

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended ~~June~~September 30, 2014
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from		to
Commission File Number: 001-11307-01

Freeport-McMoRan Inc.

(Exact name of registrant as specified in its charter)



Delaware	74-2480931
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

333 North Central Avenue
Phoenix, AZ	85004-2189
(Address of principal executive offices)	(Zip Code)
(602) 366-8100
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨ Yes þ No

On ~~July~~October 31, 2014, there were issued and outstanding ~~1,039,046,081~~1,039,118,147 shares of the registrant’s common stock, par value $0.10 per share.

FREEPORT-McMoRan INC.

TABLE OF CONTENTS




	Page

Part I. Financial Information	3

Item 1. Financial Statements:

Condensed Consolidated Balance Sheets (Unaudited)	3

Consolidated Statements of Income (Unaudited)	4

Consolidated Statements of Comprehensive Income (Unaudited)	5

Consolidated Statements of Cash Flows (Unaudited)	6

Consolidated Statement of Equity (Unaudited)	7

Notes to Consolidated Financial Statements (Unaudited)	8

Review Report of Independent Registered Public Accounting Firm	31

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3. Quantitative and Qualitative Disclosures About Market Risk	8890

Item 4. Controls and Procedures	8890

Part II. Other Information	8890

Item 1. Legal Proceedings	8890

Item 1A. Risk Factors	8890

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	9092

Item 4. Mine Safety Disclosure	9092

Item 5. Other Information	93

Item 6. Exhibits	9096

Signature	9196

Exhibit Index	E-1

Table of Contents


Part I.	FINANCIAL INFORMATION


Item 1.	Financial Statements.

FREEPORT-McMoRan INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


	June 30, 2014			December 31, 2013			September 30, 2014			December 31, 2013
	(In millions)						(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	1,458		$	1,985		$	658		$	1,985
Trade accounts receivable	1,838			1,728			1,514			1,728
Other accounts receivable	920			834			793			834
Inventories:
Mill and leach stockpiles	1,880			1,705			1,967			1,705
Materials and supplies, net	1,825			1,730			1,943			1,730
Product	1,665			1,583			1,579			1,583
Other current assets	668			407			577			407
Total current assets	10,254			9,972			9,031			9,972
Property, plant, equipment and mining development costs, net	25,407			24,042			26,304			24,042
Oil and gas properties - full cost method
Subject to amortization, less accumulated amortization	11,057			12,472			11,306			12,472
Not subject to amortization	10,769			10,887			11,031			10,887
Long-term mill and leach stockpiles	2,518			2,386			2,569			2,386
Goodwill	1,717			1,916			1,717			1,916
Other assets	2,287			1,798			2,018			1,798
Total assets	$	64,009		$	63,473		$	63,976		$	63,473

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	3,950		$	3,708		$	3,784		$	3,708
Current portion of debt	2,784			312			1,762			312
Dividends payable	334			333			334			333
Current portion of environmental and asset retirement obligations	250			236			310			236
Accrued income taxes	240			184			153			184
Total current liabilities	7,558			4,773			6,343			4,773
Long-term debt, less current portion	17,512			20,394			17,975			20,394
Deferred income taxes	7,451			7,410			7,559			7,410
Environmental and asset retirement obligations, less current portion	3,294			3,259			3,654			3,259
Other liabilities	1,782			1,690			1,730			1,690
Total liabilities	37,597			37,526			37,261			37,526

Redeemable noncontrolling interest	745			716			749			716

Equity:
FCX stockholders’ equity:
Common stock	117			117			117			117
Capital in excess of par value	22,221			22,161			22,248			22,161
Retained earnings	3,081			2,742			3,306			2,742
Accumulated other comprehensive loss	(401		)	(405		)	(394		)	(405		)
Common stock held in treasury	(3,686		)	(3,681		)	(3,686		)	(3,681		)
Total FCX stockholders’ equity	21,332			20,934			21,591			20,934
Noncontrolling interests	4,335			4,297			4,375			4,297
Total equity	25,667			25,231			25,966			25,231
Total liabilities and equity	$	64,009		$	63,473		$	63,976		$	63,473

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

FREEPORT-McMoRan INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2014			2013			2014			2013			2014			2013			2014			2013
	(In millions, except per share amounts)												(In millions, except per share amounts)
Revenues	$	5,522		$	4,288		$	10,507		$	8,871		$	5,696		$	6,165		$	16,203		$	15,036
Cost of sales:
Production and delivery	3,082			2,853			5,819			5,572			3,152			3,332			8,971			8,904
Depreciation, depletion and amortization	1,013			530			1,979			859			945			919			2,924			1,778
Impairment of oil and gas properties													308			—			308			—
Total cost of sales	4,095			3,383			7,798			6,431			4,405			4,251			12,203			10,682
Selling, general and administrative expenses	164			186			299			299			158			158			457			457
Mining exploration and research expenses	34			64			64			116			29			57			93			173
Environmental obligations and shutdown costs	76			16			82			31			18			(8		)	100			23
Net gain on sales of assets													(46		)	—			(46		)	—
Total costs and expenses	4,369			3,649			8,243			6,877			4,564			4,458			12,807			11,335
Operating income	1,153			639			2,264			1,994			1,132			1,707			3,396			3,701
Interest expense, net	(164		)	(132		)	(325		)	(189		)	(158		)	(162		)	(483		)	(351		)
Net gain (loss) on early extinguishment of debt	5			—			5			(45		)	58			—			63			(45		)
Gain on investment in McMoRan Exploration Co.	—			128			—			128			—			—			—			128
Other (expense) income, net	(8		)	13			25			10
Income before income taxes and equity in affiliated companies' net earnings	986			648			1,969			1,898
Other income, net													23			3			48			13
Income before income taxes and equity in affiliated companies' net (losses) earnings													1,055			1,548			3,024			3,446
Provision for income taxes	(328		)	(40		)	(685		)	(468		)	(349		)	(499		)	(1,034		)	(967		)
Equity in affiliated companies’ net earnings	2			2			2			4
Equity in affiliated companies’ net (losses) earnings													(2		)	(1		)	—			3
Net income	660			610			1,286			1,434			704			1,048			1,990			2,482
Net income attributable to noncontrolling interests	(168		)	(125		)	(274		)	(301		)	(142		)	(218		)	(416		)	(519		)
Preferred dividends attributable to redeemable noncontrolling interest	(10		)	(3		)	(20		)	(3		)	(10		)	(9		)	(30		)	(12		)
Net income attributable to FCX common stockholders	$	482		$	482		$	992		$	1,130		$	552		$	821		$	1,544		$	1,951

Net income per share attributable to FCX common stockholders:
Basic	$	0.46		$	0.49		$	0.95		$	1.17		$	0.53		$	0.79		$	1.48		$	1.97
Diluted	$	0.46		$	0.49		$	0.95		$	1.17		$	0.53		$	0.79		$	1.47		$	1.96

Weighted-average common shares outstanding:
Basic	1,039			980			1,039			965			1,039			1,038			1,039			989
Diluted	1,045			984			1,045			968			1,046			1,043			1,045			993

Dividends declared per share of common stock	$	0.3125		$	1.3125		$	0.625		$	1.625		$	0.3125		$	0.3125		$	0.9375		$	1.9375

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

FREEPORT-McMoRan INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2014			2013			2014			2013			2014			2013			2014			2013
	(In millions)												(In millions)
Net income	$	660		$	610		$	1,286		$	1,434		$	704		$	1,048		$	1,990		$	2,482

Other comprehensive income, net of taxes:
Defined benefit plans:
Amortization of unrecognized amounts included in net periodic benefit costs	4			5			7			12			5			6			12			18
Foreign exchange losses	(3		)	—			(3		)	—			2			—			(1		)	—
Translation adjustments and unrealized gains (losses) on securities	—			—			—			(1		)	—			4			—			3
Other comprehensive income	1			5			4			11			7			10			11			21

Total comprehensive income	661			615			1,290			1,445			711			1,058			2,001			2,503
Total comprehensive income attributable to noncontrolling interests	(168		)	(125		)	(274		)	(301		)	(142		)	(217		)	(416		)	(518		)
Preferred dividends attributable to redeemable noncontrolling interest	(10		)	(3		)	(20		)	(3		)	(10		)	(9		)	(30		)	(12		)
Total comprehensive income attributable to FCX common stockholders	$	483		$	487		$	996		$	1,141		$	559		$	832		$	1,555		$	1,973

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

FREEPORT-McMoRan INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Six Months Ended						Nine Months Ended
	June 30,						September 30,
	2014			2013			2014			2013
	(In millions)						(In millions)
Cash flow from operating activities:
Net income	$	1,286		$	1,434		$	1,990		$	2,482
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	1,979			859			2,924			1,778
Impairment of oil and gas properties							308			—
Net losses on crude oil and natural gas derivative contracts	120			35			56			205
Gain on investment in McMoRan Exploration Co. (MMR)	—			(128		)	—			(128		)
Stock-based compensation	69			65
Pension plans contributions	(28		)	(42		)
Net charges for environmental and asset retirement obligations, including accretion	97			73			146			98
Payments for environmental and asset retirement obligations	(96		)	(91		)	(134		)	(166		)
Net (gain) loss on early extinguishment of debt	(5		)	45			(63		)	45
Net gain on sales of assets							(46		)	—
Deferred income taxes	37			43			107			169
Increase in long-term mill and leach stockpiles	(131		)	(236		)	(182		)	(348		)
Other, net	36			3			106			97
(Increases) decreases in working capital and changes in other tax payments, excluding amounts from acquisitions:
Decreases (increases) in working capital and changes in other tax payments, excluding amounts from acquisitions and dispositions:
Accounts receivable	(243		)	350			200			51
Inventories	(230		)	(160		)	(267		)	(66		)
Other current assets	35			58			(26		)	162
Accounts payable and accrued liabilities	(186		)	(371		)	(379		)	(596		)
Accrued income taxes and other tax payments	(153		)	(72		)	(227		)	(40		)
Net cash provided by operating activities	2,587			1,865			4,513			3,743

Cash flow from investing activities:
Capital expenditures:
North America copper mines	(627		)	(543		)	(815		)	(795		)
South America	(839		)	(470		)	(1,278		)	(734		)
Indonesia	(479		)	(511		)	(722		)	(720		)
Africa	(60		)	(103		)	(100		)	(155		)
Molybdenum mines	(33		)	(82		)	(45		)	(128		)
U.S. oil and gas operations	(1,484		)	(190		)	(2,392		)	(928		)
Other	(40		)	(79		)	(63		)	(163		)
Acquisition of Deepwater Gulf of Mexico interests	(925		)	—			(1,421		)	—
Acquisition of Plains Exploration & Production Company, net of cash acquired	—			(3,465		)	—			(3,465		)
Acquisition of MMR, net of cash acquired	—			(1,628		)	—			(1,628		)
Acquisition of cobalt chemical business, net of cash acquired	—			(321		)	—			(348		)
Net proceeds from sale of Eagle Ford shale assets	3,009			—			2,971			—
Restricted cash and other, net	(363		)	(264		)
Other, net							221			(24		)
Net cash used in investing activities	(1,841		)	(7,656		)	(3,644		)	(9,088		)

Cash flow from financing activities:
Proceeds from debt	1,248			11,021			3,346			11,229
Repayments of debt	(1,611		)	(4,541		)	(4,196		)	(4,816		)
Redemption of MMR preferred stock	—			(202		)	—			(227		)
Cash dividends and distributions paid:
Common stock	(653		)	(595		)	(979		)	(1,957		)
Noncontrolling interests	(250		)	(90		)	(365		)	(157		)
Contributions from noncontrolling interests	24			—			24			—
Debt financing costs	(34		)	(111		)
Stock-based awards net proceeds (payments), including excess tax benefit	3			(102		)	7			(100		)
Debt financing costs and other, net							(33		)	(113		)
Net cash (used in) provided by financing activities	(1,273		)	5,380			(2,196		)	3,859

Net decrease in cash and cash equivalents	(527		)	(411		)	(1,327		)	(1,486		)
Cash and cash equivalents at beginning of year	1,985			3,705			1,985			3,705
Cash and cash equivalents at end of period	$	1,458		$	3,294		$	658		$	2,219

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

FREEPORT-McMoRan INC.

CONSOLIDATED STATEMENT OF EQUITY (Unaudited)


	FCX Stockholders’ Equity																																	FCX Stockholders’ Equity
	Common Stock								Retained Earnings				Accumu- lated Other Compre- hensive Loss				Common Stock Held in Treasury						Total FCX Stock-holders' Equity											Common Stock											Retained Earnings			Accumu- lated Other Compre- hensive Loss				Common Stock Held in Treasury						Total FCX Stock-holders' Equity
	Number of Shares	At Par Value			Capital in Excess of Par Value							Number of Shares					At Cost				Non- controlling Interests						Total Equity			Number of Shares			At Par Value				Capital in Excess of Par Value						Number of Shares								At Cost					Non- controlling Interests						Total Equity
	Number of Shares			Retained Earnings				Accumu- lated Other Compre- hensive Loss				Number of Shares				Total FCX Stock-holders' Equity										Retained Earnings				Number of Shares		Accumu- lated Other Compre- hensive Loss	At Par Value			Total FCX Stock-holders' Equity							Number of Shares								At Cost					Non- controlling Interests						Total Equity
	(In millions)																												(In millions)
Balance at December 31, 2013	1,165	At Par Value				$	117						$	22,161				$	2,742		Non- controlling Interests			$	(405			)	127		$		(3,681	)	$			20,934		$	4,297		$	25,231		1,165		$	117			$	22,161			$	2,742		$	(405	)	127		$	(3,681	)	$	20,934	$	4,297	$	25,231
Exercised and issued stock-based awards	1	—					8				—				—				—			—						8					—						8			2			—			13				—				—			—			—				13			—			13
Stock-based compensation	—	—			52					—				—				—			—				52				—				52			—			—				75				—			—				—			—			75				—				75
Tender of shares for stock-based awards	—	—			—				—				—				—		(5		)		(5		)		—				(5		)	—			—				—				—			—				—			(5		)	(5		)		—				(5		)
Dividends on common stock	—	—			—				(653		)		—				—		—				(653		)		—				(653		)	—			—				—				(980		)	—				—			—			(980		)		—				(980		)
Dividends to noncontrolling interests	—	—			—				—				—				—		—				—				(236		)		(236		)	—			—				—				—			—				—			—			—				(344		)		(344		)
Noncontrolling interests' share of contributed capital in subsidiary																																		—			—				(1		)		—			—				—			—			(1		)		6				5
Net income attributable to FCX common stockholders	—	—			—				992				—				—		—				992				—				992			—			—				—				1,544			—				—			—			1,544				—				1,544
Net income attributable to noncontrolling interests	—	—			—				—				—				—		—				—				274				274			—			—				—				—			—				—			—			—				416				416
Other comprehensive income	—	—			—				—				4				—		—				4				—				4			—			—				—				—			11				—			—			11				—				11
Balance at June 30, 2014	1,166	$	117		$	22,221			$	3,081			$	(401	)		127		$	(3,686	)		$	21,332			$	4,335			$	25,667
Balance at September 30, 2014																																		1,167			$	117			$	22,248			$	3,306		$	(394	)		127			$	(3,686	)	$	21,591			$	4,375			$	25,966

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

FREEPORT-McMoRan INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1. GENERAL INFORMATION

Effective July 14, 2014, Freeport-McMoRan Copper & Gold Inc. changed its name to Freeport-McMoRan Inc. (FCX) to simplify the corporate name and better reflect FCX's expanded portfolio of assets. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required by generally accepted accounting principles (GAAP) in the United States (U.S.). Therefore, this information should be read in conjunction with FCX's consolidated financial statements and notes contained in its annual report on Form 10-K for the year ended December 31, 2013. The information furnished herein reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods reported. With the exception of the oil and gas properties impairment discussed below and certain adjustments associated with the acquisitions of Plains Exploration & Production Company (PXP) and McMoRan Exploration Co. (MMR), collectively known as FCX Oil & Gas Inc. (FM O&G), all such adjustments are, in the opinion of management, of a normal recurring nature. Operating results for the three-month and ~~six-month~~nine-month periods ended ~~June~~September 30, 2014, are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.

As further discussed in Note 2, FCX completed its acquisitions of PXP on May 31, 2013, and MMR on June 3, 2013. The results included in these financial statements for ~~second-quarter 2013 and~~ the ~~six~~nine months ended ~~June~~September 30, 2013, include PXP's results beginning June 1, 2013, and MMR's results beginning June 4, 2013.

Oil and Gas Properties. Under the Securities and Exchange Commission's (SEC) full cost accounting rules, FCX reviews the carrying value of its oil and gas properties each quarter on a country-by-country basis. Under these rules, capitalized costs of oil and gas properties (net of accumulated depreciation, depletion and amortization, and related deferred income taxes) for each cost center may not exceed a “ceiling” equal to:

the present value, discounted at 10 percent, of estimated future net cash flows from the related proved oil and natural gas reserves, net of estimated future income taxes; plus

the cost of the related unproved properties not being amortized; plus

the lower of cost or estimated fair value of the related unproved properties included in the costs being amortized (net of related tax effects).

These rules require that FCX price its future oil and gas production at the twelve-month average of the first-day-of-the-month historical reference prices as adjusted for location and quality differentials. FCX's reference prices are West Texas Intermediate for oil and the Henry Hub spot price for natural gas. Such prices are utilized except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts. The reserve estimates exclude the effect of any crude oil and natural gas derivatives FCX has in place. The estimated future net cash flows also exclude future cash outflows associated with settling asset retirement obligations included in the net book value of the oil and gas properties. The rules require an impairment if the capitalized costs exceed this “ceiling.”

At September 30, 2014, the net capitalized costs with respect to FCX's U.S. oil and gas properties exceeded the related ceiling; therefore, an impairment charge of $308 million was recorded in third-quarter 2014, primarily because of higher capitalized costs and the lower twelve-month average of the first-day-of-the-month historical reference oil price at September 30, 2014. During October 2014, oil prices declined from the third-quarter average. Continuation of recent oil price declines, increases in capitalized costs subject to amortization and other factors may result in future additional ceiling test impairments.

NOTE 2. ACQUISITIONS AND DISPOSITIONS

Eagle Ford Disposition. On June 20, 2014, FCX completed the sale of its Eagle Ford shale assets to a subsidiary of Encana Corporation for cash consideration of $3.1 billion, before closing adjustments from the April 1, 2014, effective date. Under full cost accounting rules, the proceeds were recorded as a reduction of capitalized oil and gas properties, with no gain or loss recognition, except for $62 million of deferred tax expense recorded through September 30, 2014, in connection with the allocation of $221 million of goodwill (for which deferred taxes were not previously provided) to the Eagle Ford shale assets. Approximately $1.3 billion of proceeds from this transaction was placed in a like-kind exchange escrow and was used to reinvest in additional oil and gas interests, as discussed below. The remaining proceeds were used to repay debt.

Table of Contents

Deepwater Gulf of Mexico (GOM) Acquisitions. On June 30, 2014, FCX completed the acquisition of interests in the Deepwater GOM from a subsidiary of Apache Corporation, including interests in the Lucius and Heidelberg oil fields and several exploration leases, for $919 million. Based on preliminary valuations, and including transaction costs and estimated asset retirement costs, FCX recorded capitalized costs for oil and gas properties subject to amortization of $460 million and costs not subject to amortization of $476 million. The Deepwater GOM acquisition was funded by the like-kind exchange escrow.

Additionally, on September 8, 2014, FCX completed the acquisition of additional Deepwater GOM interests for $496 million, including an interest in the Vito oil discovery in the Mississippi Canyon area and a significant lease position in the Vito basin area. Based on preliminary valuations, and including purchase price adjustments and transaction costs, FCX recorded capitalized costs for oil and gas properties not subject to amortization of $509 million. This acquisition was funded in part with the remaining $414 million of funds from the like-kind exchange escrow.

PXP and MMR Acquisitions. The second-quarter 2013 acquisitions of PXP and MMR added a portfolio of oil and gas assets to FCX's global mining business, creating a U.S.-based natural resources company. The acquisitions have been accounted for under the acquisition method, with FCX as the acquirer.

During ~~the second quarter of~~second-quarter 2014, FCX finalized the purchase price allocations, which resulted in a net increase of $20 million to oil and gas properties, an increase of $22 million to goodwill and a net decrease of $42 million to deferred income tax assets.

For further discussion of the PXP and MMR acquisitions and the related financing, refer to Notes 2 and 8 in FCX's annual report on Form 10-K for the year ended December 31, 2013.

Unaudited Pro Forma Consolidated Financial Information. The following unaudited pro forma financial information has been prepared to reflect the acquisitions of PXP and MMR. The unaudited pro forma financial information combines the historical statements of income of FCX, PXP and MMR for the ~~three-month and six-month periods~~nine months ended ~~June~~September 30, 2013, giving effect to the mergers as if they had occurred on January 1, 2012. The historical consolidated financial information has been adjusted to reflect factually supportable items that are directly attributable to the acquisitions.


	Three Months		Six Months		Nine Months
	Ended		Ended		Ended
	June 30, 2013		June 30, 2013		September 30, 2013
	(in millions, except per share amounts)				(in millions, except per share amounts)

Revenues	$	5,330	$	11,025	$	17,190
Operating income	1,330		2,910		4,617
Income from continuing operations	722		1,635
Net income from continuing operations					2,683
Net income attributable to FCX common stockholders	585		1,313		2,134

Net income per share attributable to FCX common stockholders:
Basic	$	0.56	$	1.26	$	2.05
Diluted	0.56		1.26		2.04

~~Table of Contents~~

The unaudited pro forma consolidated information for the nine months ended September 30, 2013, has been prepared for illustrative purposes only and is not intended to be indicative of the results of operations that actually would have occurred, or the results of operations expected in future periods, had the events reflected herein occurred on the date indicated. The most significant pro forma adjustments to net income from continuing operations for the ~~three-month period~~nine months ended ~~June~~September 30, 2013, were to exclude ~~$506~~$519 million of acquisition-related costs, the net tax benefit of $183 million of acquisition-related adjustments and the $128 million gain on the investment in MMR. Additionally, for the ~~six-month period~~nine months ended ~~June~~September 30, 2013, the pro forma consolidated information excluded a $77 million gain on the sale of MMR oil and gas properties because of the application of the full cost method of accounting.

~~Eagle Ford Disposition.~~ On ~~June 20, 2014~~, FCX completed the sale of its Eagle Ford shale assets to a subsidiary of Encana Corporation (Encana) for cash consideration of $3.1 billion, before closing adjustments from the April 1, 2014, effective date through closing. Under full cost accounting rules, the proceeds were recorded as a reduction of capitalized oil and gas properties, with no gain or loss recognition, except for $58 million of deferred tax expense recorded in connection with the allocation of ~~$221 million~~ of goodwill (for which deferred taxes were not previously provided) to the Eagle Ford shale assets. Approximately $1.3 billion of proceeds from this transaction was placed in a like-kind exchange escrow to reinvest into additional oil and gas interests. On ~~June 30, 2014~~, ~~$919 million~~ from this like-kind exchange escrow was used to fund the Deepwater Gulf of Mexico (GOM) acquisition discussed below. The remaining $414 million of funds in the like-kind exchange escrow may be used to acquire additional interests in the Deepwater GOM on a tax-efficient basis. Additionally, a portion of the proceeds was used to reduce indebtedness.

~~Deepwater GOM Acquisition.~~ On ~~June 30, 2014, FCX completed the acquisition~~

Table of ~~interests in the Deepwater GOM from a subsidiary of Apache Corporation, including interests in the Lucius and Heidelberg oil production development projects and~~ ~~several~~ ~~exploration leases, for~~ ~~$919 million~~. Based on preliminary valuations, and including transaction costs and estimated asset retirement costs, FCX recorded capitalized costs for oil and gas properties subject to amortization of $460 million and costs not subject to amortization of $476 million. The Deepwater GOM acquisition was funded with a portion of the net proceeds from the sale of the Eagle Ford shale assets.Contents

NOTE 3. EARNINGS PER SHARE

FCX’s basic net income per share of common stock was computed by dividing net income attributable to FCX common stockholders by the weighted-average of common stock outstanding during the period. Diluted net income per share of common stock was computed using the most dilutive of (a) the two-class method or (b) the treasury stock method. Under the two-class method, net income is allocated to each class of common stock and participating securities as if all of the earnings for the period had been distributed. FCX’s participating securities consist of vested restricted stock units (RSUs) for which the underlying common shares are not yet issued and entitle holders to non-forfeitable dividends.

The following table sets forth the computation of basic and diluted net income per share (in millions, except per share amounts):


	Three Months Ended							Six Months Ended							Three Months Ended							Nine Months Ended
	June 30,							June 30,							September 30,							September 30,
	2014				2013			2014				2013			2014				2013			2014				2013
Net income	$	660			$	610		$	1,286			$	1,434		$	704			$	1,048		$	1,990			$	2,482
Net income attributable to noncontrolling interests	(168		)		(125		)	(274		)		(301		)	(142		)		(218		)	(416		)		(519		)
Preferred dividends on redeemable noncontrolling interest	(10		)		(3		)	(20		)		(3		)	(10		)		(9		)	(30		)		(12		)
Undistributed earnings allocable to participating securities	(2		)		—			(3		)		—			(2		)		—			(4		)		—
Net income allocable to FCX common stockholders	$	480			$	482		$	989			$	1,130		$	550			$	821		$	1,540			$	1,951

Basic weighted-average shares of common stock outstanding	1,039				980			1,039				965			1,039				1,038			1,039				989
Add shares issuable upon exercise or vesting of dilutive stock options and RSUs	6			^a	4			6			^a	3			7			^a	5			6			^a	4
Diluted weighted-average shares of common stock outstanding	1,045				984			1,045				968			1,046				1,043			1,045				993

Basic net income per share attributable to FCX common stockholders	$	0.46			$	0.49		$	0.95			$	1.17		$	0.53			$	0.79		$	1.48			$	1.97
Diluted net income per share attributable to FCX common stockholders	$	0.46			$	0.49		$	0.95			$	1.17		$	0.53			$	0.79		$	1.47			$	1.96

~~Table of Contents~~


a.	Excluded shares of common stock associated with outstanding stock options with exercise prices less than the average market price of FCX's common stock that were anti-dilutive totaled approximately 35 million for ~~both~~ ~~second-quarter~~third-quarter 2014 and 3 million for the ~~six~~nine months ended ~~June~~September 30, 2014.

~~Table of Contents~~

Outstanding stock options with exercise prices greater than the average market price of FCX’s common stock during the period are excluded from the computation of diluted net income per share of common stock. Excluded stock options totaled 3025 million with a weighted-average exercise price of $~~41.05~~42.34 per option for ~~both~~ ~~second-quarter~~third-quarter 2014 ~~and~~, 28 million with a weighted-average exercise price of $41.42 per option for the ~~six~~nine months ended ~~June~~September 30, 2014, 3234 million with a weighted-average exercise price of $~~40.53~~40.11 per option for ~~second-quarter~~third-quarter 2013 and 3032 million with a weighted-average exercise price of ~~$40.92~~$40.63 per option for the ~~six~~nine months ended ~~June~~September 30, 2013.

Table of Contents

NOTE 4. INVENTORIES, INCLUDING LONG-TERM MILL AND LEACH STOCKPILES

The components of inventories follow (in millions):


	June 30, 2014		December 31, 2013		September 30, 2014		December 31, 2013
Current inventories:
Raw materials (primarily concentrates)	$	297	$	238	$	335	$	238
Work-in-process^a	154		199		129		199
Finished goods^b	1,214		1,146		1,115		1,146
Total product inventories	$	1,665	$	1,583	$	1,579	$	1,583

Mill stockpiles	$	104	$	91	$	126	$	91
Leach stockpiles	1,776		1,614		1,841		1,614
Total current mill and leach stockpiles	$	1,880	$	1,705	$	1,967	$	1,705

Total materials and supplies, net^c	$	1,825	$	1,730	$	1,943	$	1,730

Long-term inventories:
Mill stockpiles	$	753	$	698	$	787	$	698
Leach stockpiles	1,765		1,688		1,782		1,688
Total long-term mill and leach stockpiles^d	$	2,518	$	2,386	$	2,569	$	2,386


a.	FCX's mining operations also have work-in-process inventories that are reflected as mill and leach stockpiles.


b.	Primarily included molybdenum concentrates; copper concentrates, anodes, cathodes and rod; and various cobalt products.


c.	Materials and supplies inventory was net of obsolescence reserves totaling ~~$21~~$22 million at ~~June~~September 30, 2014, and $24 million at December 31, 2013.


d.	Estimated metals in stockpiles not expected to be recovered within the next 12 months.

NOTE 5. INCOME TAXES

Variations in the relative proportions of jurisdictional income result in fluctuations to FCX’s consolidated effective income tax rate. Geographic sources of FCX's provision for income taxes follow (in millions):


	Three Months Ended							Six Months Ended							Three Months Ended						Nine Months Ended
	June 30,							June 30,							September 30,						September 30,
	2014			2013				2014			2013				2014			2013			2014			2013
U.S. operations	$	149	^a	$	(95	)	^b	$	285	^a	$	(19	)	^b	$	38		$	104	^a	$	323	^b	$	85	^a
International operations	179			135				400			487				311		^c	395			711		^c	882
Total	$	328		$	40			$	685		$	468			$	349		$	499		$	1,034		$	967


a.	~~FCX recognized a $58 million charge for deferred taxes recorded in connection with the allocation of goodwill to the sale of Eagle Ford.~~

As a result of second-quarter 2013 oil and gas acquisitions, FCX recognized a net tax benefit of $183 million, consisting of income tax benefits of $190 million associated with net reductions in FCX's valuation allowances and $69 million related to the release of the deferred tax liability on PXP's investment in MMR common stock; partially offset by income tax expense of $76 million associated with the write off of deferred tax assets related to environmental liabilities.


b.	Included a $62 million charge for deferred taxes recorded in connection with the allocation of goodwill to the sale of the Eagle Ford shale assets.


c.	Included a $54 million charge related to changes in Chilean tax rules.

FCX’s consolidated effective income tax rate was 3534 percent for the first ~~six~~nine months of 2014 and 3433 percent for the first ~~six~~nine months of 2013, excluding the net benefit of $183 million for acquisition-related adjustments.

NOTE 6. DEBT AND EQUITY TRANSACTIONS

In September 2014, FCX announced the planned redemption of the $400 millionoutstanding aggregate principal amount of its 8.625% Senior Notes due 2019. OnOctober 15, 2014, the redemption date, these senior notes had a book value of $441 million, which included purchase accounting fair value adjustments of $41 million. Holders of these senior notes received the principal amount together with the redemption premium and accrued and unpaid interest to the redemption date. As a result of this redemption, FCX will report a gain on early extinguishment of debt of $24 million in fourth-quarter 2014.

Table of Contents

~~NOTE 6. DEBT AND EQUITY TRANSACTIONS~~

In ~~June~~July 2014, FCX ~~announced the redemption of~~redeemed $1.7 billion of the aggregate principal amount of outstanding senior notes, on~~July 23, 2014. The redemptions~~which included $263 million for the 6.125% Senior Notes due 2019, $525 million for the 6½% Senior Notes due 2020, $350 million for the 6.75% Senior Notes due 2022 and $525 million for the 6.875% Senior Notes due 2023. At the redemption date, these senior notes had a book value of $1.8 billion, which included purchase accounting fair value adjustments of $167 million. In accordance with the terms of these senior notes, the redemptions were funded with cash contributions to FM O&G by FCX in exchange for additional equity, which is eliminated in the consolidated financial statements. ~~FCX used available cash and borrowed approximately $950 million under its revolving credit facility and uncommitted lines of credit to fund the contributions to FM O&G.~~ Holders of these senior notes received the principal amount together with the redemption premium and accrued and unpaid interest to the redemption date. As a result of these redemptions, FCX ~~will report~~recorded a gain on early extinguishment of debt of $58 million in third-quarter 2014.

In May 2014, FCX, PT Freeport Indonesia (PT-FI) and Freeport-McMoRan Oil & Gas LLC (FM O&G LLC, a wholly owned subsidiary of FM O&G and the successor entity of PXP) amended the senior unsecured $3.0 billion revolving credit facility to extend the maturity date one year to May 31, 2019, and increase the aggregate principal amount from $3.0 billion to $4.0 billion, with $500 million available to PT-FI. FCX, PT-FI and FM O&G LLC had entered into the $3.0 billion revolving credit facility on May 31, 2013 (upon completion of the acquisition of PXP). At ~~June~~September 30, 2014, ~~there were no~~FCX had borrowings of $1.1 billion and ~~$46~~$45 million of letters of credit issued under the revolving credit facility, resulting in availability of approximately ~~$4.0~~$2.9 billion, of which $1.5 billion could be used for additional letters of credit.

In April 2014, FCX redeemed $210 million of the aggregate principal amount of the outstanding 6.625% Senior Notes due 2021. In accordance with the terms of the senior notes, the redemption was funded with cash contributions to FM O&G by FCX in exchange for additional equity, which is eliminated in the consolidated financial statements. Holders of these senior notes received the principal amount together with the redemption premium and accrued and unpaid interest to the redemption date. As a result of the redemption, FCX recorded a gain on early extinguishment of debt of $6 million in second-quarter 2014.

In March 2014, Sociedad Minera Cerro Verde S.A.A. (Cerro Verde, FCX's mining subsidiary in Peru) entered into a five-year, $1.8 billion senior unsecured credit facility that is nonrecourse to FCX and the other shareholders of Cerro Verde. The credit facility allows for term loan borrowings up to the full amount of the facility, less any amounts issued and outstanding under a $500 million letter of credit sublimit. Interest on amounts drawn under the term loan is based on London Interbank Offered Rate (LIBOR) plus a spread (currently 1.90 percent) based on Cerro Verde’s total net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio as defined in the agreement. Amounts may be drawn or letters of credit may be issued over a two-year period to fund a portion of Cerro Verde’s expansion project and for Cerro Verde's general corporate purposes. The credit facility amortizes in three installments in amounts necessary for the aggregate borrowings and outstanding letters of credit not to exceed 85 percent of the $1.8 billion commitment on September 30, 2017, 70 percent on March 31, 2018, and 35 percent on September 30, 2018, with the remaining balance due on the maturity date of March 10, 2019. At ~~June~~September 30, 2014, there were no borrowings and no letters of credit issued under Cerro Verde’s credit facility.

FCX recorded a loss on early extinguishment of debt of $45 million ~~($39 million to net income attributable to FCX common stockholders)~~ in first-quarter 2013 for financing costs incurred for the terminated $9.5 billion acquisition bridge loan facility, which was entered into in December 2012 to provide interim financing for FCX's second-quarter 2013 acquisitions of PXP and MMR.

Consolidated interest expense (excluding capitalized interest) totaled ~~$225~~$212 million in ~~second-quarter~~third-quarter 2014, ~~$167~~$223 million in ~~second-quarter~~third-quarter 2013, ~~$449~~$661 million for the first ~~six~~nine months of 2014 and ~~$242~~$465 million for the first ~~six~~nine months of 2013. Capitalized interest included in property, plant, equipment and mining development costs, net, totaled $3934 million in ~~second-quarter~~third-quarter 2014, $2726 million in ~~second-quarter~~third-quarter 2013, $79113 million for the first ~~six~~nine months of 2014 and $4568 million for the ~~six~~nine months of 2013. Capitalized interest included in oil and gas properties not subject to amortization totaled $2220 million in ~~second-quarter~~third-quarter 2014, $835 million in ~~second-quarter~~third-quarter 2013, $4565 million for the first ~~six~~nine months of 2014 and $846 million for the ~~first~~ ~~six~~four months offrom June 1, 2013, to September 30, 2013.

On ~~June 25,~~September 24, 2014, FCX's Board of Directors declared a quarterly dividend of $0.3125 per share, which was paid on ~~August 1,~~November 3, 2014, to common shareholders of record at the close of business on ~~July~~October 15, 2014.

In connection with the second-quarter 2013 acquisition of PXP, FCX issued 91 million shares of its common stock.

Table of Contents

NOTE 7. FINANCIAL INSTRUMENTS

FCX does not purchase, hold or sell derivative financial instruments unless there is an existing asset or obligation, or it anticipates a future activity that is likely to occur and will result in exposure to market risks, which FCX intends to offset or mitigate. FCX does not enter into any derivative financial instruments for speculative purposes, but has entered into derivative financial instruments in limited instances to achieve specific objectives. These objectives principally relate to managing risks associated with commodity price changes, foreign currency exchange rates and interest rates.

Commodity Contracts. From time to time, FCX has entered into derivative contracts to hedge the market risk associated with fluctuations in the prices of commodities it purchases and sells. As a result of the acquisition of PXP, FCX assumed a variety of crude oil and natural gas commodity derivatives to hedge the exposure to the volatility of crude oil and natural gas commodity prices. Derivative financial instruments used by FCX to manage its risks do not contain credit risk-related contingent provisions. As of ~~June~~September 30, 2014, and December 31, 2013, FCX had no price protection contracts relating to its mine production. A discussion of FCX’s derivative contracts and programs follows.

Derivatives Designated as Hedging Instruments – Fair Value Hedges

Copper Futures and Swap Contracts. Some of FCX’s U.S. copper rod customers request a fixed market price instead of the Commodity Exchange Inc. (COMEX), a division of the New York Mercantile Exchange (NYMEX), average copper price in the month of shipment. FCX hedges this price exposure in a manner that allows it to receive the COMEX average price in the month of shipment while the customers pay the fixed price they requested. FCX accomplishes this by entering into copper futures or swap contracts. Hedging gains or losses from these copper futures and swap contracts are recorded in revenues. FCX did not have any significant gains or losses during the three-month or ~~six-month~~nine-month periods ended ~~June~~September 30, 2014 and 2013, resulting from hedge ineffectiveness. At ~~June~~September 30, 2014, FCX held copper futures and swap contracts that qualified for hedge accounting for 5354 million pounds at an average contract price of $~~3.10~~3.09 per pound, with maturities through ~~September~~December 2015.

A summary of gains (losses) recognized in revenues for derivative financial instruments related to commodity contracts that are designated and qualify as fair value hedge transactions, along with the unrealized gains (losses) on the related hedged item follows (in millions):


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2014			2013			2014			2013			2014			2013			2014			2013
Copper futures and swap contracts:
Unrealized gains (losses):
Derivative financial instruments	$	12		$	(6	)	$	—		$	(18	)	$	(10	)	$	16		$	(10	)	$	(2	)
Hedged item – firm sales commitments	(12		)	6			—			18			10			(16		)	10			2

Realized losses:
Realized gains (losses):
Matured derivative financial instruments	(2		)	(13		)	(4		)	(14		)	1			(3		)	(3		)	(17		)

Derivatives Not Designated as Hedging Instruments

Embedded Derivatives. As described in Note 1 to FCX's annual report on Form 10-K for the year ended December 31, 2013, under “Revenue Recognition,” certain FCX copper concentrate, copper cathode and gold sales contracts provide for provisional pricing primarily based on the London Metal Exchange (LME) copper price or the COMEX copper price and the London Bullion Market Association (London) gold price at the time of shipment as specified in the contract. Similarly, FCX purchases copper under contracts that provide for provisional pricing. FCX applies the normal purchases and normal sales scope exception in accordance with derivatives and hedge accounting guidance to the host sales agreements since the contracts do not allow for net settlement and always result in physical delivery. Sales and purchases with a provisional sales price contain an embedded derivative (i.e., the price settlement mechanism is settled after the time of delivery) that is required to be bifurcated from the host contract. The host contract is the sale or purchase of the metals contained in the concentrates or cathodes at the then-current LME or COMEX copper price or the London gold price as defined in the contract. Mark-to-market price fluctuations recorded through the settlement date are reflected in revenues for sales contracts and in cost of sales as production and delivery costs for purchase contracts.

Table of Contents

A summary of FCX’s embedded commodity derivatives at ~~June~~September 30, 2014, follows:


	Open Positions	Average Price Per Unit				Maturities Through	Open Positions	Average Price Per Unit				Maturities Through
	Open Positions	Contract		Market		Maturities Through	Open Positions	Contract		Market		Maturities Through
Embedded derivatives in provisional sales contracts:
Copper (millions of pounds)	496	$	3.08	$	3.18	November 2014	554	$	3.14	$	3.03	February 2015
Gold (thousands of ounces)	85	1,273		1,314		August 2014	301	1,259		1,214		January 2015
Embedded derivatives in provisional purchase contracts:
Copper (millions of pounds)	84	3.07		3.19		October 2014	98	3.16		3.03		January 2015

Crude Oil and Natural Gas Contracts. As a result of the acquisition of PXP, FCX has derivative contracts for 2014 and 2015 that consist of crude oil options and natural gas swaps. These crude oil and natural gas derivatives are not designated as hedging instruments and are recorded at fair value with the mark-to-market gains and losses recorded in revenues.

The crude oil options were entered into by PXP to protect the realized price of a portion of expected future sales in order to limit the effects of crude oil price decreases. At ~~June~~September 30, 2014, these contracts are composed of crude oil put spreads consisting of put options with a floor limit. The premiums associated with put options are deferred until the settlement period. At ~~June~~September 30, 2014, the deferred option premiums and accrued interest associated with the crude oil option contracts totaled $~~329~~269 million, which was included as a reduction of the fair value of the crude oil options contracts. At ~~June~~September 30, 2014, the outstanding crude oil option contracts, which settle monthly and cover approximately 2010 million barrels in the fourth quarter of 2014 and approximately 31 million barrels in 2015, follow:


			Average Strike Price (per barrel)^a									Average Strike Price (per barrel)^a
Period	Instrument Type	Daily Volumes (thousand barrels)	Floor		Floor Limit		Average Deferred Premium (per barrel)		Index	Instrument Type	Daily Volumes (thousand barrels)	Floor		Floor Limit		Average Deferred Premium (per barrel)		Index

2014
Jul - Dec	Put options^b	75	$	90	$	70	$	5.74	Brent
Jul - Dec	Put options^b	30	95		75		6.09		Brent
Jul - Dec	Put options^b	5	100		80		7.11		Brent
Oct - Dec										Put options^b	75	$	90	$	70	$	5.74	Brent
Oct - Dec										Put options^b	30	95		75		6.09		Brent
Oct - Dec										Put options^b	5	100		80		7.11		Brent

2015
Jan - Dec	Put options^b	84	90		70		6.89		Brent	Put options^b	84	90		70		6.89		Brent


a.	The average strike prices do not reflect any premiums to purchase the put options.


b.	If the index price is less than the per barrel floor, FCX receives the difference between the per barrel floor and the index price up to a maximum of $20 per barrel less the option premium. If the index price is at or above the per barrel floor, FCX pays the option premium and no cash settlement is received.

In addition, at ~~June~~September 30, 2014, outstanding natural gas swaps with a weighted-average fixed swap price of $4.09 per million British thermal units (MMBtu) cover approximately 189 million MMBtu of natural gas, with maturities through December 2014 (on daily volumes of 100,000 MMBtu). If the Henry Hub index price is less than the fixed price, FCX receives the difference between the fixed price and the Henry Hub index price. FCX pays the difference between the index price and the fixed price if the Henry Hub index price is greater than the fixed price.

Copper Forward Contracts. Atlantic Copper, FCX's wholly owned smelting and refining unit in Spain, enters into forward copper contracts designed to hedge its copper price risk whenever its physical purchases and sales pricing periods do not match. These economic hedge transactions are intended to hedge against changes in copper prices, with the mark-to-market hedging gains or losses recorded in cost of sales. At ~~June~~September 30, 2014, Atlantic Copper held net forward copper purchase contracts for 1946 million pounds at an average contract price of $~~3.07~~3.12 per pound, with maturities through ~~July~~November 2014.

Table of Contents

Summary of Gains (Losses). A summary of the realized and unrealized gains (losses) recognized in income before income taxes and equity in affiliated companies’ net earnings for commodity contracts that do not qualify as hedge transactions, including embedded derivatives, follows (in millions):


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2014			2013			2014			2013			2014			2013			2014			2013
Embedded derivatives in provisional copper and gold
sales contracts^a	$	84		$	(205	)	$	(85	)	$	(288	)	$	(99	)	$	141		$	(184	)	$	(147	)
Crude oil options^a	(68		)	(54		)	(104		)	(54		)
Crude oil options and swaps^a													57			(173		)	(47		)	(227		)
Natural gas swaps^a	(2		)	19			(16		)	19			7			3			(9		)	22
Copper forward contracts^b	4			—			5			3			(4		)	—			1			3


a.	Amounts recorded in revenues.


b.	Amounts recorded in cost of sales as production and delivery costs.

Unsettled Derivative Financial Instruments

A summary of the fair values of unsettled commodity derivative financial instruments follows (in millions):


	June 30, 2014		December 31, 2013		September 30, 2014		December 31, 2013
Commodity Derivative Assets:
Derivatives designated as hedging instruments:
Copper futures and swap contracts^a	$	6	$	6	$	1	$	6
Derivatives not designated as hedging instruments:
Embedded derivatives in provisional copper and gold
sales/purchase contracts	55		63		12		63
Copper forward contracts	2		—
Total derivative assets	$	63	$	69	$	13	$	69

Commodity Derivative Liabilities:
Derivatives designated as hedging instruments:
Copper futures and swap contracts^a	$	1	$	—	$	5	$	—
Derivatives not designated as hedging instruments:
Embedded derivatives in provisional copper and gold
sales/purchase contracts	12		16		75		16
Crude oil options^b	298		309		182		309
Natural gas swaps	7		4		—		4
Copper forward contracts	—		1		4		1
Total derivative liabilities	$	318	$	330	$	266	$	330


a.	FCX paid $16 million to brokers at ~~June~~September 30, 2014, and $1 million at December 31, 2013, for margin requirements (recorded in other current assets).


b.	Included $~~329~~269 million at ~~June~~September 30, 2014, and $444 million at December 31, 2013, for deferred premiums and accrued interest.

Table of Contents

FCX's commodity contracts have netting arrangements with counterparties with which the right of offset exists, and it is FCX's policy to offset balances by counterparty on the balance sheet. FCX's embedded derivatives on provisional sales/purchases are netted with the corresponding outstanding receivable/payable balances. A summary of these unsettled commodity contracts that are offset in the balance sheet follows (in millions):


	Assets				Liabilities				Assets				Liabilities
	June 30, 2014		December 31, 2013		June 30, 2014		December 31, 2013		September 30, 2014		December 31, 2013		September 30, 2014		December 31, 2013

Gross amounts recognized:
Commodity contracts:
Embedded derivatives on provisional
sales/purchase contracts	$	55	$	63	$	12	$	16	$	12	$	63	$	75	$	16
Crude oil and natural gas derivatives	—		—		305		313		—		—		182		313
Copper derivatives	8		6		1		1		1		6		9		1
	63		69		318		330		13		69		266		330

Less gross amounts of offset:
Commodity contracts:
Embedded derivatives on provisional
sales/purchase contracts	—		10		—		10		—		10		—		10
Crude oil and natural gas derivatives	—		—		—		—		—		—		—		—
Copper derivatives	1		—		1		—		1		—		1		—
	1		10		1		10		1		10		1		10

Net amounts presented in balance sheet:
Commodity contracts:
Embedded derivatives on provisional
sales/purchase contracts	55		53		12		6		12		53		75		6
Crude oil and natural gas derivatives	—		—		305		313		—		—		182		313
Copper derivatives	7		6		—		1		—		6		8		1
	$	62	$	59	$	317	$	320	$	12	$	59	$	265	$	320

Balance sheet classification:
Trade accounts receivable	$	55	$	53	$	—	$	—	$	1	$	53	$	60	$	—
Other current assets	7		6		—		—		—		6		—		—
Accounts payable and accrued liabilities	—		—		232		205		11		—		169		205
Other liabilities	—		—		85		115		—		—		36		115
	$	62	$	59	$	317	$	320	$	12	$	59	$	265	$	320

Credit Risk. FCX is exposed to credit loss when financial institutions with which FCX has entered into derivative transactions (commodity, foreign exchange and interest rate swaps) are unable to pay. To minimize the risk of such losses, FCX uses counterparties that meet certain credit requirements and periodically reviews the creditworthiness of these counterparties. FCX does not anticipate that any of the counterparties it deals with will default on their obligations. As of ~~June~~September 30, 2014, the maximum amount of credit exposure associated with derivative transactions was $6212 million.

Other Financial Instruments. Other financial instruments include cash and cash equivalents, accounts receivable, investment securities, legally restricted funds, accounts payable and accrued liabilities, dividends payable and long-term debt. The carrying value for cash and cash equivalents (which included time deposits of $72 million at ~~June~~September 30, 2014, and $211 million at December 31, 2013), accounts receivable, accounts payable and accrued liabilities, and dividends payable approximates fair value because of their short-term nature and generally negligible credit losses (refer to Note 8 for the fair values of investment securities, legally restricted funds and long-term debt).

In addition, FCX has non-detachable warrants, which are considered to be embedded derivative instruments, associated with FM O&G's Plains Offshore Operations Inc. (Plains Offshore) 8% Convertible Preferred Stock (Preferred Stock) (refer to Note 8 for the fair value of these instruments).

Table of Contents

NOTE 8. FAIR VALUE MEASUREMENT

Fair value accounting guidance includes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs). FCX recognizes transfers between levels at the end of the reporting period. FCX did not have any significant transfers in or out of Level 1, 2 or 3 for ~~second~~third-quarter 2014. or for the first nine months of 2014.

A summary of the carrying amount and fair value of FCX’s financial instruments, other than cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and dividends payable (refer to Note 7), follows (in millions):


	At June 30, 2014										At September 30, 2014
	Carrying		Fair Value								Carrying		Fair Value
	Amount		Total		Level 1		Level 2		Level 3		Amount		Total		Level 1		Level 2		Level 3
Assets
Investment securities:^a,b
Money market funds^c	$	434	$	434	$	434	$	—	$	—
Investment securities:^a,b,c
U.S. core fixed income fund	22		22		—		22		—		$	22	$	22	$	—	$	22	$	—
Money market funds											20		20		20		—		—
Equity securities	4		4		4		—		—		4		4		4		—		—
Total	460		460		438		22		—		46		46		24		22		—

Legally restricted funds:^a,b,d
U.S. core fixed income fund	50		50		—		50		—		50		50		—		50		—
Government bonds and notes	35		35		—		35		—		35		35		—		35		—
Government mortgage-backed securities	31		31		—		31		—		33		33		—		33		—
Corporate bonds	29		29		—		29		—		26		26		—		26		—
Asset-backed securities	16		16		—		16		—		16		16		—		16		—
Money market funds	6		6		6		—		—		8		8		8		—		—
Municipal bonds	1		1		—		1		—		1		1		—		1		—
Total	168		168		6		162		—		169		169		8		161		—

Derivatives:^a,e
Embedded derivatives in provisional sales/purchase
contracts in a gross asset position	55		55		—		55		—		12		12		—		12		—
Copper futures and swap contracts	6		6		6		—		—		1		1		1		—		—
Copper forward contracts	2		2		2		—		—
Total	63		63		8		55		—		13		13		1		12		—

Total assets			$	691	$	452	$	239	$	—			$	228	$	33	$	195	$	—

Liabilities
Derivatives:^a,e
Embedded derivatives in provisional sales/purchase
contracts in a gross liability position	$	12	$	12	$	—	$	12	$	—	$	75	$	75	$	—	$	75	$	—
Crude oil options	298		298		—		—		298		182		182		—		—		182
Natural gas swaps	7		7		—		7		—
Copper futures and swap contracts	1		1		1		—		—		5		5		5		—		—
Copper forward contracts											4		4		2		2		—
Total	318		318		1		19		298		266		266		7		77		182

Long-term debt, including current portion^f	20,296		20,607		—		20,607		—		19,737		19,882		—		19,882		—

Total liabilities			$	20,925	$	1	$	20,626	$	298			$	20,148	$	7	$	19,959	$	182

Table of Contents



	At December 31, 2013
	Carrying		Fair Value
	Amount		Total		Level 1		Level 2		Level 3
Assets
Investment securities:^a,b
U.S. core fixed income fund	$	21	$	21	$	—	$	21	$	—
Money market funds	18		18		18		—		—
Equity securities	5		5		5		—		—
Total	44		44		23		21		—

Legally restricted funds:^a,b,d
U.S. core fixed income fund	48		48		—		48		—
Government mortgage-backed securities	34		34		—		34		—
Corporate bonds	28		28		—		28		—
Government bonds and notes	28		28		—		28		—
Money market funds	28		28		28		—		—
Asset-backed securities	15		15		—		15		—
Municipal bonds	1		1		—		1		—
Total	182		182		28		154		—

Derivatives:^a,e
Embedded derivatives in provisional sales/purchase
contracts in a gross asset position	63		63		—		63		—
Copper futures and swap contracts	6		6		5		1		—
Total	69		69		5		64		—

Total assets			$	295	$	56	$	239	$	—

Liabilities
Derivatives:^a
Embedded derivatives in provisional sales/purchase
contracts in a gross liability position^e	$	16	$	16	$	—	$	16	$	—
Crude oil options^e	309		309		—		—		309
Natural gas swaps^e	4		4		—		4		—
Copper forward contracts^e	1		1		1		—		—
Plains Offshore warrants^g	2		2		—		—		2
Total	332		332		1		20		311

Long-term debt, including current portion^f	20,706		20,487		—		20,487		—

Total liabilities			$	20,819	$	1	$	20,507	$	311


a.	Recorded at fair value.


b.	Current portion included in other current assets and long-term portion included in other assets.


c.	~~Included $414~~ Excluded $115 million ~~held~~ of time deposits (which approximated fair value) at September 30, 2014 (included in other assets), associated with an ~~escrow account~~assurance bond to support PTFI's commitment for ~~future oil and gas property acquisitions~~smelter development in Indonesia (refer to Note 29 for further discussion).

Excluded ~~$225 million of~~ time deposits (which approximated fair value) of $9 million at ~~June~~September 30, 2014 (included in other current assets), associated with a customs audit assessment at PT-FI, and ~~at December 31, 2013 ($15~~$15 million included in other current assets and $210 million in other ~~assets),~~assets at December 31, 2013, associated with the Cerro Verde royalty dispute.


e.	Refer to Note 7 for further discussion and balance sheet classifications. Crude oil options are net of $~~329~~269 million at ~~June~~September 30, 2014, and $444 million at December 31, 2013, for deferred premiums and accrued interest.


f.	Recorded at cost except for debt assumed in acquisitions, which were recorded at fair value at the respective acquisition dates.


g.	Included in other liabilities.

Table of Contents

Valuation Techniques

Money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

Fixed income securities (U.S. core fixed income funds, government securities, corporate bonds, asset-backed securities and municipal bonds) are valued using a bid evaluation price or a mid-evaluation price. A bid evaluation price is an estimated price at which a dealer would pay for a security. A mid-evaluation price is the average of the estimated price at which a dealer would sell a security and the estimated price at which a dealer would pay for a security. These evaluations are based on quoted prices, if available, or models that use observable inputs and, as such, are classified within Level 2 of the fair value hierarchy.

Equity securities are valued at the closing price reported on the active market on which the individual securities are traded and, as such, are classified within Level 1 of the fair value hierarchy.

FCX’s embedded derivatives on provisional copper concentrate, copper cathode and gold purchases and sales have critical inputs of quoted monthly LME or COMEX copper forward prices and the London gold forward price at each reporting date based on the month of maturity; however, FCX's contracts themselves are not traded on an exchange. As a result, these derivatives are classified within Level 2 of the fair value hierarchy.

FCX's derivative financial instruments for crude oil options are valued using an option pricing model, which uses various inputs including IntercontinentalExchange, Inc. crude oil prices, volatilities, interest rates and contract terms. FCX's derivative financial instruments for natural gas swaps are valued using a pricing model that has various inputs including NYMEX price quotations, interest rates and contract terms. Valuations are adjusted for credit quality, using the counterparties' credit quality for asset balances and FCX's credit quality for liability balances (which considers the impact of netting agreements on counterparty credit risk, including whether the position with the counterparty is a net asset or net liability). For asset balances, FCX uses the credit default swap value for counterparties when available or the spread between the risk-free interest rate and the yield rate on the counterparties' publicly traded debt for similar instruments. The 2014 natural gas swaps are classified within Level 2 of the fair value hierarchy because the inputs used in the valuation models are directly or indirectly observable for substantially the full term of the instruments. The 2014 and 2015 crude oil options are classified within Level 3 of the fair value hierarchy because the inputs used in the valuation models are not observable for substantially the full term of the instruments. The significant unobservable inputs used in the fair value measurement of the crude oil options are implied volatilities and deferred premiums. Significant increases (decreases) in implied volatilities in isolation would result in a significantly higher (lower) fair value measurement. The implied volatilities ranged from 1417 percent to 5533 percent, with a weighted average of 21 percent. The deferred premiums ranged from $5.15 per barrel to $7.22 per barrel, with a weighted average of $~~6.49~~6.64 per barrel. Refer to Note 7 for further discussion of these derivative financial instruments.

FCX’s derivative financial instruments for copper futures and swap contracts and copper forward contracts that are traded on the respective exchanges are classified within Level 1 of the fair value hierarchy because they are valued using quoted monthly COMEX or LME prices at each reporting date based on the month of maturity (refer to Note 7 for further discussion). Certain of these contracts are traded on the over-the-counter market and are classified within Level 2 of the fair value hierarchy based on COMEX and LME forward prices.

The fair value of warrants associated with the Plains Offshore Preferred Stock was determined with an option pricing model that used unobservable inputs. The inputs used in the valuation model are the estimated fair value of the underlying Plains Offshore common stock, expected exercise price, expected term, expected volatility and risk-free interest rate. The assumptions used in the valuation model are highly subjective because the common stock of Plains Offshore is not publicly traded. As a result, these warrants are classified within Level 3 of the fair value hierarchy.

Long-term debt, including the current portion, is not actively traded and is valued using prices obtained from a readily available pricing source and, as such, is classified within Level 2 of the fair value hierarchy.

Table of Contents

The techniques described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while FCX believes its valuation techniques are appropriate and consistent with other market participants, the use of different techniques or assumptions to determine fair value of certain financial instruments could result in a different fair value measurement at the reporting date. There have been no changes in the techniques used at ~~June~~September 30, 2014.

A summary of the changes in the fair value of FCX's Level 3 instruments follows (in millions):


	Crude Oil				Plains Offshore				Crude Oil				Plains Offshore
	Options				Warrants				Options				Warrants
Fair value at December 31, 2013	$	(309	)		$	(2	)		$	(309	)		$	(2	)
Net realized losses	(6		)	^a	—				(21		)	^a	—
Net unrealized (losses) gains included in earnings related to assets and liabilities still held at the end of the period	(100		)	^b	2			^c	(29		)	^b	2			^c
Settlement payments	117				—				177				—
Fair value at June 30, 2014	$	(298	)		$	—
Fair value at September 30, 2014									$	(182	)		$	—


a.	~~Recorded~~Included net realized losses of $20 million recorded in ~~revenues.~~revenues and $1 million of interest expense associated with the deferred premiums.


b.	Included net unrealized losses of ~~$98~~$28 million recorded in revenues and $2$1 million of interest expense associated with the deferred premiums.


c.	Recorded in other ~~(expense)~~ income, net.

NOTE 9. CONTINGENCIES AND COMMITMENTS

Litigation. During ~~second-quarter~~third-quarter 2014, there were no significant ~~updates to~~developments in previously reported legal proceedings included in Note 12 of FCX’s annual report on Form 10-K for the year ended December 31, 2013, ~~and~~as updated in Note 9 of FCX's quarterly report on Form 10-Q for the quarter ended March 31, 2014.

Tax and Other Matters. Cerro Verde Royalty Dispute. There were no significant changes to the Cerro Verde royalty dispute during the first ~~six~~nine months of 2014 (refer to Note 12 of FCX’s annual report on Form 10-K for the year ended December 31, 2013, for further discussion of this matter).

Indonesia Tax Matters. As reported in Note 12 of FCX’s annual report on Form 10-K for the year ended December 31, 2013, PT-FI has received assessments from the Indonesian tax authorities for additional taxes and interest related to various audit exceptions for the years 2005, 2006, 2007, 2008 and 2011. PT-FI has filed objections to these assessments because it believes it has properly determined and paid its taxes.

~~During second-quarter 2014, the Indonesian~~Required estimated income tax ~~authorities issued a tax assessment~~payments for 2012 ~~and refunded~~significantly exceeded PT-FI’s 2012 reported income tax liability, which resulted in a $~~151~~303 million ~~(before foreign exchange adjustments) in August 2014 associated with income tax overpayments made by PT-FI ($303 million was included~~overpayment (included in other accounts receivable in the condensed consolidated balance sheets at December 31, 2013). During second-quarter 2014, the Indonesian tax authorities issued tax assessments for 2012 of $137 million and other offsets of $15 million, and refunded the balance of $151 million (before foreign exchange adjustments). PT-FI expects to file objections and use other means available under Indonesian tax laws and regulations to recover ~~the remaining 2012~~all overpayments that ~~it believes it is due.~~remain in dispute.

As of ~~June~~September 30, 2014, PT-FI had $~~379~~392 million included in other assets for amounts paid on disputed tax assessments, which it believes are collectable.

Mining Contract - Indonesia. On July 25, 2014, PT-FI entered into a Memorandum of Understanding (MOU) with the Indonesian government under which PT-FI and the government agreed to negotiate an amended Contract of Work (COW) to address provisions related to the size of PT-FI’s concession area, royalties and taxes, domestic processing and refining, divestment, local content, and continuation of operations post-2021.

Under the MOU, provisions to be addressed in the negotiation of an amended COW include provisions for the development of new copper smelting and refining capacity in Indonesia, which will take into consideration an equitable sharing of costs between PT-FI (and any partners in the project) and the Indonesian government through fiscal incentives, provisions for divestment to the Indonesian government and/or Indonesian nationals of up to a 30 percent interest (an additional 20.64 percent interest) in PT-FI at fair value, and continuation of operations from 2022 through 2041. The MOU provides that negotiations for an amended COW will take into consideration PT-FI’s need for assurance of legal and fiscal terms post-2021 for PT-FI to continue with its large-scale investment program

Table of Contents

for the development of its underground reserves. PT-FI is engaged in discussions with the Indonesian government regarding an amended COW.

Effective with the signing of the MOU, PT-FI provided a $115 million assurance bond to support its commitment for smelter development, agreed to increase royalties to 4.0 percent for copper and 3.75 percent for gold from the previous rates of 3.5 percent for copper and 1.0 percent for gold, and to pay export duties set forth in a new regulation. The Indonesian government revised its January 2014 regulations (as discussed in Note 13 of FCX’s annual report on Form 10-K for the year ended December 31, 2013) regarding export duties to incorporate reduced rates for copper concentrate exports for companies engaged in smelter development. The revised regulations provide for duties on copper concentrate exports during smelter development initially at 7.5 percent, declining to 5.0 percent when development progress exceeds 7.5 percent and is eliminated when development progress exceeds 30 percent. In addition, PT-FI is required to apply for renewal of export permits at six-month intervals, with the next renewal date in January 2015.

Under the MOU, no terms of the COW other than those relating to the export duties, smelter bond and royalties described previously will be changed until the completion of an amended COW.

NOTE 10. BUSINESS SEGMENTS

FCX has organized its operations into six primary divisions – North America copper mines, South America mining, Indonesia mining, Africa mining, Molybdenum mines and U.S. oil and gas operations. Notwithstanding this structure, FCX internally reports information on a mine-by-mine basis for its mining operations. Therefore, FCX concluded that its operating segments include individual mines or operations relative to its mining operations. For oil and gas operations, FCX determines its operating segments on a country-by-country basis. FCX's U.S. oil and gas operations reflect the results of FM O&G beginning June 1, 2013. Operating segments that meet certain thresholds are reportable segments, which are disclosed separately in the following tables.

On November 3, 2014, FCX completed the sale of its 80 percent ownership interests in the Candelaria mine, a separately reported segment, and the Ojos del Salado mine, reported as a component of other South America mines. Refer to Note 13 for further discussion.

Intersegment Sales. 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.

FCX defers recognizing profits on sales from its mining operations to other divisions, including Atlantic Copper and on 25 percent of PT-FI's sales to PT Smelting until final sales to third parties occur. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices result in variability in FCX's net deferred profits and quarterly earnings.

Allocations. 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, 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.

Table of Contents

Business Segments


(In millions)	Mining Operations																																												Mining Operations
	North America Copper Mines								South America								Indonesia				Africa																								North America Copper Mines											South America												Indonesia				Africa
																											Atlantic			Other									Corporate,																																										Atlantic				Other												Corporate,
																							Molyb-				Copper			Mining						U.S.			Other																																				Molyb-						Copper				Mining								U.S.				Other
			Other						Cerro		Candel-		Other										denum		Rod &		Smelting			& Elimi-				Total		Oil & Gas			& Elimi-				FCX						Other							Cerro			Candel-			Other													denum			Rod &			Smelting				& Elimi-				Total				Oil & Gas				& Elimi-				FCX
	Morenci		Mines			Total			Verde		aria		Mines		Total		Grasberg				Tenke		Mines		Refining		& Refining			nations				Mining		Operations			nations				Total		Morenci				Mines				Total			Verde			aria			Mines			Total			Grasberg				Tenke			Mines			Refining			& Refining				nations				Mining				Operations				nations				Total
Three Months Ended June 30, 2014
Three Months Ended September 30, 2014
Revenues:
Unaffiliated customers																																											$	140		$	79			$	219			$	295		$	141		$	300		$	736		$	1,086	^a	$	379			$	—		$	1,219		$	597		$	470		^b	$	4,706			$	990		^c	$	—			$	5,696
Intersegment																																											428			843				1,271				63			48			—			111			167			49				173			8			4			(1,783		)		—				—				—				—
Production and delivery																																											341			561				902				178			142			151			471			700			206				86			1,220			578			(1,283		)		2,880				273				(1		)		3,152
Depreciation, depletion and amortization																																											51			82				133				41			14			47			102			92			58				25			2			11			15				438				504				3				945
Impairment of oil and gas properties																																											—			—				—				—			—			—			—			—			—				—			—			—			—				—				308				—				308
Selling, general and administrative expenses																																											—			1				1				—			—			1			1			27			3				—			—			4			7				43				55				60				158
Mining exploration and research expenses																																											—			2				2				—			—			—			—			—			—				—			—			—			27				29				—				—				29
Environmental obligations and shutdown costs																																											—			(5		)		(5		)		—			—			—			—			—			—				—			—			—			23				18				—				—				18
Net gain on sales of assets																																											—			(14		)		(14		)		—			—			—			—			—			—				—			—			—			(32		)		(46		)		—				—				(46		)
Operating income (loss)																																											176			295				471				139			33			101			273			434			161				62			5			8			(70		)		1,344				(150		)		(62		)		1,132

Interest expense, net																																											1			—				1				1			—			—			1			—			—				—			—			3			19				24				51				83				158
Provision for (benefit from) income taxes																																											—			—				—				47			4			91			142			181			36				—			—			—			—				359				—				(10		)		349
Total assets at September 30, 2014																																											3,689			5,742				9,431				7,030			1,511			2,210			10,751			8,537			5,010				2,089			282			948			1,025				38,073				25,328				575				63,976
Capital expenditures																																											158			30				188				416			7			16			439			243			40				12			1			3			11				937				908				8				1,853

Three Months Ended September 30, 2013
Revenues:
Unaffiliated customers	$	52	$	55		$	107		$	421	$	213	$	311	$	945	$	523		^a	$	386	$	—	$	1,234	$	623		$	468		^b	$	4,286	$	1,236	^c	$	—			$	5,522	$	100			$	145			$	245		$	434		$	318		$	300		$	1,052		$	1,108		^a	$	406		$	—		$	1,247		$	514			$	417		^b	$	4,989			$	1,176		^c	$	—			$	6,165
Intersegment	474		888			1,362			23		62		1		86		—				32		170		8		6			(1,664		)		—		—			—				—		375				681				1,056			27			60			—			87			3				14			121			6			2				(1,289		)		—				—				—				—
Production and delivery	312		558			870			195		164		171		530		511				198		81		1,233		618			(1,287		)		2,754		329			(1		)		3,082		287				520				807			175			163			156			494			617				190			82			1,245			523				(916		)		3,042				288				2				3,332
Depreciation, depletion and amortization	43		85			128			43		16		36		95		54				63		24		3		10			17				394		616			3				1,013		35				67				102			35			19			31			85			60				64			21			2			10				9				353				563				3				919
Selling, general and administrative expenses	1		—			1			1		1		—		2		25				3		—		—		5			6				42		59			63				164		—				1				1			—			1			1			2			29				3			—			—			5				5				45				51				62				158
Mining exploration and research expenses	—		2			2			—		—		—		—		—				—		—		—		—			32				34		—			—				34		—				2				2			—			—			—			—			1				—			—			—			—				52				55				—				2				57
Environmental obligations and shutdown costs	—		—			—			—		—		—		—		—				—		—		—		—			76				76		—			—				76		—				5				5			—			—			—			—			—				—			—			—			—				(13		)		(8		)		—				—				(8		)
Operating income (loss)	170		298			468			205		94		105		404		(67		)		154		65		6		(4		)	(40		)		986		232			(65		)		1,153		153				231				384			251			195			112			558			404				163			18			6			(22		)		(9		)		1,502				274				(69		)		1,707

Interest expense, net	—		1			1			—		—		—		—		—				—		—		—		3			18				22		74			68				164		—				—				—			—			—			—			—			—				—			—			—			4				20				24				74				64				162
Provision for income taxes	—		—			—			73		32		35		140		(33		)		33		—		—		—			—				140		—			188				328		—				—				—			92			67			35			194			173				33			—			—			—				—				400				—				99				499
Total assets at June 30, 2014	3,675		5,822			9,497			6,901		1,520		2,271		10,692		7,972				4,952		2,095		299		882			1,127				37,516		25,293			1,200				64,009
Total assets at September 30, 2013																																											2,915			5,734				8,649				6,440			1,612			2,478			10,530			7,399			4,862				2,094			308			691			1,267				35,800				26,347				451				62,598
Capital expenditures	289		35			324			391		12		13		416		243				29		14		1		5			17				1,049		903			(2		)		1,950		172				80				252			224			23			17			264			209				52			46			1			20				51				895				738				12				1,645

Three Months Ended June 30, 2013
Revenues:
Unaffiliated customers	$	38	$	76		$	114		$	311	$	138	$	315	$	764	$	471		^a	$	355	$	—	$	1,265	$	583		$	399		^b	$	3,951	$	336	^c	$	1			$	4,288
Intersegment	444		751			1,195			86		101		—		187		120				10		144		7		4			(1,667		)		—		—			—				—
Production and delivery	301		552			853			189		174		153		516		563				185		78		1,262		575			(1,273		)		2,759		89			5				2,853
Depreciation, depletion and amortization	37		71			108			37		16		33		86		58				57		21		2		12			14				358		169			3				530
Selling, general and administrative expenses	1		1			2			2		—		—		2		27				3		—		—		4			9				47		14			125				186
Mining exploration and research expenses	—		1			1			—		—		—		—		—				—		—		—		—			60				61		—			3				64
Environmental obligations and shutdown costs	—		(2		)	(2		)	—		—		—		—		—				—		—		—		—			18				16		—			—				16
Operating income (loss)	143		204			347			169		49		129		347		(57		)		120		45		8		(4		)	(96		)		710		64			(135		)		639

Interest expense, net	2		1			3			2		—		—		2		10				2		—		—		4			20				41		26			65				132
Provision for income taxes	—		—			—			59		20		48		127		(4		)		22		—		—		—			—				145		—			(105		)	^d	40
Total assets at June 30, 2013	2,730		5,768			8,498			6,089		1,623		2,487		10,199		7,095				4,887		2,061		287		934			1,100				35,061		26,587			1,509				63,157
Capital expenditures	204		82			286			208		28		8		244		320				46		42		1		11			23				973		190			10				1,173


a.	Included PT-FI’s sales to PT Smelting totaling $~~540~~628 million in ~~second-quarter~~third-quarter 2014 and $~~291~~458 million in ~~second-quarter~~third-quarter 2013.


b.	Included revenues from FCX's molybdenum sales company, which included sales of molybdenum produced by the Molybdenum mines and by certain of the North and South America copper mines.


c.	Included net mark-to-market ~~losses~~gains (losses) associated with crude oil and natural gas derivative contracts totaling ~~$70~~$64 million in ~~second-quarter~~third-quarter 2014 and ~~$35~~$(170) million ~~for the period from June 1, 2013, to June 30,~~in third-quarter 2013.


d.	~~Included~~ ~~$183 million~~ ~~of net benefits resulting from oil and gas acquisitions.~~

Table of Contents



(In millions)	Mining Operations																																												Mining Operations
	North America Copper Mines								South America								Indonesia				Africa																								North America Copper Mines											South America												Indonesia				Africa
																											Atlantic			Other									Corporate,																																											Atlantic				Other											Corporate,
																							Molyb-				Copper			Mining						U.S.			Other																																				Molyb-							Copper				Mining							U.S.				Other
			Other						Cerro		Candel-		Other										denum		Rod &		Smelting			& Elimi-				Total		Oil & Gas			& Elimi-				FCX						Other							Cerro			Candel-			Other													denum			Rod &				Smelting				& Elimi-				Total			Oil & Gas				& Elimi-				FCX
	Morenci		Mines			Total			Verde		aria		Mines		Total		Grasberg				Tenke		Mines		Refining		& Refining			nations				Mining		Operations			nations				Total		Morenci				Mines				Total			Verde			aria			Mines			Total			Grasberg				Tenke			Mines			Refining				& Refining				nations				Mining			Operations				nations				Total
Six Months Ended June 30, 2014
Nine Months Ended September 30, 2014
Revenues:
Unaffiliated customers																																											$	215		$	195			$	410			$	996		$	482		$	905		$	2,383		$	2,071	^a	$	1,071			$	—		$	3,599		$	1,808			$	1,374		^b	$	12,716			$	3,487	^c	$	—			$	16,203
Intersegment																																											1,346			2,489				3,835				150			238			5			393			175			102				469			24			15				(5,013		)		—				—			—				—
Production and delivery																																											936			1,622				2,558				538			456			483			1,477			1,594			556				243			3,601			1,784				(3,753		)		8,060				913			(2		)		8,971
Depreciation, depletion and amortization																																											128			240				368				120			49			115			284			194			172				71			7			31				51				1,178				1,736			10				2,924
Impairment of oil and gas properties																																											—			—				—				—			—			—			—			—			—				—			—			—				—				—				308			—				308
Selling, general and administrative expenses																																											1			2				3				2			1			2			5			73			9				—			—			13				20				123				171			163				457
Mining exploration and research expenses																																											—			6				6				—			—			—			—			—			—				—			—			—				87				93				—			—				93
Environmental obligations and shutdown costs																																											—			(5		)		(5		)		—			—			—			—			—			—				—			—			—				105				100				—			—				100
Net gain on sales of assets																																											—			(14		)		(14		)		—			—			—			—			—			—				—			—			—				(32		)		(46		)		—			—				(46		)
Operating income (loss)																																											496			833				1,329				486			214			310			1,010			385			436				155			15			(5		)		(117		)		3,208				359			(171		)		3,396

Interest expense, net																																											2			1				3				1			—			—			1			—			—				—			—			10				55				69				201			213				483
Provision for income taxes																																											—			—				—				177			72			160			409			166			93				—			—			—				—				668				—			366				1,034
Capital expenditures																																											691			124				815				1,207			29			42			1,278			722			100				45			3			9				38				3,010				2,392			13				5,415

Nine Months Ended September 30, 2013
Revenues:
Unaffiliated customers	$	75	$	116		$	191		$	701	$	341	$	605	$	1,647	$	985		^a	$	692	$	—	$	2,380	$	1,211		$	904		^b	$	8,010	$	2,497	^c	$	—			$	10,507	$	218			$	266			$	484		$	1,035		$	709		$	922		$	2,666		$	2,443		^a	$	1,199		$	—		$	3,842			$	1,730			$	1,157		^b	$	13,521		$	1,512		^c	$	3			$	15,036
Intersegment	918		1,646			2,564			87		190		5		282		8				53		296		16		11			(3,230		)		—		—			—				—		1,255				2,256				3,511			222			216			—			438			190				24			408			20				12				(4,603		)		—			—				—				—
Production and delivery	595		1,061			1,656			360		314		332		1,006		894				350		157		2,381		1,206			(2,470		)		5,180		640			(1		)		5,819		885				1,574				2,459			535			504			446			1,485			1,743				560			240			3,835				1,726				(3,531		)		8,517			377				10				8,904
Depreciation, depletion and amortization	77		158			235			79		35		68		182		102				114		46		5		20			36				740		1,232			7				1,979		105				207				312			105			44			93			242			173				179			62			7				32				31				1,038			732				8				1,778
Selling, general and administrative expenses	1		1			2			2		1		1		4		46				6		—		—		9			13				80		116			103				299		1				3				4			2			2			1			5			82				9			—			—				14				23				137			65				255				457
Mining exploration and research expenses	—		4			4			—		—		—		—		—				—		—		—		—			60				64		—			—				64		—				3				3			—			—			—			—			1				—			—			—				—				161				165			—				8				173
Environmental obligations and shutdown costs	—		—			—			—		—		—		—		—				—		—		—		—			82				82		—			—				82		—				(1		)		(1		)	—			—			—			—			—				—			—			—				—				24				23			—				—				23
Operating income (loss)	320		538			858			347		181		209		737		(49		)		275		93		10		(13		)	(47		)		1,864		509			(109		)		2,264		482				736				1,218			615			375			382			1,372			634				475			106			20				(30		)		(154		)		3,641			338				(278		)		3,701

Interest expense, net	1		1			2			—		—		—		—		—				—		—		—		7			36				45		150			130				325		3				1				4			2			—			—			2			12				2			—			—				12				60				92			100				159				351
Provision for income taxes	—		—			—			130		68		69		267		(15		)		57		—		—		—			—				309		—			376				685		—				—				—			215			131			126			472			289				99			—			—				—				—				860			—				107			^d	967
Capital expenditures	533		94			627			791		22		26		839		479				60		33		2		6			27				2,073		1,484			5				3,562		529				266				795			596			91			47			734			720				155			128			3				39				91				2,665			928				30				3,623

Six Months Ended June 30, 2013
Revenues:
Unaffiliated customers	$	118	$	121		$	239		$	601	$	391	$	622	$	1,614	$	1,335		^a	$	793	$	—	$	2,595	$	1,216		$	740		^b	$	8,532	$	336	^c	$	3			$	8,871
Intersegment	880		1,575			2,455			195		156		—		351		187				10		287		14		10			(3,314		)		—		—			—				—
Production and delivery	598		1,054			1,652			360		341		290		991		1,126				370		158		2,590		1,203			(2,615		)		5,475		89			8				5,572
Depreciation, depletion and amortization	70		140			210			70		25		62		157		113				115		41		5		22			22				685		169			5				859
Selling, general and administrative expenses	1		2			3			2		1		—		3		53				6		—		—		9			18				92		14			193				299
Mining exploration and research expenses	—		1			1			—		—		—		—		—				—		—		—		—			109				110		—			6				116
Environmental obligations and shutdown costs	—		(6		)	(6		)	—		—		—		—		—				—		—		—		—			37				31		—			—				31
Operating income (loss)	329		505			834			364		180		270		814		230				312		88		14		(8		)	(145		)		2,139		64			(209		)		1,994

Interest expense, net	3		1			4			2		—		—		2		12				2		—		—		8			40				68		26			95				189
Provision for income taxes	—		—			—			123		64		91		278		116				66		—		—		—			—				460		—			8			^d	468
Capital expenditures	357		186			543			372		68		30		470		511				103		82		2		19			40				1,770		190			18				1,978


a.	Included PT-FI’s sales to PT Smelting totaling ~~$913 million~~$1.5 billion for the first ~~six~~nine months of 2014 and ~~$721 million~~$1.2 billion for the first ~~six~~nine months of 2013.


b.	Included revenues from FCX's molybdenum sales company, which included sales of molybdenum produced by the Molybdenum mines and by certain of the North and South America copper mines.


c.	Included net mark-to-market losses associated with crude oil and natural gas derivative contracts totaling ~~$120~~$56 million for the first ~~six~~nine months of 2014 and ~~$35~~$205 million for the period from June 1, 2013 to ~~June~~September 30, 2013.


d.	Included ~~$183~~$183 million of net benefits resulting from second-quarter 2013 oil and gas acquisitions.

Table of Contents

NOTE 11. GUARANTOR FINANCIAL STATEMENTS

In March 2013, FCX completed the sale of $6.5 billion of senior notes. These notes, along with FCX's senior notes sold in February 2012, are fully and unconditionally guaranteed on a senior basis jointly and severally by FM O&G LLC, as guarantor, which is a 100 percent owned subsidiary of FM O&G and FCX. The guarantee is an unsecured obligation of the guarantor and ranks equal in right of payment with all existing and future indebtedness of ~~FCX,~~FM O&G LLC, including indebtedness under the revolving credit facility. The guarantee ranks senior in right of payment with all of FM O&G LLC's future subordinated obligations and is effectively subordinated in right of payment to any debt of ~~FCX's subsidiaries that are not subsidiary guarantors.~~FM O&G LLC's subsidiaries. In the future, FM O&G LLC's guarantee may be released or terminated for certain obligations under the following circumstances: (i) all or substantially all of the equity interests or assets of FM O&G LLC are sold to a third party; or (ii) FM O&G LLC no longer has any obligations under any FM O&G senior notes or any refinancing thereof and no longer guarantees any obligations of FCX under the revolver, the term loan or any other senior debt.

The following condensed consolidating financial information includes information regarding FCX, as issuer, FM O&G LLC, as guarantor, and all other non-guarantor subsidiaries of FCX. Included are the condensed consolidating balance sheets at ~~June~~September 30, 2014, and December 31, 2013, and the related condensed consolidating statements of comprehensive income for the three and ~~six~~nine months ended ~~June~~September 30, 2014 and 2013, and condensed consolidating statements of cash flows for the ~~six~~nine months ended ~~June~~September 30, 2014 and 2013 (in millions), which should be read in conjunction with FCX's notes to the consolidated financial statements (in millions). Certain amounts in the Condensed Consolidating Statement of Cash Flows for the six months ended June 30, 2013, have been reclassified to conform with the current period presentation. These amounts, which were not material, had no effect on the reported changes in cash and cash equivalents.statements.

CONDENSED CONSOLIDATING BALANCE SHEET

~~June~~September 30, 2014


	FCX			FM O&G LLC		Non-guarantor					Consolidated		FCX			FM O&G LLC		Non-guarantor					Consolidated
	Issuer			Guarantor		Subsidiaries		Eliminations			FCX		Issuer			Guarantor		Subsidiaries		Eliminations			FCX
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	1	$	1,457	$	—		$	1,458	$	—		$	1	$	657	$	—		$	658
Accounts receivable	388			2,840		2,466		(2,936		)	2,758		348			1,814		2,187		(2,042		)	2,307
Other current assets	78			56		5,904		—			6,038		104			73		5,889		—			6,066
Total current assets	466			2,897		9,827		(2,936		)	10,254		452			1,888		8,733		(2,042		)	9,031
Property, plant, equipment and mining development costs, net	25			45		25,337		—			25,407		23			45		26,236		—			26,304
Oil and gas properties, net - full cost method:
Subject to amortization, less accumulated amortization	—			4,583		6,460		14			11,057		—			4,235		6,727		344			11,306
Not subject to amortization	—			1,853		8,916		—			10,769		—			2,346		8,685		—			11,031
Investments in consolidated subsidiaries	32,769			10,107		11,416		(54,292		)	—		33,908			10,492		13,063		(57,463		)	—
Goodwill	—			217		1,500		—			1,717		—			217		1,500		—			1,717
Other assets	6,346			3,432		4,241		(9,214		)	4,805		6,512			3,913		4,439		(10,277		)	4,587
Total assets	$	39,606		$	23,134	$	67,697	$	(66,428	)	$	64,009	$	40,895		$	23,136	$	69,383	$	(69,438	)	$	63,976

LIABILITIES AND EQUITY
Current liabilities	$	1,550		$	1,026	$	6,088	$	(1,106	)	$	7,558	$	1,664		$	985	$	5,294	$	(1,600	)	$	6,343
Long-term debt, less current portion	12,435			6,762		5,885		(7,570		)	17,512		13,355			5,301		6,562		(7,243		)	17,975
Deferred income taxes	4,244		^a	—		3,207		—			7,451		4,233		^a	—		3,326		—			7,559
Environmental and asset retirement obligations, less current portion	—			291		3,003		—			3,294		—			302		3,352		—			3,654
Other liabilities	46			3,457		1,753		(3,474		)	1,782		52			3,403		1,751		(3,476		)	1,730
Total liabilities	18,275			11,536		19,936		(12,150		)	37,597		19,304			9,991		20,285		(12,319		)	37,261

Redeemable noncontrolling interest	—			—		745		—			745		—			—		749		—			749

Equity:
Stockholders' equity	21,331			11,598		43,140		(54,737		)	21,332		21,591			13,145		44,460		(57,605		)	21,591
Noncontrolling interests	—			—		3,876		459			4,335		—			—		3,889		486			4,375
Total equity	21,331			11,598		47,016		(54,278		)	25,667		21,591			13,145		48,349		(57,119		)	25,966
Total liabilities and equity	$	39,606		$	23,134	$	67,697	$	(66,428	)	$	64,009	$	40,895		$	23,136	$	69,383	$	(69,438	)	$	63,976


a.	All U.S. related deferred income taxes are recorded at the parent company.

Table of Contents

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2013



	FCX			FM O&G LLC		Non-guarantor					Consolidated
	Issuer			Guarantor		Subsidiaries		Eliminations			FCX
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	—	$	1,985	$	—		$	1,985
Accounts receivable	855			659		2,258		(1,210		)	2,562
Other current assets	114			38		5,273		—			5,425
Total current assets	969			697		9,516		(1,210		)	9,972
Property, plant, equipment and mining development costs, net	27			43		23,972		—			24,042
Oil and gas properties, net - full cost method:
Subject to amortization, less accumulated amortization	—			6,207		6,265		—			12,472
Not subject to amortization	—			2,649		8,238		—			10,887
Investments in consolidated subsidiaries	31,162			9,712		12,468		(53,342		)	—
Goodwill	—			437		1,479		—			1,916
Other assets	7,126			4,640		4,128		(11,710		)	4,184
Total assets	$	39,284		$	24,385	$	66,066	$	(66,262	)	$	63,473

LIABILITIES AND EQUITY
Current liabilities	$	1,003		$	758	$	4,222	$	(1,210	)	$	4,773
Long-term debt, less current portion	13,184			7,199		8,056		(8,045		)	20,394
Deferred income taxes	4,137		^a	—		3,273		—			7,410
Environmental and asset retirement obligations, less current portion	—			301		2,958		—			3,259
Other liabilities	26			3,436		1,893		(3,665		)	1,690
Total liabilities	18,350			11,694		20,402		(12,920		)	37,526

Redeemable noncontrolling interest	—			—		716		—			716

Equity:
Stockholders' equity	20,934			12,691		41,100		(53,791		)	20,934
Noncontrolling interests	—			—		3,848		449			4,297
Total equity	20,934			12,691		44,948		(53,342		)	25,231
Total liabilities and equity	$	39,284		$	24,385	$	66,066	$	(66,262	)	$	63,473


a.	All U.S. related deferred income taxes are recorded at the parent company.

Table of Contents

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2014


Three Months Ended June 30, 2014
Three Months Ended September 30, 2014
	FCX			FM O&G LLC			Non-guarantor						Consolidated			FCX			FM O&G LLC			Non-guarantor						Consolidated
	Issuer			Guarantor			Subsidiaries			Eliminations			FCX			Issuer			Guarantor			Subsidiaries			Eliminations			FCX
Revenues	$	—		$	570		$	4,952		$	—		$	5,522		$	—		$	370		$	5,326		$	—		$	5,696
Total costs and expenses	21			489			3,865			(6		)	4,369			12			916			3,966			(330		)	4,564
Operating (loss) income	(21		)	81			1,087			6			1,153			(12		)	(546		)	1,360			330			1,132
Interest expense, net	(87		)	(44		)	(51		)	18			(164		)	(99		)	(38		)	(37		)	16			(158		)
Net (loss) gain on early extinguishment of debt	(1		)	6			—			—			5
Net gain on early extinguishment of debt																—			58			—			—			58
Other income (expense), net	17			1			(8		)	(18		)	(8		)	15			—			24			(16		)	23
Benefit from (provision for) income taxes	26			26			(378		)	(2		)	(328		)	46			(104		)	(166		)	(125		)	(349		)
Equity in affiliated companies' net earnings (losses)	548			126			154			(826		)	2			602			381			(111		)	(874		)	(2		)
Net income (loss)	482			196			804			(822		)	660			552			(249		)	1,070			(669		)	704
Net income and preferred dividends attributable to noncontrolling interests	—			—			(180		)	2			(178		)	—			—			(130		)	(22		)	(152		)
Net income (loss) attributable to FCX common stockholders	$	482		$	196		$	624		$	(820	)	$	482		$	552		$	(249	)	$	940		$	(691	)	$	552

Other comprehensive income	—			—			1			—			1			—			—			7			—			7
Total comprehensive income (loss)	$	482		$	196		$	625		$	(820	)	$	483		$	552		$	(249	)	$	947		$	(691	)	$	559



Six Months Ended June 30, 2014
Nine Months Ended September 30, 2014
	FCX			FM O&G LLC			Non-guarantor						Consolidated			FCX			FM O&G LLC			Non-guarantor						Consolidated
	Issuer			Guarantor			Subsidiaries			Eliminations			FCX			Issuer			Guarantor			Subsidiaries			Eliminations			FCX
Revenues	$	—		$	1,214		$	9,293		$	—		$	10,507		$	—		$	1,584		$	14,619		$	—		$	16,203
Total costs and expenses	32			1,015			7,204			(8		)	8,243			44			1,931			11,170			(338		)	12,807
Operating (loss) income	(32		)	199			2,089			8			2,264			(44		)	(347		)	3,449			338			3,396
Interest expense, net	(169		)	(85		)	(109		)	38			(325		)	(268		)	(123		)	(146		)	54			(483		)
Net (loss) gain on early extinguishment of debt	(1		)	6			—			—			5			(1		)	64			—			—			63
Other income (expense), net	37			1			25			(38		)	25			52			1			49			(54		)	48
Benefit from (provision for) income taxes	5			(17		)	(670		)	(3		)	(685		)	51			(121		)	(836		)	(128		)	(1,034		)
Equity in affiliated companies' net earnings (losses)	1,152			256			339			(1,745		)	2			1,754			637			228			(2,619		)	—
Net income (loss)	992			360			1,674			(1,740		)	1,286			1,544			111			2,744			(2,409		)	1,990
Net income and preferred dividends attributable to noncontrolling interests	—			—			(291		)	(3		)	(294		)	—			—			(421		)	(25		)	(446		)
Net income (loss) attributable to FCX common stockholders	$	992		$	360		$	1,383		$	(1,743	)	$	992		$	1,544		$	111		$	2,323		$	(2,434	)	$	1,544

Other comprehensive income	—			—			4			—			4			—			—			11			—			11
Total comprehensive income (loss)	$	992		$	360		$	1,387		$	(1,743	)	$	996		$	1,544		$	111		$	2,334		$	(2,434	)	$	1,555

Table of Contents

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2013


Three Months Ended June 30, 2013
Three Months Ended September 30, 2013
	FCX			FM O&G LLC			Non-guarantor						Consolidated			FCX			FM O&G LLC			Non-guarantor						Consolidated
	Issuer			Guarantor			Subsidiaries			Eliminations			FCX			Issuer			Guarantor			Subsidiaries			Eliminations			FCX
Revenues	$	—		$	162		$	4,126		$	—		$	4,288		$	—		$	512		$	5,653		$	—		$	6,165
Total costs and expenses	76			135			3,438			—			3,649			11			452			3,995			—			4,458
Operating (loss) income	(76		)	27			688			—			639			(11		)	60			1,658			—			1,707
Interest expense, net	(92		)	(12		)	(39		)	11			(132		)	(94		)	(51		)	(40		)	23			(162		)
Gain on investment in MMR	128			—			—			—			128
Other income (expense), net	11			—			13			(11		)	13			24			—			2			(23		)	3
Benefit from (provision for) income taxes	35			(5		)	(70		)	—			(40		)	35			(5		)	(529		)	—			(499		)
Equity in affiliated companies' net earnings (losses)	476			20			(3		)	(491		)	2			867			187			47			(1,102		)	(1		)
Net income (loss)	482			30			589			(491		)	610			821			191			1,138			(1,102		)	1,048
Net income and preferred dividends attributable to noncontrolling interests	—			—			(133		)	5			(128		)	—			—			(202		)	(25		)	(227		)
Net income (loss) attributable to FCX common stockholders	$	482		$	30		$	456		$	(486	)	$	482		$	821		$	191		$	936		$	(1,127	)	$	821

Other comprehensive income	—			—			5			—			5			—			—			11			—			11
Total comprehensive income (loss)	$	482		$	30		$	461		$	(486	)	$	487		$	821		$	191		$	947		$	(1,127	)	$	832



Six Months Ended June 30, 2013
Nine Months Ended September 30, 2013
	FCX			FM O&G LLC			Non-guarantor						Consolidated			FCX			FM O&G LLC			Non-guarantor						Consolidated
	Issuer			Guarantor			Subsidiaries			Eliminations			FCX			Issuer			Guarantor			Subsidiaries			Eliminations			FCX
Revenues	$	—		$	162		$	8,709		$	—		$	8,871		$	—		$	674		$	14,362		$	—		$	15,036
Total costs and expenses	95			135			6,647			—			6,877			106			587			10,642			—			11,335
Operating (loss) income	(95		)	27			2,062			—			1,994			(106		)	87			3,720			—			3,701
Interest expense, net	(128		)	(12		)	(64		)	15			(189		)	(222		)	(63		)	(104		)	38			(351		)
Losses on early extinguishment of debt	(45		)	—			—			—			(45		)
Loss on early extinguishment of debt																(45		)	—			—			—			(45		)
Gain on investment in MMR	128			—			—			—			128			128			—			—			—			128
Other income (expense), net	15			—			10			(15		)	10			39			—			12			(38		)	13
Benefit from (provision for) income taxes	26			(5		)	(489		)	—			(468		)	61			(10		)	(1,018		)	—			(967		)
Equity in affiliated companies' net earnings (losses)	1,229			20			(46		)	(1,199		)	4			2,096			207			1			(2,301		)	3
Net income (loss)	1,130			30			1,473			(1,199		)	1,434			1,951			221			2,611			(2,301		)	2,482
Net income and preferred dividends attributable to noncontrolling interests	—			—			(292		)	(12		)	(304		)	—			—			(494		)	(37		)	(531		)
Net income (loss) attributable to FCX common stockholders	$	1,130		$	30		$	1,181		$	(1,211	)	$	1,130		$	1,951		$	221		$	2,117		$	(2,338	)	$	1,951

Other comprehensive income	—			—			11			—			11			—			—			22			—			22
Total comprehensive income (loss)	$	1,130		$	30		$	1,192		$	(1,211	)	$	1,141		$	1,951		$	221		$	2,139		$	(2,338	)	$	1,973

Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

~~Six~~Nine Months Ended ~~June~~September 30, 2014


	FCX			FM O&G LLC			Non-guarantor						Consolidated			FCX			FM O&G LLC			Non-guarantor						Consolidated
	Issuer			Guarantor			Subsidiaries			Eliminations			FCX			Issuer			Guarantor			Subsidiaries			Eliminations			FCX
Cash flow from operating activities:
Net income (loss)	$	992		$	360		$	1,674		$	(1,740	)	$	1,286		$	1,544		$	111		$	2,744		$	(2,409	)	$	1,990
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation, depletion and amortization	2			545			1,440			(8		)	1,979			3			673			2,269			(21		)	2,924
Impairment of oil and gas properties																—			625			—			(317		)	308
Net losses on crude oil and natural gas derivative contracts	—			120			—			—			120			—			56			—			—			56
Net gain (loss) on early extinguishment of debt	1			(6		)	—			—			(5		)
Net loss (gain) on early extinguishment of debt																1			(64		)	—			—			(63		)
Equity in (earnings) losses of consolidated subsidiaries	(1,152		)	(256		)	39			1,367			(2		)	(1,754		)	(637		)	4			2,387			—
Other, net	121			(12		)	(123		)	—			(14		)	87			(17		)	(73		)	—			(3		)
(Increases) decreases in working capital and changes in other tax payments	(164		)	(2,165		)	1,552			—			(777		)
(Increases) decreases in working capital and changes in other tax payments, excluding amounts from dispositions																(217		)	(1,166		)	684			—			(699		)
Net cash (used in) provided by operating activities	(200		)	(1,414		)	4,582			(381		)	2,587			(336		)	(419		)	5,628			(360		)	4,513

Cash flow from investing activities:
Capital expenditures	—			(897		)	(2,665		)	—			(3,562		)	—			(1,771		)	(3,644		)	—			(5,415		)
Acquisition of Deepwater GOM interest	—			—			(925		)	—			(925		)
Acquisition of Deepwater GOM interests																—			—			(1,421		)	—			(1,421		)
Intercompany loans	1,318			1,629			—			(2,947		)	—			1,151			734			—			(1,885		)	—
Investment in consolidated subsidiary	(364		)	(96		)	1,079			(619		)	—			(959		)	(97		)	(696		)	1,752			—
Net proceeds from sale of Eagle Ford shale assets	—			3,009			—			—			3,009			—			2,971			—			—			2,971
Other, net	—			(381		)	18			—			(363		)	—			32			189			—			221
Net cash provided by (used in) investing activities	954			3,264			(2,493		)	(3,566		)	(1,841		)	192			1,869			(5,572		)	(133		)	(3,644		)

Cash flow from financing activities:
Proceeds from debt	890			—			358			—			1,248			2,806			—			540			—			3,346
Repayments of debt	(990		)	(224		)	(397		)	—			(1,611		)	(1,686		)	(1,996		)	(514		)	—			(4,196		)
Intercompany loans	—			(170		)	(2,777		)	2,947			—			—			213			(2,098		)	1,885			—
Cash dividends and distributions paid	(653		)	(1,453		)	203			1,000			(903		)
Cash dividends and distributions paid, and contributions received																(979		)	336			691			(1,392		)	(1,344		)
Other, net	(1		)	(2		)	(4		)	—			(7		)	3			(2		)	(3		)	—			(2		)
Net cash (used in) provided by financing activities	(754		)	(1,849		)	(2,617		)	3,947			(1,273		)
Net cash provided by (used in) financing activities																144			(1,449		)	(1,384		)	493			(2,196		)

Net increase (decrease) in cash and cash equivalents	—			1			(528		)	—			(527		)	—			1			(1,328		)	—			(1,327		)
Cash and cash equivalents at beginning of period	—			—			1,985			—			1,985			—			—			1,985			—			1,985
Cash and cash equivalents at end of period	$	—		$	1		$	1,457		$	—		$	1,458		$	—		$	1		$	657		$	—		$	658

Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

~~Six~~Nine Months Ended ~~June~~September 30, 2013


	FCX			FM O&G LLC			Non-guarantor						Consolidated			FCX			FM O&G LLC				Non-guarantor							Consolidated
	Issuer			Guarantor			Subsidiaries			Eliminations			FCX			Issuer			Guarantor				Subsidiaries				Eliminations			FCX
Cash flow from operating activities:
Net income (loss)	$	1,130		$	30		$	1,473		$	(1,199	)	$	1,434		$	1,951		$	221			$	2,611			$	(2,301	)	$	2,482
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation, depletion and amortization	2			79			772			6			859			3			341				1,434				—			1,778
Net losses on crude oil and natural gas derivative contracts																—			205				—				—			205
Net loss on early extinguishment of debt	45			—			—			—			45			45			—				—				—			45
Gain on investment in MMR	(128		)	—			—			—			(128		)	(128		)	—				—				—			(128		)
Net losses on crude oil and natural gas derivative contracts	—			35			—			—			35
Equity in (earnings) losses of consolidated subsidiaries	(1,229		)	(20		)	52			1,193			(4		)	(2,096		)	(207		)		2				2,301			—
Other, net	27			(6		)	(202		)	—			(181		)	8			(15		)		(143		)		—			(150		)
Decreases (increases) in working capital and changes in other tax payments, excluding amounts from acquisitions	142			31			(368		)	—			(195		)	112			518				(1,119		)		—			(489		)
Net cash (used in) provided by operating activities	(11		)	149			1,727			—			1,865			(105		)	1,063				2,785				—			3,743

Cash flow from investing activities:
Capital expenditures	—			(151		)	(1,827		)	—			(1,978		)	—			(621		)		(3,002		)		—			(3,623		)
Acquisitions, net of cash acquired	(5,437		)	—			(321		)	344			(5,414		)	(5,437		)	—				(4		)		—			(5,441		)
Investment in consolidated subsidiary	104			—			—			(104		)	—
Intercompany loans																793			—				(1,095		)	—	302			—
Dividends from consolidated subsidiary																321			—			—	—				(321		)	—
Other, net	(5		)	—			(259		)	—			(264		)	14			32				(70		)		—			(24		)
Net cash (used in) provided by investing activities	(5,338		)	(151		)	(2,407		)	240			(7,656		)	(4,309		)	(589		)		(4,171		)		(19		)	(9,088		)

Cash flow from financing activities:
Proceeds from debt	10,885			—			136			—			11,021			11,085			—				144				—			11,229
Repayments of debt	(4,050		)	(415		)	(76		)	—			(4,541		)
Repayments of debt and redemption of MMR preferred stock																(4,501		)	(416		)		(126		)		—			(5,043		)
Intercompany loans	(476		)	476			344			(344		)	—			—			(56		)		358				(302		)	—
Cash dividends and distributions paid	(595		)	—			(194		)	104			(685		)	(1,957		)	—				(478		)		321			(2,114		)
Other, net	(415		)	—			—			—			(415		)	(213		)	—				—				—			(213		)
Net cash provided by (used in) financing activities	5,349			61			210			(240		)	5,380			4,414			(472		)		(102		)		19			3,859

Net increase (decrease) in cash and cash equivalents	—			59			(470		)	—			(411		)	—			2				(1,488		)		—			(1,486		)
Cash and cash equivalents at beginning of period	—			—			3,705			—			3,705			—			—				3,705				—			3,705
Cash and cash equivalents at end of period	$	—		$	59		$	3,235		$	—		$	3,294		$	—		$	2			$	2,217			$	—		$	2,219

NOTE 12. NEW ACCOUNTING STANDARDS

In May 2014, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU), which outlines a single comprehensive model and supersedes most of the current revenue recognition guidance. For public entities, this ASU is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption is not permitted. FCX is evaluating this new guidance, but does not expect it to have a significant impact on its current revenue recognition policies.

In April 2014, FASB issued an ASU, which revises the guidance for reporting discontinued operations. This ASU amends the definition of a discontinued operation and requires additional disclosures about disposal transactions that do not meet the definition of a discontinued operation. For public entities, this ASU is effective for annual periods beginning on or after December 15, 2014, and interim periods within that year. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. FCX adopted this ASU in the first quarter of 2014.

Table of Contents

NOTE 13. SUBSEQUENT EVENTS

Candelaria and Ojos del Salado Disposition. On November 3, 2014, FCX completed the sale of its 80 percent ownership interests in the Candelaria and Ojos del Salado copper mining operations and supporting infrastructure (Candelaria/Ojos) located in Chile to Lundin Mining ~~Contract - Indonesia.~~Corporation for ~~On July 25, 2014, PT-FI entered into~~$1.8 billion in cash, before closing adjustments, and contingent consideration of up to $200 million. Contingent consideration is calculated as five percent of net copper revenues in any annual period over the next five years when the average realized copper price exceeds $4.00 per pound. Excluding contingent consideration, after-tax net proceeds approximated $1.5 billion, and FCX expects to record a ~~Memorandum~~gain of ~~Understanding (MOU)~~approximately $680 million (approximately $450 million after tax) associated with this transaction. The transaction has an effective date of June 30, 2014. FCX expects to use the ~~Indonesian government under which PT-FI and the government have agreed~~proceeds from this transaction to negotiate an amended Contract of Work (COW) to address provisions related to the size of PT-FI’s concession area, royalties and taxes, domestic processing and refining, divestment, local content, and continuation of operations post-2021.repay indebtedness.

~~Under~~The sale of Candelaria/Ojos does not meet the ~~MOU, provisions to be addressed in the negotiation of an amended COW include provisions~~criteria for the development of new copper smelting and refining capacity in Indonesia, which will take into consideration an equitable sharing of costs between PT-FI (and any partners in the project) and the Indonesian government through fiscal incentives, provisions for divestment to the Indonesian government and/or Indonesian nationals of up toclassification as a 30 percent interest (an additional 20.64 percent interest) in PT-FI at fair value, and continuation of operations from 2022 through 2041. Negotiations will take into consideration PT-FI’s need for assurance of legal and fiscal terms post-2021 for PT-FI to continue with its large-scale investment program for the development of its underground reserves. The negotiations are expected to be completed within six months.discontinued operation.

~~Effective~~The following table provides the major classes of assets and liabilities associated with the signing of the MOU, PT-FI agreed to provide a $115 million assurance bond to support its commitment for smelter development, to increase royalties to 4.0 percent for copper and 3.75 percent for gold from the previous rates of 3.5 percent for copper and 1.0 percent for gold, and to pay export duties set forth in a new regulation. On July 25,Candelaria/Ojos at September 30, 2014 the Indonesian government revised its January 2014 regulations (as discussed in Note 13 of FCX’s annual report on Form 10-K for the year ended December 31, 2013) regarding export duties to incorporate reduced rates for copper concentrate exports for companies engaged in smelter development. The revised regulations provide for duties on copper concentrate exports during smelter development initially at 7.5 percent, declining to 5.0 percent when development progress exceeds 7.5 percent and is eliminated when development progress exceeds 30 percent.(in millions):



Current assets	$	449
Long-term assets	1,160
Current liabilities	138
Long-term liabilities	92

~~Under the MOU, no terms of the COW other than those relating~~The following table provides net income before income taxes and net income attributable to ~~the export duties, smelter bond and royalties described previously will be changed until the completion of the amended COW.~~FCX associated with Candelaria/Ojos (in millions):



	Nine Months Ended
	September 30,
	2014		2013
Net income before income taxes	$	236	$	391
Net income attributable to FCX	132		199

Other. FCX evaluated events after ~~June~~September 30, 2014, and through the date the consolidated financial statements were issued, and determined any events or transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these consolidated financial statements.

Table of Contents

REVIEW REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF

FREEPORT-McMoRan INC.

We have reviewed the condensed consolidated balance sheet of Freeport-McMoRan Inc. (formerly Freeport-McMoRan Copper & Gold Inc.) as of ~~June~~September 30, 2014, and the related consolidated statements of income and comprehensive income for the three- and ~~six~~nine-month periods ended ~~June~~September 30, 2014 and 2013, the consolidated statements of cash flows for the ~~six~~nine-month periods ended ~~June~~September 30, 2014 and 2013, and the consolidated statement of equity for the ~~six~~nine-month period ended ~~June~~September 30, 2014. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Freeport-McMoRan Inc. as of December 31, 2013, and the related consolidated statements of income, comprehensive income, cash flows, and equity for the year then ended (not presented herein), and we expressed an unqualified audit opinion on those consolidated financial statements in our report dated February 27, 2014. In our opinion, the accompanying condensed consolidated balance sheet of Freeport-McMoRan Inc. as of December 31, 2013, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ ERNST & YOUNG LLP

Phoenix, Arizona

~~August 8,~~November 7, 2014

Table of Contents


Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.

In Management’s Discussion and Analysis of Financial Condition and Results of Operations, "we," "us" and "our" refer to Freeport-McMoRan Inc. (FCX) and its consolidated subsidiaries. You should read this discussion in conjunction with our financial statements, the related Management’s Discussion and Analysis of Financial Condition and Results of Operations and the discussion of our Business and Properties in our annual report on Form 10-K for the year ended December 31, 2013, filed with the United States (U.S.) Securities and Exchange Commission (SEC). The results of operations reported and summarized below are not necessarily indicative of future operating results and future results could differ materially from those anticipated in forward-looking statements (refer to "Cautionary Statement" for further discussion). References to "Notes" are Notes included in our Notes to Consolidated Financial Statements. Throughout Management's Discussion and Analysis of Financial Condition and Results of Operations, all references to earnings or losses per share are on a diluted basis.

OVERVIEW

~~Effective July 14, 2014, Freeport-McMoRan Copper & Gold Inc. changed its name to Freeport-McMoRan Inc. to simplify the corporate name and better reflect FCX's expanded portfolio of assets.~~

We are a premier U.S.-based natural resources company with an industry-leading global portfolio of mineral assets, significant oil and gas resources and a growing production profile. We are the world's largest publicly traded copper producer. Our portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world's largest copper and gold deposits; significant mining operations in North and South America; the Tenke Fungurume (Tenke) minerals district in the Democratic Republic of Congo (DRC) in Africa; and significant oil and natural gas assets in the U.S., including reserves in the Deepwater Gulf of Mexico (GOM), onshore and offshore California, in the Haynesville shale play in Louisiana, in the Madden area in central Wyoming, and an industry-leading position in the emerging Inboard Lower Tertiary/Cretaceous natural gas trend in the shallow waters of the GOM and onshore in South Louisiana.

In November 2014, we completed the sale of our 80 percent ownership interests in the Candelaria and Ojos del Salado copper mining operations and supporting infrastructure (Candelaria/Ojos) to Lundin Mining Corporation (Lundin) for $1.8 billion in cash and contingent consideration of up to $0.2 billion. Excluding contingent consideration, after-tax net proceeds from the transaction approximated $1.5 billion. Refer to Note 13 for further discussion.

As further discussed in Note 2, ~~in June 2014,~~ we completed the sale of our Eagle Ford shale assets for $3.1 billion (before closing adjustments) in June 2014, and acquired additional interests in the Deepwater GOM ~~for~~ ~~$0.9 billion~~.totaling $1.4 billion. Refer to "Operations - Oil and Gas" for further discussion.

Our results for third-quarter 2014, compared with third-quarter 2013, reflect lower oil volumes and price realizations for copper, gold and oil, partly offset by higher copper and gold sales volumes. Our results for the ~~second quarter and~~ first ~~six~~nine months of 2014, compared with the first nine months of 2013, reflect ~~the impact of restrictions on concentrate exports from Indonesia~~lower copper volumes and price realizations for copper and gold, partly offset by higher gold sales volumes and a full ~~six~~nine months of results from FCX Oil & Gas Inc. (FM O&G) ~~results in 2014. Additionally, second-quarter 2013 was~~. The third quarter and first nine months of 2014 were also impacted by a ~~temporary production suspension at PT Freeport Indonesia (PT-FI).~~ceiling-test impairment charge for our oil and gas properties pursuant to full cost accounting rules (refer to Note 1), which was partly offset by net noncash mark-to-market gains on oil and gas derivative contracts. Refer to ~~"Consolidated Results"~~“Consolidated Results” for further discussion of our consolidated financial results for the three- and ~~six-month~~nine-month periods ended ~~June~~September 30, 2014 and 2013.

On July 25, 2014, PT-FI entered into a Memorandum of Understanding (MOU) with the Indonesian government under which, PT-FI and the government have agreed to negotiate an amended Contract of Work (COW), to be completed over the next six months, to address provisions related to the size of PT-FI’s concession area, royalties and taxes, domestic processing and refining, divestment, local content and continuation of operations post-2021. The MOU provides that negotiations for an amended COW will take into consideration PT-FI’s need for assurance of legal and fiscal terms post-2021 for PT-FI to continue with its large-scale investment program for the development of its underground reserves.

Execution of the MOU enabled the resumption of concentrate exports from PT-FI, which began in August 2014. Effective with the signing of the MOU, PT-FI has agreed to provide a $115 million assurance bond to support its commitment for smelter development, to increase royalties to 4.0 percent for copper and 3.75 percent for gold from the previous rates of 3.5 percent for copper and 1 percent for gold, and to pay export duties set forth in a new regulation. On July 25, 2014, the Indonesian government revised its January 2014 regulation regarding export duties to incorporate reduced rates for copper concentrate exports for companies engaged in smelter development. The revised regulations provide for duties on copper concentrate exports during smelter development initially at 7.5 percent, declining to 5 percent when development progress exceeds 7.5 percent, and is eliminated when development progress exceeds 30 percent. Refer to Note 13 and “Operations - Indonesia” for further discussion.

At ~~June~~September 30, 2014, we had $~~1.5~~0.7 billion in consolidated cash and cash equivalents and $~~20.3~~19.7 billion in total debt. ~~On July 23,~~During third-quarter 2014, we redeemed ~~$1.8~~$1.7 billion aggregate principal amount of senior notes with an average interest rate of 6.6 percent. Additionally, on October 15, 2014, we redeemed the $400 million aggregate ~~face value~~principal amount of ~~$1.7 billion.~~our 8.625% Senior Notes. We continue to target significant reductions in debt by the end of 2016 using cash flows generated above capital expenditures and

~~Table of Contents~~

other cash requirements and potentially, net proceeds from asset sales. Refer to Note 6 and "Capital Resources and Liquidity" for further discussion.

Table of Contents

OUTLOOK

We view the long-term outlook for our business positively, supported by limitations on supplies of copper and oil and by the requirements for copper and oil in the world’s economy. Our financial results vary as a result of fluctuations in market prices primarily for copper, gold, molybdenum and oil, as well as other factors. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Because we cannot control the price of our products, the key measures that management focuses on in operating our business are sales volumes, unit net cash costs for our mining operations, cash production costs per barrel of oil equivalent (BOE) for our oil and gas operations and operating cash flow. The outlook for each of these measures follows.

Sales Volumes. Following are our projected consolidated sales volumes for the year 2014:



Copper (millions of recoverable pounds):
North America copper mines	~~1,700~~1,670
South America mining	~~1,200~~1,090	^a
Indonesia mining	~~735~~710
Africa mining	~~440~~445
	~~4,075~~3,915
Gold (thousands of recoverable ounces):
Indonesia mining	~~1,250~~1,150
North and South America mining	9070	^a
	~~1,340~~1,220
Molybdenum (millions of recoverable pounds)	9895	^ab
Oil Equivalents (million BOE, or MMBOE)	~~58.4~~56.2


a.	Excludes estimated fourth-quarter 2014 production from the Candelaria and Ojos del Salado mines (totaling 80 million pounds of copper and 25 thousand ounces of gold).


b.	Projected molybdenum sales include 5350 million pounds produced by our Molybdenum mines and 45 million pounds produced by our North and South America copper mines.

Consolidated sales for ~~third-quarter~~fourth-quarter 2014 are expected to approximate ~~1.1~~1.0 billion pounds of copper, ~~445~~350 thousand ounces of gold, 2321 million pounds of molybdenum and ~~12.2~~11.5 MMBOE. Projected sales volumes are dependent on a number of factors, including operational performance and other factors.

Mining Unit Net Cash Costs. Assuming average prices of $~~1,300~~1,250 per ounce of gold and $1210 per pound of molybdenum for ~~the second half of~~fourth-quarter 2014, and achievement of current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for our copper mines are expected to average $~~1.54~~1.52 per pound of copper for the year 2014. ~~These amounts include estimates of the new royalty rates and export duties at PT-FI.~~ Quarterly unit net cash costs vary with fluctuations in sales volumes and average realized prices (primarily gold and molybdenum prices). The impact of price changes for ~~the second half of~~ fourth-quarter2014 on consolidated unit net cash costs would approximate ~~$0.012~~$0.01 per pound for each $50 per ounce change in the average price of gold and ~~$0.01~~$0.005 per pound for each $2 per pound change in the average price of molybdenum. Refer to “Consolidated Results – Production and Delivery Costs” for further discussion of consolidated production and delivery costs for our mining operations.

Oil and Gas Cash Production Costs per BOE. Based on current sales volume and cost estimates for ~~the second half of~~fourth-quarter 2014, oil and gas cash production costs are expected to approximate $22 ~~per BOE for the second half of~~ ~~2014~~ ~~and~~ ~~$20~~21 per BOE for the year ~~2014.~~2014 and $24 per BOE for fourth-quarter 2014. Fourth-quarter 2014 unit cost estimates reflect downtime for maintenance affecting production rates at Marlin in the Deepwater GOM. Refer to “Operations – Oil and Gas” for further discussion of oil and gas production costs.

Consolidated Operating Cash Flow. Our consolidated operating cash flows vary with prices realized from copper, gold, molybdenum and oil sales, our sales volumes, production costs, income taxes, other working capital changes and other factors. Based on current sales volume and cost estimates, ~~including the new royalty rates and export duties at PT-FI,~~ and assuming average prices of $~~3.25~~3.00 per pound of copper, $~~1,300~~1,250 per ounce of gold, $1210 per pound of molybdenum and $~~110~~90 per barrel of Brent crude oil for ~~the second half of~~fourth-quarter 2014, consolidated operating cash flows are estimated to approximate $~~6.7~~5.8 billion for the year 2014 (net of $~~0.7~~0.4 billion of working capital uses and changes in other tax payments). Projected consolidated operating cash flows for the year 2014 also reflect estimated taxes of $1.6 billion (refer to “Consolidated Results – Provision

Table of Contents

~~estimated taxes of~~ ~~$1.7 billion~~ ~~(refer to “Consolidated Results – Provision~~ for Income Taxes” for further discussion of our projected consolidated effective annual tax rate for 2014). The impact of price changes during ~~the second half of~~fourth-quarter 2014 on operating cash flows would approximate $~~200~~90 million for each $0.10 per pound change in the average price of copper, $4015 million for each $50 per ounce change in the average price of gold and $5518 million for each $2 per pound change in the average price of ~~molybdenum and~~ ~~$60 million~~ ~~for each~~ $5 ~~per barrel change in the price of~~molybdenum. For Brent crude oil, a $5 per barrel increase above ~~$100~~$90 per ~~barrel.~~barrel in fourth-quarter 2014 would improve 2014 operating cash flows by approximately $20 million. After giving effect to derivative contracts, which provide price protection between approximately $70 and $90 per barrel, a $5 per barrel decrease below $90 per barrel in fourth-quarter 2014 would not reduce 2014 operating cash flows.

MARKETS

Metals. World prices for copper, gold and molybdenum can fluctuate significantly. During the period from January 2004 through ~~July~~ September 2014, the London Metal Exchange (LME) spot copper price varied from a low of $1.06 per pound in 2004 to a record high of $4.60 per pound in 2011, the London Bullion Market Association (London) PM gold price fluctuated from a low of $375 per ounce in 2004 to a record high of $1,895 per ounce in 2011, and the Metals Week Molybdenum Dealer Oxide weekly average price ranged from a low of $7.35 per pound in 2004 to a record high of $39.25 per pound in 2005. Copper, gold and molybdenum prices are affected by numerous factors beyond our control as described further in our “Risk Factors” contained in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2013.

This graph presents LME spot copper prices and the combined reported stocks of copper at the LME, Commodity Exchange Inc., a division of the New York Mercantile Exchange (NYMEX), and the Shanghai Futures Exchange from January 2004 through ~~July~~ October 2014. From 2006 through most of 2008, limited supplies, combined with growing demand from China and other emerging economies, resulted in high copper prices and low levels of inventories. ~~Current~~We believe current copper prices are supported by a combination of demand from developing economies and pro-growth monetary and fiscal policy decisions in Europe, China and the U.S. During the first ~~half~~nine months of 2014, copper prices declined because of concerns about slowing growth rates in China and an outlook for higher near-term supplies. During ~~second-quarter~~ third-quarter2014, LME spot copper prices ranged from a low of $~~2.99~~3.06 per pound to a high of $~~3.19~~3.26 per pound, averaged $~~3.08~~3.17 per pound, and closed at $~~3.16~~3.06 per pound on ~~June~~September 30, 2014.

We believe the underlying long-term fundamentals of the copper business remain positive, supported by the significant role of copper in the global economy and a challenging long-term supply environment. Future copper

Table of Contents

prices are expected to be volatile and are likely to be influenced by demand from China and emerging markets, as well as economic activity in the U.S. and other industrialized countries, the timing of the development of new

~~Table of Contents~~

supplies of copper and production levels of mines and copper smelters. LME spot copper prices closed at $~~3.24~~3.10 per pound on ~~July~~October 31, 2014.

This graph presents London PM gold prices from January 2004 through ~~July~~ October 2014. An improving economic outlook and positive equity performance contributed to lower demand for gold in 2013 and ~~early~~the first nine months of 2014, resulting in generally lower prices. During ~~second-quarter~~third-quarter 2014, London PM gold prices ranged from a low of $~~1,243~~1,214 per ounce to a high of $~~1,326~~1,340 per ounce, averaged $~~1,288~~1,282 per ounce and closed at $~~1,315~~1,217 per ounce on ~~June~~September 30, 2014. Gold prices closed at $~~1,285~~1,164 per ounce on ~~July~~October 31, 2014.

This graph presents the Metals Week Molybdenum Dealer Oxide weekly average prices from January 2004 through ~~July~~ October 2014. Molybdenum prices ~~have~~ improved during the first ~~half~~nine months of 2014, resulting from improved demand in the metallurgical sector. During ~~second-quarter~~third-quarter 2014, the weekly average price of molybdenum ranged from a low of $~~11.14~~11.21 per pound to a high of $~~15.00~~13.28 per pound, averaged $~~13.58~~12.77 per pound and was $~~13.77~~11.21 on ~~June~~September 30,

Table of Contents

2014. The Metals Week Molybdenum Dealer Oxide weekly average price was $~~13.28~~9.38 per pound on ~~July~~October 31, 2014.

~~Table of Contents~~

Oil and Gas. Market prices for crude oil and natural gas can fluctuate significantly. During the period from January 2004 through ~~July~~ October 2014, the Brent crude oil price ranged from a low of $28.83 per barrel in 2004 to a high of $146.08 per barrel in 2008 and the NYMEX natural gas price fluctuated from a low of $2.04 per million British thermal units (MMBtu) in 2012 to a high of $13.91 per MMBtu in 2005. Crude oil and natural gas prices are affected by numerous factors beyond our control as described further in our “Risk Factors” contained in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2013.

This graph presents Brent crude oil prices and NYMEX natural gas contract prices from January 2004 through ~~July 2014. Current~~October 2014. During third-quarter 2014 and through October 2014, oil prices have been under pressure from global oversupply primarily attributable to U.S. shale production and increased Libyan output, coupled with weak economic data in Europe and slowing Chinese demand. During third-quarter 2014, Brent crude oil prices ~~are supported by an improving global economy and demand outlook. During~~ ~~second-quarter2014, the Brent crude oil price~~ ranged from a low of ~~$104.79~~$94.67 per barrel to a high of ~~$115.06~~$112.29 per barrel, averaged ~~$109.73~~$103.50 per barrel and ~~was~~ ~~$112.36~~were $94.67 per barrel on ~~June~~September 30, ~~2014. The~~2014. Brent crude oil ~~price was~~ ~~$106.02~~prices declined during October 2014 and were $85.86 per barrel on ~~July~~October 31, 2014.

Table of Contents

CONSOLIDATED RESULTS


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
	2014			2013^a			2014			2013^a			2014			2013			2014			2013^a
SUMMARY FINANCIAL DATA	(in millions, except per share amounts)												(in millions, except per share amounts)
Revenues^b	$	5,522	^c,d	$	4,288	^c,d	$	10,507	^c,d	$	8,871	^c,d	$	5,696	^c,d	$	6,165	^c,d	$	16,203	^c,d	$	15,036	^c,d
Operating income^b	$	1,153	^c,d,e,f	$	639	^c,d,f,g	$	2,264	^c,d,e,f	$	1,994	^c,d,f,g	$	1,132	^c,d,e,f,g	$	1,707	^c,d,g	$	3,396	^c,d,e,f,g	$	3,701	^c,d,g,h
Net income attributable to common stockholders^h	$	482	^c,d,e,f,i,j	$	482	^c,d,f,g,k	$	992	^c,d,e,f,i,j	$	1,130	^c,d,f,g,j,k
Net income attributable to common stockholdersⁱ													$	552	^{c,d,e,f,g,j,k}	$	821	^c,d,g	$	1,544	^{c,d,e,f,g,j,k}	$	1,951	^c,d,g,h,j,l
Diluted net income per share attributable to common stockholders	$	0.46	^c,d,e,f,i,j	$	0.49	^c,d,f,g,k	$	0.95	^c,d,e,f,i,j	$	1.17	^c,d,f,g,j,k	$	0.53	^{c,d,e,f,g,j,k}	$	0.79	^c,d,g	$	1.47	^{c,d,e,f,g,j,k}	$	1.96	^c,d,g,h,j,l
Diluted weighted-average common shares outstanding	1,045			984			1,045			968			1,046			1,043			1,045			993
Operating cash flows^l	$	1,386		$	1,034		$	2,587		$	1,865
Operating cash flows^m													$	1,926		$	1,878		$	4,513		$	3,743
Capital expenditures	$	1,950		$	1,173		$	3,562		$	1,978		$	1,853		$	1,645		$	5,415		$	3,623
At June 30:
At September 30:
Cash and cash equivalents	$	1,458		$	3,294		$	1,458		$	3,294		$	658		$	2,219		$	658		$	2,219
Total debt, including current portion	$	20,296		$	21,215		$	20,296		$	21,215		$	19,737		$	21,123		$	19,737		$	21,123


a.	~~Reflects~~Includes the results of FM O&G beginning June 1, 2013.

b.As further detailed in Note 10, following is a summary of revenues and operating income (loss) by operating division (in millions):


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	June 30,						June 30,						September 30,						September 30,
Revenues	2014			2013			2014			2013			2014			2013			2014			2013
North America copper mines	$	1,469		$	1,309		$	2,755		$	2,694		$	1,490		$	1,301		$	4,245		$	3,995
South America mining	1,031			951			1,929			1,965			847			1,139			2,776			3,104
Indonesia mining	523			591			993			1,522			1,253			1,111			2,246			2,633
Africa mining	418			365			745			803			428			420			1,173			1,223
Molybdenum mines	170			144			296			287			173			121			469			408
Rod & Refining	1,242			1,272			2,396			2,609			1,227			1,253			3,623			3,862
Atlantic Copper Smelting & Refining	629			587			1,222			1,226			601			516			1,823			1,742
U.S. oil & gas operations	1,236			336			2,497			336			990			1,176			3,487			1,512
Other mining, corporate, other & eliminations	(1,196		)	(1,267		)	(2,326		)	(2,571		)	(1,313		)	(872		)	(3,639		)	(3,443		)
Total FCX revenues	$	5,522		$	4,288		$	10,507		$	8,871		$	5,696		$	6,165		$	16,203		$	15,036

Operating income (loss)
North America copper mines	$	468		$	347		$	858		$	834		$	471		$	384		$	1,329		$	1,218
South America mining	404			347			737			814			273			558			1,010			1,372
Indonesia mining	(67		)	(57		)	(49		)	230			434			404			385			634
Africa mining	154			120			275			312			161			163			436			475
Molybdenum mines	65			45			93			88			62			18			155			106
Rod & Refining	6			8			10			14			5			6			15			20
Atlantic Copper Smelting & Refining	(4		)	(4		)	(13		)	(8		)	8			(22		)	(5		)	(30		)
U.S. oil & gas operations	232			64			509			64			(150		)	274			359			338
Other mining, corporate, other & eliminations	(105		)	(231		)	(156		)	(354		)	(132		)	(78		)	(288		)	(432		)
Total FCX operating income	$	1,153		$	639		$	2,264		$	1,994		$	1,132		$	1,707		$	3,396		$	3,701

Includes (unfavorable) favorable ~~(unfavorable)~~ adjustments to provisionally priced concentrate and cathode sales recognized in prior periods totaling $35(22) million ($16(10) million to net income attributable to common stockholders or $~~0.01~~(0.01) per share) for ~~second-quarter~~third-quarter 2014, $~~(117)~~73 million ($~~(55)~~35 million to net income attributable to common stockholders or $~~(0.06)~~0.03 per share) for ~~second-quarter~~third-quarter 2013, $(118) million ($(65) million to net income attributable to common stockholders or $(0.06) per share) for the first ~~six~~nine months of 2014 and $(26) million ($(12) million to net income attributable to common stockholders or $(0.01) per share) for the first ~~six~~nine months of 2013. Refer to “Revenues” for further discussion.

Includes net noncash mark-to-market gains (losses) ~~gains~~ associated with crude oil and natural gas derivative contracts totaling ~~$(7)~~$122 million ($~~(4)~~76 million to net income attributable to common stockholders or ~~less than~~ ~~$(0.01)~~$0.07 per share) for ~~second-quarter~~third-quarter 2014,, $8 $(158) million ($5 ($(98) million to net income attributable to common ~~stockholders~~stock or ~~less than~~ ~~$0.01~~$(0.09) per share) for ~~the~~ ~~first six months of2014, and $(36)~~third-quarter 2013, $130 million ($~~(23)~~80 million to net income attributable to common stockholders or ~~$(0.02)~~$0.08 per share) for the first nine months of 2014, and $(194) million ($(120) million to net income attributable to common stock or $(0.12) per share) for the four-month period from June 1, 2013, to September 30, 2013. Refer to "Revenues" for further discussion.


e.	~~Includes fixed costs charged directly to cost of sales as a result of the impact of export restrictions on PT-FI's operating rates totaling~~ ~~$56 million~~ (~~$30 million~~ ~~to net income attributable to common stockholders or~~ ~~$0.03~~ ~~per share) for~~ ~~second-~~

Table of Contents

~~quarter2014~~ ~~and~~ ~~$109 million~~ (~~$58 million~~ ~~to net income attributable to common stockholders or~~ ~~$0.06~~ ~~per share) for the~~ ~~first six months of2014~~.


e.	Includes a charge of $308 million ($192 million to net income attributable to common stockholders or $0.18 per share) to reduce the carrying value of oil and gas properties pursuant to full cost accounting rules.


f.	Includes a gain of $46 million ($31 million to net income attributable to common stockholders or $0.03 per share) primarily from the sale of a metals injection molding plant.

Includes net ~~charges~~credits (charges) for adjustments to environmental obligations and related litigation reserves of ~~$69~~$1 million (~~$68~~ ($1 million ~~to net income attributable to common stockholders or~~ ~~$0.06~~ ~~per share) for the second quarter and first six months of 2014,~~ ~~$3 million~~ (~~$2 million~~ to net income attributable to common stockholders or less than ~~$0.01~~$0.01 per share) for ~~second-quarter2013~~ ~~and~~ ~~$7 million~~ (~~$7 million~~ ~~to net income attributable to common stockholders or~~ ~~$0.01~~ ~~per share) for the~~ ~~first six months of2013~~.

~~Includes charges of $61~~third-quarter 2014, $22 million ($4614 million to net income attributable to common stockholders or ~~$0.05~~$0.01 per share) for ~~second-quarter~~third-quarter 2013, ~~and $75~~$(68) million ($57(67) million to net income attributable to common stockholders or ~~$0.06~~$(0.06) per share) for the first ~~six~~nine months of ~~2013~~2014 and $14 million ($7 million to net income attributable to common stockholders or $0.01 per share) for the first nine months of 2013.


h.	Includes transaction and related costs totaling $76 million ($47 million to net income attributable to common stock or $0.05 per share) principally associated with ~~the second-quarter 2013~~ oil and gas acquisitions.


h.i.	We defer recognizing profits on intercompany sales until final sales to third parties occur. Refer to "Operations - Smelting & Refining" for a summary of net impacts from changes in these deferrals.

i.j.

Includes ~~a charge~~net gains (losses) on early extinguishment of ~~$58~~debt totaling $58 million ($17 million to net income attributable to common stockholders or ~~$0.06~~$0.02 per ~~share,~~share) in third-quarter 2014 and $63 million ($21 million to net income attributable to common stockholders or $0.02 per share) for the first nine months of 2014 related to the redemption of senior notes and $(45) million ($(36) million to net income attributable to common stockholders or $(0.04) per share) for the first nine months of 2013 related to the termination of the acquisition bridge loan facilities.


k.	Includes a tax charge of $54 million ($47 million net of noncontrolling interests or $0.04 per share) related to changes in Chilean tax rules. Additionally, the first nine months of 2014 include a tax charge of $62 million ($0.06 per share) associated with deferred taxes recorded in connection with the allocation of goodwill to the sale of Eagle ~~Ford.~~Ford properties.

~~Includes net gains (losses) on early extinguishment of debt totaling~~ ~~$5 million~~ (~~$4 million~~ ~~to net income attributable to common stockholders or less than~~ ~~$0.01~~ ~~per share) in the second quarter and~~ ~~first six months of2014~~ ~~primarily related to the redemption of senior notes and~~ ~~$(45) million~~ (~~$(39) million~~ ~~to net income attributable to common stockholders ($(0.04)~~ ~~per share) for~~ ~~first six months of2013~~ ~~related to the termination of the acquisition bridge loan facilities.~~

k.l.

Includes gains associated with the oil and gas acquisitions, including $128 million to net income attributable to common stockholders or $0.13 per share, ~~primarily~~ related to our preferred stock investment in and the subsequent acquisition of McMoRan Exploration Co., and $183 million to net income attributable to common stockholders or ~~$0.19~~$0.18 per share, associated with net reductions in our deferred tax liabilities and deferred tax asset valuation allowances.


l.m.	Includes net working capital sources (uses) ~~sources~~ and changes in other tax payments of $~~(364)~~78 million for ~~second-quarter~~third-quarter 2014, $~~235~~(294) million for ~~second-quarter~~third-quarter 2013, $~~(777)~~(699) million for the first ~~six~~nine months of 2014 and $~~(195)~~(489) million for the first ~~six~~nine months of 2013.


	Three Months Ended				Six Months Ended				Three Months Ended					Nine Months Ended
	June 30,				June 30,				September 30,					September 30,
	2014		2013^a		2014		2013^a		2014			2013		2014			2013^a
SUMMARY OPERATING DATA
Copper (recoverable)
Production (millions of pounds)	931		909		1,879		1,889		1,027			1,063		2,906			2,952
Sales, excluding purchases (millions of pounds)	968		951		1,839		1,905		1,077			1,041		2,916			2,946
Average realized price per pound	$	3.16	$	3.17	$	3.17	$	3.29	$	3.12		$	3.28	$	3.14		$	3.31
Site production and delivery costs per pound^b	$	1.99	$	2.11	$	1.94	$	2.02	$	1.91		$	1.85	$	1.92	^c	$	1.96
Unit net cash costs per pound^b	$	1.72	$	1.85	$	1.64	$	1.71	$	1.34	^d	$	1.46	$	1.52	^c,d	$	1.62
Gold (recoverable)
Production (thousands of ounces)	166		151		397		386		449			327		846			713
Sales, excluding purchases (thousands of ounces)	159		173		346		387		525			305		871			692
Average realized price per ounce	$	1,296	$	1,322	$	1,299	$	1,434	$	1,220		$	1,329	$	1,251		$	1,395
Molybdenum (recoverable)
Production (millions of pounds)	25		24		49		46		24			25		73			71
Sales, excluding purchases (millions of pounds)	25		23		52		48		22			23		74			71
Average realized price per pound	$	13.43	$	12.35	$	12.27	$	12.56	$	14.71		$	11.21	$	13.01		$	12.12
Oil Equivalents
Sales volumes:
MMBOE	16.0		5.0		32.2		5.0		12.5			16.5		44.7			21.5
Thousand BOE (MBOE) per day	176		169		178		169		136			179		164			176
Cash operating margin per BOE:^c
Cash operating margin per BOE:^e
Realized revenues	$	77.53	$	74.37	$	77.37	$	74.37	$	69.08		$	80.93	$	75.04		$	79.40
Cash production costs	19.57		16.58		19.03		16.58		20.93			16.80		19.57			16.76
Cash operating margin	$	57.96	$	57.79	$	58.34	$	57.79	$	48.15		$	64.13	$	55.47		$	62.64


a.	~~Reflects~~Includes the results of FM O&G beginning June 1, 2013.

Table of Contents

Reflects per pound weighted-average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, excluding net noncash and other costs. ~~Site~~For reconciliations of the per pound unit costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements, refer to "Product Revenues and ~~unit net cash costs exclude~~ ~~$0.06~~Production Costs."


c.	Excludes $0.05 per pound of copper ~~for the second quarter and~~ ~~first six months of2014~~ for fixed costs charged directly to cost of sales as a result of the impact of export restrictions on PT Freeport Indonesia's (PT-FI) operating rates.

~~Table of Contents~~

result of the impact of export restrictions on PT-FI's operating rates. For reconciliations of the per pound unit costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements, refer to "Product Revenues and Production Costs."


c.d.	Includes $0.06 per pound of copper in third-quarter 2014 and $0.02 per pound of copper for the first nine months of 2014 for export duties and increased royalty rates at PT-FI.

Cash operating margin for oil and gas operations reflects realized revenues less cash production costs. Realized revenues exclude noncash mark-to-market adjustments on derivative contracts, and 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 our consolidated financial statements, refer to "Product Revenues and Production Costs."

Revenues

Consolidated revenues totaled $~~5.5~~5.7 billion in ~~second-quarter~~third-quarter 2014 and ~~$10.5~~$16.2 billion for the first ~~six~~nine months of 2014, compared with $~~4.3~~6.2 billion in ~~second-quarter~~third-quarter 2013 and ~~$8.9~~$15.0 billion for the first ~~six~~nine months of 2013. Revenues included the sale of copper concentrates, copper cathodes, copper rod, gold, molybdenum, silver, cobalt hydroxide and beginning June 1, 2013, the sale of oil, natural gas and natural gas liquids (NGLs) by our oil and gas operations.

Following is a summary of changes in our consolidated revenues between periods (in millions):


	Three Months Ended June 30,			Six Months Ended June 30,			Three Months Ended September 30,			Nine Months Ended September 30,

Consolidated revenues - 2013 periods	$	4,288		$	8,871		$	6,165		$	15,036
Mining operations:
Higher (lower) sales volumes from mining operations:
Higher (lower) sales volumes:
Copper	54			(219		)	119			(100		)
Gold	(17		)	(59		)	293			250
Molybdenum	20			47			(9		)	35
(Lower) higher price realizations from mining operations:
(Lower) higher price realizations:
Copper	(10		)	(221		)	(172		)	(496		)
Gold	(4		)	(47		)	(57		)	(126		)
Molybdenum	27			(15		)	78			66
Favorable (unfavorable) impact of net adjustments for prior period provisionally priced copper sales for mining operations	152			(92		)
Higher (lower) Atlantic Copper revenues	42			(4		)
Unfavorable impact of net adjustments for prior period provisionally priced copper sales							(95		)	(92		)
Lower revenues from purchased copper	(68		)	(135		)	(189		)	(324		)
Oil and gas operations:
Lower oil sales volumes							(302		)	—
Lower oil price realizations, including realized cash losses on derivative contacts							(136		)	—
Higher oil and gas revenues, including realized cash losses on derivative contracts							—			1,651			^a
Favorable impact of net noncash mark-to-market adjustments on derivative contracts							280			324
Other, including intercompany eliminations	138			220			(279		)	(21		)
Oil and gas operations:
Oil and gas revenues, including realized cash losses on derivative contracts	871			2,117
Net noncash mark-to-market adjustments on crude oil and natural gas derivative contracts	29			44
Consolidated revenues - 2014 periods	$	5,522		$	10,507		$	5,696		$	16,203

a. Represents the change in oil and gas revenues, excluding impacts from net noncash mark-to-market adjustments on derivative contracts, for the first nine months of 2014 compared to the four-month period from June 1, 2013, to September 30, 2013.							a. Represents the change in oil and gas revenues, excluding impacts from net noncash mark-to-market adjustments on derivative contracts, for the first nine months of 2014 compared to the four-month period from June 1, 2013, to September 30, 2013.

Mining Sales Volumes

Consolidated copper sales volumes were ~~968 million~~1.08 billion pounds in ~~second-quarter~~third-quarter 2014 and ~~1.8~~2.9 billion pounds for the first ~~six~~nine months of 2014, compared with ~~951 million~~1.04 billion pounds in ~~second-quarter~~third-quarter 2013 and ~~1.9~~2.9 billion pounds for the first ~~six~~nine months of 2013. Consolidated gold sales volumes ~~decreased~~increased to ~~159~~525 thousand ounces in ~~second-quarter~~third-quarter 2014 and ~~346~~871 thousand ounces for the first ~~six~~nine months of 2014, compared with ~~173~~305 thousand ounces in ~~second-quarter~~third-quarter 2013 and ~~387~~692 thousand ounces for the first ~~six~~nine months of 2013. Copper and gold sales volumes for the second quarter and first six months of 2014 reflect restrictions on concentrate exports from Indonesia, which resulted in a deferral of approximately 150 million pounds of copper and 240 thousand ounces of gold in ~~second-quarter2014~~ ~~and 275 million pounds of copper and 380 thousand ounces of gold for the first six months of~~ ~~2014. Partly offsetting these impacts were~~, primarily reflecting higher ~~copper sales volumes from North America.~~ore grades at PT-FI. Consolidated molybdenum sales volumes ~~increased to~~were 2522 million pounds in ~~second-quarter~~third-quarter 2014 and 5274 million pounds for the first ~~six~~nine months of 2014, compared with 23 million pounds in ~~second-quarter~~third-quarter 2013 and 4871 million pounds for the first ~~six~~nine months of 2013. Refer to “Operations” for further discussion of sales volumes at our mining operations.

Table of Contents

Metal Price Realizations

Our consolidated revenues can vary significantly as a result of fluctuations in the market prices of copper, gold and molybdenum. Following is a summary of our average price realizations from mining operations for the ~~second~~third quarters and first ~~six~~nine months of 2014 and 2013:


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2014		2013		2014		2013		2014		2013		2014		2013
Copper (per pound)	$	3.16	$	3.17	$	3.17	$	3.29	$	3.12	$	3.28	$	3.14	$	3.31
Gold (per ounce)	$	1,296	$	1,322	$	1,299	$	1,434	$	1,220	$	1,329	$	1,251	$	1,395
Molybdenum (per pound)	$	13.43	$	12.35	$	12.27	$	12.56	$	14.71	$	11.21	$	13.01	$	12.12

~~We had lower copper~~Copper and gold realizations were lower in ~~second-quarter~~third-quarter 2014 and for the first ~~six~~nine months of 2014, compared with ~~second-quarter~~third-quarter 2013 and the first ~~six~~nine months of 2013. Realized molybdenum prices improved in ~~second-quarter~~third-quarter 2014 and the first nine months of 2014, compared with ~~second-quarter~~third-quarter 2013 and the first nine months of 2013. Refer to ~~"Markets" for further discussion.~~"Markets."

Provisionally Priced Copper Sales

During the first ~~six~~nine months of 2014, 4143 percent of our mined copper was sold in concentrate, 3231 percent as cathode and 2726 percent as rod from our North America operations. Impacts of net adjustments for prior period provisionally priced sales primarily relate to copper sales. Substantially all of our copper concentrate and cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) based primarily on quoted LME monthly average spot copper prices. We receive market prices based on prices in the specified future period, which results in price fluctuations recorded through revenues until the date of settlement. We record revenues and invoice customers at the time of shipment based on then-current LME prices, which results in an embedded derivative on our provisionally priced concentrate and cathode sales that is adjusted to fair value through earnings each period, using the period-end forward prices, until final pricing on the date of settlement. To the extent final prices are higher or lower than what was recorded on a provisional basis, an increase or decrease to revenues is recorded each reporting period until the date of final pricing. Accordingly, in times of rising copper prices, our revenues benefit from adjustments to the final pricing of provisionally priced sales pursuant to contracts entered into in prior periods; in times of falling copper prices, the opposite occurs.

Following is a summary of the (unfavorable) favorable ~~(unfavorable)~~ impacts of net adjustments to the prior periods' provisionally priced copper sales for the ~~second~~third quarters and first ~~six~~nine months of 2014 and 2013 (in millions, except per share amounts):


	Three Months Ended					Six Months Ended						Three Months Ended					Nine Months Ended
	June 30,					June 30,						September 30,					September 30,
	2014		2013			2014			2013			2014			2013		2014			2013
Revenues	$	35	$	(117	)	$	(118	)	$	(26	)	$	(22	)	$	73	$	(118	)	$	(26	)
Net income attributable to common stockholders	$	16	$	(55	)	$	(65	)	$	(12	)	$	(10	)	$	35	$	(65	)	$	(12	)
Net income per share attributable to common stockholders	$	0.01	$	(0.06	)	$	(0.06	)	$	(0.01	)	$	(0.01	)	$	0.03	$	(0.06	)	$	(0.01	)

At ~~June~~September 30, 2014, we had provisionally priced copper sales at our copper mining operations, primarily South America and Indonesia, totaling ~~329~~394 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $~~3.18~~3.03 per pound, subject to final pricing over the next several months. We estimate that each $0.05 change in the price realized from the ~~June~~September 30, 2014, provisional price recorded would have an approximate $1113 million impact on 2014 net income attributable to common stockholders. The LME spot copper price closed at $~~3.24~~3.10 per pound on ~~July~~October 31, 2014.

Purchased Copper

From time to time, we purchase copper cathode for processing by our Rod & Refining segment when production from our North America copper mines does not meet customer demand.

Oil &and Gas Revenues

~~FM O&G's realized revenues totaled $1.2 billion ($77.53~~Oil realizations of $88.58 per ~~BOE)~~barrel in ~~second-quarter~~third-quarter 2014~~, $2.5 billion ($77.37~~ and $93.00 per ~~BOE)~~barrel for the first ~~six~~nine months of 2014, were lower compared with $104.33 per barrel for third-quarter 2013 and ~~$372 million ($74.37~~$102.76 per ~~BOE)~~barrel for the four-month period from June ~~2013.~~1, 2013, to September 30, 2013, primarily reflecting lower oil prices and higher realized cash losses on derivative contracts.

Table of Contents

~~Consolidated~~Oil sales ofvolumes were ~~16.0~~ ~~MMBOE during~~ ~~second-quarter2014~~ ~~included~~ ~~11.7~~8.6 million barrels (MMBbls) ~~of crude oil,~~in ~~20.3 billion~~third-quarter2014 ~~cubic feet (Bcf) of natural gas and~~, ~~1.0~~11.5 MMBbls in third-quarter2013, 32.1 MMBbls ~~of NGLs. Consolidated sales of 32.2 MMBOE~~ for the first ~~six~~nine months of 2014 ~~included 23.5~~and 14.9 MMBbls for the four-month period from June 1, 2013, to September 30, 2013. Lower oil sales volumes in third-quarter2014, compared with third-quarter2013, primarily reflected the sale of ~~crude oil, 39.8 Bcf of natural gas and 2.1 MMBbls of NGLs. Consolidated sales of 5.0 MMBOE during~~the Eagle Ford properties in June ~~2013 included 3.4 MMBbls of crude oil, 7.7 Bcf of natural gas and 0.3 MMBbls of NGLs.~~2014.

Refer to “Operations” for further discussion of ~~realized revenues~~average realizations and sales volumes at our oil and gas operations.

In connection with the acquisition of Plains Exploration & Production Company (PXP) ~~in June 2013,~~, we have derivative contracts for 2014 and 2015 that consist of crude oil options and natural gas ~~swaps at June 30, 2014.~~swaps. These crude oil and natural gas derivative contracts are not designated as hedging instruments; accordingly, they are recorded at fair value with the mark-to-market gains and losses recorded in revenues each period. ~~Excluded from~~Following is a summary of the ~~realized revenues above are the following~~ net noncash mark-to-market gains (losses) ~~gains~~ on crude oil and natural gas derivative contracts for the ~~second quarter~~third quarters and first ~~six~~nine months of 2014 and ~~for June~~ 2013 (in millions, except per share amounts):


	Three Months Ended						Six Months Ended					Three Months Ended					Nine Months Ended
	June 30,						June 30,					September 30,					September 30,
	2014			2013^a			2014		2013^a			2014		2013			2014		2013^a
Revenues	$	(7	)	$	(36	)	$	8	$	(36	)	$	122	$	(158	)	$	130	$	(194	)
Net income attributable to common stockholders	$	(4	)	$	(23	)	$	5	$	(23	)	$	76	$	(98	)	$	80	$	(120	)
Net income per share attributable to common stockholders	$	—		$	(0.02	)	$	—	$	(0.02	)	$	0.07	$	(0.09	)	$	0.08	$	(0.12	)


a.	Reflects the ~~results of FM O&G beginning~~four month period from June 1, 2013, to September 30, 2013.

Refer to Note 7 for further discussion of oil and gas derivative contracts.

Production and Delivery Costs

Consolidated production and delivery costs ~~increased to~~totaled $~~3.1~~3.2 billion in ~~second-quarter~~third-quarter 2014 and ~~$5.8~~$9.0 billion for the first ~~six~~nine months of 2014, compared with ~~$2.9~~$3.3 billion in ~~second-quarter~~third-quarter 2013 and ~~$5.6~~$8.9 billion for the first ~~six~~nine months of 2013. ~~The increase in costs are primarily associated with~~Higher production and delivery costs ~~from~~for first nine months of 2014 were primarily associated with our oil and gas operations, ~~beginning June 1, 2013,~~ which ~~totaled~~ ~~$329 million~~ ~~for~~ ~~second-quarter2014, $640 million for the first six~~included a full nine months of results for 2014, partly offset by lower costs of cathode purchases in North America and ~~$89 million for June 2013.~~lower costs in Indonesia associated with lower volumes.

Mining Unit Site Production and ~~delivery costs for our mining operations for the second quarter and first six months of~~ Delivery Costs

~~2014~~ ~~also reflected lower volumes from PT-FI related to restrictions on concentrate exports from Indonesia, while second-quarter 2013~~Consolidated unit site production and delivery costs (before net noncash and other costs) for our copper mines of $1.91 per pound of copper in third-quarter2014were ~~impacted~~higher than consolidated unit site production and delivery costs of $1.85 per pound in third-quarter2013, primarily reflecting the impact of lower production rates at PT-FI and lower copper sales volumes in South America, partly offset by ~~a temporary suspension of operations at PT-FI.~~higher copper sales volumes in North America.

Consolidated unit site production and delivery costs (before net noncash and other costs) for our copper mines of ~~$1.99~~ ~~per pound of copper in~~ ~~second-quarter2014~~ ~~and $1.94~~$1.92 per pound for the first ~~six~~nine months of 2014, were lower than $1.96 per pound for the first nine months of 2013, primarily reflecting higher copper sales volumes in North America, partly offset by the impact of lower production rates at PT-FI. Additionally, consolidated unit site production and delivery costs of ~~$2.11~~ ~~per pound in~~ ~~second-quarter2013~~ ~~and $2.02 per pound~~ for the first ~~six~~nine months of ~~2013~~2014 ~~primarily reflecting higher North America sales volumes. Consolidated unit site production and delivery costs~~ exclude fixed costs charged directly to cost of sales as a result of the impact of export restrictions on PT-FI's operating rates totaling ~~$0.06~~$0.05 per pound of ~~copper in the second quarter and first six months of~~ copper.

~~2014~~. Assuming achievement of current volume and cost estimates, consolidated unit site production and delivery costs are expected to average $~~1.95~~1.91 per pound of copper for the year 2014. Refer to “Operations – Unit Net Cash Costs” for further discussion of unit net cash costs associated with our operating divisions and to “Product Revenues and Production Costs” for reconciliations of per pound costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements.

Our mining operations require significant energy, principally diesel, electricity, coal and natural gas, most of which is obtained from third parties under long-term contracts. Energy costs are expected to approximate 20 percent of our consolidated copper production costs for the year 2014, including purchases of approximately ~~270~~260 million gallons of diesel fuel; 8,000 gigawatt hours of electricity at our North America, South America and Africa copper mining operations (we generate all of our power at our Indonesia mining operation); ~~655~~650 thousand metric tons of coal for our coal power plant in Indonesia; and 1 MMBtu of natural gas at certain of our North America mines.

~~Cash production costs for our oil and gas operations of $19.57 per BOE in~~ ~~second-quarter2014~~ ~~and$19.03 for the first six months of~~ ~~2014, were higher than $16.58 per BOE in June 2013, primarily reflecting higher operating costs in California.~~

Table of Contents

Oil and Gas Cash Production Costs per BOE

Cash production costs for our oil and gas operations of $20.93 per BOE in third-quarter2014 and$19.57 for the first nine months of 2014, were higher than the $16.80 per BOE in third-quarter2013 and $16.76 for the four months from June 1, 2013, to September 30, 2013, primarily reflecting the sale of lower cost Eagle Ford properties in June 2014 and higher operating costs in California.

Assuming achievement of current volume and cost estimates for fourth-quarter 2014, cash production costs are expected to approximate $21 per BOE for the year 2014 and $24 per BOE for fourth-quarter 2014. Fourth-quarter 2014 unit cost estimates reflect downtime for maintenance affecting production rates at Marlin in the Deepwater GOM.

Refer to “Operations” for further discussion of cash production costs at our oil and gas operations.

Depreciation, Depletion and Amortization

Depreciation will vary under the unit-of-production (UOP) method as a result of changes in sales volumes and the related UOP rates at our mining and oil and gas operations. Consolidated depreciation, depletion and amortization ~~expense~~ totaled $~~1.0~~0.9 billion in ~~second-quarter~~both the third quarters of 2014 and ~~$2.0~~2013, $2.9 billion for the first ~~six~~nine months of 2014~~, compared with$530 million~~ in ~~second-quarter2013~~ and ~~$859 million~~$1.8 billion for the first ~~six~~nine months of 2013. Higher depreciation, depletion and amortization ~~expense~~ in the ~~2014 periods was primarily associated with depreciation, depletion and amortization costs from our oil and gas operations, which totaled~~ ~~$616 million~~ ~~for~~ ~~second-quarter2014, $1.2 billion~~ first ~~six~~nine months of 2014 was primarily associated with a full nine months of expense for our acquired oil and ~~$169~~gas operations in 2014, compared with the four months in 2013.

Impairment of Oil and Gas Properties

Under the full cost accounting rules, a "ceiling test" is conducted each quarter to review the carrying value of the oil and gas properties for impairment. At September 30, 2014, the net capitalized costs with respect to FM O&G's U.S. oil and gas properties exceeded the related ceiling, which resulted in the recognition of an impairment charge of $308 million ($192 million to net income attributable to common stockholders), reflecting higher capitalized costs and the lower twelve-month average of the first-day-of-the-month historical reference oil price at September 30, 2014. Refer to Note 1 for ~~June 2013.~~further discussion.

Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses totaled $~~164~~158 million in both the third quarters of ~~second-quarter~~2014 and ~~$299~~2013, and $457 million for both the first ~~six~~nine months of 2014~~, compared with~~ ~~$186 million~~ in ~~second-quarter2013~~ and ~~$299 million for the first six months of~~ 2013. Excluding amounts for our oil and gas operations, which totaled ~~$59 million~~ in ~~second-quarter2014, $116~~$171 million for the first ~~six~~nine months of 2014 and ~~$14~~$65 million for the four months from June 1, 2013, to September 30, 2013, selling, general and administrative expenses were lower in the first nine months of 2014 ~~periods~~, primarily because of transaction costs incurred during 2013 associated with the oil and gas acquisitions. Consolidated selling, general and administrative expenses were net of capitalized general and administrative expense at our oil and gas operations totaling $37 million in third-quarter2014, $27 million in third-quarter2013, $111 million for the first nine months of 2014 and $35 million for the four months from June 1, 2013, to September 30, 2013.

Mining Exploration and Research Expenses

Consolidated exploration and research expenses for our mining operations ~~totaled~~decreased to $3429 million in ~~second-quarter~~third-quarter 2014 and ~~$64~~$93 million for the first ~~six~~nine months of 2014, compared with $6457 million in ~~second-quarter~~third-quarter 2013 and ~~$116~~$173 million for the first ~~six~~nine months of 2013. We are actively conducting exploration activities near our existing mines with a focus on opportunities to expand reserves and resources to support development of additional future production capacity in the large mineral districts where we currently operate. Exploration results continue to indicate opportunities for what we believe could be significant future potential reserve additions in North and South America, and in the Tenke minerals district. The drilling data in North America ~~continues~~also continue to indicate the potential for significantly expanded sulfide production. Drilling results and exploration modeling in North America have identified large scale potential sulfide resources in the Morenci and Safford/Lone Star districts, providing a long-term pipeline for future growth in reserves and production capacity in an established minerals district.

For the year 2014, mining exploration and research expenditures ~~for our mining operations~~ are expected to approximate $~~135~~130 million, including $100 million for mining exploration.

Under the full cost method of accounting, exploration costs for our oil and gas operations are capitalized to oil and gas properties.

Table of Contents

Environmental Obligations and Shutdown Costs

Environmental obligation costs reflect net revisions to our long-term environmental obligations, which will vary from period to period because of changes to environmental laws and regulations, the settlement of environmental matters and/or circumstances affecting our operations that could result in significant changes in our estimates. Shutdown costs include care and maintenance costs and any litigation, remediation or related expenditures associated with closed facilities or operations. Net charges (credits) for environmental obligations and shutdown costs totaled $7618 million in ~~second-quarter~~third-quarter 2014 and ~~$82~~$100 million for the first ~~six~~nine months of 2014, compared with $16(8) million in ~~second-quarter~~third-quarter 2013 and ~~$31~~$23 million for the first ~~six~~nine months of 2013. Refer to ~~Note~~ 9 ~~and~~ "Contingencies" for further discussion of environmental obligations and litigation matters associated with closed facilities or operations.

Net Gain on Sales of Assets

Net gain on sales of assets totaled $46 million ($31 million to net income attributable to common stockholders) for the third quarter and first nine months of 2014, primarily related to the sale of a metals injection molding plant.

Interest Expense, Net

Consolidated interest expense (excluding capitalized interest) ~~increased to~~totaled $~~225~~212 million in ~~second-quarter~~third-quarter 2014 ~~and $449~~, $661 million for the first ~~six~~nine months of 2014, ~~compared with~~ $~~167~~223 million in ~~second-quarter~~third-quarter 2013 and ~~$242~~$465 million for the first ~~six~~nine months of 2013~~, reflecting additional~~. Increased interest expense for the first nine months of 2014 was primarily associated with acquisition-related debt and assumed debt of PXP. ~~Refer to Note~~ 6 ~~for further discussion.~~

Capitalized interest is related to the level of expenditures for our development projects and average interest rates on our borrowings, and totaled $6154 million in ~~second-quarter~~third-quarter 2014 and ~~$124~~$178 million for the first ~~six~~nine months of 2014, compared with $3561 million in ~~second-quarter~~third-quarter 2013 and ~~$53~~$114 million for the first ~~six~~nine months of 2013. Refer to "Operations" and “Capital Resources and Liquidity - Investing Activities” for further discussion of current development projects.

~~Table of Contents~~

Net ~~Gains (Losses)~~Gain (Loss) on Early Extinguishment of Debt

Net ~~gains (losses)~~gain (loss) on early extinguishment of debt totaled $5$58 millionin the ~~second~~third quarter and $63 millionfor thefirst ~~six~~nine months of 2014, primarily related to the redemption of senior notes and $(45) million for the first ~~six~~nine months of 2013 related to the termination of the bridge loan facilities for the oil and gas acquisitions.

Gain on Investment in McMoRan Exploration Co. (MMR)

~~Gain on investment in MMR totaled $128 million in~~During the ~~second quarter and~~ first ~~six~~nine months of 2013 ~~primarily~~, we recorded a gain totaling $128 million related to the carrying value of our ~~2010~~ preferred stock investment in and the subsequent acquisition of MMR. Refer to Note 2 in our annual report on Form 10-K for the year ended December 31, 2013.

Provision for Income Taxes

Following is a summary of the approximate amounts used in the calculation of our consolidated provision for income taxes for the first nine months of2014 and 2013 ~~periods~~ (in millions, except percentages):


	Six Months Ended									Six Months Ended							Nine Months Ended								Nine Months Ended
	June 30, 2014									June 30, 2013							September 30, 2014								September 30, 2013
	Income (Loss)^a			Effective Tax Rate		Income Tax (Provision) Benefit				Income (Loss)^a		Effective Tax Rate	Income Tax (Provision) Benefit				Income^a		Effective Tax Rate		Income Tax Provision				Income^a		Effective Tax Rate	Income Tax (Provision) Benefit
U.S.	$	936		31%		$	(291	)	^b	$	578	28%	$	(160	)		$	1,165	28%		$	(321	)	^b	$	1,007	26%	$	(259	)
South America	747			36%		(267		)		784		35%	(278		)		1,014		40%		(409		)	^c	1,325		36%	(472		)
Indonesia	(39		)	38%		15				213		54%	(116		)	^c	397		42%		(166		)		622		46%	(289		)
Africa	187			30%		(57		)		210		31%	(66		)		305		30%		(93		)		320		31%	(99		)
Eliminations and other	138			N/A		(37		)		113		N/A	(18		)		143		N/A		(14		)		172		N/A	(31		)
Annualized rate adjustment^d	—			N/A		(48		)		—		N/A	(13		)		—		N/A		(31		)		—		N/A	—
	1,969			35%		(685		)		1,898		34%	(651		)		3,024		34%		(1,034		)		3,446		33%	(1,150		)
Adjustments	—			N/A		—				—		N/A	183			^e	—		N/A		—				—		N/A	183			^e
Consolidated FCX	$	1,969		35%	^f	$	(685	)		$	1,898	25%	$	(468	)		$	3,024	34%	^f	$	(1,034	)		$	3,446	28%	$	(967	)


a.	Represents income ~~(loss)~~ by geographic location before income taxes and equity in affiliated companies’ net earnings.


b.	Includes a $5862 million charge for deferred taxes recorded in connection with the allocation of goodwill to the sale of Eagle ~~Ford.~~Ford properties.

Table of Contents


c.	Includes ~~an $18~~a $54 million charge ~~to reflect increases in tax reserves~~ related to ~~prior periods.~~changes in Chilean tax rules.


d.	In accordance with applicable accounting rules, we adjust our interim provision for income taxes equal to our estimated annualized tax rate.


e.	Reflects net reductions in our deferred tax liabilities and deferred tax asset valuation allowances resulting from the oil and gas acquisitions.

Our consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which we conduct operations. Accordingly, variations in the relative proportions of jurisdictional income result in fluctuations to our consolidated effective income tax rate. Assuming average prices of $~~3.25~~3.00 per pound for copper, $~~1,300~~1,250 per ounce for gold, $1210 per pound for molybdenum and Brent crude oil of $~~110~~90 per barrel for fourth-quarter ~~the second half of~~2014 and achievement of current sales volume and cost estimates, we estimate that our consolidated effective tax rate will approximate 34 percent for the year 2014.

~~Table of Contents~~

OPERATIONS

North America Copper Mines

We operate seven open-pit copper mines in North America – Morenci, Bagdad, Safford, Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico. All of the North America mining operations are wholly owned, except for Morenci. We record our 85 percent joint venture interest in Morenci using the proportionate consolidation method.

The North America copper mines include open-pit mining, sulfide ore concentrating, leaching and solution extraction/electrowinning (SX/EW) operations. A majority of the copper produced at our North America copper mines is cast into copper rod by our Rod & Refining segment. The remainder of our North America copper sales is in the form of copper cathode or copper concentrate, a portion of which is shipped to Atlantic Copper (our wholly owned copper smelter). Molybdenum concentrate is also produced by certain of our North America copper mines.

Operating and Development Activities. We have increased production from our North America copper mines by approximately 25 percent over the past five years and continue to evaluate a number of opportunities to invest in additional production capacity following positive exploration results. Future investments will be undertaken based on the results of economic and technical feasibility studies and market conditions.

Morenci Mill Expansion. ~~At Morenci, start-up activities from the expanded~~The mill expansion project ~~began in second-quarter 2014. Commissioning activities~~ commenced operations in May 2014 ~~with a ramp up to full rates~~and is expected to ~~be achieved~~reach full rates by year-end 2014. The project targets average incremental annual production of approximately 225 million pounds of copper (an approximate 40 percent increase from 2013) through an increase in milling rates from 50,000 metric tons of ore per day to approximately 115,000 metric tons of ore per day. During third-quarter 2014, Morenci's mill rates averaged 77,900 metric tons per day. At full rates, Morenci's copper production is expected to ~~approach 1 billion pounds in 2015, compared with 564~~average over 900 million pounds ~~in 2013. At~~ ~~June 30, 2014~~, ~~$1.5 billion~~ ~~had been incurred for this project ($0.4 billion during~~per year over the ~~first six months of~~ ~~2014~~).next five years.

Construction of the ~~new mill~~expanded Morenci milling facility is substantially complete. Remaining items include completion of the molybdenum circuit, which would add capacity of approximately 9 million pounds of molybdenum per year, and the construction of an expanded tailings storage facility, which is expected to be completed in 2015. As of September 30, 2014, $1.5 billion had been incurred for this project ($0.5 billion during the first nine months of 2014), with approximately $0.1 billion remaining to be incurred.

Table of Contents

Operating Data. Following is summary operating data for the North America copper mines for the ~~second~~third quarters and first ~~six~~nine months of 2014 and 2013:


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2014		2013		2014		2013		2014		2013		2014		2013
Operating Data, Net of Joint Venture Interest
Copper (recoverable)
Production (millions of pounds)	395		349		780		692		423		354		1,203		1,046
Sales, excluding purchases (millions of pounds)	423		372		794		725		436		363		1,230		1,088
Average realized price per pound	$	3.16	$	3.25	$	3.21	$	3.41	$	3.17	$	3.27	$	3.19	$	3.37

Molybdenum (millions of recoverable pounds)
Production^a	9		9		17		17		8		9		25		26

100% Operating Data
SX/EW operations
Leach ore placed in stockpiles (metric tons per day)	1,044,500		1,053,000		1,014,000		1,026,700		1,003,900		993,100		1,010,600		1,015,400
Average copper ore grade (percent)	0.25		0.22		0.25		0.22		0.25		0.22		0.25		0.22
Copper production (millions of recoverable pounds)	234		226		463		435		244		216		707		651

Mill operations
Ore milled (metric tons per day)	260,100		240,900		257,700		245,700		278,000		247,400		264,500		246,300
Average ore grade (percent):
Copper	0.44		0.38		0.43		0.39		0.44		0.38		0.43		0.39
Molybdenum	0.03		0.03		0.03		0.03		0.03		0.03		0.03		0.03
Copper recovery rate (percent)	82.8		82.4		84.4		83.4		87.5		86.3		85.5		84.6
Copper production (millions of recoverable pounds)	188		148		370		306		211		163		581		469

~~Table of Contents~~


a.	Refer to "Consolidated Results" for our consolidated molybdenum sales volumes, which include sales of molybdenum produced at the North America copper mines.

Copper sales volumes from our North America copper mines increased to ~~423~~436 million pounds in ~~second-quarter~~third-quarter 2014 and ~~794 million~~1.2 billion pounds for the first ~~six~~nine months of 2014, compared with ~~372~~363 million pounds in ~~second-quarter~~third-quarter 2013 and ~~725 million~~1.1 billion pounds for the first ~~six~~nine months of 2013, reflecting higher mining and milling rates at Morenci and higher ore grades at ~~several operating sites.~~Chino.

~~North America's copper production is expected to continue to increase during the second half of 2014 with the ramp up of the Morenci mill expansion project.~~ Copper sales from ~~our~~ North America ~~copper mines~~ are expected to approximate 1.7 billion pounds for the year 2014, compared with 1.4 billion pounds in 2013. North America copper production is expected to continue to increase for the year 2015 as a result of higher mill rates from the Morenci expansion. Refer to "Outlook" for projected molybdenum sales volumes.

Unit Net Cash Costs. Unit net cash costs per pound of copper is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our 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 our measure may not be comparable to similarly titled measures reported by other companies.

Table of Contents

Gross Profit per Pound of Copper and Molybdenum

The following tables summarize unit net cash costs and gross profit per pound at our North America copper mines for the ~~second~~third quarters and first ~~six~~nine months of 2014 and 2013. Refer to “Product Revenues and Production Costs” for an explanation of the “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.


	Three Months Ended							Three Months Ended											Three Months Ended											Three Months Ended
	June 30, 2014							June 30, 2013											September 30, 2014											September 30, 2013
	By- Product Method			Co-Product Method				By- Product Method				Co-Product Method							By- Product Method				Co-Product Method							By- Product Method				Co-Product Method
				Copper		Molyb- denum^a					Copper				Molyb- denum^a							Copper				Molyb- denum^a							Copper				Molyb- denum^a
Revenues, excluding adjustments	$	3.16		$	3.16	$	12.26		$	3.25			$	3.25			$	11.17		$	3.17			$	3.17			$	13.55		$	3.27			$	3.27			$	10.24

Site production and delivery, before net noncash and other costs shown below	1.87			1.83		2.63		2.09				2.01				4.63			1.83				1.79				3.17			2.00				1.94				4.01
By-product credits	(0.28		)	—		—		(0.25		)		—				—			(0.26		)		—				—			(0.24		)		—				—
Treatment charges	0.11			0.11		—		0.08				0.08				—			0.11				0.11				—			0.10				0.09				—
Unit net cash costs	1.70			1.94		2.63		1.92				2.09				4.63			1.68				1.90				3.17			1.86				2.03				4.01
Depreciation, depletion and amortization	0.30			0.29		0.19		0.28				0.27				0.30			0.30				0.30				0.17			0.27				0.27				0.24
Noncash and other costs, net	0.07			0.06		0.03		0.08				0.08				0.04			0.11				0.10				0.03			0.08				0.07				0.03
Total unit costs	2.07			2.29		2.85		2.28				2.44				4.97			2.09				2.30				3.37			2.21				2.37				4.28
Revenue adjustments, primarily for pricing on prior period open sales	0.02			0.02		—		(0.04		)		(0.04		)		—			(0.02		)		(0.02		)		—			0.02				0.02				—
Gross profit per pound	$	1.11		$	0.89	$	9.41	$	0.93			$	0.77			$	6.20		$	1.06			$	0.85			$	10.18		$	1.08			$	0.92			$	5.96

Copper sales (millions of recoverable pounds)	421			421				370				370							434				434							362				362
Molybdenum sales (millions of recoverable pounds)^a						9										9											8											9




	Nine Months Ended								Nine Months Ended
	September 30, 2014								September 30, 2013
	By- Product Method			Co-Product Method					By- Product Method			Co-Product Method
	By- Product Method			Copper			Molyb- denum^a		By- Product Method			Copper		Molyb- denum^a
Revenues, excluding adjustments	$	3.19		$	3.19		$	11.93	$	3.37		$	3.37	$	11.03

Site production and delivery, before net noncash and other costs shown below	1.86			1.83			2.75		2.03			1.97		3.99
By-product credits	(0.25		)	—			—		(0.25		)	—		—
Treatment charges	0.11			0.11			—		0.10			0.10		—
Unit net cash costs	1.72			1.94			2.75		1.88			2.07		3.99
Depreciation, depletion and amortization	0.29			0.29			0.15		0.28			0.27		0.25
Noncash and other costs, net	0.09			0.08			0.03		0.08			0.08		0.03
Total unit costs	2.10			2.31			2.93		2.24			2.42		4.27
Revenue adjustments, primarily for pricing on prior period open sales	(0.01		)	(0.01		)	—		—			—		—
Gross profit per pound	$	1.08		$	0.87		$	9.00	$	1.13		$	0.95	$	6.76

Copper sales (millions of recoverable pounds)	1,224			1,224					1,084			1,084
Molybdenum sales (millions of recoverable pounds)^a							25							26


a.	Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.

4546

Table of Contents

Six Months Ended Six Months Ended
June 30, 2014 June 30, 2013
By- Product Method Co-Product Method By- Product Method Co-Product Method
Copper
Molyb-
denum
Copper
Molyb-
denum

Revenues, excluding adjustments $ 3.21
$ 3.21
$ 11.19
^a
$ 3.41
$ 3.41
$ 11.45
^a

Site production and delivery, before net noncash and other costs shown below 1.87
1.84
2.56
2.04
1.98
3.98

By-product credits (0.25 ) —
—
(0.26 ) —
—

Treatment charges 0.12
0.12
—
0.11
0.10
—

Unit net cash costs 1.74
1.96
2.56
1.89
2.08
3.98

Depreciation, depletion and amortization 0.29
0.28
0.14
0.28
0.27
0.26

Noncash and other costs, net 0.08
0.08
0.03
0.08
0.08
0.04

Total unit costs 2.11
2.32
2.73
2.25
2.43
4.28

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

Gross profit per pound $ 1.09
$ 0.88
$ 8.46
$ 1.15
$ 0.97
$ 7.17

Copper sales (millions of recoverable pounds) 790
790
722
722

Molybdenum sales (millions of recoverable pounds)^a
17 17


a.	~~Reflects sales of molybdenum produced by certain of the North America copper mines to our molybdenum sales company at market-based pricing.~~

Our North America copper mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-product credits and other factors. Average unit net cash costs (net of by-product credits) of $~~1.70~~1.68 per pound of copper in ~~second-quarter~~third-quarter 2014 and ~~$1.74~~$1.72 per pound for the first ~~six~~nine months of 2014, were lower than unit net cash costs of $~~1.92~~1.86 per pound in ~~second-quarter~~third-quarter 2013 and ~~$1.89~~$1.88 per pound for the first ~~six~~nine months of 2013, primarily reflecting higher copper sales volumes.

Because certain assets are depreciated on a straight-line basis, North America's average unit depreciation rate may vary with asset additions and the level of copper production and sales.

Assuming achievement of current sales volume and cost estimates, and an average price of $1210 per pound of molybdenum for fourth-quarter ~~the second half of~~2014, average unit net cash costs (net of by-product credits) for our North America copper mines are expected to approximate $~~1.74~~1.73 per pound of copper for the year 2014, compared with $1.87 per pound in 2013. North America's unit net cash costs for ~~the remainder of~~fourth-quarter 2014 would change by approximately ~~$0.015~~$0.007 per pound for each $2 per pound change in the average price of molybdenum.

South America Mining

We operate four copper mines in South America – Cerro Verde in Peru and El Abra, Candelaria and Ojos del Salado in Chile. We own a 53.56 percent interest in Cerro Verde, a 51 percent interest in El Abra, and an 80 percent interest in the Candelaria and Ojos del Salado mining complex. All operations in South America are consolidated in our financial statements.

South America mining includes open-pit and underground mining, sulfide ore concentrating, leaching and SX/EW operations. Production from our South America mines is sold as copper concentrate or copper cathode under long-term contracts. Our South America mines ship a portion of their copper concentrate inventories to Atlantic Copper. In addition to copper, the Candelaria and Ojos del Salado mines produce gold and silver, and the Cerro Verde mine produces molybdenum concentrates.

Sale Transaction. In November 2014, we completed the sale of our 80 percent ownership interests in Candelaria/Ojos to Lundin for $1.8 billion in cash and contingent consideration of up to $0.2 billion. Contingent consideration is calculated as five percent of net copper revenues in any annual period over the next five years when the average copper price exceeds $4.00 per pound. Excluding contingent consideration, we estimate after-tax net proceeds from the transaction of approximately $1.5 billion.

As of December 31, 2013, we estimated that Candelaria and Ojos del Salado had consolidated recoverable proven and probable reserves totaling 4.0 billion pounds of copper and 1.1 million ounces of gold, determined using a long-term average price of $2.00 per pound for copper and $1,000 per ounce for gold. Consolidated production for the first nine months of 2014 totaled 246 million pounds of copper and 62 thousand ounces of gold.

The transaction has an effective date of June 30, 2014. We expect to record an after-tax net gain of approximately $450 million related to the transaction. Refer to Note 13 for further discussion.

Development Activities.

Cerro Verde Expansion. Construction activities associated with a large-scale expansion at Cerro Verde are in progress. Detailed ~~project~~ engineering and major procurement activities are ~~substantially~~ complete and construction progress is ~~advancing on schedule.~~approaching 40 percent completion. The project will expand the concentrator facilities from 120,000 metric tons of ore per day to 360,000 metric tons of ore per day and provide incremental annual production of approximately 600 million pounds of copper and 15 million pounds of molybdenum beginning in 2016. At ~~June~~As of September 30, 2014,, ~~$2.3~~ $2.7 billion had been incurred for this project ~~(approximately $0.8~~($1.2 billion during the first ~~six~~nine months of ~~2014~~)2014), with approximately ~~$2.3~~$1.9 billion remaining to

~~Table of Contents~~

be incurred. ~~Considering the long-term nature and large size of the project, actual costs could vary from these estimates.~~

El Abra Sulfide. We continue 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 be dependent on technical studies, economic factors and global copper market conditions.

Table of Contents

Operating Data. Following is summary operating data for our South America mining operations for the ~~second~~third quarters and first ~~six~~nine months of 2014 and 2013:


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2014		2013		2014		2013		2014		2013		2014		2013
Copper (recoverable)
Production (millions of pounds)	300		299		614		597		284		347		898		944
Sales (millions of pounds)	310		315		617		600		271		323		888		923
Average realized price per pound	$	3.17	$	3.13	$	3.16	$	3.22	$	3.10	$	3.30	$	3.12	$	3.30

Gold (recoverable)
Production (thousands of ounces)	21		19		42		40		20		30		62		70
Sales (thousands of ounces)	20		21		43		42		16		26		59		68
Average realized price per ounce	$	1,302	$	1,317	$	1,302	$	1,449	$	1,234	$	1,335	$	1,280	$	1,415

Molybdenum (millions of recoverable pounds)
Production^a	2		2		5		4		3		4		8		8

SX/EW operations
Leach ore placed in stockpiles (metric tons per day)	281,700		279,100		284,200		271,000		269,600		287,500		279,300		276,600
Average copper ore grade (percent)	0.52		0.50		0.51		0.50		0.50		0.48		0.50		0.49
Copper production (millions of recoverable pounds)	125		110		248		219		122		110		370		329

Mill operations
Ore milled (metric tons per day)	182,200		194,600		185,500		191,600		192,100		189,900		187,700		191,000
Average ore grade:
Copper (percent)	0.56		0.56		0.58		0.57		0.50		0.71		0.55		0.62
Gold (grams per metric ton)	0.11		0.09		0.11		0.10		0.09		0.14		0.10		0.11
Molybdenum (percent)	0.02		0.02		0.02		0.02		0.02		0.03		0.02		0.02
Copper recovery rate (percent)	88.7		89.8		89.4		90.3		86.9		90.5		88.6		90.4
Copper production (millions of recoverable pounds)	175		189		366		378		162		237		528		615


a.	Refer to "Consolidated Results" for our consolidated molybdenum sales volumes, which include sales of molybdenum produced at Cerro Verde.

Consolidated copper sales volumes from South America of ~~310~~271 million pounds in ~~second-quarter~~third-quarter 2014 ~~were slightly lower than second-quarter 2013 sales of~~ ~~315 million~~ ~~pounds, primarily reflecting timing of shipments. South America's consolidated copper sales volumes increased to 617~~and 888 million pounds for the first ~~six~~nine months of 2014~~, compared with 600~~ were lower than third-quarter 2013 sales of 323 million pounds and 923 million pounds for the first ~~six~~nine months of 2013, primarily reflecting ~~higher copper production from El Abra.~~anticipated lower ore grades at Candelaria and Cerro Verde.

~~Consolidated sales volumes~~Sales from South America ~~mines~~mining are expected to approximate ~~1.2~~1.1 billion pounds of copper for the year 2014~~, compared with sales of~~ ~~1.3 billion~~ and exclude estimated fourth-quarter 2014 production from the Candelaria and Ojos del Salado mines (totaling approximately 80 million pounds of ~~copper in~~ ~~2013, primarily reflecting lower ore grades at Candelaria and Cerro Verde.~~copper) because of the pending sale transaction. Refer to "Outlook" for projected gold and molybdenum sales volumes.

~~Table of Contents~~

performance determined in accordance with U.S. GAAP. This measure is presented by other metals mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

Table of Contents

Gross Profit per Pound of Copper

The following tables summarize unit net cash costs and gross profit per pound of copper at the South America mining operations for the ~~second~~third quarters and first ~~six~~nine months of 2014 and 2013. Unit net cash costs per pound of copper are reflected under the by-product and co-product methods as the South America mining operations also had small amounts of molybdenum, gold and silver sales. Refer to “Product Revenues and Production Costs” for an explanation of the “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.


	Three Months Ended					Three Months Ended						Three Months Ended						Three Months Ended
	June 30, 2014					June 30, 2013						September 30, 2014						September 30, 2013
	By-Product Method			Co-Product Method		By-Product Method			Co-Product Method			By-Product Method			Co-Product Method			By-Product Method			Co-Product Method
Revenues, excluding adjustments	$	3.17		$	3.17	$	3.13		$	3.13		$	3.10		$	3.10		$	3.30		$	3.30

Site production and delivery, before net noncash and other costs shown below	1.64			1.52		1.62			1.50			1.67			1.53			1.49			1.40
By-product credits	(0.23		)	—		(0.24		)	—			(0.23		)	—			(0.22		)	—
Treatment charges	0.18			0.18		0.16			0.16			0.16			0.16			0.16			0.16
Royalty on metals^a	0.01			0.01		—			—
Unit net cash costs	1.60			1.71		1.54			1.66			1.60			1.69			1.43			1.56
Depreciation, depletion and amortization	0.30			0.29		0.27			0.25			0.37			0.35			0.26			0.25
Noncash and other costs (credits), net	0.08			0.09		0.02			(0.01		)
Noncash and other costs, net												0.07			0.07			0.05			0.02
Total unit costs	1.98			2.09		1.83			1.90			2.04			2.11			1.74			1.83
Revenue adjustments, primarily for pricing on prior period open sales	0.10			0.10		(0.21		)	(0.21		)	(0.06		)	(0.06		)	0.15			0.15
Gross profit per pound	$	1.29		$	1.18	$	1.09		$	1.02		$	1.00		$	0.93		$	1.71		$	1.62

Copper sales (millions of recoverable pounds)	310			310		315			315			271			271			323			323



	Six Months Ended						Six Months Ended						Nine Months Ended						Nine Months Ended
	June 30, 2014						June 30, 2013						September 30, 2014						September 30, 2013
	By-Product Method			Co-Product Method			By-Product Method			Co-Product Method			By-Product Method			Co-Product Method			By-Product Method			Co-Product Method
Revenues, excluding adjustments	$	3.16		$	3.16		$	3.22		$	3.22		$	3.12		$	3.12		$	3.30		$	3.30

Site production and delivery, before net noncash and other costs shown below	1.57			1.46			1.62			1.50			1.61			1.48			1.57			1.46
By-product credits	(0.24		)	—			(0.26		)	—			(0.24		)	—			(0.25		)	—
Treatment charges	0.18			0.18			0.17			0.16			0.17			0.17			0.17			0.17
Royalty on metals^a	—			—			—			—
Unit net cash costs	1.51			1.64			1.53			1.66			1.54			1.65			1.49			1.63
Depreciation, depletion and amortization	0.29			0.28			0.26			0.25			0.32			0.30			0.26			0.24
Noncash and other costs, net	0.07			0.07			0.04			0.01			0.06			0.08			0.04			0.01
Total unit costs	1.87			1.99			1.83			1.92			1.92			2.03			1.79			1.88
Revenue adjustments, primarily for pricing on prior period open sales	(0.11		)	(0.11		)	(0.05		)	(0.05		)	(0.07		)	(0.07		)	(0.04		)	(0.04		)
Gross profit per pound	$	1.18		$	1.06		$	1.34		$	1.25		$	1.13		$	1.02		$	1.47		$	1.38

Copper sales (millions of recoverable pounds)	617			617			600			600			888			888			923			923


a.	~~Represents royalties under Cerro Verde's current stability agreement.~~

Our South America mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-product credits and other factors. ~~Unit~~Average unit net cash costs (net of by-product credits) ~~averaged~~of $1.60 per pound of copper in ~~second-quarter~~third-quarter 2014~~, $1.51~~ and $1.54 per pound for the first ~~six~~nine months of 2014, were higher than unit net cash costs of $~~1.54~~1.43 per pound in ~~second-quarter~~third-quarter 2013 and ~~$1.53~~$1.49 per pound for the first ~~six~~nine months of 2013., primarily reflecting lower sales volumes.

~~Table of Contents~~

Because certain assets are depreciated on a straight-line basis, South America's unit depreciation rate may vary with asset additions and the level of copper production and sales.

Revenue adjustments primarily result from changes in prices on provisionally priced copper sales recognized in prior periods. Refer to “Consolidated Results - Revenues” for further discussion of adjustments to prior period provisionally priced copper sales.

Table of Contents

Assuming achievement of current sales volume and cost estimates, and average prices of $~~1,300~~1,250 per ounce of gold and $1210 per pound of molybdenum for fourth-quarter ~~the second half of~~2014, we estimate that average unit net cash costs (net of by-product credits) for our South America mining operations would approximate $~~1.59~~1.56 per pound of copper for the year 2014, compared with $1.43 per pound in 2013.

Indonesia Mining

Indonesia mining includes PT-FI’s Grasberg minerals district. We own 90.64 percent of PT-FI, including 9.36 percent owned through our wholly owned subsidiary, PT Indocopper Investama.

PT-FI operates a proportionately consolidated joint venture, which produces copper concentrates that contain significant quantities of gold and silver. Substantially all of PT-FI’s copper concentrates are sold under long-term contracts, of which approximately one-half is sold to Atlantic Copper and PT Smelting and the remainder to third-party customers.

We have established certain unincorporated joint ventures with Rio Tinto plc (Rio Tinto), under which Rio Tinto has a 40 percent interest in certain assets and future production exceeding specified annual amounts of copper, gold and silver. Refer to Note 3 in our annual report on Form 10-K for the year ended December 31, 2013, for discussion of our joint ventures with Rio Tinto.

Refer to "Risk Factors" contained in Part II, Item 1A of this quarterly report and in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2013, for discussions of risks associated with operations in Indonesia.

Regulatory Matters. On July 25, 2014, PT-FI entered into a ~~MOU~~Memorandum of Understanding (MOU) with the Indonesian government under which PT-FI and the government ~~have~~ agreed to negotiate an amended ~~COW,~~Contract of Work (COW) to address provisions related to the size of PT-FI’s concession area, royalties and taxes, domestic processing and refining, divestment, local content, and continuation of operations post-2021. Execution of the MOU enabled the resumption of concentrate exports ~~which began~~ in August 2014, which had been suspended since January 2014. In addition, PT-FI is required to apply for renewal of export permits at six-month intervals, with the next renewal date in January 2015.

Under the MOU, provisions to be addressed in the negotiation of an amended COW include provisions for the development of new copper smelting and refining capacity in Indonesia, ~~which will take into consideration an equitable sharing of costs between PT-FI (and any partners in the project) and the Indonesian government through fiscal incentives,~~ provisions for divestment to the Indonesian government and/or Indonesian nationals of up to a 30 percent interest (an additional 20.64 percent interest) in PT-FI at fair value, and continuation of operations from 2022 through 2041. The MOU provides that negotiations for an amended COW will take into consideration PT-FI’s need for assurance of legal and fiscal terms post-2021 for PT-FI to continue with its large-scale investment program for the development of its underground reserves. The ~~negotiations~~revisions to the COW are expected to ~~be completed within six months.~~result in additional costs for our Indonesian operations. PT-FI is engaged in discussions with the Indonesian government regarding an amended COW.

Effective with the signing of the MOU, PT-FI ~~agreed to provide~~provided a $115 million assurance bond to support its commitment for smelter development, agreed to increase royalties to 4.0 percent for copper and 3.75 percent for gold from the previous rates of 3.5 percent for copper and 1.0 percent for gold, and to pay export duties set forth in a new regulation. ~~On July 25, 2014, the~~The Indonesian government revised its January 2014 regulations regarding export duties to incorporate reduced rates for copper concentrate exports for companies engaged in smelter development. The revised regulations provide for duties on copper concentrate exports during smelter development initially at 7.5 percent, declining to 5.0 percent when development progress exceeds 7.5 percent and is eliminated when development progress exceeds 30 percent. During third-quarter 2014, PT-FI paid export duties of $42 million and increased royalties of $20 million.

Under the MOU, no terms of the COW other than those relating to the export duties, the smelter bond and royalties described above will be changed until the completion of ~~the~~an amended COW.

~~Table of Contents~~

Operating and Development Activities. We have several projects in progress in the Grasberg minerals district related to the development of the large-scale, long-lived, high-grade underground ore bodies. In aggregate, these underground ore bodies are expected to ramp up over several years to ~~produce~~process approximately 240,000 metric tons of ore per day following the transition from the Grasberg open pit, currently anticipated to occur in 2017. Development of the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) underground mines is advancing to enable DMLZ to commence production in 2015 and the Grasberg Block Cave mine to commence production in

Table of Contents

2017. Over the next five years, estimated aggregate capital spending on these projects is currently expected to average $0.9 billion per year ($0.7 billion per year net to PT-FI). Considering the long-term nature and large size of these projects, actual costs could vary from these estimates. Additionally, PT-FI may reduce or defer these activities pending resolution of negotiations for an amended COW.

The following provides additional information on the continued development of the Common Infrastructure project, the Grasberg Block Cave underground mine and development of the ~~Deep Mill Level Zone (DMLZ)~~DMLZ ore body that lies below the Deep Ore Zone (DOZ) underground mine.

Common Infrastructure and Grasberg Block Cave Mine. In 2004, PT-FI commenced its Common Infrastructure project to provide access to its large undeveloped underground ore bodies located in the Grasberg minerals district through a tunnel system located approximately 400 meters deeper than its existing underground tunnel system. In addition to providing access to our underground ore bodies, the tunnel system will enable PT-FI to conduct future exploration in prospective areas associated with currently identified ore bodies. The tunnel system was completed to the Big Gossan terminal, and the Big Gossan mine was brought into production in 2010. Development of the DMLZ and Grasberg Block Cave underground mines is advancing using the Common Infrastructure project tunnels as access.

The Grasberg Block Cave underground mine accounts for more than 40 percent of our recoverable proven and probable reserves in Indonesia. Production at the Grasberg Block Cave mine is expected to commence in 2017, at the end of mining the Grasberg open pit. Targeted production rates once the Grasberg Block Cave mining operation reaches full capacity are expected to approximate 160,000 metric tons of ore per day.

Aggregate mine development capital for the Grasberg Block Cave mine and associated Common Infrastructure is expected to approximate $5.2 billion (incurred between 2008 and 2021), with PT-FI’s share totaling approximately $4.6 billion. Aggregate project costs totaling $~~1.5~~1.7 billion have been incurred through ~~June~~September 30, 2014 ($~~216 million~~0.3 billion during the first ~~six~~nine months of 2014).

DMLZ. The DMLZ ore body lies below the DOZ mine at the 2,590-meter elevation and represents the downward continuation of mineralization in the Ertsberg East Skarn system and neighboring Ertsberg porphyry. We plan to mine the ore body using a block-cave method with production beginning in 2015. Targeted production rates once the DMLZ mining operation reaches full capacity are expected to approximate 80,000 metric tons of ore per day. Drilling efforts continue to determine the extent of this ore body. Aggregate mine development capital costs for the DMLZ mine are expected to approximate $2.6 billion (incurred between 2009 toand 2020), with PT-FI’s share totaling approximately $1.5 billion. Aggregate project costs totaling $~~1.0~~1.1 billion have been incurred through ~~June~~September 30, 2014 ($~~149 million~~0.2 billion during the first ~~six~~nine months of 2014).

5051

Table of Contents

Operating Data. Following is summary operating data for our Indonesia mining operations for the ~~second~~third quarters and first ~~six~~nine months of 2014 and 2013:


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2014		2013		2014		2013		2014		2013		2014		2013
Operating Data, Net of Joint Venture Interest
Copper (recoverable)
Production (millions of pounds)	122		139		262		358		203		253		465		611
Sales (millions of pounds)	117		158		226		356		258		237		484		593
Average realized price per pound	$	3.19	$	3.08	$	3.15	$	3.20	$	3.05	$	3.30	$	3.09	$	3.27

Gold (recoverable)
Production (thousands of ounces)	142		131		350		343		426		297		776		640
Sales (thousands of ounces)	135		151		297		342		505		278		802		620
Average realized price per ounce	$	1,294	$	1,321	$	1,299	$	1,431	$	1,219	$	1,330	$	1,248	$	1,393

100% Operating Data
Ore milled (metric tons per day):^a
Grasberg open pit	50,700		81,800		58,200		109,500		78,100		149,000		64,900		122,700
DOZ underground mine^b	50,500		31,100		50,400		44,900		57,600		47,600		52,800		45,900
Big Gossan underground mine^c	1,700		1,400		1,800		2,200		—		1,600		1,200		2,000
Total	102,900		114,300		110,400		156,600		135,700		198,200		118,900		170,600
Average ore grades:
Copper (percent)	0.73		0.73		0.72		0.69		0.88		0.74		0.78		0.71
Gold (grams per metric ton)	0.65		0.53		0.72		0.53		1.28		0.65		0.94		0.57
Recovery rates (percent):
Copper	89.0		89.0		88.7		88.7		91.4		89.7		89.9		89.1
Gold	76.3		75.4		78.1		73.1		84.6		80.3		81.5		76.3
Production (recoverable):
Copper (millions of pounds)	125		139		269		358		207		253		476		611
Gold (thousands of ounces)	142		131		351		343		426		297		777		640


a.	Amounts represent the approximate average daily throughput processed at PT-FI’s mill facilities from each producing mine.


b.	Production from the DOZ underground mine is expected to ramp up to the design rate of 80,000 metric tons of ore per day in ~~second-quarter~~third-quarter 2015.


c.	Production from the Big Gossan underground mine is expected to ramp up to 7,000 metric tons of ore per day in 2017.

Indonesia's sales volumes ~~decreased~~increased to ~~117~~258 million pounds of copper and ~~135~~505 thousand ounces of gold for ~~second-quarter~~third-quarter 2014, compared with 237 million pounds of copper and ~~226~~278 thousand ounces of gold for third-quarter2013, primarily reflecting higher ore grades. Indonesia's sales volumes totaled 484 million pounds of copper and ~~297~~802 thousand ounces of gold for the first ~~six~~nine months of 2014, compared with ~~158 million~~ ~~pounds of copper and~~ ~~151 thousand~~ ~~ounces of gold for~~ ~~second-quarter2013~~ ~~and 356~~593 million pounds of copper and ~~342~~620 thousand ounces of gold for the first ~~six~~nine months of 2013~~. As a result of~~, reflecting lower mill throughput resulting from the delay in obtaining approvals for 2014 exports, PT-FI implemented changes to its operations to align its concentrate production with PT Smelting’s operating plans. PT-FI’s milling rate averaged 102,900 metric tons ofexport ban, offset by higher gold ore per day in second-quarter 2014 and 110,400 metric tons of ore per day for the first six months of 2014, which is approximately half of normal rates, and resulted in the deferral of approximately 150 million pounds of copper and 240 thousand ounces of gold in second-quarter 2014 and 275 million pounds of copper and 380 thousand ounces of gold for the first six months of ~~2014~~.grades.

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 our Indonesia mining operations are expected to approximate 0.7 billion pounds of copper and ~~1.25~~1.15 million ounces of gold for 2014, compared with 0.9 billion pounds of copper and 1.1 million ounces of gold in 2013. Sales from Indonesia mining are expected to increase through 2016 as PT-FI gains access to higher grade ore.

On September 27, 2014, four Grasberg workers were fatally injured when a haul truck collided with a light

vehicle near the Grasberg open-pit operations. Operations in the Grasberg open pit were temporarily suspended in

order to complete internal and government investigations regarding the accident. On October 13, 2014, Indonesian

authorities approved the resumption of operations after issuing recommendations on traffic control procedures

that have been implemented by PT-FI. Workforce attendance in several operating areas reflect normal levels.

However, a large percentage of Grasberg open-pit operators have not reported to their scheduled shifts resulting in

reduced production from the open pit during October. These actions conflict with agreed policies and processes in

the Collective Labor Agreement (CLA), and PT-FI is working with union leadership regarding this work stoppage to

Table of Contents

resume normal operations as soon as possible.

On October 27, 2014, PT-FI received notice from union leadership indicating its intention to conduct a 30-day strike beginning on November 6, 2014. Following constructive dialogue between PT-FI and union leadership, union leadership advised PT-FI on October 31, 2014, that all strike actions had been canceled.

~~Table of Contents~~

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 our measure may not be comparable to similarly titled measures reported by other companies.

Gross Profit per Pound of Copper and per Ounce of Gold

The following tables summarize the unit net cash costs and gross profit per pound of copper and per ounce of gold at our Indonesia mining operations for the ~~second~~third quarters and first ~~six~~nine months of 2014 and 2013. Refer to “Production Revenues and Production Costs” for an explanation of “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

Three Months Ended Three Months Ended
June 30, 2014 June 30, 2013
By-Product Method Co-Product Method By-Product Method Co-Product Method
Copper Gold Copper Gold
Revenues, excluding adjustments $ 3.19
$ 3.19
$ 1,294
$ 3.08
$ 3.08
$ 1,321

Site production and delivery, before net noncash and other costs shown below 3.86
2.59
1,050
3.55
2.49
1,066
Gold and silver credits (1.57 ) —
—
(1.20 ) —
—
Treatment charges 0.26
0.17
70
0.23
0.16
69
Royalty on metals 0.11
0.08
31
0.13
0.09
39
Unit net cash costs 2.66
2.84
1,151
2.71
2.74
1,174
Depreciation and amortization 0.47
0.31
127
0.37
0.26
111
Noncash and other costs, net 0.55
^a
0.37
151
0.22
0.15
67
Total unit costs 3.68
3.52
1,429
3.30
3.15
1,352
Revenue adjustments, primarily for pricing on prior period open sales 0.09
0.09
5
(0.18 ) (0.18 ) (110 )
PT Smelting intercompany profit 0.03
0.02
9
0.21
0.14
62
Gross loss per pound/ounce $ (0.37 ) $ (0.22 ) $ (121 ) $ (0.19 ) $ (0.11 ) $ (79 )

Copper sales (millions of recoverable pounds) 117
117
158
158

Gold sales (thousands of recoverable ounces) 135
151



	Six Months Ended									Six Months Ended											Three Months Ended											Three Months Ended
	June 30, 2014									June 30, 2013											September 30, 2014											September 30, 2013
	By-Product Method				Co-Product Method					By-Product Method				Co-Product Method							By-Product Method				Co-Product Method							By-Product Method				Co-Product Method
					Copper			Gold					Copper				Gold							Copper				Gold							Copper				Gold
Revenues, excluding adjustments	$	3.15			$	3.15		$	1,299		$	3.20			$	3.20			$	1,431		$	3.05			$	3.05			$	1,219		$	3.30			$	3.30			$	1,330

Site production and delivery, before net noncash and other costs shown below	3.60				2.31			950		3.03				2.08				934			2.42				1.34				537			2.30				1.54				621
Gold and silver credits	(1.85		)		—			—		(1.44		)		—				—			(2.44		)		—				—			(1.65		)		—				—
Treatment charges	0.25				0.16			65		0.23				0.16				70			0.25				0.14				56			0.23				0.15				62
Export duties																					0.16				0.09				36			—				—				—
Royalty on metals	0.12				0.07			31		0.13				0.09				41			0.21			^a	0.12				45			0.11				0.08				31
Unit net cash costs	2.12				2.54			1,046		1.95				2.33				1,045			0.60				1.69				674			0.99				1.77				714
Depreciation and amortization	0.45				0.29			120		0.32				0.22				98			0.35				0.20				79			0.25				0.17				68
Noncash and other costs, net	0.61			^a	0.39			161		0.24				0.17				76			0.11				0.06				24			0.15				0.10				40
Total unit costs	3.18				3.22			1,327		2.51				2.72				1,219			1.06				1.95				777			1.39				2.04				822
Revenue adjustments, primarily for pricing on prior period open sales	(0.24		)		(0.24		)	59		—				—				(4		)	(0.01		)		(0.01		)		(1		)	0.08				0.08				17
PT Smelting intercompany profit	0.26				0.16			68		0.10				0.07				33
Gross (loss) profit per pound/ounce	$	(0.01	)		$	(0.15	)	$	99	$	0.79			$	0.55			$	241
PT Smelting intercompany loss																					(0.19		)		(0.10		)		(42		)	(0.15		)		(0.10		)		(41		)
Gross profit per pound/ounce																					$	1.79			$	0.99			$	399		$	1.84			$	1.24			$	484

Copper sales (millions of recoverable pounds)	226				226					356				356							258				258							237				237
Gold sales (thousands of recoverable ounces)								297										342											505											278


a.	Includes ~~$0.48~~$0.08 per pound of copper associated with increased royalty rates.

Table of Contents




	Nine Months Ended									Nine Months Ended
	September 30, 2014									September 30, 2013
	By-Product Method				Co-Product Method					By-Product Method			Co-Product Method
					Copper			Gold					Copper		Gold
Revenues, excluding adjustments	$	3.09			$	3.09		$	1,248	$	3.27		$	3.27	$	1,393

Site production and delivery, before net noncash and other costs shown below	2.90				1.72			694		2.74			1.87		795
Gold and silver credits	(2.16		)		—			—		(1.52		)	—		—
Treatment charges	0.25				0.15			60		0.23			0.16		67
Export duties	0.09				0.05			21		—			—		—
Royalty on metals	0.16			^a	0.09			39		0.12			0.08		36
Unit net cash costs	1.24				2.01			814		1.57			2.11		898
Depreciation and amortization	0.40				0.24			96		0.29			0.20		85
Noncash and other costs, net	0.41			^b	0.25			98		0.21			0.14		60
Total unit costs	2.05				2.50			1,008		2.07			2.45		1,043
Revenue adjustments, primarily for pricing on prior period open sales	(0.11		)		(0.11		)	22		—			—		(2		)
PT Smelting intercompany profit	0.02				0.01			5		0.01			0.01		1
Gross profit per pound/ounce	$	0.95			$	0.49		$	267	$	1.21		$	0.83	$	349

Copper sales (millions of recoverable pounds)	484				484					593			593
Gold sales (thousands of recoverable ounces)								802							620


a.	Includes $0.04 per pound of copper for the first nine months of 2014 associated with increased royalty rates.


b.	Includes $0.30 per pound of fixed costs charged directly to cost of sales as a result of the impact of export restrictions on PT-FI's operating rates.

A significant portion of PT-FI's costs are fixed and unit costs vary depending on production volumes. ~~During the second quarter and first six months of~~ ~~2014, PT-FI operated at approximately half of normal rates.~~ Indonesia's unit

~~Table of Contents~~

net cash costs (net of gold and silver credits) totaled $~~2.66~~0.60 per pound of copper in ~~second-quarter~~third-quarter 2014~~, $2.12~~ and $1.24 per pound ~~of copper~~ for the first ~~six~~nine months of 2014, compared with $~~2.71~~0.99 per pound in ~~second-quarter~~third-quarter 2013 and ~~$1.95~~$1.57 per pound ~~of copper~~ for the first ~~six~~nine months of 2013~~. Indonesia's unit net cash costs exclude $0.48 per pound of copper in the second quarter~~, primarily reflecting higher gold and ~~first six months of~~ ~~2014~~ ~~for fixed costs charged directly to cost of sales as a result of~~silver credits, partly offset by export duties, increased royalty rates and the impact of ~~export restrictions on PT-FI's operating~~lower production rates. ~~PT-FI's unit net cash costs in second-quarter 2013 also reflect the impact of a temporary production suspension.~~

Treatment charges vary with the volume of metals sold and the price of copper, and royalties vary with the volume of metals sold and the prices of copper and gold.

Because certain assets are depreciated on a straight-line basis, PT-FI’s unit depreciation rate varies with the level of copper production and sales.

PT Smelting intercompany profit (loss) represents the change in the elimination of 25 percent of PT-FI's profit on sales to PT Smelting. Refer to "Operations - Smelting & Refining" for further discussion.

Based on current sales volume and cost estimates, ~~including the new royalty rates and export duties,~~ and assuming an average gold price of $~~1,300~~1,250 per ounce for fourth-quarter ~~the second half of~~2014, Indonesia's unit net cash costs (net of gold and silver credits) are expected to approximate $~~1.17~~1.19 per pound of copper for the year 2014, compared with $1.12 for the year 2013. Indonesia's projected unit net cash costs would change by approximately $~~0.07~~0.05 per pound for each $50 per ounce change in the average price of gold for fourth-quarter ~~the second half of~~2014. 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.

Table of Contents

Africa Mining

Africa mining includes Tenke Fungurume Mining S.A.R.L's (TFM) Tenke minerals district. We hold an effective 56 percent interest in the Tenke copper and cobalt mining concessions in the Katanga province of the DRC through our consolidated subsidiary TFM, and we are the operator of Tenke.

The Tenke operation includes surface mining, leaching and SX/EW operations. Copper production from the Tenke minerals district is sold as copper cathode. In addition to copper, the Tenke minerals district produces cobalt hydroxide.

Operating and Development Activities. TFM completed its second phase expansion project in early 2013, which included increasing mine, mill and processing capacity. ~~The expanded mill's throughput rates averaged~~ ~~15,200~~ ~~metric tons per day for~~ ~~second-quarter2014, compared with the project's design capacity of 14,000 metric tons of ore per day.~~ We continue to engage in exploration activities and metallurgical testing to evaluate the potential of the highly prospective minerals district at Tenke. These analyses are being incorporated in future plans for potential expansions of production capacity. Future expansions are subject to a number of factors, including economic and market conditions, and the business and investment climate in the DRC.

~~Table of Contents~~

Operating Data. Following is summary operating data for our Africa mining operations for the ~~second~~third quarters and first ~~six~~nine months of 2014 and 2013:


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				September 30,				September 30,
	2014		2013		2014		2013		2014		2013		2014		2013
Copper (recoverable)
Production (millions of pounds)	114		122		223		242		117		109		340		351
Sales (millions of pounds)	118		106		202		224		112		118		314		342
Average realized price per pound^a	$	3.08	$	3.10	$	3.08	$	3.22	$	3.11	$	3.19	$	3.09	$	3.22

Cobalt (contained)
Production (millions of pounds)	7		5		14		11		8		8		22		19
Sales (millions of pounds)	7		5		15		11		8		6		23		17
Average realized price per pound	$	9.58	$	8.48	$	9.29	$	7.99	$	9.99	$	8.57	$	9.68	$	8.10

Ore milled (metric tons per day)	15,200		15,000		14,800		14,800		15,500		14,500		15,100		14,700
Average ore grades (percent):
Copper	4.08		4.59		4.07		4.52		4.13		3.94		4.09		4.32
Cobalt	0.34		0.31		0.33		0.32		0.33		0.43		0.33		0.36
Copper recovery rate (percent)	92.7		89.9		93.7		91.7		91.3		91.6		92.8		91.7


a.	Includes point-of-sale transportation costs as negotiated in customer contracts.

TFM's copper sales ~~totaled~~of 112 million pounds in third-quarter2014 and 314 million pounds for the first nine months of 2014 were lower than copper sales of 118 million pounds in third-quarter ~~second-quarter2014~~, ~~106 million~~2013 ~~pounds in second-quarter 2013, 202~~and 342 million pounds for the first ~~six months of~~ ~~2014~~ ~~and 224 million pounds for thefirst six~~nine months of 2013~~. TFM's copper sales reflected lower grade ore in the 2014 periods. Higher sales volumes for second-quarter 2014, compared with second-quarter 2013, were~~, primarily because of timing of shipments.

For the year 2014, we expect sales volumes from TFM to approximate ~~440~~445 million pounds of copper and 30 million pounds of cobalt, compared with 454 million pounds of copper and 25 million pounds of cobalt for the year 2013.

5455

Table of Contents

Gross Profit per Pound of Copper and Cobalt

The following tables summarize the unit net cash costs and gross profit per pound of copper and cobalt at our Africa mining operations for the ~~second~~third quarters and first ~~six~~nine months of 2014 and 2013. Refer to “Production Revenues and Production Costs” for an explanation of “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.


	Three Months Ended								Three Months Ended											Three Months Ended											Three Months Ended
	June 30, 2014								June 30, 2013											September 30, 2014											September 30, 2013
	By-Product Method			Co-Product Method					By-Product Method				Co-Product Method							By-Product Method				Co-Product Method							By-Product Method				Co-Product Method
				Copper		Cobalt						Copper				Cobalt							Copper				Cobalt							Copper				Cobalt
Revenues, excluding adjustments^a	$	3.08		$	3.08	$	9.58			$	3.10			$	3.10			$	8.48		$	3.11			$	3.11			$	9.99		$	3.19			$	3.19			$	8.57

Site production and delivery, before net noncash and other costs shown below	1.46			1.35		5.22			1.47				1.37				4.92			1.61				1.40				5.32			1.43				1.38				4.14
Cobalt credits^b	(0.34		)	—		—			(0.30		)		—				—			(0.58		)		—				—			(0.27		)		—				—
Royalty on metals	0.06			0.06		0.15			0.06				0.05				0.15			0.07				0.06				0.18			0.07				0.06				0.13
Unit net cash costs	1.18			1.41		5.37			1.23				1.42				5.07			1.10				1.46				5.50			1.23				1.44				4.27
Depreciation, depletion and amortization	0.54			0.46		1.30			0.53				0.49				0.80			0.51				0.43				1.06			0.55				0.48				1.37
Noncash and other costs, net	0.03			0.03		0.08			0.11				0.10				0.17			0.05				0.04				0.10			0.02				0.02				0.06
Total unit costs	1.75			1.90		6.75			1.87				2.01				6.04			1.66				1.93				6.66			1.80				1.94				5.70
Revenue adjustments, primarily for pricing on prior period open sales	—			—		(0.19		)	(0.07		)		(0.07		)		0.27			0.01				0.01				0.39			0.03				0.03				(0.27		)
Gross profit per pound	$	1.33		$	1.18	$	2.64		$	1.16			$	1.02			$	2.71		$	1.46			$	1.19			$	3.72		$	1.42			$	1.28			$	2.60

Copper sales (millions of recoverable pounds)	118			118					106				106							112				112							118				118
Cobalt sales (millions of contained pounds)						7											5											8											6



	Six Months Ended								Six Months Ended											Nine Months Ended											Nine Months Ended
	June 30, 2014								June 30, 2013											September 30, 2014											September 30, 2013
	By-Product Method			Co-Product Method					By-Product Method				Co-Product Method							By-Product Method				Co-Product Method							By-Product Method				Co-Product Method
				Copper			Cobalt					Copper				Cobalt							Copper				Cobalt							Copper				Cobalt
Revenues, excluding adjustments^a	$	3.08		$	3.08		$	9.29		$	3.22			$	3.22			$	7.99		$	3.09			$	3.09			$	9.68		$	3.22			$	3.22			$	8.10

Site production and delivery, before net noncash and other costs shown below	1.47			1.30			5.19		1.43				1.35				4.54			1.51				1.33				5.24			1.43				1.36				4.40
Cobalt credits^b	(0.48		)	—			—		(0.26		)		—				—			(0.51		)		—				—			(0.26		)		—				—
Royalty on metals	0.07			0.06			0.16		0.06				0.06				0.14			0.07				0.06				0.16			0.06				0.06				0.14
Unit net cash costs	1.06			1.36			5.35		1.23				1.41				4.68			1.07				1.39				5.40			1.23				1.42				4.54
Depreciation, depletion and amortization	0.57			0.49			1.03		0.51				0.47				0.75			0.55				0.47				1.04			0.52				0.48				0.97
Noncash and other costs, net	0.05			0.04			0.09		0.08				0.07				0.11			0.05				0.05				0.10			0.06				0.05				0.09
Total unit costs	1.68			1.89			6.47		1.82				1.95				5.54			1.67				1.91				6.54			1.81				1.95				5.60
Revenue adjustments, primarily for pricing on prior period open sales	(0.01		)	(0.01		)	0.13		0.01				0.01				0.21			—				—				0.09			0.01				0.01				0.14
Gross profit per pound	$	1.39		$	1.18		$	2.95	$	1.41			$	1.28			$	2.66		$	1.42			$	1.18			$	3.23		$	1.42			$	1.28			$	2.64

Copper sales (millions of recoverable pounds)	202			202					224				224							314				314							342				342
Cobalt sales (millions of contained pounds)							15										11											23											17


a.	Includes point-of-sale transportation costs as negotiated in customer contracts.


b.	Net of cobalt downstream processing and freight costs.

Unit net cash costs (net of cobalt credits) for our Africa operations of $~~1.18~~1.10 per pound of copper in ~~second-quarter~~third-quarter 2014 and ~~$1.06~~$1.07 per pound for the first ~~six~~nine months of 2014 were lower than unit net cash costs of $1.23 per pound in both the ~~second~~third quarter and first ~~six~~nine months of 2013, primarily reflecting higher cobalt ~~credits.~~credits, partly offset by higher site production and delivery costs.

Because certain assets are depreciated on a straight-line basis, Africa's unit depreciation rate may vary with ~~asset additions and~~ the level of copper production and sales.

5556

Table of Contents

Assuming achievement of current sales volume and cost estimates, and an average cobalt market price of $13 per pound for fourth-quarter ~~the second half of~~2014, average unit net cash costs (net of cobalt credits) are expected to approximate $~~1.21~~1.16 per pound of copper for the year 2014, compared with $1.21 per pound in 2013. Africa's projected unit net cash costs would change by $~~0.045~~0.02 per pound for each $2 per pound change in the average price of cobalt during fourth-quarter ~~the second half of~~2014.

Molybdenum Mines

We have 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 concentrates, which are typically further processed into value-added molybdenum chemical products. The majority of the molybdenum concentrates produced at the Henderson and Climax mines, as well as from certain of our North and South America copper mines, are processed at our own conversion facilities.

~~Operating Data.~~ ~~Following is summary operating data for~~Production from the Molybdenum mines totaled 13 million pounds of molybdenum in third-quarter 2014, 12 million pounds in third-quarter 2013, 40 million pounds for the ~~second quarters~~ ~~and~~ first ~~six~~nine months of 2014 and ~~2013~~:

Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
Molybdenum mines operating data
Molybdenum production (millions of recoverable pounds) 14
13
27
25
Ore milled (metric tons per day) 44,800
39,000
42,200
37,400
Average molybdenum ore grade (percent) 0.18
0.19
0.18
0.19

~~Molybdenum prices have improved during~~37 million pounds for the first ~~six~~nine months of ~~2014, resulting from improved demand in the metallurgical sector. We continue to monitor market conditions and may make adjustments to our primary molybdenum production as market conditions warrant.~~2013. Refer to "Consolidated Results" for our consolidated molybdenum operating data, which includes sales of molybdenum produced at our molybdenum mines and at our North and South America copper mines, and refer to "Outlook" for projected consolidated molybdenum sales volumes.

Unit Net Cash ~~Costs.~~Costs Per Pound of Molybdenum. Unit net cash costs per pound of molybdenum is a measure intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for our respective operations. We use this measure for the same purpose and for monitoring operating performance by our 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 our measure may not be comparable to similarly titled measures reported by other companies.

~~Table of Contents~~

~~Gross Profit per Pound of Molybdenum~~

~~The following table summarizes the average unit net cash costs and gross profit per pound of molybdenum at the Henderson and Climax molybdenum mines for the~~ ~~second quartersand first six months of~~ ~~2014~~ ~~and~~ ~~2013~~. Refer to “Product Revenues and Production Costs” for a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
Revenues, excluding adjustments^a
$ 12.90
$ 12.13
$ 11.88
$ 12.33

Site production and delivery, before net noncash and other costs shown below 5.64
5.84
5.75
6.10
Treatment charges and other 0.83
0.95
0.83
0.95
Unit net cash costs 6.47
6.79
6.58
7.05
Depreciation, depletion and amortization 1.69
1.65
1.72
1.64
Noncash and other costs, net 0.10
0.18
0.10
0.16
Total unit costs 8.26
8.62
8.40
8.85
Gross profit $ 4.64
$ 3.51
$ 3.48
$ 3.48

Molybdenum production (millions of recoverable pounds)^a
14
13
27
25


a.	Revenues reflect sales of the Molybdenum mines' production to our molybdenum sales company at market-based pricing. On a consolidated basis, realizations are based on actual contract terms of sales made to third parties. As a result, our consolidated average realized price per pound of molybdenum (refer to "Consolidated Results") will differ from the amounts reported in this table.

Average unit net cash costs for our Molybdenum mines decreased to $~~6.47~~7.12 per pound of molybdenum in ~~second-quarter~~third-quarter 2014 and ~~$6.58~~$6.76 per pound for the first ~~six~~nine months of 2014, compared with $~~6.79~~7.15 per pound in ~~second-quarter~~third-quarter 2013 and ~~$7.05~~$7.08 per pound for the first ~~six~~nine months of 2013, primarily reflecting higher production volumes. Assuming achievement of current sales volume and cost estimates, unit net cash costs for our Molybdenum mines are expected to average approximately $7.00 per pound of molybdenum for the year 2014. Refer to “Product Revenues and Production Costs” for a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

Smelting & Refining

~~Smelting~~Treatment charges for smelting and refining ~~charges~~copper concentrates consist of a base rate and, in certain contracts, price participation based on copper prices. Treatment charges ~~for smelting and refining copper concentrates~~ represent a cost to our mining operations and income to Atlantic Copper and PT Smelting. Thus, higher treatment ~~and refining~~ charges benefit our smelter operations and adversely affect our mining operations. Our North America copper mines are less significantly affected by changes in treatment ~~and refining~~ charges because these operations are largely integrated with our wholly owned smelter located in Miami, Arizona.

Atlantic Copper, our wholly owned subsidiary located in Spain, smelts and refines copper concentrates and markets refined copper and precious metals in slimes. During the first ~~six~~nine months of 2014, Atlantic Copper purchased 3125 percent of its concentrate requirements from our North America mining operations, 2220 percent from our South America copper mines and 49 percent from our Indonesia mining operations, ~~(prior to implementation of the export restrictions),~~ with the remainder purchased from third parties. Through this form of downstream integration, we are assured placement of a significant portion of our concentrate production.

We defer recognizing profits on sales from our mining operations to Atlantic Copper and on 25 percent of Indonesia mining's sales to PT Smelting 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 stockholders totaling $41(20) million in ~~second-quarter~~third-quarter 2014 and ~~$56~~$36 million for the first ~~six~~nine months of 2014, compared with $2 million in ~~second-quarter~~third-quarter 2013 and ~~$27~~$28 million for the first ~~six~~nine months of 2013. Our net deferred profits on inventories at Atlantic Copper and PT Smelting to be recognized in future periods’ net income attributable to common stockholders totaled $3687 million at ~~June~~September 30, 2014. Quarterly variations in ore grades, the timing of

Table of Contents

intercompany shipments and changes in product prices will result in variability in our net deferred profits and quarterly earnings. ~~As PT-FI's sales volumes increase, in third-quarter 2014 we expect to defer approximately $50 million of profit on intercompany sales until final sales to third parties occur.~~

~~Table of Contents~~

Oil and Gas

~~In second-quarter 2013, we acquired oil and gas operations by completing the acquisitions of PXP and MMR, collectively FM O&G.~~ Our oil and gas operations provide exposure to energy markets with ~~positive~~favorable long-term fundamentals, strong margins and cash flows, and a large resource base with financially attractive exploration and development investment opportunities. The portfolio of assets includes significant oil production facilities and growth potential in the Deepwater GOM, established oil production onshore and offshore California, large onshore natural gas resources in the Haynesville shale play in Louisiana, natural gas production from the Madden area in central Wyoming, and an industry-leading position in the emerging Inboard Lower Tertiary/Cretaceous natural gas trend located in the shallow waters of the GOM and onshore in South Louisiana. More than 90 percent of our oil and gas revenues are from oil and NGLs.

Our oil and gas operations follow the full cost method of accounting whereby all costs associated with oil and gas property acquisition, exploration and development activities are capitalized into cost centers on a country-by-country basis. Capitalized costs, along with estimated future costs to develop proved reserves and asset retirement costs that are not already included in oil and gas properties, net of related salvage value, are amortized to expense under the unit-of-production method using estimates of ~~the related~~ proved oil and natural gas reserves. The costs of unproved oil and gas properties are excluded from amortization until the properties are evaluated, at which time the related costs are ~~transferred to the full cost pool and become~~ subject to amortization. Our depletion, depreciation and amortization rate is affected by changes to estimates of proved reserves and costs subject to amortization, as further discussed in "Critical Accounting Estimates" in Part II, Item 7 and 7a of our annual report on Form 10-K for the year ended December 31, 2013.

Under full cost accounting rules, a "ceiling test" is conducted each quarter to review the carrying value of our oil and gas properties for impairment. As of ~~June~~September 30, 2014, the ~~ceiling~~net capitalized costs with respect to ~~our~~FM O&G's U.S. oil and gas properties exceeded the related ceiling, which resulted in the recognition of an impairment charge of $308 million ($192 million to net income attributable to common stock), reflecting higher capitalized costs ~~by approximately 1 percent.~~and the lower twelve-month average of the first-day-of-the-month historical reference oil price at September 30, 2014. We evaluated our goodwill, which totaled $1.7 billion at September 30, 2014, and is assigned to our U.S. oil and gas reporting unit, and concluded no impairment charge was required at September 30, 2014. As further discussed in "Critical Accounting Estimates" in Part II, Item 7 and 7a of our annual report on Form 10-K for the year ended December 31, 2013, events that could result in impairment of our oil and gas properties in future periods include, but are not limited to, a decline in trailing average oil and gas prices, transfers of costs into the full cost pool without equivalent increased reserve values, increased costs or negative reserve revisions. In the near term, FM O&G expects to conduct significant completion activities to assess certain of its unevaluated properties. As these assessments are completed, related costs currently recorded as unevaluated properties not subject to amortization will be transferred into the full cost pool. If these activities do not result in additions to discounted future net cash flows from proved oil and natural gas reserves at least equal to the related costs transferred (net of related tax effects), aadditional ceiling test ~~impairment~~impairments may occur.

During October 2014, oil prices declined significantly from the third-quarter 2014 average. Continuation of recent oil price declines, increases in capitalized costs subject to amortization and other factors discussed above, may result in future additional ceiling test impairments. A ceiling test impairment may also trigger an impairment assessment of our goodwill ~~balance, which totaled $1.7 billion at June 30, 2014, and is assigned to our U.S. oil & gas reporting unit.~~

~~Sale and Purchase Transactions.~~On June 20, 2014, we completed the sale of the Eagle Ford shale assets for cash consideration of $3.1 billion, before closing adjustments from the effective date of April 1, 2014. Under full cost accounting rules, the proceeds from this transaction were accounted for as a reduction to capitalized costs, with no gain or loss recognition, except for $58 million of deferred tax expense recorded in connection with the allocation of goodwill to the sale of Eagle Ford. FM O&G's Eagle Ford interests included approximately 45,500 net acres with estimated net proved reserves of 59 MMBOE and estimated net proved and probable reserves of 69 MMBOE at year-end 2013. FM O&G's second-quarter 2014 results included 4.0 MMBOE of sales volumes from Eagle Ford through June 19, 2014.

Approximately $1.3 billion of proceeds from the sale of the Eagle Ford shale assets was placed in a like-kind exchange escrow to reinvest into additional oil and gas interests. On June 30, 2014, $0.9 billion from this like-kind exchange escrow was used to complete the acquisition of interests in the Deepwater GOM, including interests in the Lucius and Heidelberg oil production development projects and several exploration leases. The remaining $0.4 billion of funds in the like-kind exchange escrow may be used to acquire additional interests in the Deepwater GOM on a tax-efficient basis.balance.

Exploration and Development Activities. Our oil and gas business has significant proved, probable and possible reserves, ~~and~~ a broad range of development opportunities and high-potential exploration prospects. The business is being managed to reinvest its cash flows in projects with attractive rates of return and risk profiles.

FM O&G has a large, strategic position in the Deepwater GOM with significant current oil production, strong cash margins and existing infrastructure and facilities with excess capacity. These assets, combined with FM O&G’s large leasehold interests in an established geologic basin, provide financially attractive investment opportunities for high-impact growth in oil production and cash margins. ~~Following the sale of the Eagle Ford shale assets on June~~

~~Table of Contents~~

~~20, 2014,~~ FM O&G’s capital allocation strategy is principally focused on exploitation drilling and development opportunities that can be tied back to existing ~~facilities in the Deepwater GOM.~~facilities. Additional oil and gas asset sales ~~are being~~and other transactions may be considered to provide ~~additional~~incremental funding to accelerate FM O&G’s growth plans in the Deepwater GOM.

Capital expenditures for our oil and gas operations approximated $0.9 billion for ~~second-quarter~~third-quarter 2014, including $0.5 billion incurred for the Deepwater GOM and $0.2 billion for the Inboard Lower Tertiary/Cretaceous natural gas trend,

Table of Contents

and ~~$1.5~~$2.4 billion for the first ~~six~~nine months of 2014, including ~~$0.8~~$1.3 billion incurred for the Deepwater GOM and ~~$0.3~~$0.5 billion for the Inboard Lower Tertiary/Cretaceous natural gas trend. Capital expenditures for our oil and gas operations, which are expected to be funded by its operating cash flows and ~~proceeds from~~ oil and gas asset sales, are projected to approximate $3.4 billion for the year 2014, including $~~1.8~~2.0 billion for the Deepwater GOM and $0.7 billion for the Inboard Lower Tertiary/Cretaceous natural gas trend. Our future capital spending estimates may be adjusted to incorporate results from our ongoing drilling activities and follow-on development ~~activities.~~activities, and changes in market conditions.

See "Financial and Operating Data" below for further discussion of our current oil and gas operations.

Sale and Purchase Transactions.In June 2014, FM O&G completed the sale of the Eagle Ford shale assets for cash consideration of $3.1 billion ($2.6 billion net of taxes and closing adjustments). Approximately $1.3 billion of the proceeds was placed in a like-kind exchange escrow to reinvest in additional oil and gas interests and the remaining net proceeds were used to repay debt. In June 2014, FM O&G completed the acquisition of Deepwater GOM interests for $0.9 billion, including interests in the Lucius and Heidelberg oil fields and several exploration leases, and in September 2014, FM O&G acquired additional Deepwater GOM interests for $0.5 billion, including an 18.67 percent interest in the Vito oil discovery in the Mississippi Canyon area (Blocks 940, 941, 984 and 985) and a significant lease position in the Vito area.

Financial and Operating Data. Following is summary operating results for the U.S. oil and gas operations for the ~~second~~third quarters and first ~~six~~nine months of 2014 and 2013:


	Three Months Ended						Six Months Ended					Three Months Ended						Nine Months Ended
	June 30,						June 30,					September 30,						September 30,
	2014^a			2013^b			2014^a		2013^b			2014			2013			2014^a		2013^b
Sales Volumes
Oil (MMBbls)	11.7			3.4			23.5		3.4			8.6			11.5			32.1		14.9
Natural gas (Bcf)	20.3			7.7			39.8		7.7			20.2			23.5			59.9		31.3
NGLs (MMBbls)	1.0			0.3			2.1		0.3			0.6			1.0			2.7		1.3
MMBOE	16.0			5.0			32.2		5.0			12.5			16.5			44.7		21.5

Average Realizations^c
Oil (per barrel)	$	95.50		$	97.42		$	94.63	$	97.42		$	88.58		$	104.33		$	93.00	$	102.76
Natural gas(per MMBtu)	$	4.44		$	3.86		$	4.55	$	3.86		$	4.02		$	3.97		$	4.37	$	3.94
NGLs (per barrel)	$	38.79		$	35.18		$	42.35	$	35.18		$	39.69		$	37.16		$	41.77	$	36.70

Gross Profit per BOE
Gross (Loss) Profit per BOE
Realized revenues^c	$	77.53		$	74.37		$	77.37	$	74.37		$	69.08		$	80.93		$	75.04	$	79.40
Less: cash production costs^c	19.57			16.58			19.03		16.58			20.93			16.80			19.57		16.76
Cash operating margin^c	57.96			57.79			58.34		57.79			48.15			64.13			55.47		62.64
Less: depreciation, depletion and amortization	38.39			33.82			38.30		33.82			40.12			34.15			38.81		34.07
Less: impairment of oil and gas properties												24.59			—			6.90		—
Less: accretion and other costs	0.94			1.11			0.87		1.11			0.85			0.70			0.86		0.80
Plus: net noncash mark-to-market (losses) gains on derivative contracts	(0.44		)	(7.27		)	0.23		(7.27		)
Plus: net noncash mark-to-market gains (losses) on derivative contracts												9.73			(9.58		)	2.90		(9.04		)
Plus: other net adjustments	0.04			(0.02		)	0.04		(0.02		)	0.09			0.06			0.05		0.04
Gross profit	$	18.23		$	15.57		$	19.44	$	15.57
Gross (loss) profit												$	(7.59	)	$	19.76		$	11.85	$	18.77


a.	~~The 2014 periods include~~Includes results from Eagle Ford through June 19, 2014.


b.	~~The 2013 periods include~~Include the results of FM O&G beginning June 1, 2013.

Cash operating margin for our oil and gas operations reflects realized revenues less cash production costs. Realized revenues exclude noncash mark-to-market adjustments on derivative contracts, and cash production costs exclude accretion and other costs. For reconciliations of realized revenues (including average realizations for oil, natural gas and NGLs) and cash production costs per BOE to revenues and production and delivery costs reported in our consolidated financial statements, refer to "Product Revenues and Production Costs."

~~Realized revenues for our oil and gas operations totaled $1.2 billion ($77.53 per BOE) in~~ ~~second-quarter2014, $2.5 billion ($77.37 per BOE) for the first six months of~~ ~~2014~~ ~~and $372 million ($74.37 per BOE) in June 2013. Cash production costs totaled $314 million ($19.57 per BOE) in~~ ~~second-quarter2014, $612 million ($19.03 per BOE) for the first six months of~~ ~~2014~~ ~~and $83 million ($16.58 per BOE) in June 2013. Based on current sales volume and cost estimates for the second half of 2014, cash production costs are expected to approximate~~ ~~$22~~ ~~per BOE for the second half of~~ ~~2014~~, which is higher than the estimate previously reported in our quarterly report on Form 10-Q for the quarter ended March 31, 2014, primarily reflecting lower estimated volumes because of the sale of the Eagle Ford shale assets.

~~Table of Contents~~

~~Our~~FM O&G's average realized price for crude oil was ~~$95.50~~$88.58 per barrel, net of ~~$4.96~~$6.77 per barrel associated with payments on derivative contracts in ~~second-quarter~~third-quarter 2014, and ~~$94.63~~$93.00 per barrel, net of ~~$4.91~~$5.41 per barrel associated with payments on derivative contracts for the first ~~six~~nine months of 2014. Excluding the impact of derivative contracts,

Table of Contents

the ~~second-quarter~~third-quarter 2014 average realized price for crude oil was ~~$100.46~~$95.35 per barrel (92 percent of the average Brent crude oil price of $~~109.73~~103.50 per barrel) and ~~$99.54~~$98.41 per barrel ~~(91~~(92 percent of the average Brent crude oil price of ~~$108.79~~$106.98 per barrel) for the first ~~six~~nine months of 2014.

FM O&G has derivative contracts that provide price protection averaging between approximately $70 and $90 per barrel of Brent crude oil for all of its estimated fourth-quarter 2014 oil production and approximately 80 percent of estimated 2015 oil production. See Note 7 for further discussion.

~~Our~~FM O&G's average realized price for natural gas was ~~$4.44~~$4.02 per MMBtu in ~~second-quarter~~third-quarter 2014 and ~~$4.55~~$4.37 per MMBtu for the first ~~six~~nine months of 2014. Excluding the impact of derivative contracts, the ~~second-quarter~~third-quarter 2014 average realized price for natural gas was ~~$4.70~~$4.00 per MMBtu, compared to the NYMEX natural gas price average of ~~$4.67~~$4.06 per MMBtu for the ~~April~~July through ~~June~~September 2014 contracts, and ~~$4.87~~$4.58 per MMBtu for the first ~~six~~nine months of 2014, compared to the NYMEX natural gas price average of ~~$4.79~~$4.54 per MMBtu for the January through ~~June~~September 2014 contracts.

Realized revenues for oil and gas operations of $69.08 per BOE in third-quarter2014 were lower than realized revenues of $80.93 per BOE in third-quarter 2013, primarily reflecting lower oil prices (the Brent crude oil average price was $6.09 per barrel lower) and higher realized cash losses on derivative contracts ($58 million or $4.62 per BOE in third-quarter 2014, compared with $12 million or $0.74 per BOE in third-quarter 2013). Realized revenues of $75.04 per BOE for the first nine months of 2014 were lower than realized revenues of $79.40 per BOE for the four month period from June 1, 2013, to September 30, 2013 primarily reflecting higher realized cash losses on derivative contracts ($186 million or $4.16 per BOE for the first nine months of 2014, compared with $11 million or $0.49 per BOE for the four month period from June 1, 2013, to September 30, 2013).

Cash production costs of $20.93 per BOE in third-quarter2014 and $19.57 per BOE for the first nine months of 2014 were higher than cash production costs of $16.80 per BOE in third-quarter 2013 and $16.76 per BOE for the four month period from June 1, 2013, to September 30, 2013, primarily reflecting the sale of lower cost Eagle Ford properties in June 2014 and the higher operating costs in California.

Based on current sales volume and cost estimates for fourth-quarter 2014, cash production costs are expected to approximate $21 per BOE for the year 2014 and $24 per BOE for fourth-quarter 2014. Fourth-quarter 2014 sales volumes and unit cost estimates reflect downtime for maintenance affecting production rates at Marlin in the Deepwater GOM.

The following table presents average sales volumes per day by region for our oil and gas operations for the ~~second~~third quarters and first ~~six~~nine months of 2014 and 2013:


	Three Months Ended			Six Months Ended			Three Months Ended			Nine Months Ended
	June 30,			June 30,			September 30,			September 30,
	2014		2013^a	2014		2013^a	2014		2013	2014		2013^a
Sales Volumes (MBOE per day):
GOM^b	75		64	73		64	75		73	74		71
Eagle Ford	44	^c	43	48	^c	43
California	39		37	39		37	39		39	39		38
Haynesville/Madden/Other	18		25	18		25	22	^c	21	19	^c	22
Eagle Ford							—		46	32	^d	45
Total oil and gas operations	176		169	178		169	136		179	164		176


a.	~~Reflects~~Includes the results of ~~our oil and gas operations~~FM O&G beginning June 1, 2013.

Includes sales from properties on the GOM Shelf and in the Deepwater GOM. Production from the GOM Shelf totaled 1214 MBOE per day in ~~the second quarter and first six months of~~third-quarter 2014 ~~(15 percent of the GOM total in second-quarter 2014 and 16 percent for the first six months of 2014), and 15 MBOE per day (22~~(18 percent of the GOM total) in, 12 MBOE per day for the first nine months of 2014 (17 percent of the GOM total) and 13 MBOE per day (18 percent of the GOM total) for both third-quarter 2013 and the four-month period from June 1, 2013, to September 30, 2013.


c.	~~Includes results~~Results include volume adjustments related to Eagle Ford's pre-close sales.


d.	FM O&G completed the sale of ~~the~~ Eagle Ford ~~field through~~on June ~~19,~~20, 2014.

Daily sales volumes averaged ~~176~~136 MBOE in ~~second-quarter~~third-quarter 2014, including ~~128~~93 MBbls of crude oil, ~~223~~219 million cubic feet (MMcf) of natural gas and 116 MBbls of NGLs, and ~~178~~164 MBOE for the first ~~six~~nine months of 2014, including ~~130~~117 MBbls of crude oil, 220 MMcf of natural gas and 1110 MBbls of NGLs. The decrease in daily average sales volumes

Table of Contents

for the 2014 periods primarily reflects the sale of Eagle Ford properties in June 2014. Oil and gas sales volumes are expected to average ~~142~~125 MBOE per day for ~~the second half of~~fourth-quarter 2014, comprised of 6967 percent oil, 2729 percent natural gas and 4 percent NGLs.

Deepwater Gulf of Mexico. Multiple development and exploration opportunities have been identified in the Deepwater GOM that are expected to benefit from tie-back opportunities to available production capacity at the FM O&G operated large-scale Holstein, Marlin and Horn Mountain deepwater production platforms. Operations to pursue these opportunities have commenced and activities are expected to accelerate following the delivery of additional contracted ~~drill ships over~~drillships in late 2014 and mid-year 2015. Production is also expected to benefit from the ~~next 12 months~~.commencement of production from the Lucius oil field in late 2014, the Heidelberg oil field in 2016 and longer range development in the Vito basin area.

All major construction and installation projects for the development of the Lucius oil field inKeathley Canyon are finished, and the initial six development wells are being completed. Commissioning work is in progress with first oil production from the 80 MBbls of oil per day spar expected to be achieved in fourth-quarter 2014. The ~~U.S. Bureau~~geologic results from the six wells drilled since 2009 confirm a significant oil resource. Lucius is a subsea development consisting of ~~Ocean Energy Management (BOEM) has awarded~~a truss spar hull located in 7,200 feet of water. FM O&G ~~all 20 leases from its March~~has a 25.1 percent working interest in Lucius.

During third-quarter 2014, ~~Central Gulf~~fabrication work on the Heidelberg spar hull and load-out was completed in Finland. The hull for this 80 MBbls of ~~Mexico Lease Sale 231. The blocks, which range~~oil per day Lucius-look-alike facility arrived in ~~water depths up to 6,000~~Texas in October 2014, and fabrication of the main topsides module is approximately 60 percent complete. Development drilling is underway and the project remains on track for first production in 2016. Heidelberg is a large, high-quality oil development project located in 5,300 feet ~~and cover approximately 106,000 gross acres, are primarily focused on high-impact, drillable targets~~of water in the ~~Mississippi Canyon, Atwater Valley and~~ Green Canyon ~~areas, and complement~~area. FM O~~&G’s existing infrastructure and production facilities, as well as add several new exploration plays.~~&G has a 12.5 percent working interest in Heidelberg.

Holstein, in which FM O&G has a 100 percent working interest, is located in Green Canyon and has production facilities capable of producing in excess of 100 MBOE per day. Drilling from the Holstein platform rig commenced in first-quarter 2014. ~~In June 2014, the~~The first sidetrack well commenced production atin June 2014 and a ~~rate of approximately 3,600 BOE per day and completion of the~~ second ~~successful~~ sidetrack well was completed in third-quarter 2014, commencing initial production in October 2014. Combined production from the first two sidetrack wells is over 4 MBOE per day. Operations to commence the third sidetrack well are under way. ~~Over the 2014 to 2016 period,~~ FM O&G expects to drill ~~five~~four additional sidetrack wells from the Holstein ~~platform following the current sidetrack well. During this period,~~platform. FM O&G also plans to drill ~~five~~several subsea tie-back wells from contracted drillships to enhance production volumes from the spar. ~~Near-term tie-back prospects in~~

Delineation drilling for subsalt Miocene objectives on the western flank of the Holstein ~~area include Holstein~~ Deep prospect commenced in third-quarter 2014. In October 2014, interim logging and ~~Copper.~~

~~Table~~core results above 28,500 feet from the delineation well indicated 110 net feet of ~~Contents~~

pay with positive reservoir characteristics and good correlation with the discovery well. The delineation well, which is approximately one mile south of the discovery well, is currently drilling below 28,900 feet towards a proposed total depth of 32,000 feet to evaluate the primary objectives. The Holstein Deep development, in which FM O&G has a 100 percent working interest, is located ~~four miles~~ west of the Holstein ~~platform.~~platform in 3,890 feet of water and is a subsea tie-back opportunity to the Holstein facility. FM O&G acquired the acreage associated with this development in a 2013 lease sale held by the BOEM. Two successful wells with approximately 500 net feet of oil pay had previously been drilled in recent ~~years, which~~years.

FM O&G drilled two exploration wells at the Copper prospect during third-quarter 2014. The first well encountered multiple hydrocarbon bearing sands in the Pliocene and Miocene totaling approximately ~~500 net~~100 feet of ~~oil~~net pay. ~~Delineation~~Follow-on drilling onat the second location was unsuccessful. FM O&G is currently evaluating future plans for this prospect, ~~is expected to commence in third-quarter 2014.~~

~~The Copper exploration prospect commenced drilling in July 2014 and is currently drilling below 6,800 feet towards a proposed total depth of 14,500 feet. Copper~~which is located southeast of the Holstein field in 4,400 feet of water and is a subsea tie-back opportunity to the Holstein facility. ~~The prospect is a Holstein analog play with Pliocene objectives, and~~ FM O&G has a 100 percent working ~~interest.~~interest in Copper.

~~Development of the Lucius field~~Marlin, in Keathley Canyon is on track with first oil production anticipated in fourth-quarter 2014. All major construction and installation projects are complete. The geologic results from the six wells drilled since 2009 confirm a significant oil resource. The sanctioned development of Lucius is a subsea development consisting of a truss spar hull located in 7,200 feet of water with a topside daily capacity of 80 MBbls of oil and 450 MMcf of gas.which FM O&G has a ~~25.1~~100 percent working interest, is located in ~~Lucius.~~Mississippi Canyon and has production facilities capable of producing in excess of 60 MBOE per day. Several tie-back opportunities in the area have been identified. Development drilling at Dorado commenced in October 2014. This multi-well, infill development program will target undrained fault blocks and updip resource potential south of the Marlin facility. FM O&G also plans to commence exploitation drilling at the King M63 prospect in late 2014. King is located south of the Marlin facility in 5,200 feet of water.

~~Development of~~FM O&G has an 18.67 percent interest in the ~~Heidelberg field~~Vito oil discovery in ~~Green~~the Mississippi Canyon isarea and a significant lease position in ~~progress~~the Vito basin in the Mississippi Canyon and ~~production is expected to commence in mid-2016. Heidelberg is~~Atwater Valley areas. Vito, a large, ~~high-quality~~deep subsalt Miocene oil ~~development project~~discovery made in 2009, is located in ~~5,300~~approximately 4,000 feet of ~~water.~~water and is operated by Shell Offshore Inc. Exploration and appraisal drilling in recent years confirmed a resource in high-quality, subsalt Miocene

Table of Contents

sands. Development options are under evaluation. The ~~hull fabrication for~~acquired exploration leases in the ~~80 MBbls of oil per day Lucius-look-alike facility is substantially complete,~~Vito basin area (with working interests ranging from 50 percent to 100 percent) provide high potential tie-back opportunities and are complementary to FM O&G’s existing lease position in the ~~spar is expected to be towed to the GOM later this year. Topside fabrication is 40 percent complete. Development drilling commenced~~Mississippi Canyon and Atwater Valley areas.

The Power Nap exploration prospect, in ~~third-quarter 2014 for the first of six development wells to be drilled through 2016.~~which FM O&G has a ~~12.5~~50 percent working interest, commenced drilling in ~~Heidelberg.~~

~~In second-quarter~~September 2014 ~~FM O&G drilled the Tara exploration~~towards a proposed total depth of 31,100 feet. The prospect is a Vito analog play. Power Nap is located in ~~Keathley Canyon~~the Vito basin in ~~8,700~~4,200 feet of water ~~to approximately 20,800 feet. In July 2014, the well was evaluated~~ and ~~determined not to contain commercial quantities of hydrocarbons.~~is operated by Shell Offshore Inc.

Inboard Lower Tertiary/Cretaceous. FM O&G has an industry-leading position in the emerging Inboard Lower Tertiary/Cretaceous natural gas trend, located on the Shelf of the GOM and onshore in South Louisiana. FM O&G has a large onshore and offshore lease acreage position with high-quality prospects and the potential to develop a significant long-term, low-cost source of natural gas. Data from eight wells drilled to date indicate the presence of geologic formations that are analogous to productive formations in the Deepwater GOM and onshore in the Gulf Coast region. The near-term focus is on defining the trend onshore with plans to spud three prospects by year-end 2014. FM O&G is currently completing the Highlander and Blackbeard West No. 2 Inboard Lower Tertiary/Cretaceous exploration prospects and plans to perform production tests on these two wells in 2014.onshore.

The Highlander discovery well is currently being completed to test Cretaceous/Tuscaloosa objectives found below the salt weld and flow testing is anticipated in fourth-quarter 2014. The Highlander onshore exploratory well, in which FM O&G is the operator and has a 72 percent working interest, located in St. Martin Parish, Louisiana, encountered gas pay in several Wilcox and Cretaceous/Tuscaloosa sands between 24,000 feet and 29,000 ~~feet.~~feet in January 2014. As previously reported, ~~in our annual report on Form 10-K for the year ended December 31, 2013,~~ the wireline log and core data obtained from the Wilcox and Cretaceous sand packages indicated favorable reservoir characteristics with approximately 150 feet of net pay. ~~The Highlander discovery well is currently in completion operations to test Cretaceous/Tuscaloosa objectives found below the salt weld. Flow testing is anticipated in the second half of 2014.~~ FM O&G has identified multiple exploratory prospects in the Highlander area where it controls rights to ~~approximately 57,000~~more than 60,000 gross acres.

~~Completion operations at~~In September and October 2014, flow testing was performed on middle Miocene sand sections in the Blackbeard West No. 2 well on Ship Shoal Block 188, in which FM O&G has a 69.4 percent working ~~interest, located on Ship Shoal Block 188 are in progress. Other near-term drilling includes~~interest. During the ~~Farthest Gate West exploratory prospect located onshore in Cameron Parish, Louisiana. Farthest Gate West is~~testing period, the well flowed at a ~~Lineham Creek analog prospect~~rate of approximately 2,000 barrels of water per day with ~~Paleogene objectives and has a proposed total depth~~flowing tubing pressure of ~~25,000 feet.~~

During second-quarter 2014, a flow test was performed on the deepest sand section (Cretaceous/Tuscaloosa) in Davy Jones No. 2, in which FM O&G has a 75 percent working interest. The test of this section, one of two potentially productive intervals inapproximately 9,000 pounds per square inch. While the well did not result in hydrocarbon production in commercial quantities, this water rate indicates that subsalt sands on the Shelf below 20,000 feet are capable of substantial production rates. The well will be temporarily abandoned while FM O&G evaluates plans to complete and test shallower upper Miocene sands in the ~~well was~~well. A rig will be moved to Blackbeard East in fourth-quarter 2014 to complete and test the middle Miocene sands in this well. FM O&G holds a 90 percent working interest in Blackbeard East. FM O&G plans to temporarily ~~abandoned. Testing of~~abandon the ~~remaining sand sections (Wilcox) was deferred until later in 2014~~Davy Jones No. 2 well in order to use certain equipment from the ~~completion equipment~~well to ~~accelerate~~advance the completion and testing of the Highlander well. ~~The~~Future plans for Davy Jones ~~No. 2~~will be determined following the Highlander flow test provided valuable data, including confirmation of permeability of the sands, which we believe is encouraging in relation to the Tuscaloosa discovery at Highlander and other Inboard Lower Tertiary/Cretaceous prospects.

~~Table of Contents~~test.

The Farthest Gate West onshore exploration prospect, commenced drilling in October 2014 and is currently drilling below 9,100 feet towards a proposed total depth of 29,000 feet. Farthest Gate West is located onshore in Cameron Parish, Louisiana, and is a Lineham Creek analog prospect with Paleogene objectives. FM O&G is currently reviewing completion options for the Lineham Creek discovery, in which FM O&G has a 36 percent working interest.

California. FM O&G's California assets benefit from an established oil production base with a stable production profile and access to favorably priced crude markets. Development plans are principally focused on maintaining stable production levels through continued drilling in the long-established producing fields onshore in California. FM O&G's position in California is located onshore in the San Joaquin Valley and Los Angeles Basin and offshore in the Point Arguello and Point Pedernales fields.

Haynesville. FM O&G has rights to a substantial natural gas resource, located in the Haynesville shale play in North Louisiana. Drilling activities in recent years have been reduced to maximize cash flows in a low natural gas price environment and to benefit from potentially higher future natural gas prices.

International Exploration (Morocco). FM O&G has a farm-in arrangement to earn interests in exploration blocks located in the Mazagan permit area offshore Morocco. The exploration area covers 2.2 million gross acres in water depths of 4,500 to 9,900 feet. The prospects include Miocene, Cretaceous and Jurassic targets. FM O&G expects to commence drilling the first well in early 2015.

Table of Contents

CAPITAL RESOURCES AND LIQUIDITY

Our operating cash flows vary with prices realized from copper, gold, molybdenum and oil sales, our sales volumes, production costs, income taxes, other working capital changes and other factors. We continue to target significant reductions in debt by the end of 2016 using cash flows generated above capital expenditures and other cash requirements. We have taken steps to accelerate our deleveraging plans through asset sales and will continue to evaluate our portfolio for potential future monetizations. We may also take additional steps to reduce or defer capital spending and other costs in response to market conditions.

Cash

Following is a summary of the U.S. and international components of consolidated cash and cash equivalents, including cash available to the parent company, net of noncontrolling interests' share, taxes and other costs at ~~June~~September 30, 2014 (in millions):



Cash at domestic companies	$	700		$	61
Cash at international operations	758			597			^a
Total consolidated cash and cash equivalents	1,458			658
Less: noncontrolling interests’ share	(333		)	(161		)
Cash, net of noncontrolling interests’ share	1,125			497
Less: withholding taxes and other	(42		)	(41		)
Net cash available	$	1,083		$	456		^a

a. Includes $121 million of consolidated cash and cash equivalents at Candelaria and Ojos del Salado ($80 million available to the parent company).

Cash held at our international operations is generally used to support our foreign operations' capital expenditures, operating expenses, working capital and other tax payments, or other cash needs. Management believes that sufficient liquidity is available in the U.S. from cash balances and availability from our revolving credit facility and uncommitted lines of credit ~~(refer to Note 6)~~(see discussion below). With the exception of TFM, we have not elected to permanently reinvest earnings from our foreign subsidiaries, and we have recorded deferred tax liabilities for foreign earnings that are available to be repatriated to the U.S. From time to time, our foreign subsidiaries distribute earnings to the U.S. through dividends that are subject to applicable withholding taxes and noncontrolling interests' share.

Debt

Following is a summary of our total debt and the related weighted-average interest rates at ~~June~~September 30, 2014 (in billions, except percentages):

Weighted-
Average
Interest Rate
Acquisition-related debt $ 10.4
3.1%
Assumed debt of PXP 6.4
^a
6.8%
^a
Other FCX debt 3.5
3.4%
$ 20.3
4.2%



				Weighted-
				Average
				Interest Rate
FCX Senior Notes	$	9.5		3.6%
FM O&G Senior Notes	4.6		^a	6.9%
FCX Term Loan	3.8			1.7%
Other FCX debt	1.8			2.8%
Total debt	$	19.7		3.9%

a. On ~~July 23,~~October 15, 2014, we redeemed ~~senior notes with a book value~~the $400 million principal amount of $1.8 billion and a weighted-average interest rate of 6.6 percent under the equity clawback provisions of the instruments. Available cash and borrowings of approximately $950 million under the revolving credit facility and uncommitted lines of credit were used to fund the redemption.our 8.625% Senior Notes. Holders received the principal amount ~~of $1.7 billion~~ together with the redemption premium and accrued and unpaid interest to the redemption date. We ~~will~~expect to report a pre-tax gain ~~on early extinguishment~~ of ~~debt of $58~~$24 million in ~~third-quarter~~fourth-quarter 2014 associated with ~~these redemptions.~~this redemption.

~~Table of Contents~~

On May 30, 2014, we amended our revolving credit facility, extending the maturity date by one year, to May 31, 2019, and increased the aggregate principal amount available from $3.0 billion to $4.0 billion. At ~~June~~September 30, 2014, we had no$1.1 billion of borrowings outstanding and ~~$46~~$45 million of letters of credit issued under our revolving credit facility.

We have uncommitted unsecured short-term lines of credit with certain financial institutions, which have terms and pricing that are more favorable than our revolving credit facility. As of ~~June~~September 30, 2014, there were no$250 million of borrowings drawn on these lines of credit.

Table of Contents

In March 2014, Cerro Verde entered into a five-year, $1.8 billion senior unsecured credit facility. Amounts may be drawn or letters of credit issued over a two-year period to fund a portion of the expansion project (see "Operations - South America Mining") and for Cerro Verde's general corporate purposes. At ~~June~~September 30, 2014, there were no borrowings and no letters of credit issued under Cerro Verde’s credit facility.

Refer to Note 6 for further discussion of our debt.

Operating Activities

During the first ~~six~~nine months of 2014, we generated consolidated operating cash flows totaling $~~2.6~~4.5 billion (net of $~~777~~699 million for working capital uses and changes in other tax payments), compared with consolidated operating cash flows for the first ~~six~~nine months of 2013 of $~~1.9~~3.7 billion (net of $~~195~~489 million for working capital uses and changes in other tax payments). Consolidated operating cash flows for the first ~~six~~nine months of 2014 benefited from a full ~~six~~nine months of our oil and gas operations, partly offset by the impact of lower ~~metals~~copper and gold price realizations and lower copper sales volumes and an increase in working capital uses and changes in other tax payments, primarily associated with accounts receivable. As discussed in "Consolidated Results - Revenues," substantially all of our copper concentrate and cathode sales contracts are provisionally priced; accordingly, the quarter-end forward price is a major determinant of recorded revenues and the resulting receivables. At ~~June 30, 2014, we had provisionally priced copper sales of~~ ~~329 million~~ ~~pounds recorded at an average of~~ ~~$3.18~~ ~~per pound, compared with 306 million pounds of copper recorded at an average of $3.06 per pound at June 30, 2013.~~volumes.

Based on current operating plans and subject to future copper, gold, molybdenum and crude oil prices, we expect estimated consolidated operating cash flows for the year 2014, plus available cash, asset sales proceeds and availability under our revolving credit facility, ~~and uncommitted lines of credit,~~ to be sufficient to fund our budgeted capital expenditures, dividends, noncontrolling interest distributions and other cash requirements for the year. Refer to “Outlook” for further discussion of projected operating cash flows for the year 2014.

Investing Activities

Capital Expenditures. Capital expenditures, including capitalized interest, totaled $~~3.6~~5.4 billion for the first ~~six~~nine months of 2014, including $~~1.4~~2.0 billion for major projects at mining operations and ~~$1.5~~$2.4 billion for oil and gas operations, compared with ~~$2.0~~$3.6 billion for the first ~~six~~nine months of 2013, including ~~$1.0~~$1.4 billion for major projects and ~~$0.2~~$0.9 billion for oil and gas operations ~~beginning~~for the four month period from June 1, 2013, to September 30, 2013. Increased capital expenditures ~~for~~at our mining operations for the first ~~six~~nine months of 2014 is primarily associated with the expansion project at Cerro Verde. Refer to “Operations” for further discussion.

Capital expenditures are currently expected to approximate $~~7.6~~7.5 billion for the year 2014, including $~~3.2~~3.0 billion for major projects at mining operations (primarily the expansion projects at Cerro Verde and Morenci, and underground development activities at Grasberg) and $3.4 billion for oil and gas ~~operations. Major projects at our mining~~ operations ~~for~~ ~~2014~~ ~~primarily include~~(primarily in the ~~Cerro Verde and Morenci expansion projects, and underground development activities at Grasberg.~~Deepwater GOM). Capital spending plans remain under review and will be revised as market conditions warrant. Refer to "Operations" for further discussion.

Acquisitions and Dispositions. In June 2014,, we ~~acquired additional interests in the Deepwater GOM, for~~ ~~$0.9 billion, and also~~ completed the sale of ~~our~~the Eagle Ford shale assets for cash consideration of $3.1 billion. Approximately $1.3 billion ~~(before closing adjustments). The~~of the proceeds was placed in a like-kind exchange escrow to reinvest in additional oil and gas interests and the remaining net proceeds were used to repay debt. In June 2014 and September 2014, we completed acquisitions of Deepwater GOM acquisition was funded with a portion of the net proceeds from the sale of Eagle Ford. The estimated combined after-tax net proceeds from these transactions approximated $1.8 billion, before purchase price adjustments.interests totaling $1.4 billion. Refer to Note 2 for further discussion of our oil and gas acquisition and disposal transactions.

In second-quarter 2013, we paid $3.5 billion in cash (net of cash acquired) for the acquisition of PXP and $1.6 billion in cash (net of cash acquired) for the acquisition of MMR. ~~Refer to Note~~ 2 ~~for further discussion of our acquisition and disposal transactions.~~

~~Table of Contents~~

In March 2013, we paid ~~$321~~$348 million (net of cash acquired) to fund the acquisition of a cobalt chemical refinery in Kokkola, Finland, and the related sales and marketing business. The acquisition was funded 70 percent by us and 30 percent by Lundin, ~~Mining Corporation,~~ our joint venture partner.

Financing Activities

Debt Transactions. ~~On April 30,~~In third-quarter 2014, we redeemed $1.7 billion of the aggregate principal amount of outstanding senior notes with an average interest rate of 6.6 percent under the equity clawback provisions of the instruments. Holders received the principal amount together with the redemption premium and accrued and unpaid interest to the redemption date.

In second-quarter 2014, we redeemed $210 million of the aggregate principal amount of the outstanding 6.625% Senior Notes. Holders received the principal amount together with the redemption premium and accrued and unpaid interest to the redemption date.

Table of Contents

We used available cash and borrowings under the revolving credit facility and uncommitted lines of credit to fund the redemptions. Refer to Note 6 for further discussion of debt transactions for the first ~~six~~nine months of 2014.

Proceeds from debt for the first ~~six~~nine months of 2013 primarily included amounts from the sale of $6.5 billion of unsecured senior notes in four tranches with a weighted-average interest rate of 3.9 percent and borrowings of $4.0 billion under an unsecured term loan with an interest rate of LIBOR plus 1.5 percent. Net proceeds from these borrowings were used to fund the second-quarter 2013 oil and gas acquisitions, repay certain debt of PXP and for general corporate purposes. Repayments of debt for the first ~~six~~nine months of 2013 primarily reflected the repayment of the $3.9 billion outstanding under PXP's amended credit facility and $0.4 billion of PXP senior notes that were assumed in the oil and gas acquisitions.

Dividends. We paid dividends on our common stock totaling $~~653 million~~1.0 billion for the first ~~six~~nine months of 2014 and $~~595 million~~2.0 billion for the first ~~six~~nine months of 2013 (which included $1.0 billion for a supplemental dividend of $1.00 per share paid on July 1, 2013). The current annual dividend rate for our common stock is $1.25 per share ($0.3125 per share quarterly). The declaration of dividends is at the discretion of our Board of Directors (Board) and will depend upon our financial results, cash requirements, future prospects and other factors deemed relevant by the Board. The Board will continue to review our financial policy on an ongoing basis.

Cash dividends and other distributions paid to noncontrolling interests totaled $~~250~~365 million for the first ~~six~~nine months of 2014 and $90157 million for the first ~~six~~nine months of 2013. These payments will vary based on the cash requirements of our consolidated subsidiaries.

CONTRACTUAL OBLIGATIONS

Except as discussed in Note 13, there have been no material changes in our contractual obligations since December 31, 2013. Refer to Item 7 in our annual report on Form 10-K for the year ended December 31, 2013, for further information regarding our contractual obligations.

CONTINGENCIES

Environmental and Asset Retirement Obligations

Our current and historical operating activities are subject to stringent laws and regulations governing the protection of the environment. We perform a comprehensive annual review of our environmental and asset retirement obligations and also review changes in facts and circumstances associated with these obligations at least quarterly. ~~There have been no material changes to our environmental and~~During third-quarter 2014, we recorded additional asset retirement obligations ~~since~~ ~~December 31, 2013~~.totaling $403 million ($413 million on an undiscounted and unescalated basis) related to increased estimated costs to reclaim a waste stockpile at Grasberg. Additionally, in accordance with the 2011 Chilean legislation regulating mine closure, we will submit revised closure plans for our Chilean mine sites in November 2014. We expect to record additional asset retirement obligations in fourth-quarter 2014 associated with these revised closure plans. Updated cost assumptions, including increases and decreases to cost estimates, changes in the anticipated scope and timing of remediation activities, and settlement of environmental matters may result in additional revisions to certain of our environmental obligations.

Refer to Note 12 in our annual report on Form 10-K for the year ended December 31, 2013, for further information regarding our environmental and asset retirement obligations.

Litigation and Other Contingencies

There have been no material changes to our contingencies associated with legal proceedings and other matters since December 31, 2013. Refer to Note 12 and "Legal Proceedings" contained in Part I, Item 3 of our annual report on Form 10-K for the year ended December 31, 2013, as updated in Note 9 to the financial statements included in our quarterly report on Form 10-Q for the quarter ended March 31, 2014, for further information regarding legal proceedings and other matters.

6465

Table of Contents

NEW ACCOUNTING STANDARDS

We do not expect the impact of recently issued accounting standards to have a significant impact on our future financial statements and disclosures.

PRODUCT REVENUES AND PRODUCTION COSTS

Mining Product Revenues and Unit Net Cash Cost

Unit net cash costs per pound of copper and molybdenum are measures intended to provide investors with information about the cash-generating capacity of our mining operations expressed on a basis relating to the primary metal product for the respective operations. We use this measure for the same purpose and for monitoring operating performance by our 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 our measures may not be comparable to similarly titled measures reported by other companies.

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

We show revenue adjustments for prior period open sales as a separate line item. Because these adjustments do not result from current period sales, we have reflected these separately from revenues on current period sales. Noncash and other costs consist of items such as stock-based compensation costs, start-up costs, write-offs of equipment and/or unusual charges. They are removed from site production and delivery costs in the calculation of unit net cash costs. 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 for our mining operations are presentations under both the by-product and co-product methods together with reconciliations to amounts reported in our 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 our oil and gas operations. We use this measure for the same purpose and for monitoring operating performance by our 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. Our measures may not be comparable to similarly titled measures reported by other companies.

We show revenue adjustments from derivative contracts as separate line items. Because these adjustments do not result from oil and gas sales, these gains and losses have been reflected separately from revenues on current period sales. Additionally, accretion and other costs are removed from production and delivery costs in the calculation of cash production costs per BOE. The following schedules include calculations of oil and gas product revenues and cash production costs together with a reconciliation to amounts reported in our consolidated financial statements.

6566

Table of Contents

North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs


Three Months Ended June 30, 2014
Three Months Ended September 30, 2014
(In millions)	By-Product			Co-Product Method									By-Product			Co-Product Method
	Method			Copper			Molybdenum^a		Other^b		Total		Method			Copper			Molybdenum^a			Other^b		Total
Revenues, excluding adjustments	$	1,332		$	1,332		$	110	$	32	$	1,474	$	1,374		$	1,374		$	106		$	34	$	1,514
Site production and delivery, before net noncash and other costs shown below	786			770			24		18		812		791			776			25			19		820
By-product credits	(116		)	—			—		—		—		(111		)	—			—			—		—
Treatment charges	46			45			—		1		46		50			49			—			1		50
Net cash costs	716			815			24		19		858		730			825			25			20		870
Depreciation, depletion and amortization	125			122			1		2		125		131			128			1			2		131
Noncash and other costs, net	29			29			—		—		29		46			45			—			1		46
Total costs	870			966			25		21		1,012		907			998			26			23		1,047
Revenue adjustments, primarily for pricing on prior period open sales	9			9			—		—		9		(8		)	(8		)	—			—		(8		)
Gross profit	$	471		$	375		$	85	$	11	$	471	$	459		$	368		$	80		$	11	$	459

Copper sales (millions of recoverable pounds)	421			421									434			434
Molybdenum sales (millions of recoverable pounds)^a							9												8

Gross profit per pound of copper/molybdenum:	Gross profit per pound of copper/molybdenum:												Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments	$	3.16		$	3.16		$	12.26					$	3.17		$	3.17		$	13.55
Site production and delivery, before net noncash and other costs shown below	1.87			1.83			2.63						1.83			1.79			3.17
By-product credits	(0.28		)	—			—						(0.26		)	—			—
Treatment charges	0.11			0.11			—						0.11			0.11			—
Unit net cash costs	1.70			1.94			2.63						1.68			1.90			3.17
Depreciation, depletion and amortization	0.30			0.29			0.19						0.30			0.30			0.17
Noncash and other costs, net	0.07			0.06			0.03						0.11			0.10			0.03
Total unit costs	2.07			2.29			2.85						2.09			2.30			3.37
Revenue adjustments, primarily for pricing
on prior period open sales	0.02			0.02			—						(0.02		)	(0.02		)	—
Gross profit per pound	$	1.11		$	0.89		$	9.41					$	1.06		$	0.85		$	10.18

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization						Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	1,474		$	812		$	125					$	1,514		$	820		$	131
Treatment charges	—			46			—						—			50			—
Noncash and other costs, net	—			29			—						—			46			—
Revenue adjustments, primarily for pricing on prior period open sales	9			—			—						(8		)	—			—
Eliminations and other	(14		)	(17		)	3						(16		)	(14		)	2
North America copper mines	1,469			870			128						1,490			902			133
Other mining & eliminations^c	2,817			1,884			266						3,216			1,978			305
Total mining	4,286			2,754			394						4,706			2,880			438
U.S. oil & gas operations	1,236			329			616						990			273			812		^d
Corporate, other & eliminations	—			(1		)	3						—			(1		)	3
As reported in FCX’s consolidated financial statements	$	5,522		$	3,082		$	1,013					$	5,696		$	3,152		$	1,253	^d


a.	Reflects sales of molybdenum produced by certain of the North America copper mines to our 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 Note 10.


d.	Includes impairment of oil and gas properties of $308 million.

Table of Contents

North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs (continued)



Three Months Ended September 30, 2013
(In millions)	By-Product			Co-Product Method
	Method			Copper			Molybdenum^a		Other^b		Total
Revenues, excluding adjustments	$	1,183		$	1,183		$	89	$	27	$	1,299
Site production and delivery, before net noncash and other costs shown below	725			701			35		18		754
By-product credits	(87		)	—			—		—		—
Treatment charges	35			34			—		1		35
Net cash costs	673			735			35		19		789
Depreciation, depletion and amortization	100			97			2		1		100
Noncash and other costs, net	27			27			—		—		27
Total costs	800			859			37		20		916
Revenue adjustments, primarily for pricing on prior period open sales	9			9			—		—		9
Gross profit	$	392		$	333		$	52	$	7	$	392

Copper sales (millions of recoverable pounds)	362			362
Molybdenum sales (millions of recoverable pounds)^a							9

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments	$	3.27		$	3.27		$	10.24
Site production and delivery, before net noncash and other costs shown below	2.00			1.94			4.01
By-product credits	(0.24		)	—			—
Treatment charges	0.10			0.09			—
Unit net cash costs	1.86			2.03			4.01
Depreciation, depletion and amortization	0.27			0.27			0.24
Noncash and other costs, net	0.08			0.07			0.03
Total unit costs	2.21			2.37			4.28
Revenue adjustments, primarily for pricing
on prior period open sales	0.02			0.02			—
Gross profit per pound	$	1.08		$	0.92		$	5.96

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	1,299		$	754		$	100
Treatment charges	—			35			—
Noncash and other costs, net	—			27			—
Revenue adjustments, primarily for pricing on prior period open sales	9			—			—
Eliminations and other	(7		)	(9		)	2
North America copper mines	1,301			807			102
Other mining & eliminations^c	3,688			2,235			251
Total mining	4,989			3,042			353
U.S. oil & gas operations	1,176			288			563
Corporate, other & eliminations	—			2			3
As reported in FCX’s consolidated financial statements	$	6,165		$	3,332		$	919


a.	Reflects sales of molybdenum produced by certain of the North America copper mines to our 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 Note 10.

Table of Contents

North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs (continued)




Nine Months Ended September 30, 2014
(In millions)	By-Product			Co-Product Method
	Method			Copper			Molybdenum^a			Other^b		Total
Revenues, excluding adjustments	$	3,901		$	3,901		$	297		$	96	$	4,294
Site production and delivery, before net noncash and other costs shown below	2,272			2,232			69			54		2,355
By-product credits	(310		)	—			—			—		—
Treatment charges	144			140			—			4		144
Net cash costs	2,106			2,372			69			58		2,499
Depreciation, depletion and amortization	360			352			4			4		360
Noncash and other costs, net	105			104			—			1		105
Total costs	2,571			2,828			73			63		2,964
Revenue adjustments, primarily for pricing on prior period open sales	(7		)	(7		)	—			—		(7		)
Gross profit	$	1,323		$	1,066		$	224		$	33	$	1,323

Copper sales (millions of recoverable pounds)	1,224			1,224
Molybdenum sales (millions of recoverable pounds)^a							25

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments	$	3.19		$	3.19		$	11.93
Site production and delivery, before net noncash
and other costs shown below	1.86			1.83			2.75
By-product credits	(0.25		)	—			—
Treatment charges	0.11			0.11			—
Unit net cash costs	1.72			1.94			2.75
Depreciation, depletion and amortization	0.29			0.29			0.15
Noncash and other costs, net	0.09			0.08			0.03
Total unit costs	2.10			2.31			2.93
Revenue adjustments, primarily for pricing
on prior period open sales	(0.01		)	(0.01		)	—
Gross profit per pound	$	1.08		$	0.87		$	9.00

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	4,294		$	2,355		$	360
Treatment charges	—			144			—
Noncash and other costs, net	—			105			—
Revenue adjustments, primarily for pricing on prior period open sales	(7		)	—			—
Eliminations and other	(42		)	(46		)	8
North America copper mines	4,245			2,558			368
Other mining & eliminations^c	8,471			5,502			810
Total mining	12,716			8,060			1,178
U.S. oil & gas operations	3,487			913			2,044		^d
Corporate, other & eliminations	—			(2		)	10
As reported in FCX’s consolidated financial statements	$	16,203		$	8,971		$	3,232	^d


a.	Reflects sales of molybdenum produced by certain of the North America copper mines to our 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 Note 10.


d.	Includes impairment of oil and gas properties of $308 million.

Table of Contents

North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs (continued)




Nine Months Ended September 30, 2013
(In millions)	By-Product			Co-Product Method
	Method			Copper			Molybdenum^a		Other^b		Total
Revenues, excluding adjustments	$	3,655		$	3,655		$	280	$	80	$	4,015
Site production and delivery, before net noncash and other costs shown below	2,201			2,130			101		56		2,287
By-product credits	(274		)	—			—		—		—
Treatment charges	112			109			—		3		112
Net cash costs	2,039			2,239			101		59		2,399
Depreciation, depletion and amortization	303			293			6		4		303
Noncash and other costs, net	88			87			1		—		88
Total costs	2,430			2,619			108		63		2,790
Revenue adjustments, primarily for pricing on prior period open sales	(4		)	(4		)	—		—		(4		)
Gross profit	$	1,221		$	1,032		$	172	$	17	$	1,221

Copper sales (millions of recoverable pounds)	1,084			1,084
Molybdenum sales (millions of recoverable pounds)^a							26

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments	$	3.37		$	3.37		$	11.03
Site production and delivery, before net noncash
and other costs shown below	2.03			1.97			3.99
By-product credits	(0.25		)	—			—
Treatment charges	0.10			0.10			—
Unit net cash costs	1.88			2.07			3.99
Depreciation, depletion and amortization	0.28			0.27			0.25
Noncash and other costs, net	0.08			0.08			0.03
Total unit costs	2.24			2.42			4.27
Revenue adjustments, primarily for pricing
on prior period open sales	—			—			—
Gross profit per pound	$	1.13		$	0.95		$	6.76

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	4,015		$	2,287		$	303
Treatment charges	—			112			—
Noncash and other costs, net	—			88			—
Revenue adjustments, primarily for pricing on prior period open sales	(4		)	—			—
Eliminations and other	(16		)	(28		)	9
North America copper mines	3,995			2,459			312
Other mining & eliminations^c	9,526			6,058			726
Total mining	13,521			8,517			1,038
U.S. oil & gas operations	1,512			377			732
Corporate, other & eliminations	3			10			8
As reported in FCX’s consolidated financial statements	$	15,036		$	8,904		$	1,778


a.	Reflects sales of molybdenum produced by certain of the North America copper mines to our 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 Note 10.

~~Table of Contents~~

~~North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs (continued)~~

Three Months Ended June 30, 2013
(In millions) By-Product Co-Product Method
Method Copper
Molybdenum^a

Other^b
Total
Revenues, excluding adjustments $ 1,205
$ 1,205
$ 98
$ 26
$ 1,329
Site production and delivery, before net noncash and other costs shown below 774
745
41
18
804
By-product credits (94 ) —
—
—
—
Treatment charges 31
30
—
1
31
Net cash costs 711
775
41
19
835
Depreciation, depletion and amortization 105
101
3
1
105
Noncash and other costs, net 29
29
—
—
29
Total costs 845
905
44
20
969
Revenue adjustments, primarily for pricing on prior period open sales (14 ) (14 ) —
—
(14 )
Gross profit $ 346
$ 286
$ 54
$ 6
$ 346

Copper sales (millions of recoverable pounds) 370
370

Molybdenum sales (millions of recoverable pounds)^a
9

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments $ 3.25
$ 3.25
$ 11.17

Site production and delivery, before net noncash
and other costs shown below
2.09
2.01
4.63

By-product credits (0.25 ) —
—

Treatment charges 0.08
0.08
—

Unit net cash costs 1.92
2.09
4.63

Depreciation, depletion and amortization 0.28
0.27
0.30

Noncash and other costs, net 0.08
0.08
0.04

Total unit costs 2.28
2.44
4.97

Revenue adjustments, primarily for pricing
on prior period open sales (0.04 ) (0.04 ) —

Gross profit per pound $ 0.93
$ 0.77
$ 6.20

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 1,329
$ 804
$ 105

Treatment charges —
31
—

Noncash and other costs, net —
29
—

Revenue adjustments, primarily for pricing on prior period open sales (14 ) —
—

Eliminations and other (6 ) (11 ) 3

North America copper mines 1,309
853
108

Other mining & eliminations^c
2,642
1,906
250

Total mining 3,951
2,759
358

U.S. oil & gas operations 336
89
169

Corporate, other & eliminations 1
5
3

As reported in FCX’s consolidated financial statements $ 4,288
$ 2,853
$ 530


a.	~~Reflects sales of molybdenum produced by certain of the North America copper mines to our 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 Note~~ 10.

~~Table of Contents~~

~~North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs (continued)~~

Six Months Ended June 30, 2014
(In millions) By-Product Co-Product Method
Method Copper
Molybdenum^a

Other^b
Total
Revenues, excluding adjustments $ 2,535
$ 2,535
$ 191
$ 62
$ 2,788
Site production and delivery, before net noncash and other costs shown below 1,481
1,457
44
35
1,536
By-product credits (198 ) —
—
—
—
Treatment charges 93
91
—
2
93
Net cash costs 1,376
1,548
44
37
1,629
Depreciation, depletion and amortization 229
224
2
3
229
Noncash and other costs, net 59
58
1
—
59
Total costs 1,664
1,830
47
40
1,917
Revenue adjustments, primarily for pricing on prior period open sales (7 ) (7 ) —
—
(7 )
Gross profit $ 864
$ 698
$ 144
$ 22
$ 864

Copper sales (millions of recoverable pounds) 790
790

Molybdenum sales (millions of recoverable pounds)^a
17

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments $ 3.21
$ 3.21
$ 11.19

Site production and delivery, before net noncash
and other costs shown below 1.87
1.84
2.56

By-product credits (0.25 ) —
—

Treatment charges 0.12
0.12
—

Unit net cash costs 1.74
1.96
2.56

Depreciation, depletion and amortization 0.29
0.28
0.14

Noncash and other costs, net 0.08
0.08
0.03

Total unit costs 2.11
2.32
2.73

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

Gross profit per pound $ 1.09
$ 0.88
$ 8.46

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 2,788
$ 1,536
$ 229

Treatment charges —
93
—

Noncash and other costs, net —
59
—

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

Eliminations and other (26 ) (32 ) 6

North America copper mines 2,755
1,656
235

Other mining & eliminations^c
5,255
3,524
505

Total mining 8,010
5,180
740

U.S. oil & gas operations 2,497
640
1,232

Corporate, other & eliminations —
(1 ) 7

As reported in FCX’s consolidated financial statements $ 10,507
$ 5,819
$ 1,979


a.	~~Reflects sales of molybdenum produced by certain of the North America copper mines to our 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 Note~~ 10.

~~Table of Contents~~

~~North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs (continued)~~

Six Months Ended June 30, 2013
(In millions) By-Product Co-Product Method
Method Copper
Molybdenum^a

Other^b
Total
Revenues, excluding adjustments $ 2,463
$ 2,463
$ 191
$ 53
$ 2,707
Site production and delivery, before net noncash and other costs shown below 1,477
1,430
66
38
1,534
By-product credits (187 ) —
—
—
—
Treatment charges 76
74
—
2
76
Net cash costs 1,366
1,504
66
40
1,610
Depreciation, depletion and amortization 204
197
4
3
204
Noncash and other costs, net 60
59
1
—
60
Total costs 1,630
1,760
71
43
1,874
Revenue adjustments, primarily for pricing on prior period open sales (4 ) (4 ) —
—
(4 )
Gross profit $ 829
$ 699
$ 120
$ 10
$ 829

Copper sales (millions of recoverable pounds) 722
722

Molybdenum sales (millions of recoverable pounds)^a
17

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments $ 3.41
$ 3.41
$ 11.45

Site production and delivery, before net noncash
and other costs shown below 2.04
1.98
3.98

By-product credits (0.26 ) —
—

Treatment charges 0.11
0.10
—

Unit net cash costs 1.89
2.08
3.98

Depreciation, depletion and amortization 0.28
0.27
0.26

Noncash and other costs, net 0.08
0.08
0.04

Total unit costs 2.25
2.43
4.28

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

Gross profit per pound $ 1.15
$ 0.97
$ 7.17

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 2,707
$ 1,534
$ 204

Treatment charges —
76
—

Noncash and other costs, net —
60
—

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

Eliminations and other (9 ) (18 ) 6

North America copper mines 2,694
1,652
210

Other mining & eliminations^c
5,838
3,823
475

Total mining 8,532
5,475
685

U.S. oil & gas operations 336
89
169

Corporate, other & eliminations 3
8
5

As reported in FCX’s consolidated financial statements $ 8,871
$ 5,572
$ 859


a.	~~Reflects sales of molybdenum produced by certain of the North America copper mines to our 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 Note~~ 10.

6970

Table of Contents

South America Mining Product Revenues, Production Costs and Unit Net Cash Costs


Three Months Ended June 30, 2014
Three Months Ended September 30, 2014
(In millions)	By-Product			Co-Product Method									By-Product			Co-Product Method
	Method			Copper			Other				Total		Method			Copper			Other				Total
Revenues, excluding adjustments	$	984		$	984		$	75		^a	$	1,059	$	840		$	840		$	69		^a	$	909
Site production and delivery, before net noncash and other costs shown below	511			474			41				515		451			415			43				458
By-product credits	(71		)	—			—				—		(62		)	—			—				—
Treatment charges	55			55			—				55		43			43			—				43
Royalty on metals^b	3			3			—				3
Royalty on metals													1			1			—				1
Net cash costs	498			532			41				573		433			459			43				502
Depreciation, depletion and amortization	95			89			6				95		102			96			6				102
Noncash and other costs, net	23			27			(4		)		23		18			19			(1		)		18
Total costs	616			648			43				691		553			574			48				622
Revenue adjustments, primarily for pricing on prior period open sales	32			32			—				32		(15		)	(15		)	—				(15		)
Gross profit	$	400		$	368		$	32			$	400	$	272		$	251		$	21			$	272

Copper sales (millions of recoverable pounds)	310			310									271			271

Gross profit per pound of copper:	Gross profit per pound of copper:												Gross profit per pound of copper:

Revenues, excluding adjustments	$	3.17		$	3.17								$	3.10		$	3.10
Site production and delivery, before net noncash and other costs shown below	1.64			1.52									1.67			1.53
By-product credits	(0.23		)	—									(0.23		)	—
Treatment charges	0.18			0.18									0.16			0.16
Royalty on metals^b	0.01			0.01
Royalty on metals													—			—
Unit net cash costs	1.60			1.71									1.60			1.69
Depreciation, depletion and amortization	0.30			0.29									0.37			0.35
Noncash and other costs, net	0.08			0.09									0.07			0.07
Total unit costs	1.98			2.09									2.04			2.11
Revenue adjustments, primarily for pricing
on prior period open sales	0.10			0.10									(0.06		)	(0.06		)
Gross profit per pound	$	1.29		$	1.18								$	1.00		$	0.93

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization						Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	1,059		$	515		$	95					$	909		$	458		$	102
Treatment charges	(55		)	—			—						(43		)	—			—
Royalty on metals	(3		)	—			—						(1		)	—			—
Noncash and other costs, net	—			23			—						—			18			—
Revenue adjustments, primarily for pricing on prior period open sales	32			—			—						(15		)	—			—
Eliminations and other	(2		)	(8		)	—						(3		)	(5		)	—
South America mining	1,031			530			95						847			471			102
Other mining & eliminations^c	3,255			2,224			299
Other mining & eliminations^b													3,859			2,409			336
Total mining	4,286			2,754			394						4,706			2,880			438
U.S. oil & gas operations	1,236			329			616						990			273			812			^c
Corporate, other & eliminations	—			(1		)	3						—			(1		)	3
As reported in FCX’s consolidated financial statements	$	5,522		$	3,082		$	1,013					$	5,696		$	3,152		$	1,253		^c


a.	Includes gold sales of 2016 thousand ounces ($~~1,302~~1,234 per ounce average realized price) and silver sales of ~~748~~684 thousand ounces ($~~18.83~~18.57 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.


b.	~~Represents royalties under Cerro Verde's current stability agreement.~~


c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10.


c.	Includes impairment of oil and gas properties of $308 million.

7071

Table of Contents

South America Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued)


Three Months Ended June 30, 2013
Three Months Ended September 30, 2013
(In millions)	By-Product			Co-Product Method									By-Product			Co-Product Method
	Method			Copper			Other			Total			Method			Copper			Other			Total
Revenues, excluding adjustments	$	986		$	986		$	80	^a	$	1,066		$	1,065		$	1,065		$	79	^a	$	1,144
Site production and delivery, before net noncash and other costs shown below	511			472			45			517			483			453			35			488
By-product credits	(74		)	—			—			—			(74		)	—			—			—
Treatment charges	49			49			—			49			52			52			—			52
Net cash costs	486			521			45			566			461			505			35			540
Depreciation, depletion and amortization	86			80			6			86			85			80			5			85
Noncash and other costs, net	7			(1		)	8			7			14			5			9			14
Total costs	579			600			59			659			560			590			49			639
Revenue adjustments, primarily for pricing on prior period open sales	(65		)	(65		)	—			(65		)	49			49			—			49
Gross profit	$	342		$	321		$	21		$	342		$	554		$	524		$	30		$	554

Copper sales (millions of recoverable pounds)	315			315									323			323

Gross profit per pound of copper:	Gross profit per pound of copper:												Gross profit per pound of copper:

Revenues, excluding adjustments	$	3.13		$	3.13								$	3.30		$	3.30
Site production and delivery, before net noncash and other costs shown below	1.62			1.50									1.49			1.40
By-product credits	(0.24		)	—									(0.22		)	—
Treatment charges	0.16			0.16									0.16			0.16
Unit net cash costs	1.54			1.66									1.43			1.56
Depreciation, depletion and amortization	0.27			0.25									0.26			0.25
Noncash and other costs, net	0.02			(0.01		)							0.05			0.02
Total unit costs	1.83			1.90									1.74			1.83
Revenue adjustments, primarily for pricing
on prior period open sales	(0.21		)	(0.21		)							0.15			0.15
Gross profit per pound	$	1.09		$	1.02								$	1.71		$	1.62

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization						Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	1,066		$	517		$	86					$	1,144		$	488		$	85
Treatment charges	(49		)	—			—						(52		)	—			—
Noncash and other costs, net	—			7			—						—			14			—
Revenue adjustments, primarily for pricing on prior period open sales	(65		)	—			—						49			—			—
Eliminations and other	(1		)	(8		)	—						(2		)	(8		)	—
South America mining	951			516			86						1,139			494			85
Other mining & eliminations^b	3,000			2,243			272						3,850			2,548			268
Total mining	3,951			2,759			358						4,989			3,042			353
U.S. oil & gas operations	336			89			169						1,176			288			563
Corporate, other & eliminations	1			5			3						—			2			3
As reported in FCX’s consolidated financial statements	$	4,288		$	2,853		$	530					$	6,165		$	3,332		$	919


a.	Includes gold sales of 2126 thousand ounces ($~~1,317~~1,335 per ounce average realized price) and silver sales of ~~809~~841 thousand ounces ($~~20.40~~15.20 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.


b.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10.

7172

Table of Contents

South America Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued)



Six Months Ended June 30, 2014
Nine Months Ended September 30, 2014
(In millions)	By-Product			Co-Product Method										By-Product			Co-Product Method
	Method			Copper			Other				Total			Method			Copper			Other				Total
Revenues, excluding adjustments	$	1,951		$	1,951		$	159		^a	$	2,110		$	2,775		$	2,775		$	227		^a	$	3,002
Site production and delivery, before net noncash and other costs shown below	972			900			81				981			1,424			1,315			124				1,439
By-product credits	(150		)	—			—				—			(212		)	—			—				—
Treatment charges	108			108			—				108			151			151			—				151
Royalty on metals^b	3			3			—				3
Royalty on metals														4			4			—				4
Net cash costs	933			1,011			81				1,092			1,367			1,470			124				1,594
Depreciation, depletion and amortization	182			170			12				182			284			266			18				284
Noncash and other costs, net	40			45			(5		)		40			57			64			(7		)		57
Total costs	1,155			1,226			88				1,314			1,708			1,800			135				1,935
Revenue adjustments, primarily for pricing on prior period open sales	(67		)	(67		)	—				(67		)	(66		)	(66		)	—				(66		)
Gross profit	$	729		$	658		$	71			$	729		$	1,001		$	909		$	92			$	1,001

Copper sales (millions of recoverable pounds)	617			617										888			888

Gross profit per pound of copper:	Gross profit per pound of copper:													Gross profit per pound of copper:

Revenues, excluding adjustments	$	3.16		$	3.16									$	3.12		$	3.12

Site production and delivery, before net noncash
and other costs shown below	1.57			1.46										1.61			1.48
By-product credits	(0.24		)	—										(0.24		)	—
Treatment charges	0.18			0.18										0.17			0.17
Royalty on metals^b	—			—
Royalty on metals														—			—
Unit net cash costs	1.51			1.64										1.54			1.65
Depreciation, depletion and amortization	0.29			0.28										0.32			0.30
Noncash and other costs, net	0.07			0.07										0.06			0.08
Total unit costs	1.87			1.99										1.92			2.03
Revenue adjustments, primarily for pricing
on prior period open sales	(0.11		)	(0.11		)								(0.07		)	(0.07		)
Gross profit per pound	$	1.18		$	1.06									$	1.13		$	1.02

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization							Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	2,110		$	981		$	182						$	3,002		$	1,439		$	284
Treatment charges	(108		)	—			—							(151		)	—			—
Royalty on metals	(3		)	—			—							(4		)	—			—
Noncash and other costs, net	—			40			—							—			57			—
Revenue adjustments, primarily for pricing on prior period open sales	(67		)	—			—							(66		)	—			—
Eliminations and other	(3		)	(15		)	—							(5		)	(19		)	—
South America mining	1,929			1,006			182							2,776			1,477			284
Other mining & eliminations^c	6,081			4,174			558
Other mining & eliminations^b														9,940			6,583			894
Total mining	8,010			5,180			740							12,716			8,060			1,178
U.S. oil & gas operations	2,497			640			1,232							3,487			913			2,044			^c
Corporate, other & eliminations	—			(1		)	7							—			(2		)	10
As reported in FCX’s consolidated financial statements	$	10,507		$	5,819		$	1,979						$	16,203		$	8,971		$	3,232		^c


a.	Includes gold sales of 4359 thousand ounces ($~~1,302~~1,280 per ounce average realized price) and silver sales of ~~1.5~~2.2 million ounces ($~~19.34~~19.10 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.


b.	~~Represents royalties under Cerro Verde's current stability agreement.~~


c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10.


c.	Includes impairment of oil and gas properties of $308 million.

7273

Table of Contents

South America Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued)



Six Months Ended June 30, 2013
Nine Months Ended September 30, 2013
(In millions)	By-Product			Co-Product Method									By-Product			Co-Product Method
	Method			Copper			Other			Total			Method			Copper			Other			Total
Revenues, excluding adjustments	$	1,929		$	1,929		$	166	^a	$	2,095		$	3,042		$	3,042		$	245	^a	$	3,287
Site production and delivery, before net noncash and other costs shown below	973			897			86			983			1,453			1,349			119			1,468
By-product credits	(156		)	—			—			—			(230		)	—			—			—
Treatment charges	99			99			—			99			151			151			—			151
Net cash costs	916			996			86			1,082			1,374			1,500			119			1,619
Depreciation, depletion and amortization	156			147			9			156			242			228			14			242
Noncash and other costs, net	22			6			16			22			38			11			27			38
Total costs	1,094			1,149			111			1,260			1,654			1,739			160			1,899
Revenue adjustments, primarily for pricing on prior period open sales	(29		)	(29		)	—			(29		)	(29		)	(29		)	—			(29		)
Gross profit	$	806		$	751		$	55		$	806		$	1,359		$	1,274		$	85		$	1,359

Copper sales (millions of recoverable pounds)	600			600									923			923

Gross profit per pound of copper:	Gross profit per pound of copper:												Gross profit per pound of copper:

Revenues, excluding adjustments	$	3.22		$	3.22								$	3.30		$	3.30

Site production and delivery, before net noncash
and other costs shown below	1.62			1.50									1.57			1.46
By-product credits	(0.26		)	—									(0.25		)	—
Treatment charges	0.17			0.16									0.17			0.17
Unit net cash costs	1.53			1.66									1.49			1.63
Depreciation, depletion and amortization	0.26			0.25									0.26			0.24
Noncash and other costs, net	0.04			0.01									0.04			0.01
Total unit costs	1.83			1.92									1.79			1.88
Revenue adjustments, primarily for pricing
on prior period open sales	(0.05		)	(0.05		)							(0.04		)	(0.04		)
Gross profit per pound	$	1.34		$	1.25								$	1.47		$	1.38

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization						Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	2,095		$	983		$	156					$	3,287		$	1,468		$	242
Treatment charges	(99		)	—			—						(151		)	—			—
Noncash and other costs, net	—			22			—						—			38			—
Revenue adjustments, primarily for pricing on prior period open sales	(29		)	—			—						(29		)	—			—
Eliminations and other	(2		)	(14		)	1						(3		)	(21		)	—
South America mining	1,965			991			157						3,104			1,485			242
Other mining & eliminations^b	6,567			4,484			528						10,417			7,032			796
Total mining	8,532			5,475			685						13,521			8,517			1,038
U.S. oil & gas operations	336			89			169						1,512			377			732
Corporate, other & eliminations	3			8			5						3			10			8
As reported in FCX’s consolidated financial statements	$	8,871		$	5,572		$	859					$	15,036		$	8,904		$	1,778


a.	Includes gold sales of 4268 thousand ounces ($~~1,449~~1,415 per ounce average realized price) and silver sales of ~~1.8~~2.6 million ounces ($~~25.93~~22.51 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.


b.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10.

7374

Table of Contents

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs


Three Months Ended June 30, 2014
Three Months Ended September 30, 2014
(In millions)	By-Product				Co-Product Method													By-Product			Co-Product Method
	Method				Copper			Gold			Silver				Total			Method			Copper			Gold				Silver			Total
Revenues, excluding adjustments	$	372			$	372		$	176		$	7		^a	$	555		$	786		$	786		$	615			$	15	^a	$	1,416
Site production and delivery, before net noncash and other costs shown below	451				303			142			6				451			624			346			271				7			624
Gold and silver credits	(184		)		—			—			—				—			(629		)	—			—				—			—
Treatment charges	30				20			10			—				30			65			36			28				1			65
Export duties																		42			23			18				1			42
Royalty on metals	14				9			5			—				14			52			29			23				—			52
Net cash costs	311				332			157			6				495			154			434			340				9			783
Depreciation and amortization	54				36			17			1				54			92			51			40				1			92
Noncash and other costs, net	64			^b	43			20			1				64			28			16			12				—			28
Total costs	429				411			194			8				613			274			501			392				10			903
Revenue adjustments, primarily for pricing on prior period open sales	11				11			1			—				12			(3		)	(3		)	(1		)		—			(4		)
PT Smelting intercompany profit	4				3			1			—				4
Gross loss	$	(42	)		$	(25	)	$	(16	)	$	(1	)		$	(42	)
PT Smelting intercompany loss																		(48		)	(27		)	(21		)		—			(48		)
Gross profit																		$	461		$	255		$	201			$	5		$	461

Copper sales (millions of recoverable pounds)	117				117													258			258
Gold sales (thousands of recoverable ounces)								135																505

Gross profit per pound of copper/per ounce of gold:	Gross profit per pound of copper/per ounce of gold:																	Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments	$	3.19			$	3.19		$	1,294									$	3.05		$	3.05		$	1,219
Site production and delivery, before net noncash and other costs shown below	3.86				2.59			1,050										2.42			1.34			537
Gold and silver credits	(1.57		)		—			—										(2.44		)	—			—
Treatment charges	0.26				0.17			70										0.25			0.14			56
Export duties																		0.16			0.09			36
Royalty on metals	0.11				0.08			31										0.21			0.12			45
Unit net cash costs	2.66				2.84			1,151										0.60			1.69			674
Depreciation and amortization	0.47				0.31			127										0.35			0.20			79
Noncash and other costs, net	0.55			^b	0.37			151										0.11			0.06			24
Total unit costs	3.68				3.52			1,429										1.06			1.95			777
Revenue adjustments, primarily for pricing on
prior period open sales	0.09				0.09			5										(0.01		)	(0.01		)	(1		)
PT Smelting intercompany profit	0.03				0.02			9
Gross loss per pound/ounce	$	(0.37	)		$	(0.22	)	$	(121	)
PT Smelting intercompany loss																		(0.19		)	(0.10		)	(42		)
Gross profit per pound/ounce																		$	1.79		$	0.99		$	399

Reconciliation to Amounts Reported
(In millions)	Revenues				Production and Delivery			Depreciation, Depletion and Amortization										Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	555			$	451		$	54									$	1,416		$	624		$	92
Treatment charges	(30		)		—			—										(65		)	—			—
Export duties																		(42		)	—			—
Royalty on metals	(14		)		—			—										(52		)	—			—
Noncash and other costs, net	—				64			—										—			28			—
Revenue adjustments, primarily for pricing on prior period open sales	12				—			—										(4		)	—			—
PT Smelting intercompany profit	—				(4		)	—
PT Smelting intercompany loss																		—			48			—
Indonesia mining	523				511			54										1,253			700			92
Other mining & eliminations^c	3,763				2,243			340
Other mining & eliminations^b																		3,453			2,180			346
Total mining	4,286				2,754			394										4,706			2,880			438
U.S. oil & gas operations	1,236				329			616										990			273			812			^c
Corporate, other & eliminations	—				(1		)	3										—			(1		)	3
As reported in FCX’s consolidated financial statements	$	5,522			$	3,082		$	1,013									$	5,696		$	3,152		$	1,253		^c


a.	Includes silver sales of ~~367~~889 thousand ounces (~~$19.67~~($17.11 per ounce average realized price).


b.	~~Includes $56 million ($0.48 per pound) of fixed costs charged directly to cost of sales as a result of the impact of export restrictions on PT-FI's operating rates.~~


c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10.

~~Table of Contents~~

~~Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued)~~

Three Months Ended June 30, 2013
(In millions) By-Product Co-Product Method
Method Copper Gold Silver Total
Revenues, excluding adjustments $ 487
$ 487
$ 199
$ 9
^a
$ 695
Site production and delivery, before net noncash and other costs shown below 561
393
161
7
561
Gold and silver credits (190 ) —
—
—
—
Treatment charges 36
25
10
1
36
Royalty on metals 21
15
6
—
21
Net cash costs 428
433
177
8
618
Depreciation and amortization 58
41
16
1
58
Noncash and other costs, net 35
25
10
—
35
Total costs 521
499
203
9
711
Revenue adjustments, primarily for pricing on prior period open sales (29 ) (29 ) (17 ) (1 ) (47 )
PT Smelting intercompany profit 33
23
10
—
33
Gross loss $ (30 ) $ (18 ) $ (11 ) $ (1 ) $ (30 )

Copper sales (millions of recoverable pounds) 158
158

Gold sales (thousands of recoverable ounces) 151

Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments $ 3.08
$ 3.08
$ 1,321

Site production and delivery, before net noncash
and other costs shown below
3.55
2.49
1,066

Gold and silver credits (1.20 ) —
—

Treatment charges 0.23
0.16
69

Royalty on metals 0.13
0.09
39

Unit net cash costs 2.71
2.74
1,174

Depreciation and amortization 0.37
0.26
111

Noncash and other costs, net 0.22
0.15
67

Total unit costs 3.30
3.15
1,352

Revenue adjustments, primarily for pricing on
prior period open sales (0.18 ) (0.18 ) (110 )
PT Smelting intercompany profit 0.21
0.14
62

Gross loss per pound/ounce $ (0.19 ) $ (0.11 ) $ (79 )

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 695
$ 561
$ 58

Treatment charges (36 ) —
—

Royalty on metals (21 ) —
—

Noncash and other costs, net —
35
—

Revenue adjustments, primarily for pricing on prior period open sales (47 ) —
—

PT Smelting intercompany profit —
(33 ) —

Indonesia mining 591
563
58

Other mining & eliminations^b
3,360
2,196
300

Total mining 3,951
2,759
358

U.S. oil & gas operations 336
89
169

Corporate, other & eliminations 1
5
3

As reported in FCX’s consolidated financial statements $ 4,288
$ 2,853
$ 530


a.	~~Includes silver sales of~~ ~~452 thousand~~ ~~ounces ($20.04~~ ~~per ounce average realized price).~~ 10.


b.c.	~~Represents the combined total for all other mining operations~~Includes impairment of oil and ~~the related eliminations, as presented in Note~~gas properties of 10$308 million.

Table of Contents

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued)



Six Months Ended June 30, 2014
Three Months Ended September 30, 2013
(In millions)	By-Product				Co-Product Method											By-Product			Co-Product Method
	Method				Copper			Gold		Silver			Total			Method			Copper			Gold			Silver				Total
Revenues, excluding adjustments	$	713			$	713		$	386	$	14	^a	$	1,113		$	782		$	782		$	370		$	16		^a	$	1,168
Site production and delivery, before net noncash and other costs shown below	814				521			283		10			814			545			365			173			7				545
Gold and silver credits	(419		)		—			—		—			—			(391		)	—			—			—				—
Treatment charges	56				36			19		1			56			54			36			18			—				54
Royalty on metals	27				17			9		1			27			27			18			8			1				27
Net cash costs	478				574			311		12			897			235			419			199			8				626
Depreciation and amortization	102				65			36		1			102			60			40			19			1				60
Noncash and other costs, net	138			^b	88			48		2			138			36			24			11			1				36
Total costs	718				727			395		15			1,137			331			483			229			10				722
Revenue adjustments, primarily for pricing on prior period open sales	(56		)		(56		)	18		1			(37		)	19			19			4			1				24
PT Smelting intercompany profit	58				37			20		1			58
Gross (loss) profit	$	(3	)		$	(33	)	$	29	$	1		$	(3	)
PT Smelting intercompany loss																(36		)	(24		)	(11		)	(1		)		(36		)
Gross profit																$	434		$	294		$	134		$	6			$	434

Copper sales (millions of recoverable pounds)	226				226											237			237
Gold sales (thousands of recoverable ounces)								297														278

Gross profit per pound of copper/per ounce of gold:	Gross profit per pound of copper/per ounce of gold:															Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments	$	3.15			$	3.15		$	1,299							$	3.30		$	3.30		$	1,330

Site production and delivery, before net noncash
and other costs shown below	3.60				2.31			950
Site production and delivery, before net noncash and other costs shown below																2.30			1.54			621
Gold and silver credits	(1.85		)		—			—								(1.65		)	—			—
Treatment charges	0.25				0.16			65								0.23			0.15			62
Royalty on metals	0.12				0.07			31								0.11			0.08			31
Unit net cash costs	2.12				2.54			1,046								0.99			1.77			714
Depreciation and amortization	0.45				0.29			120								0.25			0.17			68
Noncash and other costs, net	0.61			^b	0.39			161								0.15			0.10			40
Total unit costs	3.18				3.22			1,327								1.39			2.04			822
Revenue adjustments, primarily for pricing on
prior period open sales	(0.24		)		(0.24		)	59								0.08			0.08			17
PT Smelting intercompany profit	0.26				0.16			68
Gross (loss) profit per pound/ounce	$	(0.01	)		$	(0.15	)	$	99
PT Smelting intercompany loss																(0.15		)	(0.10		)	(41		)
Gross profit per pound/ounce																$	1.84		$	1.24		$	484

Reconciliation to Amounts Reported
(In millions)	Revenues				Production and Delivery			Depreciation, Depletion and Amortization								Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	1,113			$	814		$	102							$	1,168		$	545		$	60
Treatment charges	(56		)		—			—								(54		)	—			—
Royalty on metals	(27		)		—			—								(27		)	—			—
Noncash and other costs, net	—				138			—								—			36			—
Revenue adjustments, primarily for pricing on prior period open sales	(37		)		—			—								24			—			—
PT Smelting intercompany profit	—				(58		)	—
PT Smelting intercompany loss																—			36			—
Indonesia mining	993				894			102								1,111			617			60
Other mining & eliminations^c	7,017				4,286			638
Other mining & eliminations^b																3,878			2,425			293
Total mining	8,010				5,180			740								4,989			3,042			353
U.S. oil & gas operations	2,497				640			1,232								1,176			288			563
Corporate, other & eliminations	—				(1		)	7								—			2			3
As reported in FCX’s consolidated financial statements	$	10,507			$	5,819		$	1,979							$	6,165		$	3,332		$	919


a.	Includes silver sales of ~~700~~761 thousand ounces ~~($19.84~~($21.46 per ounce average realized price).


b.	~~Includes $109 million ($0.48 per pound) of fixed costs charged directly to cost of sales as a result of the impact of export restrictions on PT-FI's operating rates.~~


c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10.

Table of Contents

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued)



Six Months Ended June 30, 2013
Nine Months Ended September 30, 2014
(In millions)	By-Product			Co-Product Method												By-Product				Co-Product Method
	Method			Copper			Gold			Silver			Total			Method				Copper			Gold			Silver			Total
Revenues, excluding adjustments	$	1,137		$	1,137		$	490		$	24	^a	$	1,651		$	1,495			$	1,495		$	1,001		$	29	^a	$	2,525
Site production and delivery, before net noncash and other costs shown below	1,077			742			319			16			1,077			1,404				831			557			16			1,404
Gold and silver credits	(512		)	—			—			—			—			(1,048		)		—			—			—			—
Treatment charges	81			56			24			1			81			121				72			48			1			121
Export duties																42				25			16			1			42
Royalty on metals	47			33			14			—			47			79				47			31			1			79
Net cash costs	693			831			357			17			1,205			598				975			652			19			1,646
Depreciation and amortization	113			78			33			2			113			194				115			77			2			194
Noncash and other costs, net	87			60			26			1			87			200			^b	118			80			2			200
Total costs	893			969			416			20			1,405			992				1,208			809			23			2,040
Revenue adjustments, primarily for pricing on prior period open sales	1			1			(2		)	—			(1		)	(55		)		(55		)	18			—			(37		)
PT Smelting intercompany profit	38			26			11			1			38			10				6			4			—			10
Gross profit	$	283		$	195		$	83		$	5		$	283		$	458			$	238		$	214		$	6		$	458

Copper sales (millions of recoverable pounds)	356			356												484				484
Gold sales (thousands of recoverable ounces)							342																802

Gross profit per pound of copper/per ounce of gold:	Gross profit per pound of copper/per ounce of gold:															Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments	$	3.20		$	3.20		$	1,431								$	3.09			$	3.09		$	1,248

Site production and delivery, before net noncash
and other costs shown below	3.03			2.08			934									2.90				1.72			694
Gold and silver credits	(1.44		)	—			—									(2.16		)		—			—
Treatment charges	0.23			0.16			70									0.25				0.15			60
Export duties																0.09				0.05			21
Royalty on metals	0.13			0.09			41									0.16				0.09			39
Unit net cash costs	1.95			2.33			1,045									1.24				2.01			814
Depreciation and amortization	0.32			0.22			98									0.40				0.24			96
Noncash and other costs, net	0.24			0.17			76									0.41			^b	0.25			98
Total unit costs	2.51			2.72			1,219									2.05				2.50			1,008
Revenue adjustments, primarily for pricing on
prior period open sales	—			—			(4		)							(0.11		)		(0.11		)	22
PT Smelting intercompany profit	0.10			0.07			33									0.02				0.01			5
Gross profit per pound/ounce	$	0.79		$	0.55		$	241								$	0.95			$	0.49		$	267

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization									Revenues				Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	1,651		$	1,077		$	113								$	2,525			$	1,404		$	194
Treatment charges	(81		)	—			—									(121		)		—			—
Export duties																(42		)		—			—
Royalty on metals	(47		)	—			—									(79		)		—			—
Noncash and other costs, net	—			87			—									—				200			—
Revenue adjustments, primarily for pricing on prior period open sales	(1		)	—			—									(37		)		—			—
PT Smelting intercompany profit	—			(38		)	—									—				(10		)	—
Indonesia mining	1,522			1,126			113									2,246				1,594			194
Other mining & eliminations^b	7,010			4,349			572
Other mining & eliminations^c																10,470				6,466			984
Total mining	8,532			5,475			685									12,716				8,060			1,178
U.S. oil & gas operations	336			89			169									3,487				913			2,044		^d
Corporate, other & eliminations	3			8			5									—				(2		)	10
As reported in FCX’s consolidated financial statements	$	8,871		$	5,572		$	859								$	16,203			$	8,971		$	3,232	^d


a.	Includes silver sales of ~~1.0~~1.6 million ounces ($~~23.19~~18.21 per ounce average realized price).


b.	Includes $143 million ($0.30 per pound) of fixed costs charged directly to cost of sales as a result of the impact of export restrictions on PT-FI's operating rates.


c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10.


d.	Includes impairment of oil and gas properties of $308 million.

Table of Contents

Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued)




Nine Months Ended September 30, 2013
(In millions)	By-Product			Co-Product Method
	Method			Copper			Gold			Silver			Total
Revenues, excluding adjustments	$	1,938		$	1,938		$	864		$	40	^a	$	2,842
Site production and delivery, before net noncash and other costs shown below	1,623			1,107			493			23			1,623
Gold and silver credits	(903		)	—			—			—			—
Treatment charges	135			92			41			2			135
Royalty on metals	74			50			23			1			74
Net cash costs	929			1,249			557			26			1,832
Depreciation and amortization	173			118			53			2			173
Noncash and other costs, net	123			84			37			2			123
Total costs	1,225			1,451			647			30			2,128
Revenue adjustments, primarily for pricing on prior period open sales	1			1			(1		)	—			—
PT Smelting intercompany profit	3			2			1			—			3
Gross profit	$	717		$	490		$	217		$	10		$	717

Copper sales (millions of recoverable pounds)	593			593
Gold sales (thousands of recoverable ounces)							620

Gross profit per pound of copper/per ounce of gold:

Revenues, excluding adjustments	$	3.27		$	3.27		$	1,393
Site production and delivery, before net noncash
and other costs shown below	2.74			1.87			795
Gold and silver credits	(1.52		)	—			—
Treatment charges	0.23			0.16			67
Royalty on metals	0.12			0.08			36
Unit net cash costs	1.57			2.11			898
Depreciation and amortization	0.29			0.20			85
Noncash and other costs, net	0.21			0.14			60
Total unit costs	2.07			2.45			1,043
Revenue adjustments, primarily for pricing on
prior period open sales	—			—			(2		)
PT Smelting intercompany profit	0.01			0.01			1
Gross profit per pound/ounce	$	1.21		$	0.83		$	349

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	2,842		$	1,623		$	173
Treatment charges	(135		)	—			—
Royalty on metals	(74		)	—			—
Noncash and other costs, net	—			123			—
Revenue adjustments, primarily for pricing on prior period open sales	—			—			—
PT Smelting intercompany profit	—			(3		)	—
Indonesia mining	2,633			1,743			173
Other mining & eliminations^b	10,888			6,774			865
Total mining	13,521			8,517			1,038
U.S. oil & gas operations	1,512			377			732
Corporate, other & eliminations	3			10			8
As reported in FCX’s consolidated financial statements	$	15,036		$	8,904		$	1,778


a.	Includes silver sales of 1.8 million ounces ($22.55 per ounce average realized price).


b.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10.

7778

Table of Contents

Africa Mining Product Revenues, Production Costs and Unit Net Cash Costs


Three Months Ended June 30, 2014
Three Months Ended September 30, 2014
(In millions)	By-Product			Co-Product Method									By-Product			Co-Product Method
	Method			Copper			Cobalt			Total			Method			Copper			Cobalt			Total
Revenues, excluding adjustments^a	$	362		$	362		$	65		$	427		$	350		$	350		$	82		$	432
Site production and delivery, before net noncash and other costs shown below	171			159			35			194			181			158			44			202
Cobalt credits^b	(41		)	—			—			—			(64		)	—			—			—
Royalty on metals	8			7			1			8			8			6			2			8
Net cash costs	138			166			36			202			125			164			46			210
Depreciation, depletion and amortization	63			54			9			63			58			49			9			58
Noncash and other costs, net	4			3			1			4			4			4			—			4
Total costs	205			223			46			269			187			217			55			272
Revenue adjustments, primarily for pricing on prior period open sales	—			—			(1		)	(1		)	1			1			3			4
Gross profit	$	157		$	139		$	18		$	157		$	164		$	134		$	30		$	164

Copper sales (millions of recoverable pounds)	118			118									112			112
Cobalt sales (millions of contained pounds)							7												8

Gross profit per pound of copper/cobalt:	Gross profit per pound of copper/cobalt:												Gross profit per pound of copper/cobalt:

Revenues, excluding adjustments^a	$	3.08		$	3.08		$	9.58					$	3.11		$	3.11		$	9.99
Site production and delivery, before net noncash and other costs shown below	1.46			1.35			5.22						1.61			1.40			5.32
Cobalt credits^b	(0.34		)	—			—						(0.58		)	—			—
Royalty on metals	0.06			0.06			0.15						0.07			0.06			0.18
Unit net cash costs	1.18			1.41			5.37						1.10			1.46			5.50
Depreciation, depletion and amortization	0.54			0.46			1.30						0.51			0.43			1.06
Noncash and other costs, net	0.03			0.03			0.08						0.05			0.04			0.10
Total unit costs	1.75			1.90			6.75						1.66			1.93			6.66
Revenue adjustments, primarily for pricing
on prior period open sales	—			—			(0.19		)				0.01			0.01			0.39
Gross profit per pound	$	1.33		$	1.18		$	2.64					$	1.46		$	1.19		$	3.72

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization						Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	427		$	194		$	63					$	432		$	202		$	58
Royalty on metals	(8		)	—			—						(8		)	—			—
Noncash and other costs, net	—			4			—						—			4			—
Revenue adjustments, primarily for pricing on prior period open sales	(1		)	—			—						4			—			—
Africa mining	418			198			63						428			206			58
Other mining & eliminations^c	3,868			2,556			331						4,278			2,674			380
Total mining	4,286			2,754			394						4,706			2,880			438
U.S. oil & gas operations	1,236			329			616						990			273			812		^d
Corporate, other & eliminations	—			(1		)	3						—			(1		)	3
As reported in FCX’s consolidated financial statements	$	5,522		$	3,082		$	1,013					$	5,696		$	3,152		$	1,253	^d


a.	Includes point-of-sale transportation costs as negotiated in customer contracts.


b.	Net of cobalt downstream processing and freight costs.


c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10.


d.	Includes impairment of oil and gas properties of $308 million.

Table of Contents

Africa Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued)



Three Months Ended September 30, 2013
(In millions)	By-Product			Co-Product Method
	Method			Copper		Cobalt			Total
Revenues, excluding adjustments^a	$	374		$	374	$	53		$	427
Site production and delivery, before net noncash and other costs shown below	168			162		25			187
Cobalt credits^b	(32		)	—		—			—
Royalty on metals	8			7		1			8
Net cash costs	144			169		26			195
Depreciation, depletion and amortization	64			56		8			64
Noncash and other costs, net	3			2		1			3
Total costs	211			227		35			262
Revenue adjustments, primarily for pricing on prior period open sales	3			3		(2		)	1
Gross profit	$	166		$	150	$	16		$	166

Copper sales (millions of recoverable pounds)	118			118
Cobalt sales (millions of contained pounds)						6

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustments^a	$	3.19		$	3.19	$	8.57
Site production and delivery, before net noncash and other costs shown below	1.43			1.38		4.14
Cobalt credits^b	(0.27		)	—		—
Royalty on metals	0.07			0.06		0.13
Unit net cash costs	1.23			1.44		4.27
Depreciation, depletion and amortization	0.55			0.48		1.37
Noncash and other costs, net	0.02			0.02		0.06
Total unit costs	1.80			1.94		5.70
Revenue adjustments, primarily for pricing
on prior period open sales	0.03			0.03		(0.27		)
Gross profit per pound	$	1.42		$	1.28	$	2.60

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery		Depreciation, Depletion and Amortization
Totals presented above	$	427		$	187	$	64
Royalty on metals	(8		)	—		—
Noncash and other costs, net	—			3		—
Revenue adjustments, primarily for pricing on prior period open sales	1			—		—
Africa mining	420			190		64
Other mining & eliminations^c	4,569			2,852		289
Total mining	4,989			3,042		353
U.S. oil & gas operations	1,176			288		563
Corporate, other & eliminations	—			2		3
As reported in FCX’s consolidated financial statements	$	6,165		$	3,332	$	919


a.	Includes point-of-sale transportation costs as negotiated in customer contracts.


b.	Net of cobalt downstream processing and freight costs.


c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10.

Table of Contents

Africa Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued)




Nine Months Ended September 30, 2014
(In millions)	By-Product			Co-Product Method
	Method			Copper			Cobalt			Total
Revenues, excluding adjustments^a	$	972		$	972		$	222		$	1,194
Site production and delivery, before net noncash and other costs shown below	477			420			120			540
Cobalt credits^b	(161		)	—			—			—
Royalty on metals	22			18			4			22
Net cash costs	338			438			124			562
Depreciation, depletion and amortization	172			148			24			172
Noncash and other costs, net	16			14			2			16
Total costs	526			600			150			750
Revenue adjustments, primarily for pricing on prior period open sales	(1		)	(1		)	2			1
Gross profit	$	445		$	371		$	74		$	445

Copper sales (millions of recoverable pounds)	314			314
Cobalt sales (millions of contained pounds)							23

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustments^a	$	3.09		$	3.09		$	9.68
Site production and delivery, before net noncash
and other costs shown below	1.51			1.33			5.24
Cobalt credits^b	(0.51		)	—			—
Royalty on metals	0.07			0.06			0.16
Unit net cash costs	1.07			1.39			5.40
Depreciation, depletion and amortization	0.55			0.47			1.04
Noncash and other costs, net	0.05			0.05			0.10
Total unit costs	1.67			1.91			6.54
Revenue adjustments, primarily for pricing
on prior period open sales	—			—			0.09
Gross profit per pound	$	1.42		$	1.18		$	3.23

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	1,194		$	540		$	172
Royalty on metals	(22		)	—			—
Noncash and other costs, net	—			16			—
Revenue adjustments, primarily for pricing on prior period open sales	1			—			—
Africa mining	1,173			556			172
Other mining & eliminations^c	11,543			7,504			1,006
Total mining	12,716			8,060			1,178
U.S. oil & gas operations	3,487			913			2,044		^d
Corporate, other & eliminations	—			(2		)	10
As reported in FCX’s consolidated financial statements	$	16,203		$	8,971		$	3,232	^d


a.	Includes point-of-sale transportation costs as negotiated in customer contracts.


b.	Net of cobalt downstream processing and freight costs.


c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10.


d.	Includes impairment of oil and gas properties of $308 million.

Table of Contents

Africa Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued)




Nine Months Ended September 30, 2013
(In millions)	By-Product			Co-Product Method
	Method			Copper		Cobalt		Total
Revenues, excluding adjustments^a	$	1,101		$	1,101	$	140	$	1,241
Site production and delivery, before net noncash and other costs shown below	488			465		76		541
Cobalt credits^b	(90		)	—		—		—
Royalty on metals	23			20		3		23
Net cash costs	421			485		79		564
Depreciation, depletion and amortization	179			163		16		179
Noncash and other costs, net	19			17		2		19
Total costs	619			665		97		762
Revenue adjustments, primarily for pricing on prior period open sales	2			2		3		5
Gross profit	$	484		$	438	$	46	$	484

Copper sales (millions of recoverable pounds)	342			342
Cobalt sales (millions of contained pounds)						17

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustments^a	$	3.22		$	3.22	$	8.10
Site production and delivery, before net noncash
and other costs shown below	1.43			1.36		4.40
Cobalt credits^b	(0.26		)	—		—
Royalty on metals	0.06			0.06		0.14
Unit net cash costs	1.23			1.42		4.54
Depreciation, depletion and amortization	0.52			0.48		0.97
Noncash and other costs, net	0.06			0.05		0.09
Total unit costs	1.81			1.95		5.60
Revenue adjustments, primarily for pricing
on prior period open sales	0.01			0.01		0.14
Gross profit per pound	$	1.42		$	1.28	$	2.64

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery		Depreciation, Depletion and Amortization
Totals presented above	$	1,241		$	541	$	179
Royalty on metals	(23		)	—		—
Noncash and other costs, net	—			19		—
Revenue adjustments, primarily for pricing on prior period open sales	5			—		—
Africa mining	1,223			560		179
Other mining & eliminations^c	12,298			7,957		859
Total mining	13,521			8,517		1,038
U.S. oil & gas operations	1,512			377		732
Corporate, other & eliminations	3			10		8
As reported in FCX’s consolidated financial statements	$	15,036		$	8,904	$	1,778


a.	Includes point-of-sale transportation costs as negotiated in customer contracts.


b.	Net of cobalt downstream processing and freight costs.


c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10.

~~Table of Contents~~

~~Africa Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued)~~

Three Months Ended June 30, 2013
(In millions) By-Product Co-Product Method
Method Copper Cobalt Total
Revenues, excluding adjustments^a
$ 330
$ 330
$ 47
$ 377
Site production and delivery, before net noncash and other costs shown below 156
146
27
173
Cobalt credits^b
(31 ) —
—
—
Royalty on metals 6
5
1
6
Net cash costs 131
151
28
179
Depreciation, depletion and amortization 57
52
5
57
Noncash and other costs, net 12
11
1
12
Total costs 200
214
34
248
Revenue adjustments, primarily for pricing on prior period open sales (7 ) (8 ) 2
(6 )
Gross profit $ 123
$ 108
$ 15
$ 123

Copper sales (millions of recoverable pounds) 106
106

Cobalt sales (millions of contained pounds) 5

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustments^a
$ 3.10
$ 3.10
$ 8.48

Site production and delivery, before net noncash
and other costs shown below
1.47
1.37
4.92

Cobalt credits^b
(0.30 ) —
—

Royalty on metals 0.06
0.05
0.15

Unit net cash costs 1.23
1.42
5.07

Depreciation, depletion and amortization 0.53
0.49
0.80

Noncash and other costs, net 0.11
0.10
0.17

Total unit costs 1.87
2.01
6.04

Revenue adjustments, primarily for pricing
on prior period open sales (0.07 ) (0.07 ) 0.27

Gross profit per pound $ 1.16
$ 1.02
$ 2.71

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 377
$ 173
$ 57

Royalty on metals (6 ) —
—

Noncash and other costs, net —
12
—

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

Africa mining 365
185
57

Other mining & eliminations^c
3,586
2,574
301

Total mining 3,951
2,759
358

U.S. oil & gas operations 336
89
169

Corporate, other & eliminations 1
5
3

As reported in FCX’s consolidated financial statements $ 4,288
$ 2,853
$ 530


a.	~~Includes point-of-sale transportation costs as negotiated in customer contracts.~~


b.	~~Net of cobalt downstream processing and freight costs.~~


c.	~~Represents the combined total for all other mining operations and the related eliminations, as presented in Note~~ 10.

~~Table of Contents~~

~~Africa Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued)~~

Six Months Ended June 30, 2014
(In millions) By-Product Co-Product Method
Method Copper Cobalt Total
Revenues, excluding adjustments^a
$ 621
$ 621
$ 137
$ 758
Site production and delivery, before net noncash and other costs shown below 296
262
77
339
Cobalt credits^b
(96 ) —
—
—
Royalty on metals 14
12
2
14
Net cash costs 214
274
79
353
Depreciation, depletion and amortization 114
99
15
114
Noncash and other costs, net 11
10
1
11
Total costs 339
383
95
478
Revenue adjustments, primarily for pricing on prior period open sales (1 ) (1 ) 2
1
Gross profit $ 281
$ 237
$ 44
$ 281

Copper sales (millions of recoverable pounds) 202
202

Cobalt sales (millions of contained pounds) 15

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustments^a
$ 3.08
$ 3.08
$ 9.29

Site production and delivery, before net noncash
and other costs shown below 1.47
1.30
5.19

Cobalt credits^b
(0.48 ) —
—

Royalty on metals 0.07
0.06
0.16

Unit net cash costs 1.06
1.36
5.35

Depreciation, depletion and amortization 0.57
0.49
1.03

Noncash and other costs, net 0.05
0.04
0.09

Total unit costs 1.68
1.89
6.47

Revenue adjustments, primarily for pricing
on prior period open sales (0.01 ) (0.01 ) 0.13

Gross profit per pound $ 1.39
$ 1.18
$ 2.95

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 758
$ 339
$ 114

Royalty on metals (14 ) —
—

Noncash and other costs, net —
11
—

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

Africa mining 745
350
114

Other mining & eliminations^c
7,265
4,830
626

Total mining 8,010
5,180
740

U.S. oil & gas operations 2,497
640
1,232

Corporate, other & eliminations —
(1 ) 7

As reported in FCX’s consolidated financial statements $ 10,507
$ 5,819
$ 1,979


a.	~~Includes point-of-sale transportation costs as negotiated in customer contracts.~~


b.	~~Net of cobalt downstream processing and freight costs.~~


c.	~~Represents the combined total for all other mining operations and the related eliminations, as presented in Note~~ 10

~~Table of Contents~~

~~Africa Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued)~~

Six Months Ended June 30, 2013
(In millions) By-Product Co-Product Method
Method Copper Cobalt Total
Revenues, excluding adjustments^a
$ 724
$ 724
$ 89
$ 813
Site production and delivery, before net noncash and other costs shown below 321
303
51
354
Cobalt credits^b
(58 ) —
—
—
Royalty on metals 14
13
1
14
Net cash costs 277
316
52
368
Depreciation, depletion and amortization 115
107
8
115
Noncash and other costs, net 16
15
1
16
Total costs 408
438
61
499
Revenue adjustments, primarily for pricing on prior period open sales 2
2
2
4
Gross profit $ 318
$ 288
$ 30
$ 318

Copper sales (millions of recoverable pounds) 224
224

Cobalt sales (millions of contained pounds) 11

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustments^a
$ 3.22
$ 3.22
$ 7.99

Site production and delivery, before net noncash
and other costs shown below 1.43
1.35
4.54

Cobalt credits^b
(0.26 ) —
—

Royalty on metals 0.06
0.06
0.14

Unit net cash costs 1.23
1.41
4.68

Depreciation, depletion and amortization 0.51
0.47
0.75

Noncash and other costs, net 0.08
0.07
0.11

Total unit costs 1.82
1.95
5.54

Revenue adjustments, primarily for pricing
on prior period open sales 0.01
0.01
0.21

Gross profit per pound $ 1.41
$ 1.28
$ 2.66

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 813
$ 354
$ 115

Royalty on metals (14 ) —
—

Noncash and other costs, net —
16
—

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

Africa mining 803
370
115

Other mining & eliminations^c
7,729
5,105
570

Total mining 8,532
5,475
685

U.S. oil & gas operations 336
89
169

Corporate, other & eliminations 3
8
5

As reported in FCX’s consolidated financial statements $ 8,871
$ 5,572
$ 859


a.	~~Includes point-of-sale transportation costs as negotiated in customer contracts.~~


b.	~~Net of cobalt downstream processing and freight costs.~~


c.	~~Represents the combined total for all other mining operations and the related eliminations, as presented in Note~~ 10

8182

Table of Contents

Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs


	Three Months Ended June 30,								Three Months Ended September 30,
(In millions)	2014			2013					2014			2013
Revenues, excluding adjustments^a	$	181		$	156				$	184		$	132

Site production and delivery, before net noncash and other costs shown below	79			76					83			75
Treatment charges and other	11			12					11			11
Net cash costs	90			88					94			86
Depreciation, depletion and amortization	24			21					25			21
Noncash and other costs, net	2			2					3			7
Total costs	116			111					122			114
Gross profit	$	65		$	45				$	62		$	18

Molybdenum sales (millions of recoverable pounds)^a	14			13					13			12

Gross profit per pound of molybdenum:	Gross profit per pound of molybdenum:								Gross profit per pound of molybdenum:

Revenues, excluding adjustments^a	$	12.90		$	12.13				$	13.93		$	10.92

Site production and delivery, before net noncash and other costs shown below	5.64			5.84					6.29			6.27
Treatment charges and other	0.83			0.95					0.83			0.88
Unit net cash costs	6.47			6.79					7.12			7.15
Depreciation, depletion and amortization	1.69			1.65					1.89			1.71
Noncash and other costs, net	0.10			0.18					0.21			0.54
Total unit costs	8.26			8.62					9.22			9.40
Gross profit per pound	$	4.64		$	3.51				$	4.71		$	1.52

Reconciliation to Amounts Reported
(In millions)
Three Months Ended June 30, 2014	Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Three Months Ended September 30, 2014									Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	181		$	79		$	24	$	184		$	83		$	25
Treatment charges and other	(11		)	—			—		(11		)	—			—
Noncash and other costs, net	—			2			—		—			3			—
Molybdenum mines	170			81			24		173			86			25
Other mining & eliminations^b	4,116			2,673			370		4,533			2,794			413
Total mining	4,286			2,754			394		4,706			2,880			438
U.S. oil & gas operations	1,236			329			616		990			273			812		^c
Corporate, other & eliminations	—			(1		)	3		—			(1		)	3
As reported in FCX’s consolidated financial statements	$	5,522		$	3,082		$	1,013	$	5,696		$	3,152		$	1,253	^c

Three Months Ended June 30, 2013
Three Months Ended September 30, 2013
Totals presented above	$	156		$	76		$	21	$	132		$	75		$	21
Treatment charges and other	(12		)	—			—		(11		)	—			—
Noncash and other costs, net	—			2			—		—			7			—
Molybdenum mines	144			78			21		121			82			21
Other mining & eliminations^b	3,807			2,681			337		4,868			2,960			332
Total mining	3,951			2,759			358		4,989			3,042			353
U.S. oil & gas operations	336			89			169		1,176			288			563
Corporate, other & eliminations	1			5			3		—			2			3
As reported in FCX’s consolidated financial statements	$	4,288		$	2,853		$	530	$	6,165		$	3,332		$	919


a.	Reflects sales of the Molybdenum mines' production to our 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, our consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.


b.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10. Also includes amounts associated with our molybdenum sales company, which includes sales of molybdenum produced by the molybdenum mines and by certain of the North and South America copper mines.


c.	Includes impairment of oil and gas properties of $308 million.

8283

Table of Contents

Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs (continued)



	Six Months Ended June 30,								Nine Months Ended September 30,
(In millions)	2014			2013					2014			2013
Revenues, excluding adjustments^a	$	318		$	311				$	502		$	443

Site production and delivery, before net noncash and other costs shown below	154			154					237			229
Treatment charges and other	22			24					33			35
Net cash costs	176			178					270			264
Depreciation, depletion and amortization	46			41					71			62
Noncash and other costs, net	3			4					6			11
Total costs	225			223					347			337
Gross profit	$	93		$	88				$	155		$	106

Molybdenum sales (millions of recoverable pounds)^a	27			25					40			37

Gross profit per pound of molybdenum:	Gross profit per pound of molybdenum:								Gross profit per pound of molybdenum:

Revenues, excluding adjustments^a	$	11.88		$	12.33				$	12.56		$	11.87

Site production and delivery, before net noncash and other costs shown below	5.75			6.10					5.92			6.15
Treatment charges and other	0.83			0.95					0.84			0.93
Unit net cash costs	6.58			7.05					6.76			7.08
Depreciation, depletion and amortization	1.72			1.64					1.77			1.66
Noncash and other costs, net	0.10			0.16					0.14			0.29
Total unit costs	8.40			8.85					8.67			9.03
Gross profit per pound	$	3.48		$	3.48				$	3.89		$	2.84

Reconciliation to Amounts Reported
(In millions)
Six Months Ended June 30, 2014	Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Nine Months Ended September 30, 2014									Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	318		$	154		$	46	$	502		$	237		$	71
Treatment charges and other	(22		)	—			—		(33		)	—			—
Noncash and other costs, net	—			3			—		—			6			—
Molybdenum mines	296			157			46		469			243			71
Other mining & eliminations^b	7,714			5,023			694		12,247			7,817			1,107
Total mining	8,010			5,180			740		12,716			8,060			1,178
U.S. oil & gas operations	2,497			640			1,232		3,487			913			2,044		^c
Corporate, other & eliminations	—			(1		)	7		—			(2		)	10
As reported in FCX’s consolidated financial statements	$	10,507		$	5,819		$	1,979	$	16,203		$	8,971		$	3,232	^c

Six Months Ended June 30, 2013
Nine Months Ended September 30, 2013
Totals presented above	$	311		$	154		$	41	$	443		$	229		$	62
Treatment charges and other	(24		)	—			—		(35		)	—			—
Noncash and other costs,net	—			4			—		—			11			—
Molybdenum mines	287			158			41		408			240			62
Other mining & eliminations^b	8,245			5,317			644		13,113			8,277			976
Total mining	8,532			5,475			685		13,521			8,517			1,038
U.S. oil & gas operations	336			89			169		1,512			377			732
Corporate, other & eliminations	3			8			5		3			10			8
As reported in FCX’s consolidated financial statements	$	8,871		$	5,572		$	859	$	15,036		$	8,904		$	1,778


a.	Reflects sales of the Molybdenum mines' production to our 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, our consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.


b.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10. Also includes amounts associated with our molybdenum sales company, which includes sales of molybdenum produced by the molybdenum mines and by certain of the North and South America copper mines.


c.	Includes impairment of oil and gas properties of $308 million.

8384

Table of Contents

U.S. Oil & Gas Product Revenues, Cash Production Costs and Realizations


Three Months Ended June 30, 2014
Three Months Ended September 30, 2014

(In millions)	Oil			Natural Gas			NGLs		Total U.S. Oil & Gas			Oil			Natural Gas			NGLs		Total U.S. Oil & Gas
Oil and gas revenues before derivatives	$	1,172		$	96		$	38	$	1,306		$	821		$	81		$	23	$	925
Realized cash losses on derivative contracts	(57		)	(6		)	—		(63		)	(58		)	—			—		(58		)
Realized revenues	$	1,115		$	90		$	38	1,243			$	763		$	81		$	23	867
Less: cash production costs									314											263
Cash operating margin									929											604
Less: depreciation, depletion and amortization									616											504
Less: impairment of oil and gas properties																				308
Less: accretion and other costs									15											10
Plus: net noncash mark-to-market losses on derivative contracts									(7		)
Plus: net noncash mark-to-market gains on derivative contracts																				122
Plus: other net adjustments									—											1
Gross profit									$	291
Gross loss																				$	(95	)

Oil (MMBbls)	11.7											8.6
Gas (Bcf)				20.3											20.2
NGLs (MMBbls)							1.0											0.6
Oil Equivalents (MMBOE)									16.0											12.5

	Oil (per barrel)			Natural Gas (per MMBtu)			NGLs (per barrel)		Per BOE			Oil (per barrel)			Natural Gas (per MMBtu)			NGLs (per barrel)		Per BOE
Oil and gas revenues before derivatives	$	100.46		$	4.70		$	38.79	$	81.47		$	95.35		$	4.00		$	39.69	$	73.70
Realized cash losses on derivative contracts	(4.96		)	(0.26		)	—		(3.94		)
Realized cash (losses) gains on derivative contracts												(6.77		)	0.02			—		(4.62		)
Realized revenues	$	95.50		$	4.44		$	38.79	77.53			$	88.58		$	4.02		$	39.69	69.08
Less: cash production costs									19.57											20.93
Cash operating margin									57.96											48.15
Less: depreciation, depletion and amortization									38.39											40.12
Less: impairment of oil and gas properties																				24.59
Less: accretion and other costs									0.94											0.85
Plus: net noncash mark-to-market losses on derivative contracts									(0.44		)
Plus: net noncash mark-to-market gains on derivative contracts																				9.73
Plus: other net adjustments									0.04											0.09
Gross profit									$	18.23
Gross loss																				$	(7.59	)

Reconciliation to Amounts Reported
(In Millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization					Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	1,306		$	314		$	616				$	925		$	263		$	504
Realized cash losses on derivative contracts	(63		)	—			—					(58		)	—			—
Net noncash mark-to-market losses on derivative contracts	(7		)	—			—
Net noncash mark-to-market gains on derivative contracts												122			—			—
Accretion and other costs	—			15			—					—			10			—
Impairment of oil and gas properties												—			—			308
Other net adjustments	—			—			—					1			—			—
U.S. oil & gas operations	1,236			329			616					990			273			812
Total mining^a	4,286			2,754			394					4,706			2,880			438
Corporate, other & eliminations	—			(1		)	3					—			(1		)	3
As reported in FCX's consolidated financial statements	$	5,522		$	3,082		$	1,013				$	5,696		$	3,152		$	1,253


a.	Represents the combined total for mining operations and the related eliminations, as presented in Note 10. 10.

~~Table of Contents~~

~~U.S. Oil & Gas Product Revenues, Cash Production Costs and Realizations (continued)~~

Six Months Ended June 30, 2014

(In millions) Oil Natural Gas NGLs
Total
U.S. Oil & Gas

Oil and gas revenues before derivatives $ 2,334
$ 194
$ 88
$ 2,616

Realized cash losses on derivative contracts (115 ) (13 ) —
(128 )
Realized revenues $ 2,219
$ 181
$ 88
2,488

Less: cash production costs 612

Cash operating margin 1,876

Less: depreciation, depletion and amortization 1,232

Less: accretion and other costs 28

Plus: net noncash mark-to-market gains on derivative
contracts
8

Plus: other net adjustments 1

Gross profit $ 625

Oil (MMBbls) 23.5

Gas (Bcf) 39.8

NGLs (MMBbls) 2.1

Oil Equivalents (MMBOE) 32.2

Oil
(per barrel) Natural Gas
(per MMBtu) NGLs
(per barrel) Per BOE
Oil and gas revenues before derivatives $ 99.54
$ 4.87
$ 42.35
$ 81.34

Realized cash losses on derivative contracts (4.91 ) (0.32 ) —
(3.97 )
Realized revenues $ 94.63
$ 4.55
$ 42.35
77.37

Less: cash production costs 19.03

Cash operating margin 58.34

Less: depreciation, depletion and amortization 38.30

Less: accretion and other costs 0.87

Plus: net noncash mark-to-market gains on derivative
contracts
0.23

Plus: other net adjustments 0.04

Gross profit $ 19.44

Reconciliation to Amounts Reported
(In Millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 2,616
$ 612
$ 1,232

Realized cash losses on derivative contracts (128 ) —
—

Net noncash mark-to-market gains on derivative contracts

8
—
—

Accretion and other costs —
28
—

Other net adjustments 1
—
—

U.S. oil & gas operations 2,497
640
1,232

Total mining^a
8,010
5,180
740

Corporate, other & eliminations —
(1 ) 7

As reported in FCX's consolidated financial statements $ 10,507
$ 5,819
$ 1,979


a.	~~Represents the combined total for mining operations and the related eliminations, as presented in Note~~ 10.

Table of Contents

~~U.S. Oil & Gas Product Revenues, Cash Production Costs and Realizations (continued)~~


June 1, 2013, to June 30, 2013

(In millions)	Oil			Natural Gas		NGLs		Total U.S. Oil & Gas
U.S. Oil & Gas Product Revenues, Cash Production Costs and Realizations (continued)											U.S. Oil & Gas Product Revenues, Cash Production Costs and Realizations (continued)

Three Months Ended September 30, 2013
																		Total
														Natural				U.S. Oil
(In Millions)											Oil			Gas		NGLs		& Gas
Oil and gas revenues before derivatives	$	330		$	30	$	11	$	371		$	1,220		$	86	$	39	$	1,345
Realized cash gains on derivative contracts	1			—		—		1
Realized cash (losses) gains on derivative contracts											(19		)	7		—		(12		)
Realized revenues	$	331		$	30	$	11	372			$	1,201		$	93	$	39	1,333
Less: cash production costs								83										277
Cash operating margin								289										1,056
Less: depreciation, depletion and amortization								169										563
Less: accretion and other costs								6										11
Plus: net noncash mark-to-market losses on derivative contracts								(36		)								(158		)
Plus: other net adjustments								—										1
Gross profit								$	78									$	325

Oil (MMBbls)	3.4										11.5
Gas (Bcf)				7.7										23.5
NGLs (MMBbls)						0.3										1.0
Oil Equivalents (MMBOE)								5.0										16.5

	Oil (per barrel)			Natural Gas (per MMBtu)		NGLs (per barrel)		Per BOE			Oil			Natural Gas		NGLs
											(per barrel)			(per MMBtu)		(per barrel)		Per BOE
Oil and gas revenues before derivatives	$	97.05		$	3.81	$	35.18	$	74.03		$	106.00		$	3.67	$	37.16	$	81.67
Realized cash gains on derivative contracts	0.37			0.05		—		0.34
Realized cash (losses) gains on derivative contracts											(1.67		)	0.30		—		(0.74		)
Realized revenues	$	97.42		$	3.86	$	35.18	74.37			$	104.33		$	3.97	$	37.16	80.93
Less: cash production costs								16.58										16.80
Cash operating margin								57.79										64.13
Less: depreciation, depletion and amortization								33.82										34.15
Less: accretion and other costs								1.11										0.70
Plus: net noncash mark-to-market losses on derivative contracts								(7.27		)								(9.58		)
Plus: other net adjustments								(0.02		)								0.06
Gross profit								$	15.57									$	19.76

Reconciliation to Amounts Reported for the Three Months Ended June 30, 2013
Reconciliation to Amounts Reported											Reconciliation to Amounts Reported
(In Millions)	Revenues			Production and Delivery		Depreciation, Depletion and Amortization					Revenues			Production and Delivery		Depreciation, Depletion and Amortization
Totals presented above	$	371		$	83	$	169				$	1,345		$	277	$	563
Realized cash gains on derivative contracts	1			—		—
Realized cash losses on derivative contracts											(12		)	—		—
Net noncash mark-to-market losses on derivative contracts	(36		)	—		—					(158		)	—		—
Accretion and other costs	—			6		—					—			11		—
Other net adjustments	—			—		—					1			—		—
U.S. oil & gas operations	336			89		169					1,176			288		563
Total mining^a	3,951			2,759		358					4,989			3,042		353
Corporate, other & eliminations	1			5		3					—			2		3
As reported in FCX's consolidated financial statements	$	4,288		$	2,853	$	530				$	6,165		$	3,332	$	919


a.	Represents the combined total for mining operations and the related eliminations, as presented in Note 10.

Table of Contents

U.S. Oil & Gas Product Revenues, Cash Production Costs and Realizations (continued)




Nine Months Ended September 30, 2014

(In millions)	Oil			Natural Gas			NGLs		Total U.S. Oil & Gas
Oil and gas revenues before derivatives	$	3,155		$	275		$	111	$	3,541
Realized cash losses on derivative contracts	(173		)	(13		)	—		(186		)
Realized revenues	$	2,982		$	262		$	111	3,355
Less: cash production costs									875
Cash operating margin									2,480
Less: depreciation, depletion and amortization									1,736
Less: impairment of oil and gas properties									308
Less: accretion and other costs									38
Plus: net noncash mark-to-market gains on derivative contracts									130
Plus: other net adjustments									2
Gross profit									$	530

Oil (MMBbls)	32.1
Gas (Bcf)				59.9
NGLs (MMBbls)							2.7
Oil Equivalents (MMBOE)									44.7

	Oil (per barrel)			Natural Gas (per MMBtu)			NGLs (per barrel)		Per BOE
Oil and gas revenues before derivatives	$	98.41		$	4.58		$	41.77	$	79.20
Realized cash losses on derivative contracts	(5.41		)	(0.21		)	—		(4.16		)
Realized revenues	$	93.00		$	4.37		$	41.77	75.04
Less: cash production costs									19.57
Cash operating margin									55.47
Less: depreciation, depletion and amortization									38.81
Less: impairment of oil and gas properties									6.90
Less: accretion and other costs									0.86
Plus: net noncash mark-to-market gains on derivative contracts									2.90
Plus: other net adjustments									0.05
Gross profit									$	11.85

Reconciliation to Amounts Reported
(In Millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization
Totals presented above	$	3,541		$	875		$	1,736
Realized cash losses on derivative contracts	(186		)	—			—
Net noncash mark-to-market gains on derivative contracts	130			—			—
Accretion and other costs	—			38			—
Impairment of oil and gas properties	—			—			308
Other net adjustments	2			—			—
U.S. oil & gas operations	3,487			913			2,044
Total mining^a	12,716			8,060			1,178
Corporate, other & eliminations	—			(2		)	10
As reported in FCX's consolidated financial statements	$	16,203		$	8,971		$	3,232


a.	Represents the combined total for mining operations and the related eliminations, as presented in Note 10.

Table of Contents

U.S. Oil & Gas Product Revenues, Cash Production Costs and Realizations (continued)



Four months from June 1, 2013 to September 30, 2013

(In millions)	Oil			Natural Gas		NGLs		Total U.S. Oil & Gas
Oil and gas revenues before derivatives	$	1,550		$	116	$	50	$	1,716
Realized cash (losses) gains on derivative contracts	(18		)	7		—		(11		)
Realized revenues	$	1,532		$	123	$	50	1,705
Less: cash production costs								360
Cash operating margin								1,345
Less: depreciation, depletion and amortization								732
Less: accretion and other costs								17
Plus: net noncash mark-to-market losses on derivative contracts								(194		)
Plus: other net adjustments								1
Gross profit								$	403

Oil (MMBbls)	14.9
Gas (Bcf)				31.3
NGLs (MMBbls)						1.3
Oil Equivalents (MMBOE)								21.5

	Oil (per barrel)			Natural Gas (per MMBtu)		NGLs (per barrel)		Per BOE
Oil and gas revenues before derivatives	$	103.96		$	3.70	$	36.70	$	79.89
Realized cash (losses) gains on derivative contracts	(1.20		)	0.24		—		(0.49		)
Realized revenues	$	102.76		$	3.94	$	36.70	79.40
Less: cash production costs								16.76
Cash operating margin								62.64
Less: depreciation, depletion and amortization								34.07
Less: accretion and other costs								0.80
Plus: net noncash mark-to-market losses on derivative contracts								(9.04		)
Plus: other net adjustments								0.04
Gross profit								$	18.77

Reconciliation to Amounts Reported for the Nine Months Ended September 30, 2013
(In Millions)	Revenues			Production and Delivery		Depreciation, Depletion and Amortization
Totals presented above	$	1,716		$	360	$	732
Realized cash losses on derivative contracts	(11		)	—		—
Net noncash mark-to-market losses on derivative contracts	(194		)	—		—
Accretion and other costs	—			17		—
Other net adjustments	1			—		—
U.S. oil & gas operations	1,512			377		732
Total mining^a	13,521			8,517		1,038
Corporate, other & eliminations	3			10		8
As reported in FCX's consolidated financial statements	$	15,036		$	8,904	$	1,778


a.	Represents the combined total for mining operations and the related eliminations, as presented in Note 10.

Table of Contents

CAUTIONARY STATEMENT

Our discussion and analysis contains forward-looking statements in which we discuss factors we believe may affect our 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, cash production costs per BOE, operating cash flows, capital expenditures, exploration efforts and results, development and production activities and costs, liquidity, tax rates, the impact of copper, gold, molybdenum, cobalt, crude oil and natural gas price changes, the impact of derivative positions, the impact of deferred intercompany profits on earnings, reserve estimates, and future dividend payments, debt reduction and share purchases. The words “anticipates,” “may,” “can,” “plans,” “believes,” “potential,” “estimates,” “expects,” “projects,” “targets,” “intends,” “likely,” “will,” “should,” “to be” and any similar expressions are intended to identify those assertions as forward-looking statements. The declaration of dividends is at the discretion of the Board and will depend on our financial results, cash requirements, future prospects, and other factors deemed relevant by the Board.

We caution readers that forward-looking statements are not guarantees of future performance and that our actual results may differ materially from those anticipated, projected or assumed in the forward-looking statements. Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements include supply of and demand for, and prices of copper, gold, molybdenum, cobalt, oil and gas, mine sequencing, production rates, industry risks, regulatory changes, political risks, drilling results, the outcome of negotiations with the Indonesian government regarding an amendment to PT-FI's COW, the potential effects of violence in Indonesia, the ability of the parties to satisfy customary closing conditions and consummate the pending sale of our ownership interest in the Candelaria/Ojos del Salado copper mining operations and supporting infrastructure, the resolution of administrative disputes in the Democratic Republic of Congo, weather- and climate-related risks, labor relations, environmental risks, litigation results, currency translation risks and other factors described in more detail under the heading “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2013, and in Part II Item 1A of this report filed with the SEC as updated by our subsequent filings with the SEC.

Investors are cautioned that many of the assumptions on which our forward-looking statements are based are likely to change after our forward-looking statements are made, including for example commodity prices, which we cannot control, and production volumes and costs, some aspects of which we may or may not be able to control. Further, we may make changes to our business plans that could or will affect our results. We caution investors that we do not intend to update forward-looking statements more frequently than quarterly notwithstanding any changes in our assumptions, changes in business plans, actual experience or other changes, and we undertake no obligation to update any forward-looking statements.

8789

Table of Contents


Item 3.	Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in our market risks during the three-month period ended ~~June~~September 30, 2014. For additional information on market risks, refer to “Disclosures About Market Risks” included in Part I, Item 2. of our annual report on Form 10-K for the year ended December 31, 2013. For projected sensitivities of our operating cash flow to changes in commodity prices, refer to “Outlook” in Part I, Item 2. of this quarterly report on Form 10-Q for the period ended ~~June~~September 30, 2014; for projected sensitivities of our provisionally priced copper sales and derivative instruments to changes in commodity prices refer to “Consolidated Results – Revenues” in Part I, Item 2. of this quarterly report on Form 10-Q for the period ended ~~June~~September 30, 2014.


Item 4.	Controls and Procedures.

(a)

Evaluation of disclosure controls and procedures. Our chief executive officer and chief financial officer, with the participation of management, have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this quarterly report on Form 10-Q. Based on their evaluation, they have concluded that our disclosure controls and procedures are effective as of ~~June~~September 30, 2014.


(b)	Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting that occurred during the quarter ended ~~June~~September 30, 2014, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


Part II.	OTHER INFORMATION


Item 1.	Legal Proceedings.

We are involved in numerous legal proceedings that arise in the ordinary course of our business or that are associated with environmental issues arising from legacy operations conducted over the years by Freeport Minerals Corporation (FMC - formerly Freeport-McMoRan Corporation) and its affiliates. We are also involved from time to time in other reviews, investigations and proceedings by government agencies, some of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief.

Management does not believe, based on currently available information, that the outcome of any proceeding reported in Note 12 and incorporated by reference into Part I, Item 3. “Legal Proceedings” of our annual report on Form 10-K for the year ended December 31, 2013, as updated in Note 9 to the financial statements included in our quarterly report on Form 10-Q for the quarter ended March 31, 2014, will have a material adverse effect on our financial condition; although individual outcomes could be material to our operating results for a particular period, depending on the nature and magnitude of the outcome and the operating results for the period.

Item 1A. Risk Factors.

The risk factor “Because our Grasberg minerals district is our most significant operating asset, our business may continue to be adversely affected by political, economic and social uncertainties and security risks in Indonesia”, which was included in FCX’s annual report on Form 10-K for the year ended December 31, 2013, is amended to add the following:

PT Freeport Indonesia (PT-FI) has been engaged in discussions with officials of the Indonesian government since 2012 regarding various provisions of its Contract of Work (COW). The government has sought to modify existing mining contracts, including PT-FI’s COW, to address provisions of Indonesia’s 2009 mining law and subsequent regulations, including with respect to the size of contract concessions, government revenues, domestic processing of minerals, divestment, provision of local services, ~~and~~ conversion from a COW to a licensing framework for extension periods, and a requirement that extensions may be applied for only within two years prior to a COW’s expiration.

In January 2014, the Indonesian government published regulations providing that holders of contracts of work with existing processing facilities in Indonesia may continue to export product through January 12, 2017, but established new requirements for the continued export of copper concentrates, including the imposition of a progressive export duty on copper concentrates in the amount of 25 percent in 2014, rising to 60 percent by mid-2016. Regulations

~~Table of Contents~~

published in 2014 require companies to obtain permits issued at six-month intervals to allow exports of products, including copper concentrates.

Table of Contents

Despite PT-FI’s rights under its COW to export concentrates without the payment of duties, PT-FI was unable to obtain administrative approval for exports and operated at approximately half of its capacity from mid-January 2014 until late-July 2014.

On July 25, 2014, PT-FI and the Indonesian government entered into a Memorandum of Understanding (MOU) under which PT-FI and the government agreed to negotiate an amended COW to address provisions related to the size of PT-FI’s concession area, royalties and taxes, domestic processing and refining, divestment, local content, and continuation of operations post-2021. Execution of the MOU enabled the resumption of concentrate exports, which began in August 2014.

Effective with the signing of the MOU, PT-FI agreed to provide a $115 million assurance bond to support its commitment for smelter development, pay higher royalties on copper, gold and silver and pay export duties set forth in a new regulation issued by the Indonesian government on July 25, 2014.

Among other items, MOU provisions to be addressed in the negotiation of an amended COW include provisions for the development of new copper smelting and refining capacity in Indonesia, which will take into consideration an equitable sharing of costs between PT-FI (and any partners in the project) and the Indonesian government through fiscal incentives and PT-FI’s requirement for assurance of fiscal and legal certainty of its operational rights, provisions for divestment to the Indonesian government and/or Indonesian nationals of up to a 30 percent interest (an additional 20.64 percent interest) in PT-FI at fair value, and continuation of operations from 2022 through 2041. The parties agreed to complete negotiations within a six month period. Under the MOU, no terms of the COW other than those relating to the export duties, smelter bond and royalties described above will be changed until the completion of ~~the~~an amended COW.

The MOU also provides that negotiations for an amended COW will take into consideration PT-FI’s need for assurance of legal and fiscal terms post-2021 for PT-FI to continue with its large-scale investment program for the development of its underground reserves.

The revisions to the COW are expected to result in additional costs for our Indonesian operations. We cannot predict whether we will be successful in reaching a satisfactory agreement on the terms of our long-term mining rights. If we are unable to reach agreement with the government on our long-term rights, we may be required to reduce or defer investments in our underground development projects, which would negatively impact future production and reserves. In addition, we are required to apply for renewal of export permits at six-month intervals and cannot predict if such permits will be granted on a timely basis or whether we will be permitted to export concentrates after January 12, 2017.

~~On July 22,~~In October 2014, ~~the Indonesian General Elections Commission announced that~~ Joko “Jokowi” Widodo ~~was~~took office as the president of Indonesia, elected ~~Indonesia’s next president~~ in ~~the election held on~~ July 9, 2014, to ~~take office in October 2014~~serve for a five-year term. PT-FI’s COW negotiations ~~will take~~are taking place during a period of transition for the Indonesian national government, and we cannot predict what impact the transition will have on the progress or outcome of the negotiations.

On September 27, 2014, four Grasberg workers were fatally injured when a haul truck collided with a light vehicle near the Grasberg open-pit operations. Operations in the Grasberg open pit were temporarily suspended in order to complete internal and government investigations regarding the accident. On October 13, 2014, Indonesian authorities approved the resumption of operations after issuing recommendations on traffic control procedures that have been implemented by PT-FI. Workforce attendance in several operating areas reflect normal levels. However, a large percentage of Grasberg open-pit operators have not reported to their scheduled shifts resulting in reduced production from the open pit during October. These actions conflict with agreed policies and processes in the Collective Labor Agreement (CLA) and PT-FI is working with union leadership regarding this work stoppage to resume normal operations as soon as possible.

On October 27, 2014, PT-FI received notice from union leadership indicating its intention to conduct a 30-day strike beginning on November 6. Following constructive dialogue between PT-FI and union leadership, union leadership advised PT-FI on October 31, 2014, that all strike actions had been canceled.

Except as described above, there have been no material changes to our risk factors ~~during the three-month period ended~~ ~~June 30, 2014. For additional information on risk factors, refer to~~as discussed in Part I Item 1A. "Risk Factors" of our annual report on Form 10-K for the year ended December 31, 2013.

8991

Table of Contents


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.


(c)	The following table sets forth information with respect to shares of our common stock purchased by us during the three months ended ~~June~~September 30, 2014:



Period	(a) Total Number of Shares Purchased	(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs^a	(d) Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs^a
Period	(a) Total Number of Shares Purchased	(b) Average Price Paid Per Share
~~April 1-30, 2014~~	—	$	—	—	~~23,685,500~~
~~May~~July 1-31, 2014	—	$	—	—	23,685,500
~~June~~August 1-31, 2014	—	$	—	—	23,685,500
September 1-30, 2014	—	$	—	—	23,685,500
Total	—	$	—	—	23,685,500


a.	On July 21, 2008, our Board of Directors approved an increase in our open-market share purchase program for up to 30 million shares. There have been no purchases under this program since 2008. This program does not have an expiration date.


Item 4.	Mine Safety Disclosure.

The safety and health of all employees is our highest priority. Management believes that safety and health considerations are integral to, and compatible with, all other functions in the organization and that proper safety and health management will enhance production and reduce costs. Our approach towards the safety and health of our workforce is to continuously improve performance through implementing robust management systems and providing adequate training, safety incentive and occupational health programs. The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this quarterly report on Form 10-Q.

Table of Contents


Item 5.	Other Information.

(a) Completion of Disposition of Assets; Pro Forma Financial Information.

The following unaudited pro forma condensed financial statements (the Pro Forma Financial Statements) have been prepared to reflect the sale of FCX's 80 percent ownership interests in the Candelaria and Ojos del Salado mining operations to Lundin Mining Corporation (Lundin), which was completed on November 3, 2014 (the sale transaction). For additional information, see Part I, Item II "Operations - South America Mining" in this report on Form 10-Q.

The unaudited pro forma condensed balance sheet is presented as if the sale transaction had occurred on September 30, 2014. The unaudited pro forma condensed statements of income for the year ended December 31, 2013, and the nine months ended September 30, 2014, are presented as if the sale transaction had occurred on January 1, 2013. The historical consolidated financial information has been adjusted to reflect factually supportable items that are directly attributable to the sale transaction and, with respect to the statements of income only, expected to have a continuing impact on the combined results.

The Pro Forma Financial Statements have been prepared using the sale of assets method of accounting under accounting principles generally accepted in the United States (U.S.). The sale transaction is subject to closing adjustments that have not yet been finalized. Accordingly, the pro forma adjustments are preliminary, and have been made solely for the purpose of providing Pro Forma Financial Statements as required by the U.S. Securities and Exchange Commission (SEC) rules. Differences between these preliminary estimates and the final sale accounting may be material.

The Pro Forma Financial Statements are provided for informational purposes only and do not purport to represent what the actual consolidated results of operations or the consolidated financial position of FCX would have been had the sale transaction occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position. The Pro Forma Financial Statements should be read in conjunction with (i) the accompanying notes to the Pro Forma Financial Statements; (ii) the audited consolidated financial statements and accompanying notes of FCX contained in its annual report on Form 10-K for the year ended December 31, 2013; and (iii) the unaudited condensed consolidated financial statements and accompanying notes of FCX contained in this quarterly report on Form 10-Q for the quarterly period ended September 30, 2014.

Affiliates of FCX own an effective 56 percent interest in Tenke Fungurume Mining S.A.R.L. (TFM), with the remaining ownership interests held by affiliates of Lundin (an effective 24 percent interest) and La Generale des Carrieres et des Mines (Gecamines), which is wholly owned by the government of the Democratic Republic of Congo (DRC) (a 20 percent non-dilutable interest). TFM holds copper and cobalt mining concessions in the Katanga province of the DRC, and affiliates of FCX operate the mine. Affiliates of FCX also own and operate a cobalt chemical refinery in Kokkola, Finland, and related sales and marketing business, through a joint venture with affiliates of Lundin and Gecamines, with ownership interests similar to the interests in TFM. The consideration in the sale transaction was determined through arms-length bargaining.

Table of Contents

FREEPORT-McMoRan INC.

UNAUDITED PRO FORMA CONDENSED BALANCE SHEET

AT SEPTEMBER 30, 2014

(in millions)



	Historical				Adjustments
	FCX		Candelaria/Ojos del Salado		Pro Forma⁽¹⁾			Sale⁽²⁾				Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	658	$	121	$	—		$	1,852		A	$	2,389
Trade and other accounts receivable	2,307		197		94			—				2,204
Inventories	5,489		124		—			—				5,365
Other current assets	577		7		(1		)	—				569
Total current assets	9,031		449		93			1,852				10,527
Property, plant, equipment and development costs, net	26,304		663		—			—				25,641
Oil and natural gas properties, net - full cost method	22,337		—		—			—				22,337
Long-term mill and leach stockpiles	2,569		438		—			—				2,131
Goodwill and other assets	3,735		59		(19		)	1				3,658
Total assets	$	63,976	$	1,609	$	74		$	1,853			$	64,294

LIABILITIES AND EQUITY
Current liabilities	$	6,343	$	138	$	94		$	405		A	$	6,704
Long-term debt, less current portion	17,975		—		—			—				17,975
Deferred income taxes	7,559		—		—			(179		)	B	7,380
Reclamation and environmental obligations, less current portion	3,654		36		—			—				3,618
Other liabilities	1,730		56		3			—				1,677
Total liabilities	37,261		230		97			226				37,354

Redeemable noncontrolling interest	749		—		—			—				749

Total stockholders' equity	21,591		1,140		(23		)	1,627				22,055
Noncontrolling interests	4,375		239		—			—				4,136
Total equity	25,966		1,379		(23		)	1,627				26,191
Total liabilities and equity	$	63,976	$	1,609	$	74		$	1,853			$	64,294

NOTES TO THE UNAUDITED PRO FORMA CONDENSED BALANCE SHEET


(1)	Pro Forma Adjustments

Pro forma adjustments reflect reversal of the elimination of intercompany balances (such as intercompany receivables/payables) primarily between the Candelaria and Ojos del Salado mining complex (Candelaria/Ojos) and Atlantic Copper, FCX's wholly owned copper smelter.


(2)	Sale Adjustments


A.	Represents adjusted gross cash proceeds of $1.85 billion from the sale of Candelaria/Ojos and $405 million for income taxes related to the sale of Candelaria/Ojos.


B.	Adjustment reflects the reversal of $179 million of deferred withholding taxes associated with FCX's tax liability for its share of undistributed earnings from Candelaria/Ojos.

Table of Contents

FREEPORT-McMoRan INC.

UNAUDITED PRO FORMA CONDENSED STATEMENTS OF INCOME

(in millions, except per share amounts)



	Year Ended December 31, 2013
	Historical
	FCX			Candelaria/Ojos del Salado			Pro Forma Adjustments⁽¹⁾			Pro Forma

Revenues	$	20,921		$	1,518		$	274		$	19,677
Total operating costs and expenses	15,570			834			222			14,958
Operating income	5,351			684			52			4,719
Interest expense and other, net	(438		)	5			—			(443		)
Income before taxes and equity in affiliated companies' net earnings	4,913			689			52			4,276
Provision for income taxes	(1,475		)	(252		)	(18		)	(1,241		)
Equity in affiliated companies' net earnings	3			—			—			3
Net income	3,441			437			34			3,038
Net income and preferred dividends attributable to noncontrolling interests	(783		)	(96		)	(8		)	(695		)
Net income attributable to FCX common stockholders	$	2,658		$	341		$	26		$	2,343

Net income per share attributable to FCX common stockholders:
Basic	$	2.65								$	2.34
Diluted	$	2.64								$	2.33
Weighted-average common shares outstanding:
Basic	1,002									1,002
Diluted	1,006									1,006



	Nine Months Ended September 30, 2014
	Historical
	FCX			Candelaria/Ojos del Salado			Pro Forma Adjustments⁽¹⁾			Pro Forma

Revenues	$	16,203		$	769		$	238		$	15,672
Total operating costs and expenses	12,807			541			214			12,480
Operating income	3,396			228			24			3,192
Interest expense and other, net	(372		)	8			—			(380		)
Income before taxes and equity in affiliated companies' net earnings	3,024			236			24			2,812
Provision for income taxes	(1,034		)	(80		)	(8		)	(962		)
Equity in affiliated companies' net earnings	—			—			—			—
Net income	1,990			156			16			1,850
Net income and preferred dividends attributable to noncontrolling interests	(446		)	(24		)	(3		)	(425		)
Net income attributable to FCX common stockholders	$	1,544		$	132		$	13		$	1,425

Net income per share attributable to FCX common stockholders:
Basic	$	1.48								$	1.37
Diluted	$	1.47								$	1.36
Weighted-average common shares outstanding:
Basic	1,039									1,039
Diluted	1,045									1,045

Table of Contents

NOTE TO THE UNAUDITED PRO FORMA CONDENSED STATEMENTS OF INCOME


(1)	Pro Forma Adjustments

Candelaria/Ojos revenues include sales to Atlantic Copper that are eliminated in FCX's consolidated results. The pro forma adjustments primarily reflect recognition of these previously eliminated intercompany sales and purchases.


Item 6.	Exhibits.

The exhibits to this report are listed in the Exhibit Index beginning on Page E-1 hereof.

~~Table of Contents~~

FREEPORT-McMoRan INC.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



	FREEPORT-McMoRan INC.

	By:	/s/ C. Donald Whitmire, Jr.
		C. Donald Whitmire, Jr.
		Vice President and
		Controller - Financial Reporting
		(authorized signatory
		and Principal Accounting Officer)

Date: ~~August 8,~~November 7, 2014

9196

Table of Contents



FREEPORT-McMoRan INC.
EXHIBIT INDEX
		Filed
Exhibit		with this	Incorporated by Reference
Number	Exhibit Title	Form 10-Q	Form	File No.	Date Filed
~~3.1~~2.1	Stock Purchase Agreement, dated as of October 6, 2014, among LMC Candelaria SpA, LMC Ojos del Salado SpA and Freeport Minerals Corporation	X
3.1	Composite Certificate of Incorporation of FCX	X	10-Q	001-11307-01	8/8/2014
3.2	Composite By-Laws of FCX as of July 14, 2014		8-K	001-11307-01	7/2/2014
4.1	Indenture dated as of February 13, 2012, between FCX and U.S. Bank National Association, as Trustee (relating to the 1.4% Senior Notes due 2015, the 2.15% Senior Notes due 2017, and the 3.55% Senior Notes due 2022)		8-K	001-11307-01	2/13/2012
4.2	First Supplemental Indenture dated as of February 13, 2012, between FCX and U.S. Bank National Association, as Trustee (relating to the 1.4% Senior Notes due 2015)		8-K	001-11307-01	2/13/2012
4.3	Second Supplemental Indenture dated as of February 13, 2012, between FCX and U.S. Bank National Association, as Trustee (relating to the 2.15% Senior Notes due 2017)		8-K	001-11307-01	2/13/2012
4.4	Third Supplemental Indenture dated as of February 13, 2012, between FCX and U.S. Bank National Association, as Trustee (relating to the 3.55% Senior Notes due 2022)		8-K	001-11307-01	2/13/2012
4.5	Fourth Supplemental Indenture dated as of May 31, 2013, among FCX, Freeport-McMoRan Oil & Gas LLC and U.S. Bank National Association, as Trustee (relating to the 1.4% Senior Notes due 2015, the 2.15% Senior Notes due 2017, and the 3.55% Senior Notes due 2022)		8-K	001-11307-01	6/3/2013
4.6	Indenture dated as of March 7, 2013, between FCX and U.S. Bank National Association, as Trustee (relating to the 2.375% Senior Notes due 2018, the 3.100% Senior Notes due 2020, the 3.875% Senior Notes due 2023, and the 5.450% Senior Notes due 2043)		8-K	001-11307-01	3/7/2013
4.7	Supplemental Indenture dated as of May 31, 2013, among FCX, Freeport-McMoRan Oil & Gas LLC and U.S. Bank National Association, as Trustee (relating to the 2.375% Senior Notes due 2018, the 3.100% Senior Notes due 2020, the 3.875% Senior Notes due 2023, and the 5.450% Senior Notes due 2043)		8-K	001-11307-01	6/3/2013
4.8	Indenture dated as of March 13, 2007, among Plains Exploration & Production Company, the Subsidiary Guarantors parties thereto, and Wells Fargo Bank, N.A., as Trustee (relating to the 8.625% Senior Notes due 2019, the 7.625% Senior Notes due 2020, the 6.625% Senior Notes due 2021, the 6.75% Senior Notes due 2022, the 6.125% Senior Notes due 2019, the 6.5% Senior Notes due 2020, and the 6.875% Senior Notes due 2023)		8-K	001-31470	3/13/2007

E-1

Table of Contents



FREEPORT-McMoRan INC.
EXHIBIT INDEX
		Filed
Exhibit		with this	Incorporated by Reference
Number	Exhibit Title	Form 10-Q	Form	File No.	Date Filed
4.09	Tenth Supplemental Indenture dated as of September 11, 2009 to the Indenture dated as of March 13, 2007, among Plains Exploration & Production Company, the Subsidiary Guarantors parties thereto and Wells Fargo Bank, N.A., as Trustee (relating to the 8.625% Senior Notes due 2019)		8-K	001-31470	9/11/2009
4.10	Eleventh Supplemental Indenture dated as of March 29, 2010 to the Indenture dated as of March 13, 2007, among Plains Exploration & Production Company, the Subsidiary Guarantors parties thereto and Wells Fargo Bank, N.A., as Trustee (relating to the 7.625% Senior Notes due 2020)		8-K	001-31470	3/29/2010
4.11	Twelfth Supplemental Indenture dated as of March 29, 2011 to the Indenture dated as of March 13, 2007, among Plains Exploration & Production Company, the Subsidiary Guarantors parties thereto and Wells Fargo Bank, N.A., as Trustee (relating to the 6.625% Senior Notes due 2021)		8-K	001-31470	3/29/2011
4.12	Thirteenth Supplemental Indenture dated as of November 21, 2011 to the Indenture dated as of March 13, 2007, among Plains Exploration & Production Company, the Subsidiary Guarantors parties thereto and Wells Fargo Bank, N.A., as Trustee (relating to the 6.75% Senior Notes due 2022)		8-K	001-31470	11/22/2011
4.13	Fourteenth Supplemental Indenture dated as of April 27, 2012 to the Indenture dated as of March 13, 2007, among Plains Exploration & Production Company, the Subsidiary Guarantors parties thereto and Wells Fargo Bank, N.A., as Trustee (relating to the 6.125% Senior Notes due 2019)		8-K	001-31470	4/27/2012
4.14	Sixteenth Supplemental Indenture dated as of October 26, 2012 to the Indenture dated as of March 13, 2007, among Plains Exploration & Production Company, the Subsidiary Guarantors parties thereto and Wells Fargo Bank, N.A., as Trustee (relating to the 6.5% Senior Notes due 2020)		8-K	001-31470	10/26/2012
4.15	Seventeenth Supplemental Indenture dated as of October 26, 2012 to the Indenture dated as of March 13, 2007, among Plains Exploration & Production Company, the Subsidiary Guarantors parties thereto and Wells Fargo Bank, N.A., as Trustee (relating to the 6.875% Senior Notes due 2023)		8-K	001-31470	10/26/2012
4.16	Eighteenth Supplemental Indenture dated as of May 31, 2013 to the Indenture dated as of March 13, 2007, among Freeport-McMoRan Oil & Gas LLC, as Successor Issuer, FCX Oil & Gas Inc., as Co-Issuer, FCX, as Parent Guarantor, Plains Exploration & Production Company, as Original Issuer, and Wells Fargo Bank, N.A., as Trustee (relating to the 8.625% Senior Notes due 2019, the 7.625% Senior Notes due 2020, the 6.625% Senior Notes due 2021, the 6.75% Senior Notes due 2022, the 6.125% Senior Notes due 2019, the 6.5% Senior Notes due 2020, and the 6.875% Senior Notes due 2023)		8-K	001-11307-01	6/3/2013
4.17	Form of Indenture dated as of September 22, 1997, between Phelps Dodge Corporation and The Chase Manhattan Bank, as Trustee (relating to the 7.125% Senior Notes due 2027, the 9.50% Senior Notes due 2031, and the 6.125% Senior Notes due 2034)		S-3	333-36415	9/25/1997

E-2

Table of Contents



FREEPORT-McMoRan INC.
EXHIBIT INDEX
		Filed
Exhibit		with this	Incorporated by Reference
Number	Exhibit Title	Form 10-Q	Form	File No.	Date Filed
4.18	Form of 7.125% Debenture due November 1, 2027 of Phelps Dodge Corporation issued on November 5, 1997, pursuant to the Indenture dated as of September 22, 1997, between Phelps Dodge Corporation and The Chase Manhattan Bank, as Trustee (relating to the 7.125% Senior Notes due 2027)		8-K	01-00082	11/3/1997
4.19	Form of 9.5% Note due June 1, 2031 of Phelps Dodge Corporation issued on May 30, 2001, pursuant to the Indenture dated as of September 22, 1997, between Phelps Dodge Corporation and First Union National Bank, as successor Trustee (relating to the 9.50% Senior Notes due 2031)		8-K	01-00082	5/30/2001
4.20	Form of 6.125% Note due March 15, 2034 of Phelps Dodge Corporation issued on March 4, 2004, pursuant to the Indenture dated as of September 22, 1997, between Phelps Dodge Corporation and First Union National Bank, as successor Trustee (relating to the 6.125% Senior Notes due 2034)		10-K	01-00082	3/7/2005
~~4.21~~	Registration Rights Agreement dated as of March 7, 2013, among FCX and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the Initial Purchasers (relating to the 2.375% Senior Notes due 2018)		~~8-K~~	~~001-11307-01~~	~~3/7/2013~~
~~4.22~~	Registration Rights Agreement dated as of March 7, 2013, among FCX and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the Initial Purchasers (relating to the 3.100% Senior Notes due 2020)		~~8-K~~	~~001-11307-01~~	~~3/7/2013~~
~~4.23~~	Registration Rights Agreement dated as of March 7, 2013, among FCX and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the Initial Purchasers (relating to the 3.875% Senior Notes due 2023)		~~8-K~~	~~001-11307-01~~	~~3/7/2013~~
~~4.24~~	Registration Rights Agreement dated as of March 7, 2013, among FCX and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the Initial Purchasers (relating to the 5.450% Senior Notes due 2043)		~~8-K~~	~~001-11307-01~~	~~3/7/2013~~
10.1	First Amendment dated as of May 30, 2014, to the Revolving Credit Agreement dated as of February 14, 2013, among FCX, PT Freeport Indonesia and Freeport-McMoRan Oil & Gas LLC, as borrowers, JPMorgan Chase Bank, N.A., as administrative agent and the swingline lender, Bank of America, N.A., as syndication agent, BNP Paribas, Citibank, N.A., HSBC Bank USA, National Association, Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, The Bank of Nova Scotia and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as co-documentation agents, and each of the lenders and issuing banks party thereto.		~~8-K~~	~~001-11307-01~~	~~6/2/2014~~
10.2*	~~FCX Annual Incentive Plan (For Fiscal Years Ending 2014 - 2018).~~		~~8-K~~	~~001-11307-01~~	~~6/18/2014~~
10.3*	~~Form of Notice of Grant of Restricted Stock Units under the 2006 Stock Incentive Plan (for grants made to non-management directors).~~	X
~~10.4~~	Memorandum of Understanding dated as of July 25, 2014, between the Directorate General of Mineral and Coal, the Ministry of Energy and Mineral Resources and PT Freeport Indonesia on Adjustment of the Contract of Work.		8-K	001-11307-01	7/28/2014

~~E-3~~

~~Table of Contents~~



~~FREEPORT-McMoRan INC.~~
~~EXHIBIT INDEX~~
		~~Filed~~
~~Exhibit~~		~~with this~~	~~Incorporated by Reference~~
~~Number~~	~~Exhibit Title~~	~~Form 10-Q~~	~~Form~~	~~File No.~~	~~Date Filed~~
15.1	Letter from Ernst & Young LLP regarding unaudited interim financial statements.	X
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d – 14(a).	X
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d – 14(a).	X
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.	X
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C Section 1350.	X
95.1	Mine Safety and Health Administration Safety Data.	X
101.INS	XBRL Instance Document.	X
101.SCH	XBRL Taxonomy Extension Schema.	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase.	X
101.LAB	XBRL Taxonomy Extension Label Linkbase.	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.	X

* Indicates management contracts or compensatory plan or arrangement.

~~E-4~~E-3