03

 
0.03

 
 
 
 
Total unit costs
 
1.85

 
1.86

 
 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
on prior period open sales
 
0.01

 
0.01

 
 
 
 
Gross profit per pound
 
$
0.47

 
$
0.46

 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
Production
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
Totals presented above
 
$
3,253

 
$
1,721

 
$
552

 
 
Treatment charges
 
(320
)
 
—

 
—

 
 
Royalty on metals
 
(7
)
 
—

 
—

 
 
Noncash and other costs, net
 
—

 
40

 
—

 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
on prior period open sales
 
11

 
—

 
—

 
 
Eliminations and other
 
1

 
(3
)
 
1

 
 
South America mining
 
2,938

 
1,758

 
553

 
 
Other mining & eliminationsb
—

10,379

 
7,085

 
1,094

 
 
Total mining
—

13,317

 
8,843

 
1,647

 
 
U.S. oil & gas operations
—

1,513

 
1,801

 
869

 
 
Corporate, other & eliminations
—

—

 
53

 
14

 
 
As reported in FCX's consolidated financial statements
 
$
14,830

 
$
10,697

 
$
2,530

 
 
 
 
 
 
 
 
 
 
 
a. Includes silver sales of 3.7 million ounces ($18.05 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing.
b. Represents the combined total for all other mining operations and the related eliminations, as presented in the supplemental schedule, "Business Segments" beginning on page XII.



XXII


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Year Ended December 31, 2015
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Othera
 
Total
 
Revenues, excluding adjustments
 
$
2,075

 
$
2,075

 
$
65

 
$
2,140

 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1,393

 
1,355

 
59

 
1,414

 
By-product credits
 
(44
)
 
—

 
—

 
—

 
Treatment charges
 
161

 
161

 
—

 
161

 
Royalty on metals
 
4

 
4

 
—

 
4

 
Net cash costs
 
1,514

 
1,520

 
59

 
1,579

 
DD&A
 
352

 
341

 
11

 
352

 
Metals inventory adjustments
 
73

 
73

 
—

 
73

 
Noncash and other costs, net
 
41

 
41

 
—

 
41

 
Total costs
 
1,980

 
1,975

 
70

 
2,045

 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(28
)
 
(28
)
 
—

 
(28
)
 
Gross profit (loss)
 
$
67

 
$
72

 
$
(5
)
 
$
67

 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
871

 
871

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.38

 
$
2.38

 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.60

 
1.56

 
 
 
 
 
By-product credits
 
(0.05
)
 
—

 
 
 
 
 
Treatment charges
 
0.19

 
0.19

 
 
 
 
 
Royalty on metals
 
—

 
—

 
 
 
 
 
Unit net cash costs
 
1.74

 
1.75

 
 
 
 
 
DD&A
 
0.40

 
0.39

 
 
 
 
 
Metals inventory adjustments
 
0.08

 
0.08

 
 
 
 
 
Noncash and other costs, net
 
0.05

 
0.05

 
 
 
 
 
Total unit costs
 
2.27

 
2.27

 
 
 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(0.03
)
 
(0.03
)
 
 
 
 
 
Gross profit per pound
 
$
0.08

 
$
0.08

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
Metals
 
(In millions)
 
 
 
Production
 
 
 
Inventory
 
 
 
Revenues
 
and Delivery
 
DD&A
 
Adjustments
 
Totals presented above
 
$
2,140

 
$
1,414

 
$
352

 
$
73

 
Treatment charges
 
(161
)
 
—

 
—

 
—

 
Royalty on metals
 
(4
)
 
—

 
—

 
—

 
Noncash and other costs, net
 
—

 
41

 
—

 
—

 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(28
)
 
—

 
—

 
—

 
Eliminations and other
 
(13
)
 
(17
)
 
—

 
—

 
South America mining
 
1,934

 
1,438

 
352

 
73

 
Other mining & eliminationsb
 
10,678

 
8,045


1,070

 
265

 
Total mining
 
12,612

 
9,483

 
1,422

 
338

 
U.S. oil & gas operations
 
1,994

 
1,211

 
1,804

 
—

 
Corporate, other & eliminations
 
1

 
(1
)
 
14

 
—

 
As reported in FCX's consolidated financial statements
 
$
14,607

 
$
10,693

 
$
3,240

 
$
338

 
 
 
 
 
 
 
 
 
 
 
a. Includes silver sales of 2.0 million ounces ($14.48 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to FCX's molybdenum sales company at market-based pricing.
b. Represents the combined total for all other mining operations and the related eliminations, as presented in the supplemental schedule, "Business Segments" beginning on page XII.


XXIII


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
Three Months Ended December 31, 2016
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
Method
 
Copper
 
Gold
 
Silvera
 
Total
Revenues, excluding adjustments
 
$
874

 
$
874

 
$
470

 
$
15

 
$
1,359

Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
527

 
339

 
182

 
6

 
527

Gold and silver credits
 
(473
)
 
—

 
—

 
—

 
—

Treatment charges
 
95

 
61

 
33

 
1

 
95

Export duties
 
32

 
21

 
11

 
—

 
32

Royalty on metals
 
47

 
28

 
18

 
1

 
47

Net cash costs
 
228

 
449

 
244

 
8

 
701

DD&A
 
100

 
64

 
35

 
1

 
100

Noncash and other costs, net
 
20

 
13

 
7

 
—

 
20

Total costs
 
348

 
526

 
286

 
9

 
821

Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
49

 
49

 
(11
)
 
(1
)
 
37

PT Smelting intercompany loss
 
(19
)
 
(13
)
 
(6
)
 
—

 
(19
)
Gross profit
 
$
556

 
$
384

 
$
167

 
$
5

 
$
556

 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
352

 
352

 
 
 
 
 
 
Gold sales (thousands of recoverable ounces)
 
 
 
 
 
401

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/per ounce of gold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.48

 
$
2.48

 
$
1,174

 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.50

 
0.96

 
455

 
 
 
 
Gold and silver credits
 
(1.34
)
 
—

 
—

 
 
 
 
Treatment charges
 
0.27

 
0.17

 
82

 
 
 
 
Export duties
 
0.09

 
0.06

 
28

 
 
 
 
Royalty on metals
 
0.13

 
0.09

 
46

 
 
 
 
Unit net cash costs
 
0.65

 
1.28

 
611

 
 
 
 
DD&A
 
0.29

 
0.18

 
87

 
 
 
 
Noncash and other costs, net
 
0.06

 
0.04

 
17

 
 
 
 
Total unit costs
 
1.00

 
1.50

 
715

 
 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
0.14

 
0.14

 
(26
)
 
 
 
 
PT Smelting intercompany loss
 
(0.05
)
 
(0.03
)
 
(16
)
 
 
 
 
Gross profit per pound/ounce
 
$
1.57

 
$
1.09

 
$
417

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Production
 
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
 
Totals presented above
 
$
1,359

 
$
527

 
$
100

 
 
 
 
Treatment charges
 
(95
)
 
—

 
—

 
 
 
 
Export duties
 
(32
)
 
—

 
—

 
 
 
 
Royalty on metals
 
(47
)
 
—

 
—

 
 
 
 
Noncash and other costs, net
 
—

 
20

 
—

 
 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
37

 
—

 
—

 
 
 
 
PT Smelting intercompany loss
 
—

 
19

 
—

 
 
 
 
Indonesia mining
 
1,222

 
566

 
100

 
 
 
 
Other mining & eliminationsb
 
2,774

 
1,882

 
317

 
 
 
 
Total mining
 
3,996

 
2,448

 
417

 
 
 
 
U.S. oil & gas operations
 
381

 
274

 
173

 
 
 
 
Corporate, other & eliminations
 
—

 
18

 
3

 
 
 
 
As reported in FCX's consolidated financial statements
 
$
4,377

 
$
2,740

 
$
593

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Includes silver sales of 907 thousand ounces ($16.24 per ounce average realized price).
b.
Represents the combined total for all other mining operations and the related eliminations, as presented in the supplemental schedule, "Business Segments" beginning on page XII.





XXIV


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Three Months Ended December 31, 2015
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Gold
 
Silvera
 
Total
 
Revenues, excluding adjustments
 
$
418

 
$
418

 
$
354

 
$
8

 
$
780

 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
470

 
252

 
213

 
5

 
470

 
Gold and silver credits
 
(365
)
 
—

 
—

 
—

 
—

 
Treatment charges
 
61

 
33

 
28

 
—

 
61

 
Export duties
 
17

 
9

 
8

 
—

 
17

 
Royalty on metals
 
29

 
15

 
13

 
1

 
29

 
Net cash costs
 
212

 
309

 
262

 
6

 
577

 
DD&A
 
55

 
29

 
25

 
1

 
55

 
Noncash and other costs, net
 
18

 
10

 
8

 
—

 
18

 
Total costs
 
285

 
348

 
295

 
7

 
650

 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(29
)
 
(29
)
 
3

 
—

 
(26
)
 
PT Smelting intercompany loss
 
(9
)
 
(5
)
 
(4
)
 
—

 
(9
)
 
Gross profit
 
$
95

 
$
36

 
$
58

 
$
1

 
$
95

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
195

 
195

 
 
 
 
 
 
 
Gold sales (thousands of recoverable ounces)
 
 
 
 
 
333

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/per ounce of gold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.14

 
$
2.14

 
$
1,066

 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
2.40

 
1.29

 
642

 
 
 
 
 
Gold and silver credits
 
(1.87
)
 
—

 
—

 
 
 
 
 
Treatment charges
 
0.31

 
0.16

 
84

 
 
 
 
 
Export duties
 
0.10

 
0.05

 
23

 
 
 
 
 
Royalty on metals
 
0.15

 
0.08

 
40

 
 
 
 
 
Unit net cash costs
 
1.09

 
1.58

 
789

 
 
 
 
 
DD&A
 
0.28

 
0.15

 
75

 
 
 
 
 
Noncash and other costs, net
 
0.09

 
0.05

 
25

 
 
 
 
 
Total unit costs
 
1.46

 
1.78

 
889

 
 
 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(0.15
)
 
(0.15
)
 
9

 
 
 
 
 
PT Smelting intercompany loss
 
(0.04
)
 
(0.03
)
 
(12
)
 
 
 
 
 
Gross profit per pound/ounce
 
$
0.49

 
$
0.18

 
$
174

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Production
 
 
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
 
 
Totals presented above
 
$
780

 
$
470

 
$
55

 
 
 
 
 
Treatment charges
 
(61
)
 
—

 
—

 
 
 
 
 
Export duties
 
(17
)
 
—

 
—

 
 
 
 
 
Royalty on metals
 
(29
)
 
—

 
—

 
 
 
 
 
Noncash and other costs, net
 
—

 
18

 
—

 
 
 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(26
)
 
—

 
—

 
 
 
 
 
PT Smelting intercompany loss
 
—

 
9

 
—

 
 
 
 
 
Indonesia mining
 
647

 
497

 
55

 
 
 
 
 
Other mining & eliminationsb
 
2,469

 
1,988


321

 
 
 
 
 
Total mining
 
3,116

 
2,485

 
376

 
 
 
 
 
U.S. oil & gas operations
 
400

 
354

 
339

 
 
 
 
 
Corporate, other & eliminations
 
—

 
(8
)
 
3

 
 
 
 
 
As reported in FCX's consolidated financial statements
 
$
3,516

 
$
2,831

 
$
718

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Includes silver sales of 567 thousand ounces ($13.66 per ounce average realized price).
b.
Represents the combined total for all other mining operations and the related eliminations, as presented in the supplemental schedule, "Business Segments" beginning on page XII.


XXV


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Year Ended December 31, 2016
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
Method
 
Copper
 
Gold
 
Silvera
 
Total
Revenues, excluding adjustments
 
$
2,448

 
$
2,448

 
$
1,304

 
$
50

 
$
3,802

Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1,717

 
1,106

 
589

 
22

 
1,717

Gold and silver credits
 
(1,371
)
 
—

 
—

 
—

 
—

Treatment charges
 
297

 
191

 
102

 
4

 
297

Export duties
 
95

 
61

 
33

 
1

 
95

Royalty on metals
 
131

 
79

 
50

 
2

 
131

Net cash costs
 
869

 
1,437

 
774

 
29

 
2,240

DD&A
 
384

 
247

 
132

 
5

 
384

Noncash and other costs, net
 
51

 
33

 
17

 
1

 
51

Total costs
 
1,304

 
1,717

 
923

 
35

 
2,675

Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(1
)
 
(1
)
 
17

 
—

 
16

PT Smelting intercompany loss
 
(26
)
 
(17
)
 
(9
)
 
—

 
(26
)
Gross profit
 
$
1,117

 
$
713

 
$
389

 
$
15

 
$
1,117

 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
1,054

 
1,054

 
 
 
 
 
 
Gold sales (thousands of recoverable ounces)
 
 
 
 
 
1,054

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/per ounce of gold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.32

 
$
2.32

 
$
1,237

 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.63

 
1.05

 
559

 
 
 
 
Gold and silver credits
 
(1.30
)
 
—

 
—

 
 
 
 
Treatment charges
 
0.28

 
0.18

 
97

 
 
 
 
Export duties
 
0.09

 
0.06

 
31

 
 
 
 
Royalty on metals
 
0.13

 
0.07

 
47

 
 
 
 
Unit net cash costs
 
0.83

 
1.36

 
734

 
 
 
 
DD&A
 
0.36

 
0.24

 
125

 
 
 
 
Noncash and other costs, net
 
0.05

 
0.03

 
17

 
 
 
 
Total unit costs
 
1.24

 
1.63

 
876

 
 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
—

 
—

 
16

 
 
 
 
PT Smelting intercompany loss
 
(0.02
)
 
(0.02
)
 
(8
)
 
 
 
 
Gross profit per pound/ounce
 
$
1.06

 
$
0.67

 
$
369

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Production
 
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
 
Totals presented above
 
$
3,802

 
$
1,717

 
$
384

 
 
 
 
Treatment charges
 
(297
)
 
—

 
—

 
 
 
 
Export duties
 
(95
)
 
—

 
—

 
 
 
 
Royalty on metals
 
(131
)
 
—

 
—

 
 
 
 
Noncash and other costs, net
 
—

 
51

 
—

 
 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
16

 
—

 
—

 
 
 
 
PT Smelting intercompany loss
 
—

 
26

 
—

 
 
 
 
Indonesia mining
 
3,295

 
1,794

 
384

 
 
 
 
Other mining & eliminationsb
 
10,022

 
7,049

 
1,263

 
 
 
 
Total mining
 
13,317

 
8,843

 
1,647

 
 
 
 
U.S. oil & gas operations
 
1,513

 
1,801

 
869

 
 
 
 
Corporate, other & eliminations
 
—

 
53

 
14

 
 
 
 
As reported in FCX's consolidated financial statements
 
$
14,830

 
$
10,697

 
$
2,530

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.Includes silver sales of 2.9 million ounces ($17.09 per ounce average realized price).
b.
Represents the combined total for all other mining operations and the related eliminations, as presented in the supplemental schedule, "Business Segments" beginning on page XII.






XXVI


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Year Ended December 31, 2015
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Gold
 
Silvera
 
Total
 
Revenues, excluding adjustments
 
$
1,735

 
$
1,735

 
$
1,382

 
$
31

 
$
3,148

 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1,780

 
981

 
781

 
18

 
1,780

 
Gold and silver credits
 
(1,422
)
 
—

 
—

 
—

 
—

 
Treatment charges
 
231

 
127

 
101

 
3

 
231

 
Export duties
 
109

 
60

 
48

 
1

 
109

 
Royalty on metals
 
114

 
63

 
50

 
1

 
114

 
Net cash costs
 
812

 
1,231

 
980

 
23

 
2,234

 
DD&A
 
293

 
161

 
129

 
3

 
293

 
Noncash and other costs, net
 
38

 
21

 
17

 
—

 
38

 
Total costs
 
1,143

 
1,413

 
1,126

 
26

 
2,565

 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(50
)
 
(50
)
 
8

 
1

 
(41
)
 
PT Smelting intercompany profit
 
10

 
5

 
5

 
—

 
10

 
Gross profit
 
$
552

 
$
277

 
$
269

 
$
6

 
$
552

 
 
 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
744

 
744

 
 
 
 
 
 
 
Gold sales (thousands of recoverable ounces)
 
 
 
 
 
1,224

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper/per ounce of gold:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustments
 
$
2.33

 
$
2.33

 
$
1,129

 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
 
 
and other costs shown below
 
2.39

 
1.32

 
638

 
 
 
 
 
Gold and silver credits
 
(1.91
)
 
—

 
—

 
 
 
 
 
Treatment charges
 
0.31

 
0.17

 
83

 
 
 
 
 
Export duties
 
0.15

 
0.08

 
39

 
 
 
 
 
Royalty on metals
 
0.15

 
0.09

 
41

 
 
 
 
 
Unit net cash costs
 
1.09

 
1.66

 
801

 
 
 
 
 
DD&A
 
0.39

 
0.22

 
105

 
 
 
 
 
Noncash and other costs, net
 
0.05

 
0.03

 
14

 
 
 
 
 
Total unit costs
 
1.53

 
1.91

 
920

 
 
 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(0.07
)
 
(0.06
)
 
7

 
 
 
 
 
PT Smelting intercompany profit
 
0.01

 
0.01

 
4

 
 
 
 
 
Gross profit per pound/ounce
 
$
0.74

 
$
0.37

 
$
220

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Production
 
 
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
 
 
Totals presented above
 
$
3,148

 
$
1,780

 
$
293

 
 
 
 
 
Treatment charges
 
(231
)
 
—

 
—

 
 
 
 
 
Export duties
 
(109
)
 
—

 
—

 
 
 
 
 
Royalty on metals
 
(114
)
 
—

 
—

 
 
 
 
 
Noncash and other costs, net
 
—

 
38

 
—

 
 
 
 
 
Revenue adjustments, primarily for pricing on
 
 
 
 
 
 
 
 
 
 
 
prior period open sales
 
(41
)
 
—

 
—

 
 
 
 
 
PT Smelting intercompany profit
 
—

 
(10
)
 
—

 
 
 
 
 
Indonesia mining
 
2,653

 
1,808

 
293

 
 
 
 
 
Other mining & eliminationsb
 
9,959

 
7,675

 
1,129

 
 
 
 
 
Total mining
 
12,612

 
9,483

 
1,422

 
 
 
 
 
U.S. oil & gas operations
 
1,994

 
1,211

 
1,804

 
 
 
 
 
Corporate, other & eliminations
 
1

 
(1
)
 
14

 
 
 
 
 
As reported in FCX's consolidated financial statements
 
$
14,607

 
$
10,693

 
$
3,240

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Includes silver sales of 2.1 million ounces ($14.81 per ounce average realized price).
b.
Represents the combined total for all other mining operations and the related eliminations, as presented in the supplemental schedule, "Business Segments" beginning on page XII.


XXVII


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Africa Mining Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
Period from October 1, 2016, through November 16, 2016
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Cobalt
 
Total
 
Revenues, excluding adjustmentsa
 
$
136

 
$
136

 
$
34

 
$
170

 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
84

 
75

 
23

 
98

 
Cobalt creditsb
 
(24
)
 
—

 
—

 
—

 
Royalty on metals
 
3

 
2

 
1

 
3

 
Net cash costs
 
63

 
77

 
24

 
101

 
DD&A
 
29

 
24

 
5

 
29

 
Noncash and other credits, net
 
(2
)
 
(2
)
 
—

 
(2
)
 
Total costs
 
90

 
99

 
29

 
128

 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
—

 
—

 
4

 
4

 
Gross profit
 
$
46

 
$
37

 
$
9

 
$
46

 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
59

 
59

 
 
 
 
 
Cobalt sales (millions of contained pounds)
 
 
 
 
 
4

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper and cobalt:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustmentsa
 
$
2.31

 
$
2.31

 
$
8.66

 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.42

 
1.26

 
5.84

 
 
 
Cobalt creditsb
 
(0.41
)
 
—

 
—

 
 
 
Royalty on metals
 
0.05

 
0.04

 
0.15

 
 
 
Unit net cash costs
 
1.06

 
1.30

 
5.99

 
 
 
DD&A
 
0.50

 
0.41

 
1.23

 
 
 
Noncash and other credits, net
 
(0.03
)
 
(0.03
)
 
(0.07
)
 
 
 
Total unit costs
 
1.53

 
1.68

 
7.15

 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
0.01

 
0.01

 
0.90

 
 
 
Gross profit per pound
 
$
0.79

 
$
0.64

 
$
2.41

 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Production
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
Totals presented above
 
$
170

 
$
98

 
$
29

 
 
 
Royalty on metals
 
(3
)
 
—

 
—

 
 
 
Noncash and other credits, net
 
—

 
(2
)
 
—

 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
4

 
—

 
—

 
 
 
Eliminations and other adjustmentsc
 
(31
)
 
7

 
(29
)
 
 
 
Totald
 
140

 
103

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Includes point-of-sale transportation costs as negotiated in customer contracts.
b.
Net of cobalt downstream processing and freight costs.
c.
Reflects adjustments associated with reporting Tenke as discontinued operations, including the elimination of intercompany sales to FCX's consolidated subsidiaries and the impact of discontinuing DD&A.
d.
Represents amounts included in net (loss) income from discontinued operations, as reported in FCX's consolidated financial statements (in millions):
Revenues
$
140

 
Less:
 
 
Production and delivery costs
103

 
DD&A
—

 
Loss on sale
16

 
Allocated interest expense
6

 
Provision for income taxes
17

 
Other income, net
—

 
Net loss from discontinued operations
$
(2
)
 



XXVIII


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Three Months Ended December 31, 2015
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Cobalt
 
Total
 
Revenues, excluding adjustmentsa
 
$
248

 
$
248

 
$
59

 
$
307

 
 
 
 
 
 
 
 
 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
184

 
160

 
45

 
205

 
Cobalt creditsb
 
(32
)
 
—

 
—

 
—

 
Royalty on metals
 
5

 
4

 
1

 
5

 
Net cash costs
 
157

 
164

 
46

 
210

 
DD&A
 
62

 
53

 
9

 
62

 
Noncash and other costs, net
 
21

 
18

 
3

 
21

 
Total costs
 
240

 
235

 
58

 
293

 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(1
)
 
(2
)
 
(5
)
 
(7
)
 
Gross profit (loss)
 
$
7

 
$
11

 
$
(4
)
 
$
7

 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
117

 
117

 
 
 
 
 
Cobalt sales (millions of contained pounds)
 
 
 
 
 
9

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit (loss) per pound of copper and cobalt:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustmentsa
 
$
2.13

 
$
2.13

 
$
6.47

 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.58

 
1.37

 
4.97

 
 
 
Cobalt creditsb
 
(0.28
)
 
—

 
—

 
 
 
Royalty on metals
 
0.05

 
0.04

 
0.08

 
 
 
Unit net cash costs
 
1.35

 
1.41

 
5.05

 
 
 
DD&A
 
0.52

 
0.45

 
0.95

 
 
 
Noncash and other costs, net
 
0.18

 
0.15

 
0.38

 
 
 
Total unit costs
 
2.05

 
2.01

 
6.38

 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(0.02
)
 
(0.02
)
 
(0.60
)
 
 
 
Gross profit (loss) per pound
 
$
0.06

 
$
0.10

 
$
(0.51
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
Depreciation,
 
 
 
(In millions)
 
 
 
Production
 
Depletion and
 
 
 
 
 
Revenues
 
and Delivery
 
Amortization
 
 
 
Totals presented above
 
$
307

 
$
205

 
$
62

 
 
 
Royalty on metals
 
(5
)
 
—

 
—

 
 
 
Noncash and other costs, net
 
—

 
21

 
—

 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(7
)
 
—

 
—

 
 
 
Eliminations and other adjustmentsc
 
(16
)
 
(11
)
 
—

 
 
 
Totald
 
$
279

 
$
215

 
$
62

 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Includes point-of-sale transportation costs as negotiated in customer contracts.
b.
Net of cobalt downstream processing and freight costs.
c.
Reflects adjustments associated with the presentation of Tenke as discontinued operations, including the elimination of intercompany sales to FCX's consolidated subsidiaries.
d.
Represents amounts included in net (loss) income from discontinued operations, as reported in FCX's consolidated financial statements (in millions):
Revenues
$
279

 
Less:
 
 
Production and delivery costs
215

 
DD&A
62

 
Allocated interest expense
8

 
Benefit from income taxes
(4
)
 
Other expense, net
2

 
Net loss from discontinued operations
$
(4
)
 


XXIX


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Period from January 1, 2016, through November 16, 2016
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Cobalt
 
Total
 
Revenues, excluding adjustmentsa
 
$
893

 
$
893

 
$
243

 
$
1,136

 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
673

 
583

 
172

 
755

 
Cobalt creditsb
 
(165
)
 
—

 
—

 
—

 
Royalty on metals
 
20

 
16

 
4

 
20

 
Net cash costs
 
528

 
599

 
176

 
775

 
DD&A
 
210

 
172

 
38

 
210

 
Noncash and other costs, net
 
21

 
17

 
4

 
21

 
Total costs
 
759

 
788

 
218

 
1,006

 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(4
)
 
(4
)
 
4

 
—

 
Gross profit
 
$
130

 
$
101

 
$
29

 
$
130

 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
424

 
424

 
 
 
 
 
Cobalt sales (millions of contained pounds)
 
 
 
 
 
33

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper and cobalt:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustmentsa
 
$
2.10

 
$
2.10

 
$
7.45

 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.58

 
1.37

 
5.25

 
 
 
Cobalt creditsb
 
(0.39
)
 
—

 
—

 
 
 
Royalty on metals
 
0.05

 
0.04

 
0.12

 
 
 
Unit net cash costs
 
1.24

 
1.41

 
5.37

 
 
 
DD&A
 
0.50

 
0.41

 
1.16

 
 
 
Noncash and other costs, net
 
0.05

 
0.04

 
0.12

 
 
 
Total unit costs
 
1.79

 
1.86

 
6.65

 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(0.01
)
 
(0.01
)
 
0.12

 
 
 
Gross profit per pound
 
$
0.30

 
$
0.23

 
$
0.92

 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Production
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
Totals presented above
 
$
1,136

 
$
755

 
$
210

 
 
 
Royalty on metals
 
(20
)
 
—

 
—

 
 
 
Noncash and other costs, net
 
—

 
21

 
—

 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
—

 
—

 
—

 
 
 
Eliminations and other adjustmentsc
 
(157
)
 
57

 
(130
)
 
 
 
Totald
 
$
959

 
$
833

 
$
80

 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Includes point-of-sale transportation costs as negotiated in customer contracts.
b.
Net of cobalt downstream processing and freight costs.
c.
Reflects adjustments associated with the presentation of Tenke as discontinued operations, including the elimination of intercompany sales to FCX's consolidated subsidiaries and the impact of discontinuing DD&A.
d.
Represents amounts included in net (loss) income from discontinued operations, as reported in FCX's consolidated financial statements (in millions):
Revenues
$
959

 
Less:
 
 
Production and delivery costs
833

 
DD&A
80

 
Loss on sale
198

 
Allocated interest expense
39

 
Benefit from income taxes
(8
)
 
Other expense, net
10

 
Net loss from discontinued operations
$
(193
)
 


XXX


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Year Ended December 31, 2015
 
 
 
 
 
(In millions)
 
By-Product
 
Co-Product Method
 
 
 
Method
 
Copper
 
Cobalt
 
Total
 
Revenues, excluding adjustmentsa
 
$
1,129

 
$
1,129

 
$
287

 
$
1,416

 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
738

 
639

 
189

 
828

 
Cobalt creditsb
 
(196
)
 
—

 
—

 
—

 
Royalty on metals
 
25

 
20

 
5

 
25

 
Net cash costs
 
567

 
659

 
194

 
853

 
DD&A
 
257

 
213

 
44

 
257

 
Noncash and other costs, net
 
32

 
27

 
5

 
32

 
Total costs
 
856

 
899

 
243

 
1,142

 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(6
)
 
(6
)
 
(1
)
 
(7
)
 
Gross profit
 
$
267

 
$
224

 
$
43

 
$
267

 
 
 
 
 
 
 
 
 
 
 
Copper sales (millions of recoverable pounds)
 
467

 
467

 
 
 
 
 
Cobalt sales (millions of contained pounds)
 
 
 
 
 
35

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit per pound of copper and cobalt:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustmentsa
 
$
2.42

 
$
2.42

 
$
8.21

 
 
 
Site production and delivery, before net noncash
 
 
 
 
 
 
 
 
 
and other costs shown below
 
1.58

 
1.37

 
5.40

 
 
 
Cobalt creditsb
 
(0.42
)
 
—

 
—

 
 
 
Royalty on metals
 
0.05

 
0.04

 
0.14

 
 
 
Unit net cash costs
 
1.21

 
1.41

 
5.54

 
 
 
DD&A
 
0.55

 
0.46

 
1.26

 
 
 
Noncash and other costs, net
 
0.07

 
0.06

 
0.16

 
 
 
Total unit costs
 
1.83

 
1.93

 
6.96

 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(0.01
)
 
(0.01
)
 
(0.02
)
 
 
 
Gross profit per pound
 
$
0.58

 
$
0.48

 
$
1.23

 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Production
 
 
 
 
 
 
 
Revenues
 
and Delivery
 
DD&A
 
 
 
Totals presented above
 
$
1,416

 
$
828

 
$
257

 
 
 
Royalty on metals
 
(25
)
 
—

 
—

 
 
 
Noncash and other costs, net
 
—

 
32

 
—

 
 
 
Revenue adjustments, primarily for pricing
 
 
 
 
 
 
 
 
 
on prior period open sales
 
(7
)
 
—

 
—

 
 
 
Eliminations and other adjustmentsc
 
(114
)
 
(8
)
 
—

 
 
 
Totald
 
$
1,270

 
$
852

 
$
257

 
 
 
 
 
 
 
 
 
 
 
 
 
a.
Includes point-of-sale transportation costs as negotiated in customer contracts.
b.
Net of cobalt downstream processing and freight costs.
c.
Reflects adjustments associated with the presentation of Tenke as discontinued operations, including the elimination of intercompany sales to FCX's consolidated subsidiaries.
d.
Represents amounts included in net (loss) income from discontinued operations, as reported in FCX's consolidated financial statements (in millions):
Revenues
$
1,270

 
Less:
 
 
Production and delivery costs
852

 
DD&A
257

 
Allocated interest expense
28

 
Provision from income taxes
16

 
Other expense, net
26

 
Net income from discontinued operations
$
91

 


XXXI


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
(In millions)
 
 
 
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustmentsa
 
 
 
 
$
55

 
$
58

 
Site production and delivery, before net noncash
 and other costs shown below
 
49

 
59

 
Treatment charges and other
 
 
 
 
5

 
8

 
Net cash costs
 
 
 
 
54

 
67

 
DD&A
 
 
 
 
17

 
20

 
Metals inventory adjustments
 
 
 
 
3

 
5

 
Noncash and other costs, net
 
 
 
 
3

 
6

b 
Total costs
 
 
 
 
77

 
98

 
Gross loss
 
 
 
 
$
(22
)
 
$
(40
)
 
 
 
 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)a
 
 
 
 
7

 
9

 
 
 
 
 
 
 
 
 
 
Loss per pound of molybdenum:
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustmentsa
 
 
 
 
$
8.25

 
$
6.26

 
Site production and delivery, before net noncash
 and other costs shown below
 
7.41

 
6.31

 
Treatment charges and other
 
 
 
 
0.85

 
0.84

 
Unit net cash costs
 
 
 
 
8.26

 
7.15

 
DD&A
 
 
 
 
2.51

 
2.20

 
Metals inventory adjustments
 
 
 
 
0.45

 
0.48

 
Noncash and other costs, net
 
 
 
 
0.35

 
0.65

b 
Total unit costs
 
 
 
 
11.57

 
10.48

 
Gross loss per pound
 
 
 
 
$
(3.32
)
 
$
(4.22
)
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Metals
 
 
 
 
Production
 
 
 
Inventory
 
Three Months Ended December 31, 2016
Revenues
 
and Delivery
 
DD&A
 
Adjustments
 
Totals presented above
$
55

 
$
49

 
$
17

 
$
3

 
Treatment charges and other
(5
)
 
—

 
—

 
—

 
Noncash and other costs, net
—

 
3

 
—

 
—

 
Molybdenum mines
50

 
52

 
17

 
3

 
Other mining & eliminationsc
3,946

 
2,396

 
400

 
6

 
Total mining
3,996

 
2,448

 
417

 
9

 
U.S. oil & gas operations
381

 
274

 
173

 
—

 
Corporate, other & eliminations
—

 
18

 
3

 
—

 
As reported in FCX's consolidated financial statements
$
4,377

 
$
2,740

 
$
593

 
$
9

 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2015
 
 
 
 
 
 
 
 
Totals presented above
$
58

 
$
59

 
$
20

 
$
5

 
Treatment charges and other
(8
)
 
—

 
—

 
—

 
Noncash and other costs, net
—

 
6

 
—

 
—

 
Molybdenum mines
50

 
65

 
20

 
5

 
Other mining & eliminationsc
3,066

 
2,420

 
356

 
179

 
Total mining
3,116

 
2,485

 
376

 
184

 
U.S. oil & gas operations
400

 
354

 
339

 
—

 
Corporate, other & eliminations
—

 
(8
)
 
3

 
—

 
As reported in FCX's consolidated financial statements
$
3,516

 
$
2,831

 
$
718

 
$
184

 
 
 
 
 
 
 
 
 
 
a.
Reflects sales of the Molybdenum mines' production to FCX's molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on the actual contract terms for sales to third parties; as a result, FCX's consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.
b.
Includes restructuring charges of $5 million ($0.56 per pound).
c.
Represents the combined total for all other mining operations and the related eliminations, as presented in the supplementary schedule, “Business Segments” beginning on page XII. Also includes amounts associated with FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North and South America copper mines.



XXXII


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
 
 
 
 
 
Years Ended December 31,
 
(In millions)
 
 
 
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustmentsa
 
 
 
 
$
208

 
$
388

 
Site production and delivery, before net noncash
 and other costs shown below
 
195

 
299

 
Treatment charges and other
 
 
 
 
22

 
40

 
Net cash costs
 
 
 
 
217

 
339

 
DD&A
 
 
 
 
68

 
97

 
Metals inventory adjustments
 
 
 
 
15

 
11

 
Noncash and other costs, net
 
 
 
 
4

 
13

b 
Total costs
 
 
 
 
304

 
460

 
Gross loss
 
 
 
 
$
(96
)
 
$
(72
)
 
 
 
 
 
 
 
 
 
 
Molybdenum sales (millions of recoverable pounds)a
 
 
 
 
26

 
48

 
 
 
 
 
 
 
 
 
 
Gross loss per pound of molybdenum:
 
 
 
 
 
 
 
 
 
 
 
 
Revenues, excluding adjustmentsa
 
 
 
 
$
8.02

 
$
8.14

 
Site production and delivery, before net noncash
 and other costs shown below
 
7.50

 
6.27

 
Treatment charges and other
 
 
 
 
0.86

 
0.84

 
Unit net cash costs
 
 
 
 
8.36

 
7.11

 
DD&A
 
 
 
 
2.62

 
2.04

 
Metals inventory adjustments
 
 
 
 
0.58

 
0.22

 
Noncash and other costs, net
 
 
 
 
0.15

 
0.28

b 
Total unit costs
 
 
 
 
11.71

 
9.65

 
Gross loss per pound
 
 
 
 
$
(3.69
)
 
$
(1.51
)
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
 
 
 
 
 
 
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Metals
 
 
 
 
Production
 
 
 
Inventory
 
Year Ended December 31, 2016
Revenues
 
and Delivery
 
DD&A
 
Adjustments
 
Totals presented above
$
208

 
$
195

 
$
68

 
$
15

 
Treatment charges and other
(22
)
 
—

 
—

 
—

 
Noncash and other costs, net
—

 
4

 
—

 
—

 
Molybdenum mines
186

 
199

 
68

 
15

 
Other mining & eliminationsc
13,131

 
8,644

 
1,579

 
21

 
Total mining
13,317

 
8,843

 
1,647

 
36

 
U.S. oil & gas operations
1,513

 
1,801

 
869

 
—

 
Corporate, other & eliminations
—

 
53

 
14

 
—

 
As reported in FCX's consolidated financial statements
$
14,830

 
$
10,697

 
$
2,530

 
$
36

 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2015
 
 
 
 
 
 
 
 
Totals presented above
$
388

 
$
299

 
$
97

 
$
11

 
Treatment charges and other
(40
)
 
—

 
—

 
—

 
Noncash and other costs, net
—

 
13

 
—

 
—

 
Molybdenum mines
348

 
312

 
97

 
11

 
Other mining & eliminationsc
12,264

 
9,171

 
1,325

 
327

 
Total mining
12,612

 
9,483

 
1,422

 
338

 
U.S. oil & gas operations
1,994

 
1,211

 
1,804

 
—

 
Corporate, other & eliminations
1

 
(1
)
 
14

 
—

 
As reported in FCX's consolidated financial statements
$
14,607

 
$
10,693

 
$
3,240

 
$
338

 
 
 
 
 
 
 
 
 
 
a.
Reflects sales of the Molybdenum mines' production to FCX's molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on the actual contract terms for sales to third parties; as a result, FCX's consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.
b.
Includes restructuring charges totaling $7 million ($0.15 per pound).
c.
Represents the combined total for all other mining operations and the related eliminations, as presented in the supplemental schedule, “Business Segments” beginning on page XII. Also includes amounts associated with FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North and South America copper mines.



XXXIII


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
 
U.S. Oil & Gas Product Revenues, Cash Production Costs and Realizations
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Natural
 
 
 
Total U.S.
 
 
 
 
Oil
 
Gas
 
NGLs
 
Oil & Gas
 
 
Oil and gas revenues before derivatives
 
$
371

 
$
38

 
$
3

 
$
412

a 
 
Cash gains on derivative contracts
 
6

 
—

 
—

 
6

 
 
Realized revenues
 
$
377

 
$
38

 
$
3

 
418

 
 
Cash production costs
 
 
 
 
 
 
 
(153
)
a 
 
Cash operating margin
 
 
 
 
 
 
 
265

 
 
DD&A
 
 
 
 
 
 
 
(173
)
 
 
Accretion and other costs
 
 
 
 
 
 
 
(121
)
b 
 
Net noncash mark-to-market losses on derivative contracts
 
 
 
 
 
 
 
(41
)
 
 
Other revenue
 
 
 
 
 
 
 
4

 
 
Gross loss
 
 
 
 
 
 
 
$
(66
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Oil (MMBbls)
 
8.3

 
 
 
 
 
 
 
 
Gas (Bcf)
 
 
 
12.9

 
 
 
 
 
 
NGLs (MMBbls)
 
 
 
 
 
0.1

 
 
 
 
Oil Equivalents (MMBOE)
 
 
 
 
 
 
 
10.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oil
 
Natural Gas
 
NGLs
 
 
 
 
 
 
(per barrel)
 
(per MMBtu)
 
(per barrel)
 
Per BOE
 
 
Oil and gas revenues before derivatives
 
$
44.79

 
$
2.97

 
$
47.21

 
$
39.31

a 
 
Cash gains on derivative contracts
 
0.72

 
—

 
—

 
0.57

 
 
Realized revenues
 
$
45.51

 
$
2.97

 
$
47.21

 
39.88

 
 
Cash production costs
 
 
 
 
 
 
 
(14.62
)
a 
 
Cash operating margin
 
 
 
 
 
 
 
25.26

 
 
DD&A
 
 
 
 
 
 
 
(16.51
)
 
 
Accretion and other costs
 
 
 
 
 
 
 
(11.53
)
b 
 
Net noncash mark-to-market losses on derivative contracts
 
 
 
 
 
 
 
(3.89
)
 
 
Other revenue
 
 
 
 
 
 
 
0.41

 
 
Gross loss
 
 
 
 
 
 
 
$
(6.26
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
(In millions)
 
Revenues
 
Production and Delivery
 
DD&A
 
 
 
 
Totals presented above
 
$
412

 
$
153

 
$
173

 
 
 
 
Accretion and other costs
 
—

 
121

 
—

 
 
 
 
Cash gains on derivative contracts
 
6

 
—

 
—

 
 
 
 
Net noncash mark-to-market losses on derivative contracts
 
(41
)
 
—

 
—

 
 
 
 
Other revenue
 
4

 
—

 
—

 
 
 
 
U.S. oil & gas operations
 
381

 
274

 
173

 
 
 
 
Total miningc
 
3,996

 
2,448

 
417

 
 
 
 
Corporate, other & eliminations
 
—

 
18

 
3

 
 
 
 
As reported in FCX's consolidated financial statements
 
$
4,377

 
$
2,740

 
$
593

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Following is a summary of average realized price and cash production costs per BOE by region:
 
 
 
 
 
 
 
 
 
 
 
 
 
MBOE
 
Realized Revenues
(in millions)
 
Average Realized Price per BOE
 
Cash Production Costs
(in millions)
 
Cash Production Costs per BOE
Gulf of Mexico (GOM)
 
7,207

 
$
287

 
$
39.75

 
$
82

 
$
11.38

California
 
2,947

 
126

 
42.88

 
65

 
22.01

Haynesville/Madden/Other
 
338

 
5

 
16.13

 
6

 
19.24

 
 
10,492

 
$
418

 
39.31

 
$
153

 
14.62

b. Includes $93 million ($8.78 per BOE) primarily for idle rig and contract termination costs, inventory adjustments and asset impairments, partly offset by adjustments to prior period mineral tax assessments related to the California properties.
c. Represents the combined total for mining operations and the related eliminations, as presented in the supplemental schedule, “Business Segments” beginning on page XII.




XXXIV


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
 
Three Months Ended December 31, 2015
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Natural
 
 
 
Total U.S.
 
 
 
 
Oil
 
Gas
 
NGLs
 
Oil & Gas
 
 
Oil and gas revenues before derivatives
 
$
338

 
$
45

 
$
10

 
$
393

a 
 
Cash gains on derivative contracts
 
102

 
—

 
—

 
102

 
 
Realized revenues
 
$
440

 
$
45

 
$
10

 
495

 
 
Cash production costs
 
 
 
 
 
 
 
(214
)
a 
 
Cash operating margin
 
 
 
 
 
 
 
281

 
 
DD&A
 
 
 
 
 
 
 
(339
)
 
 
Impairment of oil and gas properties
 
 
 
 
 
 
 
(3,710
)
 
 
Accretion and other costs
 
 
 
 
 
 
 
(140
)
b 
 
Net noncash mark-to-market losses on derivative contracts
 
 
 
 
 
 
 
(102
)
 
 
Other revenue
 
 
 
 
 
 
 
7

 
 
Gross loss
 
 
 
 
 
 
 
$
(4,003
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Oil (MMBbls)
 
9.0

 
 
 
 
 
 
 
 
Gas (Bcf)
 
 
 
21.5

 
 
 
 
 
 
NGLs (MMBbls)
 
 
 
 
 
0.6

 
 
 
 
Oil Equivalents (MMBOE)
 
 
 
 
 
 
 
13.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oil
 
Natural Gas
 
NGLs
 
 
 
 
 
 
(per barrel)
 
(per MMbtu)
 
(per barrel)
 
Per BOE
 
 
Oil and gas revenues before derivatives
 
$
37.49

 
$
2.10

 
$
16.37

 
$
29.73

a 
 
Cash gains on derivative contracts
 
11.39

 
—

 
—

 
7.76

 
 
Realized revenues
 
$
48.88

 
$
2.10

 
$
16.37

 
37.49

 
 
Cash production costs
 
 
 
 
 
 
 
(16.17
)
a 
 
Cash operating margin
 
 
 
 
 
 
 
21.32

 
 
DD&A
 
 
 
 
 
 
 
(25.61
)
 
 
Impairment of oil and gas properties
 
 
 
 
 
 
 
(280.80
)
 
 
Accretion and other costs
 
 
 
 
 
 
 
(10.64
)
b 
 
Net noncash mark-to-market losses on derivative contracts
 
 
 
 
 
 
 
(7.72
)
 
 
Other revenue
 
 
 
 
 
 
 
0.53

 
 
Gross loss
 
 
 
 
 
 
 
$
(302.92
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
(In millions)
 
Revenues
 
Production and Delivery
 
DD&A
 
Impairment of Oil and Gas Properties
 
 
Totals presented above
 
$
393

 
$
214

 
$
339

 
$
3,710

 
 
Cash gains on derivative contracts
 
102

 
—

 
—

 
—

 
 
Net noncash mark-to-market losses on derivative contracts
 
(102
)
 
—

 
—

 
—

 
 
Accretion and other costs
 
—

 
140

 
—

 
—

 
 
Other revenue
 
7

 
—

 
—

 
—

 
 
U.S. oil & gas operations
 
400

 
354

 
339

 
3,710

 
 
Total miningc
 
3,116

 
2,485

 
376

 
—

 
 
Corporate, other & eliminations
 
—

 
(8
)
 
3

 
(8
)
d 
 
As reported in FCX's consolidated financial statements
 
$
3,516

 
$
2,831

 
$
718

 
$
3,702

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
a. Following is a summary of average realized price and cash production costs per BOE by region:
 
 
 
 
 
 
 
 
 
 
 
 
 
MBOE
 
Revenues
(in millions)
 
Average Realized Price per BOE
 
Cash Production Costs
(in millions)
 
Cash Production Costs per BOE
GOM
 
7,994

 
$
261

 
$
32.65

 
$
96

 
$
11.94

California
 
3,282

 
107

 
32.44

 
100

 
30.53

Haynesville/Madden/Other
 
1,935

 
25

 
13.11

 
18

 
9.37

 
 
13,211

 
$
393

 
29.73

 
$
214

 
16.17

b. Includes $129 million ($9.83 per BOE) primarily for asset impairments and inventory adjustments, idle/terminated rig costs and prior period mineral tax assessments related to the California properties.
c. Represents the combined total for all mining operations and the related eliminations, as presented in the supplemental schedule, “Business Segments” beginning on page XII.
d. Primarily reflects adjustments to the third-quarter 2015 impairment of the Morocco oil and gas properties.

XXXV


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
 
Year Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Natural
 
 
 
Total U.S.
 
 
 
 
Oil
 
Gas
 
NGLs
 
Oil & Gas
 
 
Oil and gas revenues before derivatives
 
$
1,339

 
$
155

 
$
33

 
$
1,527

a 
 
Cash gains on derivative contracts
 
6

 
—

 
—

 
6

 
 
Realized revenues
 
$
1,345

 
$
155

 
$
33

 
1,533

 
 
Cash production costs
 
 
 
 
 
 
 
(714
)
a 
 
Cash operating margin
 
 
 
 
 
 
 
819

 
 
DD&A
 
 
 
 
 
 
 
(869
)
 
 
Impairment of oil and gas properties
 
 
 
 
 
 
 
(4,299
)
 
 
Accretion and other costs
 
 
 
 
 
 
 
(1,087
)
b 
 
Net noncash mark-to-market losses on derivative contracts
 
 
 
 
 
 
 
(41
)
 
 
Other revenue
 
 
 
 
 
 
 
21

 
 
Gross loss
 
 
 
 
 
 
 
$
(5,456
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Oil (MMBbls)
 
34.4

 
 
 
 
 
 
 
 
Gas (Bcf)
 
 
 
65.1

 
 
 
 
 
 
NGLs (MMBbls)
 
 
 
 
 
1.8

 
 
 
 
Oil Equivalents (MMBOE)
 
 
 
 
 
 
 
47.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oil
 
Natural Gas
 
NGLs
 
 
 
 
 
 
(per barrel)
 
(per MMBtu)
 
(per barrel)
 
Per BOE
 
 
Oil and gas revenues before derivatives
 
$
38.96

 
$
2.38

 
$
18.11

 
$
32.46

a 
 
Cash gains on derivative contracts
 
0.17

 
—

 
—

 
0.13

 
 
Realized revenues
 
$
39.13

 
$
2.38

 
$
18.11

 
32.59

 
 
Cash production costs
 
 
 
 
 
 
 
(15.19
)
a 
 
Cash operating margin
 
 
 
 
 
 
 
17.40

 
 
DD&A
 
 
 
 
 
 
 
(18.47
)
 
 
Impairment of oil and gas properties
 
 
 
 
 
 
 
(91.35
)
 
 
Accretion and other costs
 
 
 
 
 
 
 
(23.10
)
b 
 
Net noncash mark-to-market losses on derivative contracts
 
 
 
 
 
 
 
(0.87
)
 
 
Other revenue
 
 
 
 
 
 
 
0.44

 
 
Gross loss
 
 
 
 
 
 
 
$
(115.95
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
(In millions)
 
Revenues
 
Production and Delivery
 
DD&A
 
Impairment of Oil and Gas Properties
 
 
Totals presented above
 
$
1,527

 
$
714

 
$
869

 
$
4,299

 
 
Cash gains on derivative contracts
 
6

 
—

 
—

 
—

 
 
Net noncash mark-to-market losses on derivative contracts
 
(41
)
 
—

 
—

 
—

 
 
Accretion and other costs
 
—

 
1,087

 
—

 
—

 
 
Other revenue
 
21

 
—

 
—

 
—

 
 
U.S. oil & gas operations
 
1,513

 
1,801

 
869

 
4,299

 
 
Total miningc
 
13,317

 
8,843

 
1,647

 
—

 
 
Corporate, other & eliminations
 
—

 
53

 
14

 
18

 
 
As reported in FCX's consolidated financial statements
 
$
14,830

 
$
10,697

 
$
2,530

 
$
4,317

 
 
 
 
 
 
 
 
 
 
 
 
 
a. Following is a summary of average realized price and cash production costs per BOE by region:
 
 
 
 
 
 
 
 
 
 
 
 
 
MBOE
 
Realized Revenues
(in millions)
 
Average Realized Price per BOE
 
Cash Production Costs
(in millions)
 
Cash Production Costs per BOE
GOM
 
31,087

 
$
1,060

 
$
34.09

 
$
379

 
$
12.20

California
 
11,817

 
420

 
35.52

 
289

 
24.43

Haynesville/Madden/Other
 
4,154

 
53

 
12.98

 
46

 
11.26

 
 
47,058

 
$
1,533

 
32.46

 
$
714

 
15.19

b. Includes charges of $1.0 billion ($21.63 per BOE) primarily for drillship settlements/idle rig and contract termination costs, inventory adjustments and asset impairments, partly offset by adjustments to prior period mineral tax assessments related to the California properties.
c. Represents the combined total for mining operations and the related eliminations, as presented in the supplemental schedule, “Business Segments,” beginning on page XII.



XXXVI


FREEPORT-McMoRan INC.
PRODUCT REVENUES AND PRODUCTION COSTS (continued)
 
 
Year Ended December 31, 2015
 
 
 
 
 
 
 
 
(In millions)
 
 
 
Natural
 
 
 
Total U.S.
 
 
 
 
Oil
 
Gas
 
NGLs
 
Oil & Gas
 
 
Oil and gas revenues before derivatives
 
$
1,607

 
$
232

 
$
46

 
$
1,885

a 
 
Cash gains on derivative contracts
 
406

 
—

 
—

 
406

 
 
Realized revenues
 
$
2,013

 
$
232

 
$
46

 
2,291

 
 
Cash production costs
 
 
 
 
 
 
 
(979
)
a 
 
Cash operating margin
 
 
 
 
 
 
 
1,312

 
 
DD&A
 
 
 
 
 
 
 
(1,804
)
 
 
Impairment of oil and gas properties
 
 
 
 
 
 
 
(12,980
)
 
 
Accretion and other costs
 
 
 
 
 
 
 
(232
)
b 
 
Net noncash mark-to-market losses on derivative contracts
 
 
 
 
 
 
 
(319
)
 
 
Other revenues
 
 
 
 
 
 
 
22

 
 
Gross loss
 
 
 
 
 
 
 
$
(14,001
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Oil (MMBbls)
 
35.3

 
 
 
 
 
 
 
 
Gas (Bcf)
 
 
 
89.7

 
 
 
 
 
 
NGLs (MMBbls)
 
 
 
 
 
2.4

 
 
 
 
Oil Equivalents (MMBOE)
 
 
 
 
 
 
 
52.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oil
 
Natural Gas
 
NGLs
 
 
 
 
 
 
(per barrel)
 
(per MMbtu)
 
(per barrel)
 
Per BOE
 
 
Oil and gas revenues before derivatives
 
$
45.58

 
$
2.59

 
$
18.90

 
$
35.82

a 
 
Cash gains on derivative contracts
 
11.53

 
—

 
—

 
7.72

 
 
Realized revenues
 
$
57.11

 
$
2.59

 
$
18.90

 
43.54

 
 
Cash production costs
 
 
 
 
 
 
 
(18.59
)
a 
 
Cash operating margin
 
 
 
 
 
 
 
24.95

 
 
DD&A
 
 
 
 
 
 
 
(34.28
)
 
 
Impairment of oil and gas properties
 
 
 
 
 
 
 
(246.67
)
 
 
Accretion and other costs
 
 
 
 
 
 
 
(4.41
)
b 
 
Net noncash mark-to-market losses on derivative contracts
 
 
 
 
 
 
 
(6.07
)
 
 
Other revenues
 
 
 
 
 
 
 
0.43

 
 
Gross loss
 
 
 
 
 
 
 
$
(266.05
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation to Amounts Reported
 
 
(In millions)
 
Revenues
 
Production and Delivery
 
DD&A
 
Impairment of Oil and Gas Properties
 
 
Totals presented above
 
$
1,885

 
$
979

 
$
1,804

 
$
12,980

 
 
Cash gains on derivative contracts
 
406

 
—

 
—

 
—

 
 
Net noncash mark-to-market losses on derivative contracts
 
(319
)
 
—

 
—

 
—

 
 
Accretion and other costs
 
—

 
232

 
—

 
—

 
 
Other revenues
 
22

 
—

 
—

 
—

 
 
U.S. oil & gas operations
 
1,994

 
1,211

 
1,804

 
12,980

 
 
Total miningc
 
12,612

 
9,483

 
1,422

 
—

 
 
Corporate, other & eliminations
 
1

 
(1
)
 
14

 
164

d 
 
As reported in FCX's consolidated financial statements
 
$
14,607

 
$
10,693

 
$
3,240

 
$
13,144

 
 
 
 
 
 
 
 
 
 
 
 
 
a. Following is a summary of average realized price and cash production costs per BOE by region.
 
 
 
 
 
 
 
 
 
 
 
 
 
MBOE
 
Revenues
(in millions)
 
Average Realized Price per BOE
 
Cash Production Costs
(in millions)
 
Cash Production Costs per BOE
GOM
 
30,350

 
$
1,208

 
$
39.81

 
$
470

 
$
15.46

California
 
13,460

 
538

 
39.92

 
412

 
30.66

Haynesville/Madden/Other
 
8,812

 
139

 
15.77

 
97

 
11.02

 
 
52,622

 
$
1,885

 
35.82

 
$
979

 
18.59

b.
Includes $188 million ($3.58 per BOE) primarily for asset impairments and inventory adjustments, idle/terminated rig costs and prior period mineral tax assessments related to the California properties.
c.
Represents the combined total for all mining operations and the related eliminations, as presented in the supplemental schedule, “Business Segments” beginning on page XII.
d.
Reflects impairment of international oil and gas properties, primarily in Morocco.


XXXVII