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 March 31,June 30, 2015
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)
Delaware74-2480931
(State or other jurisdiction of(I.R.S. Employer Identification No.)
incorporation or organization) 
  
333 North Central Avenue 
Phoenix, AZ85004-2189
(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  o 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  o 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 o          Non-accelerated filer o         Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yes þ No

On April 30,July 31, 2015, there were issued and outstanding 1,040,044,8091,040,228,261 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 Operations (Unaudited)
4
  
Consolidated Statements of Comprehensive (Loss) 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
2630
  
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
2731
  
Item 3. Quantitative and Qualitative Disclosures About Market Risk
6991
  
Item 4. Controls and Procedures
6991
  
Part II. Other Information
6991
  
Item 1. Legal Proceedings
6991
  
Item 1A. Risk Factors
6991
  
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
7092
  
Item 4. Mine Safety Disclosure
7092
  
Item 6. Exhibits
7092
  
Signature
7193
  
Exhibit Index
E-1
  


2
Table of Contents                 


Part I.FINANCIAL INFORMATION

Item 1.
Financial Statements.

FREEPORT-McMoRan INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31,
2015		 December 31,
2014		June 30,
2015		 December 31,
2014
(In millions)(In millions)
ASSETS      
Current assets:      
Cash and cash equivalents$549
 $464
$466
 $464
Trade accounts receivable995
 953
949
 953
Other accounts receivable1,401
 1,610
1,323
 1,610
Inventories:      
Materials and supplies, net1,919
 1,886
2,014
 1,886
Mill and leach stockpiles1,877
 1,914
1,933
 1,914
Product1,442
 1,561
1,484
 1,561
Other current assets671
 657
528
 657
Total current assets8,854
 9,045
8,697
 9,045
Property, plant, equipment and mining development costs, net26,595
 26,220
27,095
 26,220
Oil and gas properties, net - full cost method      
Subject to amortization, less accumulated amortization6,713
 9,187
4,649
 9,187
Not subject to amortization9,665
 10,087
9,312
 10,087
Long-term mill and leach stockpiles2,261
 2,179
2,277
 2,179
Other assets1,977
 1,956
1,978
 1,956
Total assets$56,065
 $58,674
$54,008
 $58,674
      
LIABILITIES AND EQUITY      
Current liabilities:      
Accounts payable and accrued liabilities$3,111
 $3,653
$3,376
 $3,653
Current portion of debt558
 478
791
 478
Accrued income taxes364
 410
Current portion of environmental and asset retirement obligations317
 296
330
 296
Dividends payable60
 335
175
 335
Accrued income taxes67
 410
Total current liabilities4,410
 5,172
4,739
 5,172
Long-term debt, less current portion19,754
 18,371
20,111
 18,371
Deferred income taxes5,625
 6,398
4,870
 6,398
Environmental and asset retirement obligations, less current portion3,678
 3,647
3,716
 3,647
Other liabilities1,812
 1,861
1,760
 1,861
Total liabilities35,279
 35,449
35,196
 35,449
      
Redeemable noncontrolling interest755
 751
757
 751
      
Equity:      
Stockholders’ equity:      
Common stock117
 117
117
 117
Capital in excess of par value22,307
 22,281
22,330
 22,281
(Accumulated deficit) retained earnings(2,398) 128
(4,417) 128
Accumulated other comprehensive loss(532) (544)(523) (544)
Common stock held in treasury(3,701) (3,695)(3,702) (3,695)
Total stockholders’ equity15,793
 18,287
13,805
 18,287
Noncontrolling interests4,238
 4,187
4,250
 4,187
Total equity20,031
 22,474
18,055
 22,474
Total liabilities and equity$56,065
 $58,674
$54,008
 $58,674

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

3
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FREEPORT-McMoRan INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

Three Months Ended Three Months Ended Six Months Ended
March 31, June 30, June 30,
2015 2014 2015 2014 2015 2014
(In millions, except per share amounts) (In millions, except per share amounts)
Revenues$4,153
 $4,985
 $4,248
 $5,522
 $8,401
 $10,507
Cost of sales:           
Production and delivery2,912
 2,737
 2,848
 3,082
 5,760
 5,819
Depreciation, depletion and amortization939
 966
 890
 1,013
 1,829
 1,979
Impairment of oil and gas properties3,104
 —
 2,686
 —
 5,790
 —
Total cost of sales6,955

3,703

6,424

4,095

13,379
 7,798
Selling, general and administrative expenses154
 135
 151
 164
 305
 299
Mining exploration and research expenses33
 30
 36
 34
 69
 64
Environmental obligations and shutdown costs13
 6
 11
 76
 24
 82
Net gain on sale of assets(39) —
 —
 —
 (39) —
Total costs and expenses7,116
 3,874
 6,622
 4,369
 13,738
 8,243
Operating (loss) income(2,963) 1,111
 (2,374) 1,153
 (5,337) 2,264
Interest expense, net(146) (161) (149) (164) (295) (325)
Other income, net7
 33
 
Insurance and other third-party recoveries92
 —
 92
 —
Net gain on early extinguishment of debt—
 5
 —
 5
Other (expense) income, net(55) (8) (48) 25
(Loss) income before income taxes and equity in affiliated companies' net earnings(3,102) 983
 (2,486) 986
 (5,588) 1,969
Benefit from (provision for) income taxes695
 (357) 687
 (328) 1,382
 (685)
Equity in affiliated companies’ net earnings1
 —
 —
 2
 1
 2
Net (loss) income(2,406) 626
 (1,799) 660
 (4,205) 1,286
Net income attributable to noncontrolling interests(58) (106) (42) (168) (100) (274)
Preferred dividends attributable to redeemable noncontrolling interest(10) (10) (10) (10) (20) (20)
Net (loss) income attributable to common stockholders$(2,474) $510
 $(1,851) $482
 $(4,325) $992
           
Net (loss) income per share attributable to common stockholders:           
Basic$(2.38) $0.49
 $(1.78) $0.46
 $(4.16) $0.95
Diluted$(2.38) $0.49
 $(1.78) $0.46
 $(4.16) $0.95
           
Weighted-average common shares outstanding:           
Basic1,040
 1,038
 1,040
 1,039
 1,040
 1,039
Diluted1,040
 1,044
 1,040
 1,045
 1,040
 1,045
           
Dividends declared per share of common stock$0.05
 $0.3125
 $0.1605
 $0.3125
 $0.2105
 $0.6250
 
The accompanying notes are an integral part of these consolidated financial statements.


4
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FREEPORT-McMoRan INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)

 Three Months Ended  Three Months Ended Six Months Ended
 March 31,  June 30, June 30,
 2015 2014  2015 2014 2015 2014
 (In millions)  (In millions)
Net (loss) income $(2,406) $626
  $(1,799) $660
 $(4,205) $1,286
             
Other comprehensive income, net of taxes:             
Defined benefit plans:             
Amortization of unrecognized amounts included in net periodic benefit costs 8
 3
  8
 4
 16
 7
Foreign exchange gains 4
 —
 
Foreign exchange gains (losses) 1
 (3) 5
 (3)
Other comprehensive income 12
 3
  9
 1
 21
 4
             
Total comprehensive (loss) income (2,394) 629
  (1,790) 661
 (4,184) 1,290
Total comprehensive income attributable to noncontrolling interests (58) (106)  (42) (168) (100) (274)
Preferred dividends attributable to redeemable noncontrolling interest (10) (10)  (10) (10) (20) (20)
Total comprehensive (loss) income attributable to common stockholders $(2,462) $513
  $(1,842) $483
 $(4,304) $996

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




5
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FREEPORT-McMoRan INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended Six Months Ended 
March 31, June 30, 
2015 2014 2015 2014 
(In millions) (In millions) 
Cash flow from operating activities:        
Net (loss) income$(2,406) $626
 $(4,205) $1,286
 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:        
Depreciation, depletion and amortization939
 966
 1,829
 1,979
 
Impairment of oil and gas properties3,104
 —
 5,790
 —
 
Lower of cost or market inventory adjustments63
 —
 
Net gain on sale of assets(39) —
 (39) —
 
Net (gains) losses on crude oil and natural gas derivative contracts(52) 50
 (58) 120
 
Net charges for environmental and asset retirement obligations, including accretion53
 46
 109
 97
 
Payments for environmental and asset retirement obligations(42) (45) (81) (96) 
Net gain on early extinguishment of debt—
 (5) 
Deferred income taxes(709) 90
 (1,432) 37
 
Increase in long-term mill and leach stockpiles(82) (86) (104) (131) 
Other, net37
 (33) 104
 77
 
Decreases (increases) in working capital and changes in other tax payments, excluding amounts from disposition:    
Changes in working capital and other tax payments, excluding amounts from acquisitions and disposition:    
Accounts receivable316
 179
 493
 (243) 
Inventories165
 (180) 8
 (230) 
Other current assets(42) (34) (1) 35
 
Accounts payable and accrued liabilities(402) (362) (205) (186) 
Accrued income taxes and other tax payments(123) (16) 
Accrued income taxes and changes in other tax payments(485) (153) 
Net cash provided by operating activities717
 1,201
 1,786
 2,587
 
        
Cash flow from investing activities:        
Capital expenditures:        
North America copper mines(107) (303) (214) (627) 
South America(445) (423) (902) (839) 
Indonesia(225) (236) (438) (479) 
Africa(39) (31) (97) (60) 
Molybdenum mines(3) (19) (7) (33) 
United States oil and gas operations(1,018) (579) (1,795) (1,484) 
Other(30) (21) (75) (40) 
Acquisition of Deepwater Gulf of Mexico interests—
 (925) 
Net proceeds from sale of Eagle Ford shale assets—
 3,009
 
Other, net127
 7
 136
 (363) 
Net cash used in investing activities(1,740) (1,605) (3,392) (1,841) 
        
Cash flow from financing activities:        
Proceeds from debt2,273
 1,149
 4,422
 1,248
 
Repayments of debt(802) (987) (2,360) (1,611) 
Cash dividends and distributions paid:        
Common stock(327) (326) (380) (653) 
Noncontrolling interests(23) (77) (60) (250) 
Stock-based awards net (payments) proceeds, including excess tax benefit(6) 3
 (7) 3
 
Debt financing costs and other, net(7) (1) (7) (10) 
Net cash provided by (used in) financing activities1,108
 (239) 1,608
 (1,273) 
        
Net increase (decrease) in cash and cash equivalents85
 (643) 2
 (527) 
Cash and cash equivalents at beginning of year464
 1,985
 464
 1,985
 
Cash and cash equivalents at end of period$549
 $1,342
 $466
 $1,458
 
The accompanying notes are an integral part of these consolidated financial statements.

6
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FREEPORT-McMoRan INC.
CONSOLIDATED STATEMENT OF EQUITY (Unaudited)

Stockholders’ Equity    Stockholders’ Equity    
Common Stock   Retained
Earnings(Accum-ulated Deficit)		 Accumu-
lated
Other Compre-
hensive
Loss		 
Common Stock
Held in Treasury
 Total
Stock-holders' Equity		    Common Stock   Retained
Earnings(Accum-ulated Deficit)		 Accumu-
lated
Other Compre-
hensive
Loss		 
Common Stock
Held in Treasury
 Total
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
 Retained
Earnings(Accum-ulated Deficit)		Accumu-
lated
Other Compre-
hensive
Loss		Total
Stock-holders' Equity		 Retained
Earnings(Accum-ulated Deficit)		Accumu-
lated
Other Compre-
hensive
Loss		Total
Stock-holders' Equity
(In millions)(In millions)
Balance at December 31, 20141,167
 $117
 $22,281
 $128
 $(544)128
$(3,695)$18,287
$4,187
$22,474
1,167
 $117
 $22,281
 $128
 $(544)128
$(3,695)$18,287
$4,187
$22,474
Exercised and issued stock-based awards1
 —
 1
 —
 —
 —
 —
 1
 —
 1
1
 —
 3
 —
 —
 —
 —
 3
 —
 3
Stock-based compensation—
 —
 28
 —
 —
 —
 —
 28
 7
 35
—
 —
 50
 —
 —
 —
 —
 50
 7
 57
Reserve of tax benefit for stock-based awards—
 —
 (2) —
 —
 —
 —
 (2) —
 (2)—
 —
 (2) —
 —
 —
 —
 (2) —
 (2)
Tender of shares for stock-based awards—
 —
 —
 —
 —
 —
 (6) (6) —
 (6)—
 —
 —
 —
 —
 —
 (7) (7) —
 (7)
Dividends on common stock—
 —
 —
 (52) —
 —
 —
 (52) —
 (52)—
 —
 —
 (220) —
 —
 —
 (220) —
 (220)
Dividends to noncontrolling interests—
 —
 —
 —
 —
 —
 —
 —
 (15) (15)—
 —
 —
 —
 —
 —
 —
 —
 (46) (46)
Noncontrolling interests' share of contributed capital in subsidiary—
 —
 (1) —
 —
 —
 —
 (1) 1
 —
—
 —
 (2) —
 —
 —
 —
 (2) 2
 —
Net loss attributable to common stockholders—
 —
 —
 (2,474) —
 —
 —
 (2,474) —
 (2,474)—
 —
 —
 (4,325) —
 —
 —
 (4,325) —
 (4,325)
Net income attributable to noncontrolling interests—
 —
 —
 —
 —
 —
 —
 —
 58
 58
—
 —
 —
 —
 —
 —
 —
 —
 100
 100
Other comprehensive income—
 —
 —
 —
 12
 —
 —
 12
 —
 12
—
 —
 —
 —
 21
 —
 —
 21
 —
 21
Balance at March 31, 20151,168
 $117
 $22,307
 $(2,398) $(532) 128
 $(3,701) $15,793
 $4,238
 $20,031
Balance at June 30, 20151,168
 $117
 $22,330
 $(4,417) $(523) 128
 $(3,702) $13,805
 $4,250
 $18,055
 
The accompanying notes are an integral part of these consolidated financial statements.


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FREEPORT-McMoRan INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1. GENERAL INFORMATION
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 Freeport-McMoRan Inc.'s (FCX) consolidated financial statements and notes contained in its annual report on Form 10-K for the year ended December 31, 2014. 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 the related tax charge to establish a deferred tax valuation allowance, all such adjustments are, in the opinion of management, of a normal recurring nature. Operating results for the three-month periodquarter and six months ended March 31,June 30, 2015, are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

Oil and Gas Properties. Under the U.S. 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, amortization and amortization,impairment, 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 (WTI) 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 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 June 30, 2015, and March 31, 2015,, the net capitalized costs with respect to FCX's proved U.S. oil and gas properties exceeded the related ceiling;ceiling test limitation; therefore, an impairment chargecharges of $3.1$2.7 billion waswere recorded in first-quartersecond-quarter 2015 and $5.8 billion for the first six months of 2015, primarily because of the lower twelve-month average of the first-day-of-the-month historical reference oil price and higher capitalized costs at March 31, 2015.such dates. The SEC requires that the twelve-month average of the first-day-of-the-month historical reference oil price be used in determining the ceiling amount under its full cost accounting rules. This price (using WTI as the reference oil price) was $71.68 per barrel at June 30, 2015 (the twelve-month average was $82.72 per barrel at March 31, 2015 (the twelve-month average was $94.99 per barrel at December 31, 2014)2015). Because the ceiling limitation uses a twelve-month historical average price, if WTI oil prices remain below the twelve-month average of $82.72 per barrel, the ceiling limitation will decrease, resulting in potentially significant additional ceiling test impairments of FCX's oil and gas properties during the remainder of 2015. In addition, increases in capitalized costs subject to amortization, negative reserve revisions or other factors could result in additional 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 $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 and was used to reinvest in additional Deepwater Gulf of Mexico (GOM) oil and gas interests, as discussed below and in Note 2 of FCX's annual report on Form 10-K for the year ended December 31, 2014. The remaining proceeds were used to repay debt.

Deepwater GOM Acquisition. 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 $918 million ($451 million for oil and gas properties subject to amortization and $477 million for costs not subject to amortization, including transaction costs and $10 million of asset retirement costs). The Deepwater GOM acquisition was funded by the like-kind exchange escrow.

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NOTE 3. EARNINGS PER SHARE
FCX’s basic net (loss) income per share of common stock was computed by dividing net (loss) income attributable to common stockholders by the weighted-average shares 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.


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A reconciliation of net (loss) income and weighted-average shares of common stock outstanding for purposes of calculating basic and diluted net (loss) income per share for the three months ended March 31 follows (in millions, except per share amounts):
Three Months Ended Three Months Ended Six Months Ended 
March 31, June 30, June 30, 
2015 2014 2015 2014 2015 2014 
Net (loss) income$(2,406) $626
 $(1,799) $660
 $(4,205) $1,286
 
Net income attributable to noncontrolling interests(58) (106) (42) (168) (100) (274) 
Preferred dividends on redeemable noncontrolling interest(10) (10) (10) (10) (20) (20) 
Undistributed earnings allocable to participating securities(3) (1) (3) (2) (3) (3) 
Net (loss) income allocable to common stockholders$(2,477) $509
 $(1,854) $480
 $(4,328) $989
 
            
Basic weighted-average shares of common stock outstanding1,040
 1,038
 1,040
 1,039
 1,040
 1,039
 
Add shares issuable upon exercise or vesting of dilutive stock options and RSUs—
a 
6
a 
—
a 
6
a 
—
a 
6
a 
Diluted weighted-average shares of common stock outstanding1,040
 1,044
 1,040
 1,045
 1,040
 1,045
 
            
Basic net (loss) income per share attributable to common stockholders$(2.38) $0.49
 $(1.78) $0.46
 $(4.16) $0.95
 
Diluted net (loss) income per share attributable to common stockholders$(2.38) $0.49
 $(1.78) $0.46
 $(4.16) $0.95
 
a.Excludes approximately four million shares of common stock totaling approximatelyfor both the quarter and six months ended June 30, 2015, and three million shares of common stock for first-quarter 2015both the quarter and two million for first-quartersix months ended June 30, 2014, associated with outstanding stock options with exercise prices less than the average market price of FCX's common stock and RSU'sRSUs that were anti-dilutive.

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 40 million for first-quarterboth the quarter and six months ended June 30, 2015, and 30 million for both the quarter and 2015 and six months ended June 30, million for first-quarter2014.2014.


9
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NOTE 3.4. INVENTORIES, INCLUDING LONG-TERM MILL AND LEACH STOCKPILES
The components of inventories follow (in millions):
March 31,
2015		 December 31, 2014 June 30,
2015		 December 31, 2014 
Current inventories:        
Mill stockpiles$101
 $86
 $130
 $86
 
Leach stockpiles1,776
 1,828
 1,803
 1,828
 
Total current mill and leach stockpiles$1,877
 $1,914
 $1,933
 $1,914
 
        
Total materials and supplies, neta
$1,919
 $1,886
 $2,014
 $1,886
 
        
Raw materials (primarily concentrates)$272
 $288
 $306
 $288
 
Work-in-process158
 174
 155
 174
 
Finished goods1,012
 1,099
 1,023
 1,099
 
Total product inventories$1,442
 $1,561
 $1,484
 $1,561
 
        
Long-term inventories:        
Mill stockpiles$346
 $360
 $361
 $360
 
Leach stockpiles1,915
 1,819
 1,916
 1,819
 
Total long-term mill and leach stockpilesb
$2,261
 $2,179
 $2,277
 $2,179
 
a.
Materials and supplies inventory was net of obsolescence reserves totaling $21$25 million at March 31,June 30, 2015, and $20 million at December 31, 2014.
b.Estimated metals in stockpiles not expected to be recovered within the next 12 months.


9
TableFCX recorded charges for lower of Contentscost or market (LCM) inventory adjustments of $59 million ($48 million for molybdenum inventories and $11 million for copper inventories) for second-quarter 2015 and $63 million ($52 million for molybdenum inventories and $11 million for copper inventories) for the first six months of 2015, primarily because of lower molybdenum and copper prices.


NOTE 4.5. INCOME TAXES
Variations in the relative proportions of jurisdictional income result in fluctuations to FCX's consolidated effective income tax rate. FCX’s consolidated effective income tax rate was 25 percent for the first six months of 2015 and 35 percent for the first six monthsof 2014. Geographic sources of FCX's (benefit from) provision for income taxes follow (in millions):
Three Months Ended Three Months Ended Six Months Ended 
March 31, June 30, June 30, 
2015 2014 2015 2014 2015 2014 
U.S. operations$(835) $136
 $(829)
a 
$149
b 
$(1,664)
a 
$285
b 
International operations140
 221
 142
 179
 282
 400
 
Total$(695) $357
 $(687) $328
 $(1,382) $685
 
a.As a result of the impairment to oil and gas properties, FCX recorded tax charges of $305 million for second-quarter 2015 and $763 million for the first six months of 2015 to establish a valuation allowance primarily against U.S. federal alternative minimum tax credits. Excluding this charge, FCX's consolidated effective income tax rate was 38 percent for the first six months of 2015.
b.FCX recognized a $58 million charge for deferred taxes recorded in connection with the allocation of goodwill to the sale of Eagle Ford shale assets.


FCX’s consolidated effective income tax rate was 22 percent for first-quarter 2015 and 36 percent for first-quarter2014. During first-quarter 2015, as a result

10
Table of the impairment to oil and gas properties, FCX recorded a tax charge of $458 million to establish a valuation allowance primarily against U.S. federal alternative minimum tax credits. The valuation allowance was recorded because it is no longer more likely than not that the related benefits of all deferred tax assets will be realized.Contents


NOTE 5.6. DEBT AND EQUITY TRANSACTIONS
Debt Transactions. At March 31,June 30, 2015, FCX had $20.3$20.9 billion in debt, which included additions for unamortized fair value adjustments of $233225 million (primarily from the oil and gas acquisitions in 2013), and is net of reductions attributable to unamortized net discounts of $21 million and unamortized debt issuance costs of $122116 million. Refer to Note 1112 for discussion of a change in the presentation of debt issuance costs.

In February 2015, FCX's unsecured revolving credit facility and $4.0 billion unsecured bank term loan (Term Loan) were modified to amend the maximum total leverage ratio. In addition, the Term Loan amortization schedule was extended such that, as amended, the Term Loan’s scheduled payments total $205 million in 2016, $272 million in 2017, $1.0 billion in 2018, $313 million in 2019 and $1.3 billion in 2020, compared with the previous amortization schedule of $650 million in 2016, $200 million in 2017 and $2.2 billion in 2018.

At March 31,June 30, 2015, $985 million was outstanding and $42 million of letters of credit were issued under FCX's revolving credit facility, resulting in availability of approximately $3.0 billion, of which approximately $1.5 billion could be used for additional letters of credit.

In March 2014,At June 30, 2015, $1.3 billion was outstanding and no letters of credit were issued under Sociedad Minera Cerro Verde S.A.A.'s (Cerro Verde, FCX's mining subsidiary in Peru) entered into acredit facility, resulting in availability of $531 million. Cerro Verde's five-year, $1.8 billion senior unsecured credit facility that is nonrecourse to FCX and the other shareholders of Cerro Verde. During first-quarter 2015, Cerro Verde borrowed an additional $422

In April 2014, FCX redeemed $210 million under its credit facility. At March 31, 2015,of the outstandingaggregate principal amount of FCX Oil & Gas Inc.'s (FM O&G, FCX's oil and gas subsidiary) outstanding 6.625% Senior Notes due 2021. In accordance with the terms of the senior notes, the redemption was $847funded 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 and no letters of credit were issued under Cerro Verde’s credit facility.in second-quarter 2014.

Consolidated interest expense (excluding capitalized interest) totaled $210$215 million in first-quartersecond-quarter 2015, $225 million in second-quarter 2014, $425 million for the first six months of 2015 and $224$449 million in first-quarterfor the first six months of 2014. Capitalized interest added to property, plant, equipment and mining development costs, net, totaled $4547 million in first-quartersecond-quarter 2015, and $4039 million in first-quartersecond-quarter 2014, $92 million for the first six months of 2015 and $79 million for the first six months of 2014. Capitalized interest added to oil and gas properties not subject to amortization totaled $19 million in first-quartersecond-quarter 2015, and $2322 million in first-quartersecond-quarter 2014, $38 million for the first six months of 2015 and $45 million for the first six months of 2014.

Equity Transactions. On MarchJune 24, 2015, FCX's Board of Directors (the Board) declared a quarterly dividend of $0.05$0.1605 per share, which was paid on May 1,August 3, 2015, to common shareholders of record at the close of business on AprilJuly 15, 2015. This common stock dividend consisted of $0.05 per share for FCX's regular quarterly dividend was reduced from the previous quarterly rate of $0.3125and $0.1105 per share in responseas a one-time special dividend related to the impactsettlement of lower commodity prices.

the shareholder derivative litigation (refer to Note 9 for further discussion).

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NOTE 6.7. 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 the oil and gas business in 2013, 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 March 31,June 30, 2015, and December 31, 2014, 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, 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 periods ended March 31,June 30, 2015 and 2014, resulting from hedge ineffectiveness. At March 31,June 30, 2015, FCX held copper futures and swap contracts that qualified for hedge accounting for 5551 million pounds at an average contract price of $2.752.71 per pound, with maturities through December 2016May 2017.

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 EndedThree Months Ended Six Months Ended
March 31,June 30, June 30,
2015 20142015 2014 2015 2014
Copper futures and swap contracts:          
Unrealized gains (losses):          
Derivative financial instruments$6
 $(12)$(4) $12
 $2
 $—
Hedged item – firm sales commitments(6) 12
4
 (12) (2) —
          
Realized (losses) gains:          
Matured derivative financial instruments(10) 2
(1) (2) (11) (4)

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, 2014, 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 from these embedded derivatives are recorded through the settlement date and are reflected in revenues for sales contracts and in cost of sales as production and delivery costs for purchase contracts.


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A summary of FCX’s embedded commodity derivatives at March 31,June 30, 2015, follows:
Open Positions 
Average Price
Per Unit
 Maturities ThroughOpen Positions 
Average Price
Per Unit
 Maturities Through
 Contract Market  Contract Market 
Embedded derivatives in provisional sales contracts:              
Copper (millions of pounds)577
 $2.75
 $2.74
 September 2015572
 $2.68
 $2.58
 November 2015
Gold (thousands of ounces)155
 1,195
 1,183
 July 2015229
 1,189
 1,174
 September 2015
Embedded derivatives in provisional purchase contracts:            
Copper (millions of pounds)126
 2.68
 2.75
 July 2015134
 2.75
 2.61
 October 2015

Crude Oil Contracts. As a result of the acquisition of the oil and gas business, FCX has derivative contracts extending through 2015 that consist of crude oil options. These crude oil 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 the oil and gas business to protect the realized price of a portion of expected future sales in order to limit the effects of crude oil price decreases. At March 31,June 30, 2015, 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 March 31,June 30, 2015, the deferred option premiums and accrued interest associated with the crude oil option contracts totaled $159106 million, which was included as a component of the fair value of the crude oil options contracts. At March 31,June 30, 2015, the outstanding 2015 crude oil option contracts, which settle monthly and cover approximately 2315.5 million barrels over the remainder of 2015, follow:
 Daily Volumes (thousand barrels) 
Average Strike Price (per barrel)a
 
Weighted-Average Deferred Premium
 (per barrel)
  Daily Volumes (thousand barrels) 
Average Strike Price (per barrel)a
 
Weighted-Average Deferred Premium
 (per barrel)
 
2015 Period Instrument Type Floor Floor Limit Index Instrument Type Floor Floor Limit Index
                  
April - December 
Put optionsb
 84
 $90
 $70
 $6.89
 Brent
July - December 
Put optionsb
 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.

Copper Forward Contracts. Atlantic Copper, FCX's wholly owned smelting and refining unit in Spain, enters into copper forward 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 March 31,June 30, 2015, Atlantic Copper held net copper forward purchase contracts for 3631 million pounds at an average contract price of $2.682.65 per pound, with maturities through MayAugust 2015.


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Summary of (Losses) Gains. A summary of the realized and unrealized (losses) gains recognized in (loss) 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 EndedThree Months Ended Six Months Ended
March 31,June 30, June 30,
2015 20142015 2014 2015 2014
Embedded derivatives in provisional copper and gold          
sales contractsa
$(72) $(169)$(78) $84
 $(150) $(85)
Crude oil optionsa
52
 (36)6
 (68) 58
 (104)
Natural gas swapsa
—
 (14)—
 (2) —
 (16)
Copper forward contractsb
(1) 1
(6) 4
 (7) 5
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):
 March 31,
2015		 December 31, 2014 June 30,
2015		 December 31, 2014
Commodity Derivative Assets:        
Derivatives designated as hedging instruments:    
Copper futures and swap contractsa
 $4
 $—
Derivatives not designated as hedging instruments:        
Embedded derivatives in provisional copper and gold        
sales/purchase contracts 46
 15
 $21
 $15
Crude oil optionsb
 268
 316
Copper forward contracts 3
 —
Crude oil optionsa
 174
 316
Total derivative assets $321
 $331
 $195
 $331
        
Commodity Derivative Liabilities:        
Derivatives designated as hedging instruments:        
Copper futures and swap contractsa
 $5
 $7
Copper futures and swap contractsb
 $5
 $7
Derivatives not designated as hedging instruments:        
Embedded derivatives in provisional copper and gold        
sales/purchase contracts 60
 93
 65
 93
Copper forward contracts 1
 —
Total derivative liabilities $65
 $100
 $71
 $100
a.
FCX paid $5 million to brokers at March 31, 2015, and $10 million at December 31, 2014, for margin requirements (recorded in other current assets).
b.
Amounts are net of $159106 million at March 31,June 30, 2015, and $210 million at December 31, 2014, for deferred premiums and accrued interest.
b.FCX paid $9 million to brokers at June 30, 2015, and $10 million at December 31, 2014, for margin requirements (recorded in other current assets).

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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
 March 31, 2015 December 31, 2014 March 31, 2015 December 31, 2014 
June 30,
2015
 December 31, 2014 
June 30,
 2015
 December 31, 2014
                
Gross amounts recognized:                
Commodity contracts:                
Embedded derivatives in provisional                
sales/purchase contracts $46
 $15
 $60
 $93
 $21
 $15
 $65
 $93
Crude oil derivatives 268
 316
 —
 —
 174
 316
 —
 —
Copper derivatives 7
 —
 5
 7
 —
 —
 6
 7
 321
 331
 65
 100
 195
 331
 71
 100
                
Less gross amounts of offset:                
Commodity contracts:                
Embedded derivatives in provisional                
sales/purchase contracts 9
 1
 9
 1
 1
 1
 1
 1
Copper derivatives 5
 —
 5
 —
 —
 —
 —
 —
 14
 1
 14
 1
 1
 1
 1
 1
                
Net amounts presented in balance sheet:                
Commodity contracts:                
Embedded derivatives in provisional                
sales/purchase contracts 37
 14
 51
 92
 20
 14
 64
 92
Crude oil derivatives 268
 316
 —
 —
 174
 316
 —
 —
Copper derivatives 2
 —
 —
 7
 —
 —
 6
 7
 $307
 $330
 $51
 $99
 $194
 $330
 $70
 $99
                
Balance sheet classification:                
Trade accounts receivable $32
 $5
 $22
 $56
 $3
 $5
 $53
 $56
Other current assets 270
 316
 —
 —
 174
 316
 —
 —
Accounts payable and accrued liabilities 5
 9
 29
 43
 17
 9
 17
 43
 $307
 $330
 $51
 $99
 $194
 $330
 $70
 $99

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 March 31,June 30, 2015, the maximum amount of credit exposure associated with derivative transactions was $333226 million.

Other Financial Instruments.  Other financial instruments include cash and cash equivalents, accounts receivable, restricted cash, 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 $17$27 million at March 31,June 30, 2015, and $48 million at December 31, 2014), accounts receivable, restricted cash, 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 78 for the fair values of investment securities, legally restricted funds and long-term debt).



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NOTE 7.8. 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 firstsecond-quarter 2015. A summary of the carrying amount and fair value of FCX’s financial instruments, other than cash and cash equivalents, accounts receivable, restricted cash, accounts payable and accrued liabilities, and dividends payable (refer to Note 6)7), follows (in millions):
At March 31, 2015At June 30, 2015
Carrying Fair ValueCarrying Fair Value
Amount Total Level 1 Level 2 Level 3Amount Total Level 1 Level 2 Level 3
Assets                  
Investment securities:a,b,c
         
Investment securities:a,b
         
U.S. core fixed income fund$23
 $23
 $—
 $23
 $—
$23
 $23
 $—
 $23
 $—
Money market funds22
 22
 22
 —
 —
22
 22
 22
 —
 —
Equity securities3
 3
 3
 —
 —
3
 3
 3
 —
 —
Total48
 48
 25
 23
 —
48
 48
 25
 23
 —
                  
Legally restricted funds:a,b,d
         
Legally restricted funds:a,b,c,d
         
U.S. core fixed income fund52
 52
 —
 52
 —
51
 51
 —
 51
 —
Government bonds and notes39
 39
 —
 39
 —
35
 35
 —
 35
 —
Corporate bonds28
 28
 —
 28
 —
Government mortgage-backed securities29
 29
 —
 29
 —
24
 24
 —
 24
 —
Corporate bonds28
 28
 —
 28
 —
Asset-backed securities16
 16
 —
 16
 —
14
 14
 —
 14
 —
Money market funds10
 10
 10
 —
 —
9
 9
 9
 —
 —
Collateralized mortgage-backed securities8
 8
 —
 8
 —
Municipal bonds1
 1
 —
 1
 —
1
 1
 —
 1
 —
Total175
 175
 10
 165
 —
170
 170
 9
 161
 —
                  
Derivatives:a,e
                  
Embedded derivatives in provisional sales/purchase                  
contracts in a gross asset position46
 46
 —
 46
 —
21
 21
 —
 21
 —
Crude oil options268
 268
 —
 —
 268
174
 174
 —
 —
 174
Copper futures and swap contracts4
 4
 4
 —
 —
Copper forward contracts3
 3
 2
 1
 —
Total321
 321
 6
 47
 268
195
 195
 —
 21
 174
                  
Total assets  $544
 $41
 $235
 $268
  $413
 $34
 $205
 $174
                  
Liabilities                  
Derivatives:a,e
                  
Embedded derivatives in provisional sales/purchase                  
contracts in a gross liability position$60
 $60
 $—
 $60
 $—
$65
 $65
 $—
 $65
 $—
Copper futures and swap contracts5
 5
 4
 1
 —
5
 5
 5
 —
 —
Copper forward contracts1
 1
 —
 1
 —
Total65
 65
 4
 61
 —
71
 71
 5
 66
 —
                  
Long-term debt, including current portionf
20,312
 19,866
 —
 19,866
 —
20,902
 20,191
 —
 20,191
 —
                  
Total liabilities  $19,931
 $4
 $19,927
 $—
  $20,262
 $5
 $20,257
 $—



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At December 31, 2014At December 31, 2014
Carrying Fair ValueCarrying Fair Value
Amount Total Level 1 Level 2 Level 3Amount Total Level 1 Level 2 Level 3
Assets                  
Investment securities:a,b,c
         
Investment securities:a,b
         
U.S. core fixed income fund$23
 $23
 $—
 $23
 $—
$23
 $23
 $—
 $23
 $—
Money market funds20
 20
 20
 —
 —
20
 20
 20
 —
 —
Equity securities3
 3
 3
 —
 —
3
 3
 3
 —
 —
Total46
 46
 23
 23
 —
46
 46
 23
 23
 —
                  
Legally restricted funds:a,b,d
         
Legally restricted funds:a,b,c,d
         
U.S. core fixed income fund52
 52
 —
 52
 —
52
 52
 —
 52
 —
Government bonds and notes39
 39
 —
 39
 —
39
 39
 —
 39
 —
Corporate bonds27
 27
 —
 27
 —
27
 27
 —
 27
 —
Government mortgage-backed securities25
 25
 —
 25
 —
19
 19
 —
 19
 —
Asset-backed securities17
 17
 —
 17
 —
17
 17
 —
 17
 —
Money market funds11
 11
 11
 —
 —
11
 11
 11
 —
 —
Collateralized mortgage-backed securities6
 6
 —
 6
 —
Municipal bonds1
 1
 —
 1
 —
1
 1
 —
 1
 —
Total172
 172
 11
 161
 —
172
 172
 11
 161
 —
                  
Derivatives:a,e
                  
Embedded derivatives in provisional sales/purchase                  
contracts in a gross asset position15
 15
 —
 15
 —
15
 15
 —
 15
 —
Crude oil options316
 316
 —
 —
 316
316
 316
 —
 —
 316
Total331
 331
 —
 15
 316
331
 331
 —
 15
 316
                  
Total assets  $549
 $34
 $199
 $316
  $549
 $34
 $199
 $316
                  
Liabilities                  
Derivatives:a,e
                  
Embedded derivatives in provisional sales/purchase                  
contracts in a gross liability position$93
 $93
 $—
 $93
 $—
$93
 $93
 $—
 $93
 $—
Copper futures and swap contracts7
 7
 6
 1
 —
7
 7
 6
 1
 —
Total100
 100
 6
 94
 —
100
 100
 6
 94
 —
                  
Long-term debt, including current portionf
18,849
 18,735
 —
 18,735
 —
18,849
 18,735
 —
 18,735
 —
                  
Total liabilities  $18,835
 $6
 $18,829
 $—
  $18,835
 $6
 $18,829
 $—
a.Recorded at fair value. 
b.Current portion included in other current assets and long-term portion included in other assets.
c.
Excludes time deposits of $116 million (which approximated fair value) included in other assets of $117 million at March 31,June 30, 2015, and $115 million at December 31, 2014, associated with an assurance bond to support PT Freeport Indonesia's (PT-FI) commitment for smelter development in Indonesia.
d.
Excludes time deposits of $18 million (which approximated fair value) included in other current assets of $10 million at March 31,June 30, 2015, and $17$8 million at December 31, 2014, associated with a reclamation guarantee at PT-FI. Also, excludes a time deposit of $9 million at December 31, 2014, associated with a customs audit assessment and a reclamation guarantee at PT-FI. Also, excludes $115 million (which approximated fair value) included in other current assets at March 31, 2015, associated with a restricted escrow account for the shareholder derivative litigation (refer to Note 8).assessment.
e.
Refer to Note 67 for further discussion and balance sheet classifications. Crude oil options are net of $159106 million at March 31,June 30, 2015, and $210 million at December 31, 2014, 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.




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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.

The U.S. core fixed income fund is valued at net asset value. The fund strategy seeks total return consisting of income and capital appreciation primarily by investing in a broad range of investment-grade debt securities, including U.S. government obligations, corporate bonds, mortgage-backed securities, asset-backed securities and money market instruments. There are no restrictions on redemptions (usually within one business day of notice) and, as such, this fund is classified within Level 2 of the fair value hierarchy.

Fixed income securities (U.S. core fixed income funds, government(government securities, corporate bonds, asset-backed securities, collateralized mortgage-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 are valued using quoted monthly LME or COMEX copper forward prices and the London gold forward price at each reporting date based on the month of maturity (refer to Note 67 for further discussion); 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 Intercontinental Exchange Holdings, Inc. crude oil prices, volatilities, 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 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 3128 percent to 5641 percent, with a weighted average of 3832 percent. The weighted-average cost of deferred premiums totals $6.89 per barrel at March 31,June 30, 2015. Refer to Note 67 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 67 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.

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.

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 March 31,June 30, 2015.


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A summary of the changes in the fair value of FCX's most significant Level 3 instruments, crude oil options, follows (in millions):
Crude Oil Crude Oil 
Options Options 
Fair value at December 31, 2014$316
 $316
 
Net realized gains3
a 
21
 
Net unrealized gains included in earnings related to assets and liabilities
still held at the end of the period
48
 36
a 
Net settlement receipts(99)
b 
(199)
b 
Fair value at March 31, 2015$268
 
Fair value at June 30, 2015$174
 
a.Includes net realizedunrealized gains of $4$37 million, partially offset by $1 million of interest expense associated with the deferred premiums.
b.
Includes interest payments of $12 million.

NOTE 8.9. CONTINGENCIES AND COMMITMENTS
Litigation. The following information includes a discussion of updates to previously reported legal proceedings included in Note 12 of FCX's annual report on Form 10-K for the year ended December 31, 2014.2014, as updated in Note 8 of FCX's quarterly report on Form 10-Q for the quarterly period ended March 31, 2015.

Shareholder Litigation. On April 7, 2015, the Delaware Court of Chancery approved the settlement of FCX’s consolidated stockholder derivative litigation captioned In Re Freeport-McMoRan Copper & Gold Inc. Derivative Litigation, No. 8145-VCN, and awarded the plaintiffs’plaintiffs legal fees and expenses. This settlement resolved all pending derivative claims against directors and officers of FCX challenging FCX's 2013 acquisitions of Plains Exploration & Production Company and McMoRan Exploration Co. During first-quarter 2015, insurers under FCX’s directors and officers liability insurance policies and other third parties funded an escrow account with the $115$125 million settlement amount, from which the proceeds, net of plaintiffs’ legal fees and expenses are expected to betotaling $33 million, were released to FCX in May 2015. Upon the release of funds, FCX expects to recognizerecognized a gain of $92 million in second-quarter 2015 for the amount of the net proceeds.2015. As a result and in accordance with the approved settlement terms, FCX expects theFCX's Board to declaredeclared a special dividend of approximately $115 million ($0.11 per share) that would be payable in earlywas paid on August 3, 2015, correspondingtogether with the timing of FCX’s next regular quarterly dividend.dividend paid on the same day (refer to Note 6 for further discussion).

Tax and Other Matters. There were no significant changes to the Cerro Verde royalty dispute or other Peruvian tax matters during the firstsecond quarter of 2015 (refer to Note 12 of FCX’s annual report on Form 10-K for the year ended December 31, 2014, for further discussion of these matters).

Indonesia Tax Matters. The following information includes a discussion of updates to previously reported Indonesia tax matters included in Note 12 of FCX’s annual report on Form 10-K for the year ended December 31, 2014.2014, as updated in Note 8 of FCX's quarterly report on Form 10-Q for the quarterly period ended March 31, 2015.

PT-FI received assessments from the local regional tax authority in Papua, Indonesia, for additional taxes and penalties related to water rights tax payments for the period from January 2011 through JanuaryJune 2015. PT-FI has filed or will file objections to these assessments. In March 2015, the local government of Papua rejected PT-FI’s objections to the assessments related to the period from January 2011 through December 2014, and in April 2015, PT-FI filed appeals with the Indonesian tax court. As of March 31, 2015, theThe aggregate amount of theseall assessments received through August 3, 2015, including penalties, was 2.32.5 trillion Indonesian rupiah ($177190 million based on exchange rates at March 31,June 30, 2015). Additional penalties, which could be significant, may be assessed depending on the outcome of the appeals process. No amounts have been accrued for these assessments as of March 31,June 30, 2015, because PT-FI believes its Contract of Work (COW) exempts it from these payments. PT-FI may be requiredpayments and that it has the right to record a chargecontest these assessments in second-quarter 2015 for all or a portion of the assessments.tax court and ultimately the Indonesian Supreme Court.


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NOTE 9.10. BUSINESS SEGMENTS
FCX has organized its mining operations into sixfive primary divisions – North America copper mines, South America mining, Indonesia mining, Africa mining and Molybdenum mines and U.S. oil & gas operations.mines. 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. Operating segments that meet certain thresholds are reportable segments, which are separately disclosed in the following table.

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 mines to other divisions, including Atlantic Copper (FCX's wholly owned smelter and refinery in Spain) and on 25 percent of PT-FI's sales to PT Smelting (FCX's 25 percent-owned smelter and refinery in Indonesia), 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 (included in corporate, other & eliminations), whereas foreign income taxes are recorded and managed at the applicable country level. In addition, most mining exploration and research activities are managed on a consolidated basis, and those costs along with some selling, general and administrative costs are not allocated to the operating divisions or individual segments. Accordingly, the following segment information reflects management determinations that may not be indicative of what the actual financial performance of each operating division or segment would be if it was an independent entity.


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Table of Contents                 


Financial Information by 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 Other       denum Rod & Smelting & Elimi- Total Oil & Gas & Elimi- FCX  Other   Cerro Other       denum Rod & Smelting & Elimi- Total Oil & Gas & Elimi- FCX
Morenci Mines Total Verde 
Minesa
 Total Grasberg Tenke Mines Refining & Refining nations Mining 
Operationsb
 nations TotalMorenci Mines Total Verde 
Minesa
 Total Grasberg Tenke Mines Refining & Refining nations Mining 
Operationsb
 nations Total
Three Months Ended March 31, 2015                               
Three Months Ended June 30, 2015                               
Revenues:                                                              
Unaffiliated customers$106
 $115
 $221
 $248
 $231
 $479
 $621
c 
$382
 $—
 $1,062
 $540
 $348
d 
$3,653
 $500
e 
$—
 $4,153
$180
 $92
 $272
 $195
 $221
 $416
 $792
c 
$310
 $—
 $1,089
 $495
 $305
d 
$3,679
 $569
e 
$—
 $4,248
Intersegment450
 664
 1,114
 14
 (7)
f 
7
 (14)
f 
28
 113
 7
 6
 (1,261) —
 —
 —
 —
427
 706
 1,133
 37
 —
 37
 (2)
f 
41
 102
 8
 5
 (1,324) —
 —
 —
 —
Production and delivery374
 569
 943
 198
 147
 345
 439
 235
 83
 1,063
 519
 (1,001) 2,626
 283
 3
 2,912
386
 576
g 
962
 165
 150
 315
 455
 190
 84
g 
1,088
 468
 (997)
g 
2,565
 281
 2
 2,848
Depreciation, depletion and amortization51
 82
 133
 37
 38
 75
 70
 73
 26
 2
 10
 16
 405
 530
 4
 939
55
 84
 139
 40
 32
 72
 78
 57
 25
 3
 9
 19
 402
 485
 3
 890
Impairment of oil and gas properties—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 3,104
 —
 3,104
—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 2,686
 —
 2,686
Selling, general and administrative expenses1
 —
 1
 1
 —
 1
 25
 3
 —
 —
 5
 6
 41
 54
 59
 154
—
 2
 2
 —
 1
 1
 25
 3
 —
 —
 4
 5
 40
 49
 62
 151
Mining exploration and research expenses—
 3
 3
 —
 —
 —
 —
 —
 —
 —
 —
 30
 33
 —
 —
 33
—
 2
 2
 —
 —
 —
 —
 —
 —
 —
 —
 34
 36
 —
 —
 36
Environmental obligations and shutdown costs—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 13
 13
 —
 —
 13
—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 11
 11
 —
 —
 11
Net gain on sale of assets—
 (39) (39) —
 —
 —
 —
 —
 —
 —
 —
 —
 (39) —
 —
 (39)
Operating income (loss)130
 164
 294
 26
 39
 65
 73
 99
 4
 4
 12
 23
 574
 (3,471) (66) (2,963)166
 134
 300
 27
 38
 65
 232
 101
 (7) 6
 19
 (91) 625
 (2,932) (67) (2,374)
                                                              
Interest expense, net1
 —
 1
 1
 —
 1
 —
 —
 —
 —
 3
 40
 45
 37
 64
 146
—
 1
 1
 —
 —
 —
 —
 —
 —
 —
 2
 39
 42
 41
 66
 149
Provision for (benefit from) income taxes—
 —
 —
 5
 19
 24
 29
 26
 —
 —
 —
 —
 79
 —
 (774) (695)—
 —
 —
 (5) 11
 6
 95
 27
 —
 —
 —
 —
 128
 —
 (815) (687)
Total assets at March 31, 20153,802
 5,646
 9,448
 7,991
 1,970
 9,961
 8,882
 5,108
 2,075
 314
 809
 1,379
 37,976
 17,887
 202
 56,065
Total assets at June 30, 20153,806
 5,582
 9,388
 8,567
 1,935
 10,502
 8,959
 5,125
 2,052
 286
 786
 1,336
 38,434
 15,393
 181
 54,008
Capital expenditures84
 23
 107
 431
 14
 445
 225
 39
 3
 1
 4
 16
 840
 1,018
 9
 1,867
79
 28
 107
 444
 13
 457
 213
 58
 4
 —
 4
 11
 854
 777
 30
 1,661
                                                              
Three Months Ended March 31, 2014                               
Three Months Ended June 30, 2014                               
Revenues:                                                              
Unaffiliated customers$23
 $61
 $84
 $280
 $422
 $702
 $462
c 
$306
 $—
 $1,146
 $588
 $436
d 
$3,724
 $1,261
e 
$—
 $4,985
$52
 $55
 $107
 $421
 $524
 $945
 $523
c 
$386
 $—
 $1,234
 $623
 $468
d 
$4,286
 $1,236
e 
$—
 $5,522
Intersegment444
 758
 1,202
 64
 132
 196
 8
 21
 126
 8
 5
 (1,566) —
 —
 —
 —
474
 888
 1,362
 23
 63
 86
 —
 32
 170
 8
 6
 (1,664) —
 —
 —
 —
Production and delivery283
 503
 786
 165
 311
 476
 383
 152
 76
 1,148
 588
 (1,183) 2,426
 311
 —
 2,737
312
 558
 870
 195
 335
 530
 511
 198
 81
 1,233
 618
 (1,287) 2,754
 329
 (1) 3,082
Depreciation, depletion and amortization34
 73
 107
 36
 51
 87
 48
 51
 22
 2
 10
 19
 346
 616
 4
 966
43
 85
 128
 43
 52
 95
 54
 63
 24
 3
 10
 17
 394
 616
 3
 1,013
Selling, general and administrative expenses—
 1
 1
 1
 1
 2
 21
 3
 —
 —
 4
 7
 38
 57
 40
 135
1
 —
 1
 1
 1
 2
 25
 3
 —
 —
 5
 6
 42
 59
 63
 164
Mining exploration and research expenses—
 2
 2
 —
 —
 —
 —
 —
 —
 —
 —
 28
 30
 —
 —
 30
—
 2
 2
 —
 —
 —
 —
 —
 —
 —
 —
 32
 34
 —
 —
 34
Environmental obligations and shutdown costs—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 6
 6
 —
 —
 6
—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 76
 76
 —
 —
 76
Operating income (loss)150
 240
 390
 142
 191
 333
 18
 121
 28
 4
 (9) (7) 878
 277
 (44) 1,111
170
 298
 468
 205
 199
 404
 (67) 154
 65
 6
 (4) (40) 986
 232
 (65) 1,153
                                                              
Interest expense, net1
 —
 1
 —
 —
 —
 —
 —
 —
 —
 4
 18
 23
 76
 62
 161
—
 1
 1
 —
 —
 —
 —
 —
 —
 —
 3
 18
 22
 74
 68
 164
Provision for income taxes—
 —
 —
 57
 70
 127
 18
 24
 —
 —
 —
 —
 169
 —
 188
 357
Total assets at March 31, 20143,412
 5,827
 9,239
 6,730
 4,059
 10,789
 7,466
 4,904
 2,101
 289
 951
 1,119
 36,858
 26,385
 489
 63,732
Provision for (benefit from) income taxes—
 —
 —
 73
 67
 140
 (33) 33
 —
 —
 —
 —
 140
 —
 188
 328
Total assets at June 30, 20143,675
 5,822
 9,497
 6,876
 3,791
 10,667
 7,972
 4,952
 2,095
 299
 882
 1,127
 37,491
 25,293
 1,119
 63,903
Capital expenditures244
 59
 303
 400
 23
 423
 236
 31
 19
 1
 1
 10
 1,024
 579
 9
 1,612
289
 35
 324
 391
 25
 416
 243
 29
 14
 1
 5
 17
 1,049
 903
 (2) 1,950
a.First-quarterSecond-quarter 2014 amounts includeincludes the results of the Candelaria and Ojos del Salado mining operations, which were sold in November 2014.
b.First-quarterSecond-quarter 2014 includes the results from Eagle Ford, which was sold in June 2014.
c.
Includes PT-FI’s sales to PT Smelting totaling $350293 million in first-quartersecond-quarter 2015 and $373540 million in first-quartersecond-quarter 2014.
d.Includes revenues from FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North and South America copper mines.
e.
Includes net mark-to-market gains (losses) associated with crude oil and natural gas derivative contracts totaling $52$6 million in first-quartersecond-quarter 2015 and $(50)$(70) million in first-quartersecond-quarter 2014.
f.Amounts include net reductions for provisional pricing adjustments to prior period open sales. There were no intersegment sales from Grasberg in second-quarter 2015.
g.Includes LCM inventory adjustments totaling $11 million at other North America copper mines, $3 million at Molybdenum mines and $45 million at other mining & eliminations (see Note 4).

21
Table of Contents


                                
(In millions)Mining Operations      
 North America Copper Mines South America Indonesia Africa                
                     Atlantic Other     Corporate,  
                 Molyb-   Copper Mining   U.S. Other  
   Other   Cerro Other       denum Rod & Smelting & Elimi- Total Oil & Gas & Elimi- FCX
 Morenci Mines Total Verde 
Minesa
 Total Grasberg Tenke Mines Refining & Refining nations Mining 
Operationsb
 nations Total
Six Months Ended June 30, 2015                               
Revenues:                               
Unaffiliated customers$286
 $207
 $493
 $443
 $452
 $895
 $1,413
c 
$692
 $—
 $2,151
 $1,035
 $653
d 
$7,332
 $1,069
e 
$—
 $8,401
Intersegment877
 1,370
 2,247
 51
 (7)
f 
44
 (16)
f 
69
 215
 15
 11
 (2,585) —
 —
 —
 —
Production and delivery760
 1,145
g 
1,905
 363
 297
 660
 894
 425
 167
g 
2,151
 987
 (1,998)
g 
5,191
 564
 5
 5,760
Depreciation, depletion and amortization106
 166
 272
 77
 70
 147
 148
 130
 51
 5
 19
 35
 807
 1,015
 7
 1,829
Impairment of oil and gas properties—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 5,790
 —
 5,790
Selling, general and administrative expenses1
 2
 3
 1
 1
 2
 50
 6
 —
 —
 9
 11
 81
 103
 121
 305
Mining exploration and research expenses—
 5
 5
 —
 —
 —
 —
 —
 —
 —
 —
 64
 69
 —
 —
 69
Environmental obligations and shutdown costs—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 24
 24
 —
 —
 24
Net gain on sales of assets—
 (39) (39) —
 —
 —
 —
 —
 —
 —
 —
 —
 (39) —
 —
 (39)
Operating income (loss)296
 298
 594
 53
 77
 130
 305
 200
 (3) 10
 31
 (68) 1,199
 (6,403) (133) (5,337)
                                
Interest expense, net1
 1
 2
 1
 —
 1
 —
 —
 —
 —
 5
 79
 87
 78
 130
 295
Provision for (benefit from) income taxes—
 —
 —
 —
 30
 30
 124
 53
 —
 —
 —
 —
 207
 —
 (1,589) (1,382)
Capital expenditures163
 51
 214
 875
 27
 902
 438
 97
 7
 1
 8
 27
 1,694
 1,795
 39
 3,528
                                
Six Months Ended June 30, 2014                               
Revenues:                               
Unaffiliated customers$75
 $116
 $191
 $701
 $946
 $1,647
 $985
c 
$692
 $—
 $2,380
 $1,211
 $904
d 
$8,010
 $2,497
e 
$—
 $10,507
Intersegment918
 1,646
 2,564
 87
 195
 282
 8
 53
 296
 16
 11
 (3,230) —
 —
 —
 —
Production and delivery595
 1,061
 1,656
 360
 646
 1,006
 894
 350
 157
 2,381
 1,206
 (2,470) 5,180
 640
 (1) 5,819
Depreciation, depletion and amortization77
 158
 235
 79
 103
 182
 102
 114
 46
 5
 20
 36
 740
 1,232
 7
 1,979
Selling, general and administrative expenses1
 1
 2
 2
 2
 4
 46
 6
 —
 —
 9
 13
 80
 116
 103
 299
Mining exploration and research expenses—
 4
 4
 —
 —
 —
 —
 —
 —
 —
 —
 60
 64
 —
 —
 64
Environmental obligations and shutdown costs—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 82
 82
 —
 —
 82
Operating income (loss)320
 538
 858
 347
 390
 737
 (49) 275
 93
 10
 (13) (47) 1,864
 509
 (109) 2,264
                                
Interest expense, net1
 1
 2
 —
 —
 —
 —
 —
 —
 —
 7
 36
 45
 150
 130
 325
Provision for (benefit from) income taxes—
 —
 —
 130
 137
 267
 (15) 57
 —
 —
 —
 —
 309
 —
 376
 685
Capital expenditures533
 94
 627
 791
 48
 839
 479
 60
 33
 2
 6
 27
 2,073
 1,484
 5
 3,562
a.The first six months of 2014 include the results of the Candelaria and Ojos del Salado mining operations, which were sold in November 2014.
b.The first six months of 2014 include the results from Eagle Ford, which was sold in June 2014.
c.Includes PT-FI’s sales to PT Smelting totaling $643 million for the first six months of 2015 and $913 million for the first six months of 2014.
d.Includes revenues from FCX's molybdenum sales company, which includes sales of molybdenum produced by the Molybdenum mines and by certain of the North and South America copper mines.
e.Includes net mark-to-market gains (losses) associated with crude oil and natural gas derivative contracts totaling $58 million for the first six months 2015 and $(120) million for the first six months of 2014.
f.Amounts include net reductions for provisional pricing adjustments to prior period open sales. There were no intersegment sales from El Abra or Grasberg in first-quarterfor the first six months of 2015.
g.Includes LCM inventory adjustments totaling $11 million at other North America copper mines, $3 million at Molybdenum mines and $49 million at other mining & eliminations (see Note 4).

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NOTE 10.11. GUARANTOR FINANCIAL STATEMENTS
All of the senior notes issued by FCX are fully and unconditionally guaranteed on a senior basis jointly and severally by Freeport-McMoRan Oil & Gas LLC (FM O&G LLC), as guarantor, which is a 100 percent owned subsidiary of FCX Oil & Gas Inc. (FMFM O&G)&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 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 FM O&G LLC's subsidiaries. In the future,The indentures provide that 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 March 31,June 30, 2015, and December 31, 2014, and the related condensed consolidating statements of comprehensive (loss) income for the three and six months ended June 30, 2015 and 2014, and condensed consolidating statements of cash flows for the threesix months ended March 31,June 30, 2015 and 2014 (in millions), which should be read in conjunction with FCX's notes to the consolidated financial statements.

CONDENSED CONSOLIDATING BALANCE SHEET
March 31,June 30, 2015
FCX FM O&G LLC Non-guarantor   ConsolidatedFCX FM O&G LLC Non-guarantor   Consolidated
Issuer Guarantor Subsidiaries Eliminations FCXIssuer Guarantor Subsidiaries Eliminations FCX
ASSETS                  
Current assets$288
 $3,623
 $8,257
 $(3,314) $8,854
$257
 $2,900
 $9,665
 $(4,125) $8,697
Property, plant, equipment and mining development costs, net21
 48
 26,526
 —
 26,595
20
 51
 27,024
 —
 27,095
Oil and gas properties, net - full cost method:                  
Subject to amortization, less accumulated amortization—
 2,309
 4,404
 —
 6,713
—
 1,507
 3,142
 —
 4,649
Not subject to amortization—
 2,553
 7,112
 —
 9,665
—
 2,649
 6,659
 4
 9,312
Investments in consolidated subsidiaries25,828
 4,117
 7,005
 (36,950) —
24,153
 2,216
 4,019
 (30,388) —
Other assets9,814
 4,276
 4,160
 (14,012) 4,238
9,991
 4,703
 4,179
 (14,618) 4,255
Total assets$35,951
 $16,926
 $57,464
 $(54,276) $56,065
$34,421
 $14,026
 $54,688
 $(49,127) $54,008
                  
LIABILITIES AND EQUITY                  
Current liabilities$1,819
 $400
 $5,505
 $(3,314) $4,410
$3,106
 $433
 $5,325
 $(4,125) $4,739
Long-term debt, less current portion15,900
 4,771
 9,625
 (10,542) 19,754
15,841
 5,181
 10,221
 (11,132) 20,111
Deferred income taxes2,390
a 
—
 3,235
 —
 5,625
1,613
a 
—
 3,257
 —
 4,870
Environmental and asset retirement obligations, less current portion—
 303
 3,375
 —
 3,678
—
 307
 3,409
 —
 3,716
Other liabilities49
 3,359
 1,874
 (3,470) 1,812
56
 3,361
 1,829
 (3,486) 1,760
Total liabilities20,158
 8,833
 23,614
 (17,326) 35,279
20,616
 9,282
 24,041
 (18,743) 35,196
                  
Redeemable noncontrolling interest—
 —
 755
 —
 755
—
 —
 757
 —
 757
                  
Equity:                  
Stockholders' equity15,793
 8,093
 29,376
 (37,469) 15,793
13,805
 4,744
 26,173
 (30,917) 13,805
Noncontrolling interests—
 —
 3,719
 519
 4,238
—
 —
 3,717
 533
 4,250
Total equity15,793
 8,093
 33,095
 (36,950) 20,031
13,805
 4,744
 29,890
 (30,384) 18,055
Total liabilities and equity$35,951
 $16,926
 $57,464
 $(54,276) $56,065
$34,421
 $14,026
 $54,688
 $(49,127) $54,008
a.
All U.S. related deferred income taxes are recorded at the parent company.

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CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2014
 FCX FM O&G LLC Non-guarantor   Consolidated
 Issuer Guarantor Subsidiaries Eliminations FCX
ASSETS         
Current assets$323
 $2,635
 $8,659
 $(2,572) $9,045
Property, plant, equipment and mining development costs, net22
 46
 26,152
 —
 26,220
Oil and gas properties, net - full cost method:         
Subject to amortization, less accumulated amortization—
 3,296
 5,907
 (16) 9,187
Not subject to amortization—
 2,447
 7,640
 —
 10,087
Investments in consolidated subsidiaries28,765
 6,460
 10,246
 (45,471) —
Other assets8,914
 3,947
 4,061
 (12,787) 4,135
Total assets$38,024
 $18,831
 $62,665
 $(60,846) $58,674
          
LIABILITIES AND EQUITY         
Current liabilities$1,592
 $560
 $5,592
 $(2,572) $5,172
Long-term debt, less current portion14,930
 3,874
 8,879
 (9,312) 18,371
Deferred income taxes3,161
a 
—
 3,237
 —
 6,398
Environmental and asset retirement obligations, less current portion—
 302
 3,345
 —
 3,647
Other liabilities54
 3,372
 1,910
 (3,475) 1,861
Total liabilities19,737
 8,108
 22,963
 (15,359) 35,449
          
Redeemable noncontrolling interest—
 —
 751
 —
 751
          
Equity:         
Stockholders' equity18,287
 10,723
 35,268
 (45,991) 18,287
Noncontrolling interests—
 —
 3,683
 504
 4,187
Total equity18,287
 10,723
 38,951
 (45,487) 22,474
Total liabilities and equity$38,024
 $18,831
 $62,665
 $(60,846) $58,674
a.All U.S. related deferred income taxes are recorded at the parent company.


2224
Table of Contents                 


CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Three Months Ended March 31, 2015         
Three Months Ended June 30, 2015         
FCX FM O&G LLC Non-guarantor   ConsolidatedFCX FM O&G LLC Non-guarantor   Consolidated
Issuer Guarantor Subsidiaries Eliminations FCXIssuer Guarantor Subsidiaries Eliminations FCX
Revenues$—
 $181
 $3,972
 $—
 $4,153
$—
 $169
 $4,079
 $—
 $4,248
Total costs and expenses16
 1,318
a 
5,798
a 
(16) 7,116
19
 1,217
a 
5,383
a 
3
 6,622
Operating (loss) income(16) (1,137) (1,826) 16
 (2,963)(19) (1,048) (1,304) (3) (2,374)
Interest expense, net(115) (4) (57) 30
 (146)(121) (2) (67) 41
 (149)
Other income (expense), net29
 —
 8
 (30) 7
127
 —
 (56) (34) 37
(Loss) income before income taxes and equity in affiliated companies' net (losses) earnings(102) (1,141) (1,875) 16
 (3,102)(13) (1,050) (1,427) 4
 (2,486)
(Provision for) benefit from income taxes(421) 1,157
 (35) (6) 695
(265) 374
 580
 (2) 687
Equity in affiliated companies' net (losses) earnings(1,951) (2,359) (3,530) 7,841
 1
(1,573) (1,920) (2,972) 6,465
 —
Net (loss) income(2,474) (2,343) (5,440) 7,851
 (2,406)(1,851) (2,596) (3,819) 6,467
 (1,799)
Net income and preferred dividends attributable to noncontrolling interests—
 —
 (56) (12) (68)—
 —
 (38) (14) (52)
Net (loss) income attributable to common stockholders$(2,474) $(2,343) $(5,496) $7,839
 $(2,474)$(1,851) $(2,596) $(3,857) $6,453
 $(1,851)
                  
Other comprehensive income (loss)12
 —
 12
 (12) 12
9
 —
 9
 (9) 9
Total comprehensive (loss) income$(2,462) $(2,343) $(5,484) $7,827
 $(2,462)$(1,842) $(2,596) $(3,848) $6,444
 $(1,842)
a.Includes impairment charges totaling $1.1$1.0 billion at the FM O&G LLC guarantor and $2.0$1.7 billion at the non-guarantor subsidiaries related to ceiling test impairment charges forof FCX's oil and gas properties pursuant to full cost accounting rules.
          
Six Months Ended June 30, 2015         
 FCX FM O&G LLC Non-guarantor   Consolidated
 Issuer Guarantor Subsidiaries Eliminations FCX
Revenues$—
 $350
 $8,051
 $—
 $8,401
Total costs and expenses35
 2,535
a 
11,181
a 
(13) 13,738
Operating (loss) income(35) (2,185) (3,130) 13
 (5,337)
Interest expense, net(236) (6) (124) 71
 (295)
Other income (expense), net156
 —
 (48) (64) 44
(Loss) income before income taxes and equity in affiliated companies' net (losses) earnings(115) (2,191) (3,302) 20
 (5,588)
(Provision for) benefit from income taxes(686) 790
 1,286
 (8) 1,382
Equity in affiliated companies' net (losses) earnings(3,524) (4,279) (6,502) 14,306
 1
Net (loss) income(4,325) (5,680) (8,518) 14,318
 (4,205)
Net income and preferred dividends attributable to noncontrolling interests—
 —
 (94) (26) (120)
Net (loss) income attributable to common stockholders$(4,325) $(5,680) $(8,612) $14,292
 $(4,325)
          
Other comprehensive income (loss)21
 —
 21
 (21) 21
Total comprehensive (loss) income$(4,304) $(5,680) $(8,591) $14,271
 $(4,304)
          
a.
Includes charges totaling $2.1 billion at the FM O&G LLC guarantor and $3.7 billion at the non-guarantor subsidiaries related to ceiling test impairment of FCX's oil and gas properties pursuant to full cost accounting rules.


25
Table of Contents


Three Months Ended March 31, 2014         
 FCX FM O&G LLC Non-guarantor   Consolidated
 Issuer Guarantor Subsidiaries Eliminations FCX
Revenues$—
 $644
 $4,341
 $—
 $4,985
Total costs and expenses11
 526
 3,339
 (2) 3,874
Operating (loss) income(11) 118
 1,002
 2
 1,111
Interest expense, net(82) (41) (58) 20
 (161)
Other income (expense), net20
 —
 33
 (20) 33
(Loss) income before income taxes and equity in affiliated companies' net earnings (losses)(73) 77
 977
 2
 983
Provision for income taxes(21) (43) (292) (1) (357)
Equity in affiliated companies' net earnings (losses)604
 130
 185
 (919) —
Net income (loss)510
 164
 870
 (918) 626
Net income and preferred dividends attributable to noncontrolling interests—
 —
 (111) (5) (116)
Net income (loss) attributable to common stockholders$510
 $164
 $759
 $(923) $510
          
Other comprehensive income (loss)3
 —
 3
 (3) 3
Total comprehensive income (loss)$513
 $164
 $762
 $(926) $513
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended June 30, 2014         
 FCX FM O&G LLC Non-guarantor   Consolidated
 Issuer Guarantor Subsidiaries Eliminations FCX
Revenues$—
 $570
 $4,952
 $—
 $5,522
Total costs and expenses21
 489
 3,865
 (6) 4,369
Operating (loss) income(21) 81
 1,087
 6
 1,153
Interest expense, net(87) (44) (51) 18
 (164)
Net (loss) gain on early extinguishment of debt(1) 6
 —
 —
 5
Other income (expense), net17
 1
 (8) (18) (8)
(Loss) income before income taxes and equity in affiliated companies' net earnings (losses)(92) 44
 1,028
 6
 986
Benefit from (provision for) income taxes26
 26
 (378) (2) (328)
Equity in affiliated companies' net earnings (losses)548
 126
 154
 (826) 2
Net income (loss)482
 196
 804
 (822) 660
Net income and preferred dividends attributable to noncontrolling interests—
 —
 (180) 2
 (178)
Net income (loss) attributable to common stockholders$482
 $196
 $624
 $(820) $482
          
Other comprehensive income (loss)1
 —
 1
 (1) 1
Total comprehensive income (loss)$483
 $196
 $625
 $(821) $483

          
Six Months Ended June 30, 2014         
 FCX FM O&G LLC Non-guarantor   Consolidated
 Issuer Guarantor Subsidiaries Eliminations FCX
Revenues$—
 $1,214
 $9,293
 $—
 $10,507
Total costs and expenses32
 1,015
 7,204
 (8) 8,243
Operating (loss) income(32) 199
 2,089
 8
 2,264
Interest expense, net(169) (85) (109) 38
 (325)
Net (loss) gain on early extinguishment of debt(1) 6
 —
 —
 5
Other income (expense), net37
 1
 25
 (38) 25
(Loss) income before income taxes and equity in affiliated companies' net earnings (losses)(165) 121
 2,005
 8
 1,969
Benefit from (provision for) income taxes5
 (17) (670) (3) (685)
Equity in affiliated companies' net earnings (losses)1,152
 256
 339
 (1,745) 2
Net income (loss)992
 360
 1,674
 (1,740) 1,286
Net income and preferred dividends attributable to noncontrolling interests—
 —
 (291) (3) (294)
Net income (loss) attributable to common stockholders$992
 $360
 $1,383
 $(1,743) $992
          
Other comprehensive income (loss)4
 —
 4
 (4) 4
Total comprehensive income (loss)$996
 $360
 $1,387
 $(1,747) $996
          



2326
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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
ThreeSix Months Ended March 31,June 30, 2015
FCX FM O&G LLC Non-guarantor   ConsolidatedFCX FM O&G LLC Non-guarantor   Consolidated
Issuer Guarantor Subsidiaries Eliminations FCXIssuer Guarantor Subsidiaries Eliminations FCX
Cash flow from operating activities:                  
Net (loss) income$(2,474) $(2,343) $(5,440) $7,851
 $(2,406)$(4,325) $(5,680) $(8,518) $14,318
 $(4,205)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:                  
Depreciation, depletion and amortization1
 119
 835
 (16) 939
2
 223
 1,638
 (34) 1,829
Impairment of oil and gas properties—
 1,062
 2,042
 —
 3,104
—
 2,052
 3,717
 21
 5,790
Net gains on crude oil derivative contracts—
 (52) —
 —
 (52)—
 (58) —
 —
 (58)
Equity in losses (earnings) of consolidated subsidiaries1,951
 2,359
 3,530
 (7,841) (1)3,524
 4,279
 6,502
 (14,306) (1)
Other, net(701) 6
 (86) —
 (781)(1,431) 9
 43
 —
 (1,379)
Decreases (increases) in working capital and changes in other tax payments1,171
 (1,321) 58
 6
 (86)
Changes in working capital and other tax payments2,222
 (550) (1,870) 8
 (190)
Net cash (used in) provided by operating activities(52) (170) 939
 —
 717
(8) 275
 1,512
 7
 1,786
                  
Cash flow from investing activities:                  
Capital expenditures—
 (302) (1,565) —
 (1,867)—
 (734) (2,787) (7) (3,528)
Intercompany loans(905) (400) —
 1,305
 —
(1,073) (794) —
 1,867
 —
Dividends from (investments in) consolidated subsidiaries310
 (14) 32
 (328) —
438
 (31) 74
 (481) —
Other, net—
 —
 127
 —
 127
(10) (1) 137
 10
 136
Net cash (used in) provided by investing activities(595) (716) (1,406) 977
 (1,740)(645) (1,560) (2,576) 1,389
 (3,392)
                  
Cash flow from financing activities:                  
Proceeds from debt1,515
 —
 758
 —
 2,273
2,735
 —
 1,687
 —
 4,422
Repayments of debt(530) —
 (272) —
 (802)(1,690) —
 (670) —
 (2,360)
Intercompany loans—
 903
 402
 (1,305) —
—
 1,321
 546
 (1,867) —
Cash dividends and distributions paid, and contributions received(327) —
 (319) 296
 (350)(380) —
 (481) 421
 (440)
Other, net(11) (18) (16) 32
 (13)(12) (37) (15) 50
 (14)
Net cash provided by (used in) financing activities647
 885
 553
 (977) 1,108
653
 1,284
 1,067
 (1,396) 1,608
                  
Net (decrease) increase in cash and cash equivalents—
 (1) 86
 —
 85
—
 (1) 3
 —
 2
Cash and cash equivalents at beginning of period—
 1
 463
 —
 464
—
 1
 463
 —
 464
Cash and cash equivalents at end of period$—
 $—
 $549
 $—
 $549
$—
 $—
 $466
 $—
 $466


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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
ThreeSix Months Ended March 31,June 30, 2014
FCX FM O&G LLC Non-guarantor   ConsolidatedFCX FM O&G LLC Non-guarantor   Consolidated
Issuer Guarantor Subsidiaries Eliminations FCXIssuer Guarantor Subsidiaries Eliminations FCX
Cash flow from operating activities:                  
Net income (loss)$510
 $164
 $870
 $(918) $626
$992
 $360
 $1,674
 $(1,740) $1,286
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:                  
Depreciation, depletion and amortization1
 285
 682
 (2) 966
2
 545
 1,440
 (8) 1,979
Net losses on crude oil and natural gas derivative contracts—
 50
 —
 —
 50
—
 120
 —
 —
 120
Net gain (loss) on early extinguishment of debt1
 (6) —
 —
 (5)
Equity in (earnings) losses of consolidated subsidiaries(604) (130) (185) 919
 —
(1,152) (256) 39
 1,367
 (2)
Other, net134
 (9) (140) (13) (28)121
 (12) (123) —
 (14)
(Increases) decreases in working capital and changes in other tax payments(234) 339
 (518) —
 (413)
Changes in working capital and other tax payments(164) (2,165) 1,552
 —
 (777)
Net cash (used in) provided by operating activities(193) 699
 709
 (14) 1,201
(200) (1,414) 4,582
 (381) 2,587
                  
Cash flow from investing activities:                  
Capital expenditures—
 (335) (1,277) —
 (1,612)—
 (897) (2,665) —
 (3,562)
Acquisition of Deepwater GOM interests—
 —
 (925) —
 (925)
Intercompany loans190
 (43) —
—
(147) —
1,318
 1,629
 —
—
(2,947) —
Dividends from (investments in) consolidated subsidiaries212
 (96) (430) 314
 —
(Investments in) dividends from consolidated subsidiaries(364) (96) 1,079
 (619) —
Net proceeds from sale of Eagle Ford shale assets—
 3,009

—
 —
 3,009
Other, net—
 4
 3
 —
 7
—
 (381) 18
 —
 (363)
Net cash provided by (used in) investing activities402
 (470) (1,704) 167
 (1,605)954
 3,264
 (2,493) (3,566) (1,841)
                  
Cash flow from financing activities:                  
Proceeds from debt895
 —
 254
 —
 1,149
890
 —
 358
 —
 1,248
Repayments of debt(780) —
 (207) —
 (987)(990) (224) (397) —
 (1,611)
Intercompany loans—
 (213) 66
 147
 —
—
 (170) (2,777) 2,947
 —
Cash dividends and distributions paid, and contributions received(326) (14) 237
 (300) (403)(653) (1,453) 203
 1,000
 (903)
Other, net2
 —
 —
 —
 2
(1) (2) (4) —
 (7)
Net cash (used in) provided by financing activities(209) (227) 350
 (153) (239)(754) (1,849) (2,617) 3,947
 (1,273)
                  
Net increase (decrease) in cash and cash equivalents—
 2
 (645) —
 (643)—
 1
 (528) —
 (527)
Cash and cash equivalents at beginning of period—
 —
 1,985
 —
 1,985
—
 —
 1,985
 —
 1,985
Cash and cash equivalents at end of period$—
 $2
 $1,340
 $—
 $1,342
$—
 $1
 $1,457
 $—
 $1,458


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NOTE 11.12. NEW ACCOUNTING STANDARDS
In April 2015, the Financial Accounting Standards Board issued an Accounting Standards Update (ASU) to simplify the presentation of debt issuance costs. This ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. For public entities, this ASU is effective for annual periods beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. FCX adopted this ASU in the first quarter offirst-quarter 2015 and retrospectively adjusted its previously issued financial statements. Upon adoption, FCX adjusted its December 31, 2014, balance sheet by decreasing other assets and long-term debt by $121 million for debt issuance costs related to corresponding debt balances. FCX elected to continue presenting debt issuance costs for its revolving credit facility as a deferred charge (asset) because of the volatility of its borrowings and repayments under the facility.
NOTE 12.13. SUBSEQUENT EVENTS
As reported in Note 13 of FCX's annual report on Form 10-K for the year ended December 31, 2014, PT-FI entered into a Memorandum of Understanding (MOU) with the Indonesian government in July 2014. Under the MOU, PT-FI provided a $115 million assurance bond to support its commitment for smelter development, agreed to increased royalty rates and agreed to pay export duties (which were set at 7.5 percent, declining to 5.0 percent when smelter development progress exceeds 7.5 percent and are eliminated when development progress exceeds 30 percent). The MOU also anticipated an amendment of the COW within six months to address other matters; however, no terms of the COW other than those relating to the smelter bond, increased royalties and export duties were changed. In January 2015, the MOU was extended to July 25, 2015, and it expired on that date. The increased royalty rates, export duties and smelter assurance bond remain in effect.

PT-FI is also required to apply for renewal of export permits at six-month intervals. On July 29, 2015, PT-FI's export permit was renewed through January 28, 2016. In connection with the renewal, export duties were reduced to 5.0 percent, as a result of smelter development progress.

FCX evaluated events after March 31,June 30, 2015, 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.


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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 March 31,June 30, 2015, and the related consolidated statements of operations and comprehensive (loss) income for the three- and six-month periods ended June 30, 2015 and 2014, the consolidated statements of cash flows for the three-monthsix-month periods ended March 31,June 30, 2015 and 2014, and the consolidated statement of equity for the threesix-month period ended March 31,June 30, 2015. 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, 2014, and the related consolidated statements of operations, comprehensive (loss) 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, 2015. In our opinion, the accompanying condensed consolidated balance sheet of Freeport-McMoRan Inc. as of December 31, 2014, 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
May 8,August 10, 2015

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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, 2014, 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 (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

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 U.S. oil and natural gas assets, 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-leadinga position in the emerging Inboard Lower Tertiary/Cretaceous natural gas trend in the shallow waters of the GOM and onshore in South Louisiana.

Our results for first-quarterthe second quarter and first six months of 2015, compared with first-quarter 2014, periods, reflect lower oil volumes and lower commodity price realizations and lower oil sales volumes, partly offset by higher copper and gold sales volumes. The first six months of 2015 also reflects higher copper sales volumes, compared with the first six months of 2014. Results for first-quarterthe 2015 periods were also significantly impacted by net charges of $3.1$2.7 billion ($2.42.0 billion to net loss attributable to common stockholders) relatedin second-quarter 2015 and $5.8 billion ($4.4 billion to net loss attributable to common stockholders) for the first six months of 2015, for the impairment of our oil and gas properties pursuant to full cost accounting rules and the related tax chargecharges to establish a deferred tax valuation allowance. Refer to “Consolidated Results” for further discussion of our consolidated financial results for the three-monththree- and six-month periods ended March 31,June 30, 2015 and 2014.

At March 31,June 30, 2015, we had $0.5 billion466 million in consolidated cash and cash equivalents and $20.320.9 billion in total debt. We have taken actionsmade substantial progress toward the completion of our major mining development projects, which are expected to reduce or deferresult in increased near-term production, lower unit costs, declining capital expenditures and to contribute to cash flow from operations after capital expenditures in future years. In addition, positive oil and gas drilling and development activities are expected to result in a growing oil production profile. We remain focused on maintaining a strong balance sheet and on continuing to manage costs, capital spending plans and other actions as required to maintain financial strength.

Subsequent to June 30, 2015, copper and molybdenum prices have fallen and at July 31, 2015, prices we would expect to record additional charges for LCM inventory adjustments in third-quarter 2015. Additionally, as further discussed in “Critical Accounting Estimates” in Part II, Items 7. And 7A. of our annual report on Form 10-K for the year ended December 31, 2014, we regularly assess the carrying values of our long-lived mining assets, and decreases in metal prices or other factors may result in impairment of our long-lived mining assets. Also, refer to "Operations - Oil and Gas" for further discussion of potentially significant additional ceiling test impairments of our oil and gas properties.

In July 2015, we announced that we are undertaking a comprehensive review of operating plans in our mining and oil and gas businesses to target significant additional reductions in capital spending and operating and administrative costs in response to weak market conditions for our major products. On August 5, 2015, we provided an update on our progress and are evaluating funding alternatives to advance growthannounced the deferral of investments in several long-term projects in our oil and gas business, including considerationwhich will result in a reduction of a sale$0.9 billion in projected capital expenditures for each of the years 2016 and 2017. We have also revised our estimate of the start-up of initial production from its recent drilling success in the Horn Mountain area to 2016 from the previously estimated start-up in 2017. The revised plans, together with the previously announced potential initial public equity foroffering (IPO) of a minority interest in our oilwholly owned subsidiary, Freeport-McMoRan Oil & Gas Inc., and gas business. Additional capital cost reductions, potential additional divestitures or monetizations and other actions, will be pursued as required to maintain

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fund oil and gas capital spending with cash flow for 2016 and subsequent years. Refer to “Operations - Oil and Gas” for further discussion of the potential IPO.

We are completing the review of operating plans at each of our copper and molybdenum mining operations and will revise operating and capital plans to strengthen our financial position in a strong balance sheet while preserving a strong resource positionweak copper price environment. The revised plans will target lower operating and portfoliocapital costs to achieve maximum cash flow under the current market conditions. Production at certain operations challenged by low commodity prices will be curtailed. We expect to complete this review promptly and will report our revised plans during third-quarter 2015. We will also continue to assess opportunities to partner with strategic investors potentially interested in investing capital with FCX in the development of assets with attractive long-term growth prospects.our oil and gas and mining properties. We have a broad set of natural resource assets that provide many alternatives for future actions to enhance our financial flexibility.with valuable infrastructure and associated resources with attractive long-term production and development potential.

OUTLOOK
 
We view the long-term outlook for our business positively, supported by limitations on supplies of copper 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. TheAs discussed above in "Overview," we are undertaking a comprehensive review of operating plans in our mining business to target significant additional reductions in capital spending, and operating and administrative costs, which we expect to report during third-quarter 2015. Accordingly, the following outlook for eachis subject to change as a result of these measures follows.the review and other factors.


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Sales Volumes.  Following are our projected consolidated sales volumes for the year 2015:
Copper (millions of recoverable pounds):
  
North America copper mines1,9351,960
 
South America mining935900
 
Indonesia mining885860
 
Africa mining455460
 
 4,2104,180
 
Gold (thousands of recoverable ounces)
1,300
 
Molybdenum (millions of recoverable pounds)
9593
a 
Oil Equivalents (million BOE or MMBOE)
52.352.9
 
a.
Projected molybdenum sales include 5044 million pounds produced by our Molybdenum mines and 4549 million pounds produced by our North and South America copper mines.

Consolidated sales for second-quarterthird-quarter 2015 are expected to approximate 960 million1.0 billion pounds of copper, 300315 thousand ounces of gold, 2524 million pounds of molybdenum and 12.913.6 MMBOE. Projected sales volumes are dependent on a number of factors, including operational performance and other factors. Projected 2015 copper sales are approximately 60 million pounds less than the estimate provided in our annual report on Form 10-K for the year ended December 31, 2014, primarily reflecting reduced mining rates in Indonesia; projected 2015 oil and gas sales are 3.2 MMBOE lower than the estimate provided in our annual report on Form 10-K for the year ended December 31, 2014, primarily reflecting the timing of the Lucius ramp-up and the timing of maintenance activites in the Deepwater GOM. For other important factors that could cause results to differ materially from projections, refer to "Cautionary Statement."

Mining Unit Net Cash Costs. Assuming average prices of $1,2001,150 per ounce of gold and $86 per pound of molybdenum for the remaindersecond half of 2015, 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 be lower in the second half of 2015 and average $1.53 per pound of copper for the year 2015. 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 remaindersecond half of 2015 on consolidated unit net cash costs would approximate $0.015$0.01 per pound for each $50 per ounce change in the average price of gold and $0.015$0.01 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.


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Oil and Gas Cash Production Costs per BOE. Based on current sales volume and cost estimates for the remaindersecond half of 2015,, oil and gas cash production costs are expected to approximate $1920 per BOE for the year 2015. 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, sales volumes, production costs, income taxes (refer to “Consolidated Results – Income Taxes” for further discussion of projected income taxes), other working capital changes and other factors. Based on current sales volume and cost estimates, and assuming average prices of $2.752.50 per pound of copper, $1,2001,150 per ounce of gold, $86 per pound of molybdenum and $6556 per barrel of Brent crude oil for the remaindersecond half of 2015,, consolidated operating cash flows are estimated to approximate $4.43.6 billion for the year 2015. Projected consolidated operating cash flows for the year 2015 also reflect an estimated tax benefit of $0.4 billion (refer to “Consolidated Results – Income Taxes” for further discussion of our projected consolidated effective annual tax rate for 2015). The impact of price changes during the remaindersecond half of 2015 on operating cash flows would approximate $250190 million for each $0.10 per pound change in the average price of copper, $3025 million for each $50 per ounce change in the average price of gold, $9560 million for each $2 per pound change in the average price of molybdenum and $80$55 million for each $5 per barrel change in the average Brent crude oil price.


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MARKETS

Metals. World prices for copper, gold and molybdenum can fluctuate significantly. During the period from January 2005 through AprilJuly 2015, the London Metal Exchange (LME) spot copper price varied from a low of $1.26 per pound in 2008 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 $411 per ounce in 2005 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 $7.835.87 per pound in 20092015 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, 2014.


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 2005 through AprilJuly 2015. 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. We believe current copper prices are supported by a combination of demand from developing economies and pro-growth monetary fiscal policy decisions in Europe, China and the U.S. Since mid-2014, copper prices have declined because of concerns about slowing growth rates in China, a stronger U.S. dollar and a broad-based decline in commodity prices, led by a sharp decline in oil prices. Copper prices remain under pressure as a result of slowingRenewed concerns about Chinese economic growth a strongrates, concerns about Europe, continued U.S. dollar strength and broad-based weakness in commodity prices but remain supported by supply-side constraints. During first-quarter 2015,in general put downward pressure on copper prices during second-quarter 2015. LME spot copper prices ranged from a low of $2.452.56 per pound to a high of

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$2.862.92 per pound during second-quarter 2015, averaged $2.642.74 per pound and closed at $2.742.60 per pound on March 31,June 30, 2015. Since hitting a year-to-date low of $2.45 per pound on January 29, 2015, copper prices have improved. LME spot copper prices closedhave declined further during July 2015, closing at $2.832.37 per pound on April 30,July 31, 2015.

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 attributable to difficulty in replacing exitingexisting large mines' output with new production sources. Future copper 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 supplies of copper, and production levels of mines and copper smelters.


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This graph presents London PM gold prices from January 2005 through AprilJuly 2015. An improving economic outlook and positive equity performance contributed to lower demand for gold in 2014 and early 2015, resulting in generally lower prices. During first-quartersecond-quarter 2015, London PM gold prices ranged from a low of $1,1471,165 per ounce to a high of $1,2961,225 per ounce, averaged $1,2181,192 per ounce and closed at $1,1871,171 per ounce on March 31,June 30, 2015. Gold prices have declined further during 2015 and closed at $1,1801,098 per ounce on April 30,July 31, 2015.


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This graph presents the Metals Week Molybdenum Dealer Oxide weekly average prices from January 2005 through AprilJuly 2015. Molybdenum prices improved during the first half of 2014, resulting from improved demand in the metallurgical sector, but have declined since declinedmid-2014 because of weaker demand from European and U.S. steel and stainless steel producers. During first-quartersecond-quarter 2015, the weekly average price of molybdenum ranged from a low of $7.626.38 per pound to a high of $9.358.24 per pound, averaged $8.497.57 per pound and was $8.476.38 on March 31,June 30, 2015. The Metals Week Molybdenum Dealer Oxide weekly average price has declined further during July 2015 and was $7.805.87 per pound on April 30,July 31, 2015.


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Oil and Gas. Market prices for crude oil and natural gas can fluctuate significantly. During the period from January 2005 through AprilJuly 2015, the Brent crude oil price ranged from a low of $36.61 per barrel 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, 2014.


This graph presents Brent crude oil prices and NYMEX natural gas contract prices from January 2005 through AprilJuly 2015. Crude oil prices reached a record high in July 2008 as economic growth in emerging economies and the U.S. created high global demand for oil and lower inventories. By the end of 2008, financial turmoil in the U.S. contributed to a global economic slowdown and a decline in many commodity prices. Crude oil prices rebounded
after 2008, supported by a gradually improving global economy and demand outlook. Since mid-2014, oil prices have significantly declined associated with global oversupply primarily attributable to continued strong production from U.S. shale productionplays, the Organization of Petroleum Exporting Countries and increased Brazilian and Libyan output,Russia, coupled with weak economic data in Europe and slowing Chinese demand. During first-quartersecond-quarter 2015, Brent crude oil prices ranged from a low of $46.59$54.95 per barrel to a high of $62.58$67.77 per barrel, averaged $55.19$63.57 per barrel and were $55.11$63.59 per barrel on March 31,June 30, 2015. The Brent crude oil price has declined further during July 2015 and was $66.78$52.21 per barrel on April 30,July 31, 2015.



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CONSOLIDATED RESULTS
 Three Months Ended 
 March 31, 
 2015 
2014a
 
SUMMARY FINANCIAL DATA 
(in millions, except per share amounts)
Revenuesb
$4,153
c,d 
$4,985
c,d 
Operating (loss) incomeb
$(2,963)
c,d,e,f 
$1,111
c,d,g 
Net (loss) income attributable to common stockholdersh
$(2,474)
c,d,e,f,i 
$510
c,d,g 
Diluted net (loss) income per share attributable to common stockholders$(2.38)
c,d,e,f,i 
$0.49
c,d,g 
Diluted weighted-average common shares outstanding1,040
 1,044
 
Operating cash flowsj
$717

$1,201

Capital expenditures$1,867
 $1,612
 
At March 31:    
Cash and cash equivalents$549
 $1,342
 
Total debt, including current portion$20,312
 $20,739
 
     
 Three Months Ended Six Months Ended 
 June 30, June 30, 
 2015 
2014a
 2015 
2014a
 
SUMMARY FINANCIAL DATA 
(in millions, except per share amounts) 
Revenuesb,c,d
$4,248
 $5,522
 $8,401
 $10,507
 
Operating (loss) incomeb,c,d
$(2,374)
e,f,g 
$1,153
h,i 
$(5,337)
e,f,g,j 
$2,264
h,i 
Net (loss) income attributable to common stockc,d,k
$(1,851)
e,f,g,l,m 
$482
h,i,n 
$(4,325)
e,f,g,j,l,m 
$992
h,i,n 
Diluted net (loss) income per share attributable to common stock$(1.78)
e,f,g,l,m 
$0.46
h,i,n 
$(4.16)
e,f,g,j,l,m 
$0.95
h,i,n 
Diluted weighted-average common shares outstanding1,040
 1,045
 1,040
 1,045
 
Operating cash flowso
$1,069

$1,386

$1,786

$2,587

Capital expenditures$1,661
 $1,950
 $3,528
 $3,562
 
At June 30:        
Cash and cash equivalents$466
 $1,458
 $466
 $1,458
 
Total debt, including current portion$20,902
 $20,190
 $20,902
 $20,190
 
         
a.Includes the results of the Candelaria and Ojos del Salado mines that were sold in November 2014, and the Eagle Ford properties that were sold in June 2014.
b.As further detailed in Note 9,10, following is a summary of revenues and operating income (loss) by operating division (in millions):
Three Months Ended Three Months Ended Six Months Ended 
March 31, June 30, June 30, 
Revenues2015 2014 2015 2014 2015 2014 
North America copper mines$1,335
 $1,286
 $1,405
 $1,469
 $2,740
 $2,755
 
South America mining486
 898
 453
 1,031
 939
 1,929
 
Indonesia mining607
 470
 790
 523
 1,397
 993
 
Africa mining410
 327
 351
 418
 761
 745
 
Molybdenum mines113
 126
 102
 170
 215
 296
 
Rod & Refining1,069
 1,154
 1,097
 1,242
 2,166
 2,396
 
Atlantic Copper Smelting & Refining546
 593
 500
 629
 1,046
 1,222
 
U.S. oil & gas operations500
 1,261
 569
 1,236
 1,069
 2,497
 
Other mining, corporate, other & eliminations(913) (1,130) (1,019) (1,196) (1,932) (2,326) 
Total revenues$4,153
 $4,985
 $4,248
 $5,522
 $8,401
 $10,507
 
            
Operating income (loss)            
North America copper mines$294
 $390
 $300
 $468
 $594
 $858
 
South America mining65
 333
 65
 404
 130
 737
 
Indonesia mining73
 18
 232
 (67) 305
 (49) 
Africa mining99
 121
 101
 154
 200
 275
 
Molybdenum mines4
 28
 (7) 65
 (3) 93
 
Rod & Refining4
 4
 6
 6
 10
 10
 
Atlantic Copper Smelting & Refining12
 (9) 19
 (4) 31
 (13) 
U.S. oil & gas operations(3,471) 277
 (2,932) 232
 (6,403) 509
 
Other mining, corporate, other & eliminations(43) (51) (158) (105) (201) (156) 
Total operating (loss) income$(2,963) $1,111
 $(2,374) $1,153
 $(5,337) $2,264
 
c.
Includes unfavorable(unfavorable) favorable adjustments to provisionally priced concentrate and cathode copper sales recognized in prior periods totaling $106$(20) million ($59 ($(10) million to net loss attributable to common stockholdersstock or $0.06$(0.01) per share) for first-quartersecond-quarter 2015, and $124 $35 million ($66 ($16 million to net income attributable to common stockholdersstock or $0.06$0.01 per share) for first-quartersecond-quarter 2014,. $(106) million ($(50) million to net loss attributable to common stock or $(0.05) per share) for the first six months of 2015 and $(118) million ($(65) million to net income attributable to common stock or $(0.06) per share) for the first six months of 2014. Refer to “Revenues” for further discussion. 
d.
Includes net noncash mark-to-market (losses) gains associated with crude oil and natural gas derivative contracts totaling $(48)$(95) million ($(30)($(59) million to net loss attributable to common stockholdersstock or $(0.03)$(0.06) per share) for first-quartersecond-quarter 2015, and $15$(7) million ($9(4) million to net income attributable to common stock or $0.01less than $(0.01) per share) for first-quarter 2014. Refersecond-quarter 2014, $(143) million ($(89) million to "Revenues"net loss attributable to common stock or $(0.09) per share) for further discussion.the first six months of 2015

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and $8 million ($5 million to net income attributable to common stock or less than $0.01 per share) for the first six months of 2014. Refer to "Revenues" for further discussion.
e.Includes a charge of $3.1 billion ($1.9 billion to net loss attributable to common stockholders or $1.87 per share)charges to reduce the carrying value of oil and gas properties pursuant to full cost accounting rules.rules of $2.7 billion ($1.7 billion to net loss attributable to common stock or $1.61 per share) for second-quarter 2015 and $5.8 billion ($3.6 billion to net loss attributable to common stock or $3.47 per share) for the first six months of 2015. See Note 1 and "Operations - Oil & Gas" for further discussion.
f.Includes (i) a gaincharges for lower of $39cost or market (LCM) adjustments primarily attributable to molybdenum inventories totaling $59 million ($2538 million to net loss attributable to common stockholdersstock or $0.02$0.04 per share) associated withfor second-quarter 2015 and $63 million ($41 million to net loss attributable to common stock or $0.04 per share) for the $140 million salefirst six months of our one-third interest in the Luna Energy power facility in New Mexico and (ii) charges totaling2015. See Note 4 for further discussion.

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$17 million ($10 million to net loss attributable to common stockholders or $0.01 per share) associated with idle/terminated rig costs and inventory write offs at oil and gas operations.
g.
Includes $53net charges for idle/terminated rig costs and inventory write-downs at oil and gas operations of $22 million ($28 ($14 million to net loss attributable to common stock or $0.01 per share) for second-quarter 2015 and $39 million ($24 million to net loss attributable to common stock or $0.02 per share) for the first six months of 2015.
h.Includes net charges for adjustments to environmental obligations and related litigation reserves of $69 million ($68 million to net income attributable to common stockholdersstock or $0.03$0.06 per share) for the second quarter and first six months of 2014.
i.Includes charges 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) first-quarter2014operating rates.rates of $56 million ($30 million to net income attributable to common stock or $0.03 per share) for second-quarter 2014 and $109 million ($58 million to net income attributable to common stock or $0.06 per share) for the first six months of 2014.
h.j.The first six months of 2015 includes a net gain of $39 million ($25 million to net loss attributable to common stock or $0.02 per share) associated with the sale of FCX's one-third interest in the Luna Energy power facility in New Mexico.
k.We defer recognizing profits on intercompany sales until final sales to third parties occur. For a summary of net impacts from changes in these deferrals, refer to "Operations - Smelting & Refining."
i.l.The second quarter and first six months of 2015 include a gain of $92 million ($0.09 per share) related to net proceeds received from insurance carriers and other third parties related to the shareholder derivative litigation settlement.
m.As a result of the impairment to oil and gas properties, we recorded a tax charge of $458 million ($0.44 per share)charges to establish a valuation allowance primarily against U.S. federal alternative minimum tax credits.credits of $305 million ($0.29 per share) for second-quarter 2015 and $763 million ($0.73 per share) for the first six months of 2015.
j.n.
The second quarter and first six months of 2014 included a tax charge of $58 million ($0.06 per share) associated with deferred taxes recorded in connection with the allocation of goodwill to the sale of Eagle Ford.
o.Includes net working capital uses and changes in other tax payments of $86$104 million for first-quartersecond-quarter 2015, $364 million for second-quarter 2014, $190 million for the first six months of 2015, and $413$777 million for first-quarter2014.the first six months of 2014.

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Three Months Ended Three Months Ended Six Months Ended 
March 31, June 30, June 30, 
2015 
2014a
 2015 
2014a
 2015 
2014a
 
SUMMARY OPERATING DATA        
Copper (recoverable)
    
Production (millions of pounds)915
 948
 
Sales, excluding purchases (millions of pounds)960
 871
 
Copper        
Production (millions of recoverable pounds)977
 931
 1,892
 1,879
 
Sales, excluding purchases (millions of recoverable pounds)964
 968
 1,924
 1,839
 
Average realized price per pound$2.72
 $3.14
 $2.71
 $3.16
 $2.70
 $3.17
 
Site production and delivery costs per poundb
$1.93
 $1.89
c 
$1.85
 $1.99
 $1.89
 $1.94
 
Unit net cash costs per poundb
$1.64
 $1.54
c 
$1.50
 $1.72
 $1.57
 $1.64
 
Gold (recoverable)
    
Production (thousands of ounces)259
 231
 
Sales, excluding purchases (thousands of ounces)263
 187
 
Gold        
Production (thousands of recoverable ounces)367
 166
 626
 397
 
Sales, excluding purchases (thousands of recoverable ounces)352
 159
 615
 346
 
Average realized price per ounce$1,186
 $1,300
 $1,174
 $1,296
 $1,183
 $1,299
 
Molybdenum (recoverable)
    
Production (millions of pounds)24
 24
 
Sales, excluding purchases (millions of pounds)23
 27
 
Molybdenum        
Production (millions of recoverable pounds)25
 25
 49
 49
 
Sales, excluding purchases (millions of recoverable pounds)23
 25
 46
 52
 
Average realized price per pound$10.17
 $11.21
 $9.51
 $13.43
 $9.84
 $12.27
 
Oil Equivalents            
Sales volumes            
MMBOE12.5
 16.1
 13.1
 16.0
 25.6
 32.2
 
Thousand BOE (MBOE) per day139
 179
 144
 176
 142
 178
 
Cash operating margin per BOEd
    
Cash operating margin per BOEc
        
Realized revenues$43.71
 $77.22
 $50.04
 $77.53
 $46.95
 $77.37
 
Cash production costs20.26
 18.51
 19.04
 19.57
 19.62
 19.03
 
Cash operating margin$23.45
 $58.71
 $31.00
 $57.96
 $27.33
 $58.34
 
a.IncludesThe 2014 periods include the results of the Candelaria and Ojos del Salado mines that were sold in November 2014, and the Eagle Ford properties that were sold in June 2014. First-quarter 2014 salesSales volumes included 94from Candelaria and Ojos del Salado totaled 80 million pounds of copper and 2320 thousand ounces of gold for second-quarter 2014 and 174 million pounds of copper and 43 thousand ounces of gold for the first six months of 2014; sales volumes from the Candelaria and Ojos del Salado mines and 4.7Eagle Ford totaled 4.0 MMBOE (53(44 MBOE per day) from Eagle Ford. Excluding Candelariafor second-quarter 2014 and Ojos del Salado, first-quarter 2014 mining unit net cash costs averaged $1.578.7 MMBOE (48 MBOE per poundday) for the first six months of copper; excluding Eagle Ford, first-quarter 2014 oil and gas cash production costs were $20.89 per BOE.2014.
b.Reflects per pound weighted-average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines. For reconciliations of 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.Excludes $0.06 per pound of copper for fixed costs charged directly to cost of sales as a result of the impact of export restrictions on PT-FI's operating rates.
d.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. 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 $4.2 billion in first-quartersecond-quarter 2015, and $8.4 billion for the first six months of 2015, compared with $5.05.5 billion in first-quartersecond-quarter 2014. and $10.5 billion for the first six months of 2014. Revenues include the sale of copper concentrates, copper cathodes, copper rod, gold, molybdenum, silver and

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cobalt by our mining operations, and the sale of oil, natural gas and natural gas liquids (NGLs) by our oil and gas operations.


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Following is a summary of changes in our consolidated revenues between periods (in millions):
Three Months Ended March 31, Three Months Ended June 30, Six Months Ended June 30,
     
Consolidated revenues - 2014 period$4,985
 
Consolidated revenues - 2014 periods$5,522
 $10,507
Mining operations:     
Higher (lower) sales volumes from mining operations:     
Copper279
 (14) 268
Gold100
 248
 349
Molybdenum(38) (26) (65)
Lower price realizations from mining operations:  
Lower average realized prices from mining operations:   
Copper(403) (434) (904)
Gold(29) (43) (72)
Molybdenum(24) (89) (112)
Net adjustments for prior period provisionally priced copper sales18
 (55) 12
Lower revenues from purchased copper(9) (44) (52)
Lower Atlantic Copper revenues(47) (129) (176)
Oil and gas operations:     
Lower oil sales volumes(320) (293) (613)
Lower oil price realizations, including cash realizations on derivative contacts(312) 
Lower oil average realized prices, including cash gains (losses) on derivative contacts(240) (552)
Net noncash mark-to-market adjustments on derivative contracts(63) (88) (151)
Other, including intercompany eliminations16
 (67) (38)
Consolidated revenues - 2015 period$4,153
 
Consolidated revenues - 2015 periods$4,248
 $8,401
     

Mining Sales VolumesOperations
Sales Volumes.Consolidated copper sales volumes were 960964 million pounds of copper in second-quarter 2015 and 1.9 billion pounds for the first six months of 2015, compared with 968 million pounds in second-quarter 2014 and 1.8 billion pounds for the first six months of 2014. The 2015 periods primarily reflect higher copper sales volumes from North America and Indonesia, offset by lower sales volumes from South America, resulting from the sale of Candelaria and Ojos del Salado in fourth-quarter 2014 and lower production from Cerro Verde and El Abra.
263Consolidated gold sales increased to 352 thousand ounces of gold in second-quarter 2015 and 615 thousand ounces for the first six months of 2015, compared with 159 thousand ounces in second-quarter 2014 and 346 thousand ounces for the first six months of 2014, primarily reflecting higher ore grades and operating rates at PT-FI. Consolidated molybdenum sales volumes decreased to 23 million pounds in second-quarter 2015 and 46 million pounds for the first six months of molybdenum in first-quarter2015,, and 871 million pounds of copper, 187 thousand ounces of gold and 27 compared with 25 million pounds of molybdenum in first-quartersecond-quarter 2014. Higher copper and gold sales volumes52 million pounds for the first six months of 2014, primarily reflected higher volumesreflecting slowing demand in North America, Indonesia and Africa; partly offset by lower volumes in South America mostly associated with the sale of the Candelaria and Ojos del Salado mines.metallurgic market for molybdenum. Refer to “Operations” for further discussion of sales volumes at our mining operations.
Metal Price Realizations
Metals Realized Prices.Our consolidated revenues can vary significantly as a result of fluctuations in the market prices of copper, gold, molybdenum, silver and cobalt. As presented above onin the summary operating data table, metals price realizations were lower in first-quarterfor the second quarter and first six months of 2015, compared with first-quarter 2014.the 2014 periods. Refer to "Markets" for further discussion.

Provisionally Priced Copper Sales
Sales.For first-quarterDuring the first six months of 2015, 3941 percent of our mined copper was sold in concentrate, 3633 percent as cathode and 2526 percent as rod from 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

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opposite occurs. The unfavorable(unfavorable) favorable impacts of net adjustments to the prior periods' provisionally priced copper sales totaled $106$(20) million for first-quarter second-quarter 2015 and $124$(106) million for first-quarter the first six months of 2015, compared with $35 million for second-quarter 2014. and $(118) million for the first six months of 2014.


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At March 31,June 30, 2015, we had provisionally priced copper sales at our copper mining operations, primarily South America and Indonesia, totaling 413433 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $2.742.61 per pound, subject to final pricing over the next several months. We estimate that each $0.05 change in the price realized from the March 31,June 30, 2015, provisional price recorded would have an approximate $14 million effect on 2015 net income attributable to common stockholders.stock. The LME spot copper price was $2.832.37 per pound on April 30,July 31, 2015.

Purchased Copper
Copper.We purchased copper cathode for processing by our Rod & Refining segment totaling 4024 million pounds in first-quartersecond-quarter 2015 and 3264 million for the first six months of 2015, compared with 34 million pounds in first-quartersecond-quarter 2014. and 66 million pounds for the first six months of 2014. Lower purchased copper revenues primarily reflect lower market prices for copper and lower sales volumes.

Oil and Gas Revenues and Derivative ContractsOperations
Sales Volumes.Oil sales volumes of 8.48.6 million barrels (MMBbls) in first-quartersecond-quarter 2015 and 17.0 MMBbls for the first six months of 2015, were lower than sales volumes of 11.811.7 MMBbls in first-quartersecond-quarter 2014 and 23.5 MMBbls for the first six months of 2014, primarily reflecting the sale of the Eagle Ford properties.properties in June 2014.

Realized Oil Prices and Derivative Contracts. Lower average realized prices for oil, realizations, including realizedexcluding cash gains on derivative contracts, of $56.51$55.82 per barrel in first-quartersecond-quarter 2015, and $50.25 for the first six months of 2015, compared with $93.76$100.46 per barrel for first-quarterin second-quarter 2014, and $99.54 for the first six months of 2014, primarily reflected lower oil prices. Refer to “Operations” for further discussion of average realizationsrealized prices and sales volumes at our oil and gas operations.

In connection with the acquisition of our oil and gas business, we have derivative contracts for 2015 consisting of crude oil options, and for 2014, had derivative contracts that consisted of crude oil options and natural gas 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. Realized cashCash gains (losses) on crude oil and natural gas derivative contracts totaled $100$101 million for first-quartersecond-quarter 2015 and $(65)$201 million for first-quarterthe first six months of 2015, compared with $(63) million for second-quarter 2014. and $(128) million for the first six months of 2014. Net noncash mark-to-market (losses) gains on crude oil and natural gas derivative contracts totaled $(48)$(95) million for first-quarter second-quarter 2015 and $15$(143) million for first-quarter the first six months of 2015, compared with $(7) million for second-quarter 2014. and $8 million for the first six months of 2014.

Following presents the estimated (decrease) increase in the net asset on our balance sheet of a 10 percent change in Brent crude oil prices on the fair values of outstanding crude oil derivative contracts, compared with forward prices used to determine the March 31,June 30, 2015, fair values (in millions):
  10% Increase 10% Decrease
Crude oil options $(31) $19
     
  10% Increase 10% Decrease
Crude oil options $(37) $18
     

Refer to Note 67 for further discussion of oil and natural gas derivative contracts.

Production and Delivery Costs
Consolidated production and delivery costs totaled $2.92.8 billion in first-quartersecond-quarter 2015, and $5.8 billion for the first six months of 2015, compared with $2.7$3.1 billion in first-quartersecond-quarter 2014. Higher production and $5.8 billion for the first six months of 2014. Production and delivery costs for first-quarterthe 2015 wereperiods, compared with the 2014 periods, primarily associated with higherreflect lower costs at our South America mining operations mostly related to higher volumes in North America and Indonesia; partly offset by lower costs in South America mostly resulting fromas a result of the sale of the Candelaria and Ojos del Salado mines.mines in fourth-quarter 2014, partly offset by higher costs at our North America mines related to higher production volumes. 

Consolidated production and delivery costs included LCM adjustments primarily attributable to molybdenum inventories totaling $59 million for second-quarter 2015 and $63 million for the first six months of 2015. Refer to "Overview" for further discussion of potential additional LCM inventory adjustments and impairments for third-quarter 2015.


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Mining Unit Site Production and Delivery Costs
Site production and delivery costs for our copper mining operations primarily include labor, energy and commodity-based inputs, such as sulphuric acid, reagents, liners, tires and explosives. Consolidated unit site production and delivery costs (before net noncash and other costs) for our copper mines totaled $1.93$1.85 per pound of copper in first-quartersecond-quarter 2015 and $1.89$1.89 for the first six months of 2015, compared with $1.99 per pound in first-quartersecond-quarter 2014. Higher and $1.94 for the first six months of 2014. Lower consolidated average site production and delivery costs in first-quarterfor the 2015 periods, compared with first-quarterthe 2014 periods, primarily reflected higher costs and lower sales volumes in South America, partly offset by higher copper sales volumes in North America and Indonesia.

Assuming achievement of current volume and cost estimates, consolidated unit site production and delivery costs are expected to beIndonesia, partly offset by lower sales volumes in the second half of 2015 and average $1.81 per pound of copper for the year 2015.South America. 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.

Assuming achievement of current volume and cost estimates, consolidated unit site production and delivery costs are expected to be lower in the second half of 2015 and average $1.81 per pound of copper for the year 2015, which is subject to change as a result of the comprehensive review of operating plans as further discussed in “Overview.”


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Oil and Gas Cash Production Costs per BOE
Production costs for our oil and gas operations primarily include costs incurred to operate and maintain wells and related equipment and facilities, such as lease operating expenses, steam gas costs, electricity, production and ad valorem taxes, and gathering and transportation expenses. Cash production costs for our oil and gas operations of $20.26$19.04 per BOE in first-quartersecond-quarter 2015 were higherlower than the $18.51cash production costs of $19.57 per BOE in first-quartersecond-quarter 2014,, primarily reflecting lower cash production costs in California related to reductions in repair and maintenance costs and well workover expense, partly offset by higher average costs per BOE resulting from the sale of lower-cost Eagle Ford properties. Cash production costs of $19.62 per BOE for the first six months of 2015, were higher than $19.03 for the first six months of 2014, primarily reflecting the sale of lower-cost Eagle Ford properties.properties, partly offset by lower cash production costs in California. Refer to “Operations” for further discussion of cash production costs at our oil and gas operations.

Assuming achievement of current volume and cost estimates for the remainder of 2015, cash production costs are expected to approximate $19$20 per BOE for the year 2015. 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 (DD&A) totaled $939 million in first-quarter2015 and $966$890 million in first-quartersecond-quarter 2015 and $1.8 billion for first six months of 2015, compared with $1.0 billion in second-quarter 2014. and $2.0 billion for the first six months of 2014. DD&A in first-quarterthe 2015, periods, compared with first-quarterthe 2014, periods, reflected lower expense from our oil and gas operations associated with decreased production as a result of the sale of the Eagle Ford properties,properties. Lower DD&A from our oil and gas operations for the first six months of 2015, compared with the first six months of 2014, was partly offset by higher DD&A from our mining operations mostly associated with higher sales volumes in North America and Indonesia.

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 theour oil and gas properties for impairment. At June 30, 2015, and March 31, 2015, net capitalized costs with respect to FCX Oil & Gas Inc.'s (FM O&G)FCX's proved U.S. oil and gas properties exceeded the related ceiling test limitation, which resulted in the recognition of an impairment chargecharges of $3.1$2.7 billion ($1.9 billion to net loss attributable to common stockholders) forin first-quartersecond-quarter 2015, and $5.8 billion for the first six months of 2015, reflecting the lower twelve-month average of the first-day-of-the-month historical reference oil price and higher capitalized costs at March 31, 2015.such dates. Refer to Note 1 and "Operations - Oil and Gas" for further discussion.discussion, including discussion of potentially significant additional ceiling test impairments.


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Selling, General and Administrative Expenses
Consolidated selling, general and administrative expenses totaled $154$151 million in first-quartersecond-quarter 2015 and $135$305 millionin first-quarter 2014. Adjustments to reduce accrued incentive compensation amounts were $21 million higher in first-quarter 2014, for the first six months of 2015, compared with first-quarter 2015.$164 million in second-quarter 2014 and $299 million for the first six months of 2014. Consolidated selling, general and administrative expenses were net of capitalized general and administrative expense at our oil and gas operations, totaling $32which totaled $38 million in first-quartersecond-quarter 2015 and $34$71 million for the first six months of 2015, compared with $40 million in first-quartersecond-quarter 2014. and $74 million for the first six months of 2014.

Mining Exploration and Research Expenses
Consolidated exploration and research expenses for our mining operations totaled $3336 million in first-quartersecond-quarter 2015 and $30$69 millionfor the first six months of 2015, compared with $34 million in first-quartersecond-quarter 2014. and $64 million for the first six months of 2014. Our exploration activities are generally 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 also indicates 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 2015, mining exploration expenditures are expected to total approximately $100110 million. , which is subject to change as a result of the comprehensive review of operating plans as further discussed in “Overview.”

As further discussed in Note 1 of our annual report on Form 10-K for the year ended December 31, 2014, under the full cost method of accounting, exploration costs for our oil and gas operations are capitalized to oil and gas properties.

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 for environmental obligations and shutdown costs totaled $1311 million in first-quartersecond-quarter 2015 and $6$24 million for the first six months of 2015, compared with $76 million in first-quartersecond-quarter 2014. and $82 million for the first six months of 2014. Refer to "Contingencies" for further discussion of environmental obligations and litigation matters associated with closed facilities or operations.


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Net Gain on Sale of Assets
Net gain on sale of assets totaled $39 million ($25 million to net income attributable to common stockholders) for first-quarterthe first six months of 2015,, primarily related to the January 2015 $140 million sale of our one-third interest in the Luna Energy power facility in New Mexico.

Interest Expense, Net
Consolidated interest expense (excluding capitalized interest) totaled $215 million in second-quarter 2015 and $425 million for the first six months of 2015, compared with$210225 million in first-quarter2015 and $224 million in first-quartersecond-quarter 2014. and $449 million for the first six months of 2014. Capitalized interest is related tovaries with the level of expenditures for our development projects and average interest rates on our borrowings, and totaled $6466 million in first-quartersecond-quarter 2015 and $63$130 millionfor the first six months of 2015, compared with $61 million in second-quarter first-quarter2014. and $124 million for the first six months of 2014. Refer to "Operations" and “Capital Resources and Liquidity - Investing Activities” for further discussion of current development projects.

Insurance and Other Third-party Recoveries
As further discussed in Note 9, in second-quarter 2015, we recognized a gain of $92 million associated with net proceeds received from insurers under FCX’s directors and officers liability insurance policies and other third parties in accordance with the settlement terms of shareholder derivative litigation.


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Income Taxes
Following is a summary of the approximate amounts used in the calculation of our consolidated income tax benefit (provision) for the first quarters of2015 and 2014 periods (in millions, except percentages):
Three Months Ended Three Months Ended Six Months Ended Six Months Ended 
March 31, 2015 March 31, 2014 June 30, 2015 June 30, 2014 
Income(Loss)a
 
Effective
Tax Rate
 Income Tax (Provision) Benefit 
Incomea
 
Effective
Tax Rate
 Income Tax
Provision		 
Income(Loss)a
 
Effective
Tax Rate
 Income Tax (Provision) Benefit 
Income (Loss)a
 
Effective
Tax Rate
 Income Tax
(Provision) Benefit		 
U.S.$(302) 42% $126
 $473
 29% $(136) $(469)
b 
61% $288
 $936
 31% $(291)
c 
South America60
 40% (24) 344
 37% (127) 81
 37% (30) 747
 36% (267) 
Indonesia61
 47% (29) 44
 42% (18) 289
 43% (124) (39) 38% 15
 
Africa55
 47% (26) 80
 30% (24) 114
 46% (53) 187
 30% (57) 
Impairment of oil and gas properties(3,104) 37% 1,163
 —
 N/A —
 (5,790) 38% 2,179
 —
 N/A —
 
Valuation allowance—
 N/A (458)
b 
—
 N/A —
 —
 N/A (763)
d 
—
 N/A —
 
Eliminations and other128
 N/A (27) 42
 N/A (11) 187
 N/A (28) 138
 N/A (37) 
Annualized rate adjustmentc
—
 N/A (30) —
 N/A (41) 
Annualized rate adjustmente
—
 N/A (87) —
 N/A (48) 
Consolidated FCX$(3,102) 22%
d 
$695
 $983
 36% $(357) $(5,588) 25%
f 
$1,382
 $1,969
 35% $(685) 
a.Represents income (loss) by geographic location before income taxes and equity in affiliated companies’ net earnings.
b.Includes a gain of $92 million related to net proceeds received from insurance carriers and other third parties related to a shareholder derivative litigation settlement for which there is no related tax provision.
c.
Includes a $58 million charge for deferred taxes recorded in connection with the allocation of goodwill to the sale of Eagle Ford.
d.As a result of the impairment to oil and gas properties, we recorded a tax charge to establish a valuation allowance primarily against U.S. federal alternative minimum tax credits.
c.e.In accordance with applicable accounting rules, we adjust our interim provision for income taxes equal to our estimated annualized tax rate.
d.f.
Our consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which we operate. Accordingly, variations in the relative proportions of jurisdictional income result in fluctuations to our consolidated effective income tax rate. Assuming achievement of current sales volume and cost estimates and average prices of $2.752.50 per pound for copper, $1,2001,150 per ounce for gold, $86 per pound for molybdenum and $6556 per barrel of Brent crude oil for the remaindersecond half of 2015, we estimate that our consolidated effectiveestimated a tax rate will approximate 23 percentbenefit of $1.4 billion for 2015, substantially all of which relates to the year impairment of oil and gas properties and resulting tax charge to establish a valuation allowance in the first half of 2015. See "Operations - Oil and Gas" for discussion regarding the likelihood of potentially significant ceiling charges during the remainder of 2015,. which would give rise to additional tax benefits.

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 smelter). Molybdenum concentrateconcentrates and silver are also produced by certain of our North America copper mines.

As further discussed in “Overview,” we are currently reviewing operating plans at each of our copper and molybdenum mining operations and will revise operating and capital plans to strengthen our financial position in a weak copper price environment. The revised plans will target lower operating and capital costs to achieve maximum cash flow under the current market conditions. Production at certain operations challenged by low commodity prices will be curtailed. We expect to complete this review promptly and will report our revised plans during third-quarter

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2015. Accordingly, our sales volume and unit costs estimates discussed below are subject to change as a result of this review and other factors.

Operating and Development Activities. We have increased production from our North America copper mines by approximately 50 percent over the past five years and continue to evaluate a number of opportunities to add 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. The Morenci mill expansion project commenced operations in May 2014 and approachedsuccessfully achieved full rates in first-quartersecond-quarter 2015. The project expanded mill capacity from 50,000 metric tons of ore per day to approximately 115,000 metric tons of ore per day, and is expected to addwhich results in incremental annual production of approximately 225 million pounds of copper. Morenci's copper production is expected to average over 900 million pounds per year over the next five years. Additionally, the molybdenum circuit began production in first-quarter 2015 and is expected to reach design capacity of approximately 9 million pounds of molybdenum per year in second-quarter 2015. Remaining items associated with the project include construction of the expanded tailings storage facility, which is expected to be completed in third-quarterthe second half of 2015.

Operating Data. Following is summary operating data for the North America copper mines for the second quarters and first quarterssix months of 2015 and 2014:
Three Months Ended Three Months Ended Six Months Ended
March 31, June 30, June 30,
2015 2014 2015 2014 2015 2014
Operating Data, Net of Joint Venture Interest           
Copper (recoverable)
           
Production (millions of pounds)452
 385
 469
 395
 921
 780
Sales (millions of pounds)472
 371
 486
 423
 958
 794
Average realized price per pound$2.73
 $3.24
 $2.77
 $3.16
 $2.73
 $3.21
           
Molybdenum (recoverable)
           
Production (millions of pounds)a
9
 8
 10
 9
 19
 17
           
100% Operating Data           
SX/EW operations           
Leach ore placed in stockpiles (metric tons per day)915,100
 983,100
 890,000
 1,044,500
 902,500
 1,014,000
Average copper ore grade (percent)0.25
 0.24
 0.26
 0.25
 0.25
 0.25
Copper production (millions of recoverable pounds)247
 229
 261
 234
 508
 463
           
Mill operations           
Ore milled (metric tons per day)301,500
 255,300
 316,000
 260,100
 308,800
 257,700
Average ore grade (percent):           
Copper0.48
 0.42
 0.47
 0.44
 0.48
 0.43
Molybdenum0.03
 0.03
 0.03
 0.03
 0.03
 0.03
Copper recovery rate (percent)85.4
 86.1
 85.8
 82.8
 85.6
 84.4
Copper production (millions of recoverable pounds)241
 182
 247
 188
 488
 370
a.Refer to "Consolidated Results" for our consolidated molybdenum sales volumes, which includes sales of molybdenum produced at the North America copper mines.

Copper sales volumes from our North America copper mines increased to 472486 million pounds in first-quartersecond-quarter 2015, and 958 million pounds for the first six months of 2015, compared with 371423 million pounds in first-quartersecond-quarter 2014, and 794 million pounds for the first six months of 2014, primarily reflecting higher milling rates and ore grades at Morenci and higher ore grades at Chino.

Copper sales from North America are expected to approximate 1.941.96 billion pounds for the year 2015, compared with 1.66 billion pounds in 2014.

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

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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

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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 Molybdenum

The following table summarizes unit net cash costs and gross profit per pound at our North America copper mines for the second quarters and first quarterssix months of 2015 and 2014.2014. 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 
March 31, 2015 March 31, 2014 June 30, 2015 June 30, 2014 
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-
denuma
 Copper 
Molyb-
denuma
  Copper 
Molyb-
denuma
 Copper 
Molyb-
denuma
 
Revenues, excluding adjustments$2.73
 $2.73
 $8.81
 $3.24
 $3.24
 $10.17
 $2.77
 $2.77
 $7.80
 $3.16
 $3.16
 $12.49
 
                        
Site production and delivery, before net noncash and other costs shown below1.81
 1.70
 6.25
 1.88
 1.78
 6.14
 1.78
 1.66
 6.24
 1.87
 1.74
 6.73
 
By-product credits(0.18) —
 —
 (0.22) —
 —
 (0.16) —
 —
 (0.28) —
 —
 
Treatment charges0.13
 0.13
 —
 0.13
 0.12
 —
 0.12
 0.12
 —
 0.11
 0.11
 —
 
Unit net cash costs1.76
 1.83
 6.25
 1.79
 1.90
 6.14
 1.74
 1.78
 6.24
 1.70
 1.85
 6.73
 
Depreciation, depletion and amortization0.28
 0.27
 0.63
 0.29
 0.27
 0.53
 0.28
 0.27
 0.53
 0.30
 0.28
 0.64
 
Noncash and other costs, net0.07
 0.06
 0.05
 0.08
 0.08
 0.02
 0.10
b 
0.09
 0.06
 0.07
 0.06
 0.05
 
Total unit costs2.11
 2.16
 6.93
 2.16
 2.25
 6.69
 2.12
 2.14
 6.83
 2.07
 2.19
 7.42
 
Revenue adjustments, primarily for pricing on prior period open sales(0.06) (0.06) —
 (0.02) (0.02) —
 (0.03) (0.03) —
 0.02
 0.02
 —
 
Gross profit per pound$0.56
 $0.51
 $1.88
 $1.06
 $0.97
 $3.48
 $0.62
 $0.60
 $0.97
 $1.11
 $0.99
 $5.07
 
                        
Copper sales (millions of recoverable pounds)471
 471
   369
 369
   485
 485
   421
 421
   
Molybdenum sales (millions of recoverable pounds)a
    9
     8
     10
     9
 
             
 Six Months Ended Six Months Ended 
 June 30, 2015 June 30, 2014 
 By- Product Method Co-Product Method By- Product Method Co-Product Method 
  Copper 
Molyb-
denuma
  Copper 
Molyb-
denuma
 
Revenues, excluding adjustments$2.73
 $2.73
 $8.28
 $3.21
 $3.21
 $11.39
 
             
Site production and delivery, before net noncash and other costs shown below1.79
 1.68
 6.24
 1.87
 1.76
 6.45
 
By-product credits(0.17) —
 —
 (0.25) —
 —
 
Treatment charges0.13
 0.12
 —
 0.12
 0.12
 —
 
Unit net cash costs1.75
 1.80
 6.24
 1.74
 1.88
 6.45
 
Depreciation, depletion and amortization0.28
 0.27
 0.58
 0.29
 0.27
 0.58
 
Noncash and other costs, net0.08
b 
0.08
 0.06
 0.08
 0.07
 0.04
 
Total unit costs2.11
 2.15
 6.88
 2.11
 2.22
 7.07
 
Revenue adjustments, primarily for pricing on prior period open sales(0.03) (0.03) —
 (0.01) (0.01) —
 
Gross profit per pound$0.59
 $0.55
 $1.40
 $1.09
 $0.98
 $4.32
 
             
Copper sales (millions of recoverable pounds)956
 956
   790
 790
   
Molybdenum sales (millions of recoverable pounds)a
    19
     17
 
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 charges for LCM inventory adjustments totaling $0.02 per pound for second-quarter 2015 and $0.01 per pound for the first six months of 2015.


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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 $1.761.74 per pound of copper in first-quartersecond-quarter 2015 and $1.75 per pound for the first six months of 2015, were lowerhigher than unit net cash costs of $1.791.70 per pound in first-quartersecond-quarter 2014, and $1.74 per pound for the first six months of 2014, primarily reflecting lower by-product credits, partly offset by 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 $86 per pound of molybdenum for the remaindersecond half of 2015, average unit net cash costs (net of by-product credits) for our North America copper mines are expected to approximate $1.711.72 per pound of copper for the year 2015, compared with $1.73 per pound in 2014. North America's unit net cash costs for the remainder 2015 would change by approximately $0.03$0.02 per pound for each $2 per pound change in the average price of molybdenum.molybdenum for the second half of 2015.

South America Mining
We operate two copper mines in South America – Cerro Verde in Peru (in which we own a 53.56 percent interest) and El Abra in Chile (in which we own a 51 percent interest). AllThese operations in South America are consolidated in our financial statements.
On November 3, 2014, FCX completed the sale of its ownership interests in the Candelaria and Ojos del Salado mines in Chile.

South America mining includes open-pit 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 also ship a portion of their copper concentrate inventories to Atlantic Copper. In addition to copper, the Cerro Verde mine produces molybdenum concentrates and silver.


39
TableAs further discussed in “Overview,” we are currently reviewing operating plans at each of Contentsour copper and molybdenum mining operations and will revise operating and capital plans to strengthen our financial position in a weak copper price environment. The revised plans will target lower operating and capital costs to achieve maximum cash flow under the current market conditions. Production at certain operations challenged by low commodity prices will be curtailed. We expect to complete this review promptly and will report our revised plans during third-quarter 2015. Accordingly, our sales volume and unit costs estimates discussed below are subject to change as a result of this review and other factors.


Development Activities.
Cerro Verde Expansion. Construction activities associated with a large-scale expansion at Cerro Verde are advancing on schedule toward completion in late 2015. Detailed engineering and major procurement activities are complete and construction is approximately 70more than 87 percent complete. 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. As of March 31,June 30, 2015, $3.5$3.9 billion had been incurred for this project ($0.40.8 billion during first-quarterthe first six months of 2015), with approximately $1.1$0.7 billion remaining to be incurred.

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 depend on technical studies, economic factors and global copper market conditions.


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Operating Data. Following is summary operating data for our South America mining operations for the second quarters and first quarterssix months of 2015 and 2014:2014:
Three Months Ended Three Months Ended Six Months Ended
March 31, June 30, June 30,
2015 
2014a
 2015 
2014a
 2015 
2014a
Copper (recoverable)
           
Production (millions of pounds)193
 314
 188
 300
 381
 614
Sales (millions of pounds)200
 307
 178
 310
 378
 617
Average realized price per pound$2.71
 $3.07
 $2.69
 $3.17
 $2.68
 $3.16
           
Gold (recoverable)
           
Production (thousands of ounces)—
 21
 —
 21
 —
 42
Sales (thousands of ounces)—
 23
 —
 20
 —
 43
Average realized price per ounce$—
 $1,307
 $—
 $1,302
 $—
 $1,302
           
Molybdenum (millions of recoverable pounds)
           
Productionb
2
 3
 2
 2
 4
 5
           
SX/EW operations           
Leach ore placed in stockpiles (metric tons per day)233,600
 286,700
 237,000
 281,700
 235,300
 284,200
Average copper ore grade (percent)0.41
 0.50
 0.41
 0.52
 0.41
 0.51
Copper production (millions of recoverable pounds)114
 123
 109
 125
 223
 248
           
Mill operations           
Ore milled (metric tons per day)119,300
 188,700
 116,500
 182,200
 117,900
 185,500
Average ore grade:           
Copper (percent)0.44
 0.59
 0.46
 0.56
 0.45
 0.58
Molybdenum (percent)0.02
 0.02
 0.01
 0.02
 0.02
 0.02
Gold (grams per metric ton)—
 0.10
 —
 0.11
 —
 0.11
Copper recovery rate (percent)79.6
 90.0
 78.2
 88.7
 78.9
 89.4
Copper production (millions of recoverable pounds)79
 191
 79
 175
 158
 366
a.IncludesThe 2014 periods include the results of the Candelaria and Ojos del Salado mines, which were sold in November 2014 and had sales volumes totaling 9480 million pounds of copper and 2320 thousand ounces of gold in first-quartersecond-quarter 2015 and 174 million pounds of copper and 43 thousand ounces of gold for the first six months of 2014.
b.Refer to "Consolidated Results" for our consolidated molybdenum sales volumes, which includesinclude sales of molybdenum produced at Cerro Verde.

Consolidated copper sales volumes from South America of 200178 million pounds in first-quartersecond-quarter 2015 and 378 million pounds for the first six months of 2015 were lower than first-quarter2014sales of 307310 million pounds in second-quarter 2014 and 617 million pounds for the first six months of 2014, reflecting the sale of the Candelaria and Ojos del Salado mines and lower production from Cerro Verde and El Abra primarily associated with lower ore grades and recovery rates from stockpile material.rates.

For the year 2015,, consolidated sales volumes from South America mines are expected to approximate 935900 million pounds of copper, compared with 1.14 billion pounds in 2014, which included copper sales volumes of 268 million pounds from the Candelaria and Ojos del Salado mines.

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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.


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Gross Profit per Pound of Copper

The following table summarizes unit net cash costs and gross profit per pound of copper at the South America mining operations for the second quarters and first quarterssix months of 2015 and 2014.2014. 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 EndedThree Months Ended Three Months Ended 
March 31, 2015 March 31, 2014June 30, 2015 June 30, 2014 
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$2.71
 $2.71
 $3.07
 $3.07
$2.69
 $2.69
 $3.17
 $3.17
 
               
Site production and delivery, before net noncash and other costs shown below1.75
 1.69
 1.50
 1.39
1.77
 1.72
 1.64
 1.52
 
By-product credits(0.08) —
 (0.25) —
(0.04) —
 (0.23) —
 
Treatment charges0.17
 0.17
 0.17
 0.17
0.17
 0.17
 0.18
 0.18
 
Royalty on metals—
 —
 0.01
 0.01
 
Unit net cash costs1.84
 1.86
 1.42
a 
1.56
1.90
 1.89
 1.60
a 
1.71
 
Depreciation, depletion and amortization0.38
 0.36
 0.28
 0.27
0.40
 0.39
 0.30
 0.29
 
Noncash and other costs, net0.02
 0.03
 0.06
 0.06
Noncash and other (credits) costs, net(0.02) (0.03) 0.08
 0.06
 
Total unit costs2.24
 2.25
 1.76
 1.89
2.28
 2.25
 1.98
 2.06
 
Revenue adjustments, primarily for pricing on prior period open sales(0.15) (0.15) (0.24) (0.24)(0.05) (0.05) 0.10
 0.10
 
Gross profit per pound$0.32
 $0.31
 $1.07
 $0.94
$0.36
 $0.39
 $1.29
 $1.21
 
               
Copper sales (millions of recoverable pounds)200
 200
 307
 307
178
 178
 310
 310
 
        
 Six Months Ended Six Months Ended
 June 30, 2015 June 30, 2014
 
By-Product
Method
 
Co-Product
Method
 
By-Product
Method
 
Co-Product
Method
Revenues, excluding adjustments$2.68
 $2.68
 $3.16
 $3.16
        
Site production and delivery, before net noncash and other costs shown below1.76
 1.70
 1.57
 1.46
By-product credits(0.06) —
 (0.24) —
Treatment charges0.17
 0.17
 0.18
 0.18
Royalty on metals—
 —
 —
 —
Unit net cash costs1.87
 1.87
 1.51
a 
1.64
Depreciation, depletion and amortization0.39
 0.38
 0.29
 0.27
Noncash and other costs, net—
 —
 0.07
 0.06
Total unit costs2.26
 2.25
 1.87
 1.97
Revenue adjustments, primarily for pricing on prior period open sales(0.08) (0.08) (0.11) (0.11)
Gross profit per pound$0.34
 $0.35
 $1.18
 $1.08
        
Copper sales (millions of recoverable pounds)378
 378
 617
 617
a.Excluding the results of Candelaria and Ojos del Salado, South America mining's first-quarter 2014 unit net cash costs for second-quarter 2014 averaged $1.47$1.55 per pound.pound and $1.51 for the first six months of 2014.

Our South America 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 $1.841.90 per pound of copper in first-quartersecond-quarter 2015 and $1.87 per pound for the first six months of 2015 were higher than unit net cash costs of $1.421.60 per pound in first-quartersecond-quarter 2014, and $1.51 per pound for the first six months of 2014, primarily reflecting lower sales volumes and higher mining costs at Cerro Verde mostly associated with increased repair and maintenance expense. In addition, first-quarter 2015 reflected lower by-product credits. Lower by-product credits primarilywere mostly because of the sale of the Candelaria mine.and Ojos del Salado in fourth-quarter 2014.

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.

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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.

Assuming achievement of current sales volume and cost estimates, and average prices of $86 per pound of molybdenum for the remaindersecond half of 2015, we estimate that average unit net cash costs (net of by-product credits) for our South America mining operations would approximate $1.721.75 per pound of copper for the year 2015, compared with $1.58 per pound in 2014.


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Indonesia Mining
Indonesia mining includes PT-FI’s Grasberg minerals district, one of the world's largest copper and gold deposits, in Papua, Indonesia. We own 90.64 percent of PT-FI, including 9.36 percent owned through our wholly owned subsidiary, PT Indocopper Investama.

PT-FI 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 PT Smelting and Atlantic Copper, and the remainder to third-party customers.

PT-FI proportionately consolidates an unincorporated joint venture with Rio Tinto plc (Rio Tinto), under which Rio Tinto has a 40 percent interest in certain assets and a 40 percent interest through 2021 in production exceeding specified annual amounts of copper, gold and silver. After 2021, all production and related revenues and costs are shared 60 percent PT-FI and 40 percent Rio Tinto. Refer to Note 3 in our annual report on Form 10-K for the year ended December 31, 2014,, for discussion of our joint venture with Rio Tinto.

ReferPT-FI 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, and during the first six months of 2015, approximately one-half of PT-FI's copper concentrates was sold to "Risk Factors" containedPT Smelting, our 25 percent owned smelter and refinery in Part I, Item 1A.Gresik. In July 2015, PT Smelting's operations were temporarily suspended pending completion of required repairs, which are expected to be completed in September 2015.

PT-FI has commenced discussions with union officials regarding its bi-annual labor agreement, which is scheduled for renewal in September 2015.

As further discussed in “Overview,” we are currently reviewing operating plans at each of our annualcopper and molybdenum mining operations and will revise operating and capital plans to strengthen our financial position in a weak copper price environment. The revised plans will target lower operating and capital costs to achieve maximum cash flow under the current market conditions. Production at certain operations challenged by low commodity prices will be curtailed. We expect to complete this review promptly and will report on Form 10-K for the year ended December 31, 2014, for discussionsour revised plans during third-quarter 2015. Accordingly, our sales volume and unit costs estimates discussed below are subject to change as a result of risks associated with operations in Indonesia.this review and other factors.

Regulatory Matters. In January 2014, the Indonesian government published regulations that among other things imposed a progressive export duty on copper concentrates. Despite PT-FI’s rights under its Contract of Work (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 through July 2014.

In July 2014, PT-FI entered into a Memorandum of Understanding (MOU) with the Indonesian government. Under the MOU, PT-FI provided a $115 million assurance bond to support its commitment for smelter development, agreed to increased royalty rates and agreed to pay export duties (which were set at 7.5 percent, declining to 5.0 percent when smelter development progress exceeds 7.5 percent and are eliminated when development progress exceeds 30 percent). The MOU also anticipated an amendment of the COW within six months to address other matters; however, no terms of the COW other than those relating to the smelter bond, increased royalties and export duties were changed. In January 2015, the MOU was extended to July 25, 2015, and it expired on that date. The increased royalty rates, export duties and smelter assurance bond remain in effect.

PT-FI is engagedalso required to apply for renewal of export permits at six-month intervals. On July 29, 2015, PT-FI's export permit was renewed through January 28, 2016. In connection with the renewal, export duties were reduced to 5.0 percent, as a result of smelter development progress.

In April 2015, the Indonesian government instituted a requirement that all export sales of concentrates must be arranged through letters of credit with payments received through a foreign exchange bank located in Indonesia. Under the COW, PT-FI is not required to obtain letters of credit in connection with its sales, and PT-FI requested an

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exemption from the new requirement. The Minister of Trade granted an initial exemption through July 25, 2015.  If this exemption is not renewed, shipments could be delayed for a short period of time and additional costs could be incurred.

PT-FI continues to engage in active discussions with the Indonesian government regarding its Contract of Work (COW)COW and long-term operating rights. The parties entered into a Memorandum of Understanding (MOU) related to an amended COW in July 2014, which was extended to July 25, 2015. Negotiations are taking into consideration PT-FI's requirement for assurance of legal and fiscal terms post-2021 for PT-FI to continue with its large-scale investment program in Papua, Indonesia.

PT-FI is advancing plans for the construction of new smelter capacity in parallel with completing negotiations on its COW and long-term operating rights. PT-FI has identified a site adjacent to the existing PT Smelting site in Gresik, Indonesia,potential sites for the construction of additional smelter capacity and is in discussions with potential partners for the project.

UnderWe expect, but cannot provide any assurance, that PT-FI will be successful in reaching a satisfactory agreement on the MOU, no terms of its long-term mining rights. If PT-FI is unable to reach agreement with the COW other than those relatingIndonesian government on its long-term rights, we may be required to reduce or defer investments in underground development projects, which could have a material adverse effect on PT-FI’s future production and reserves. In addition, PT-FI would intend to pursue any and all claims against the export duties, a smelter bond and increased royalties will be changed until the completionIndonesian government for breach of an amended COW.contract through international arbitration.

PT-FI is required to apply for renewal of export permits at six-month intervals and the next renewal date is July 25, 2015.

Refer to Note 13 in our annual report on Form 10-K for the year ended December 31, 2014,, for further discussion of our Indonesia mining contract. For additional discussion of risks associated with our operations in Indonesia, including labor matters and the COW, refer to "Risk Factors" contained in Part I, Item 1A. of our annual report on Form 10-K for the year ended December 31, 2014.

Operating and Development Activities. We have several projects in progress in the Grasberg minerals district related to the development of large-scale, long-lived, high-grade underground ore bodies. In aggregate, these underground ore bodies are expected to ramp up over several years to process approximately 240,000 metric tons of ore per day following the transition from the Grasberg open pit, currently anticipated to occur in late 2017. Development of the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) underground mines is advancing to enable DMLZ to commence production in late 2015 and the Grasberg Block Cave mine to commence production in 2018. Over the next five years, estimated aggregate capital spending on these projects is currently expected to average $0.8 billion per year ($0.60.7 billion per year net to PT-FI). Additionally, over the next five years, estimated aggregate capital spending for processing and power facilities to optimize the handling of underground ore is expected to average $0.3 billion per year. Considering the long-term nature and size of these projects, actual costs could vary from these estimates. PT-FI may reduce or defer these activities pending resolution of negotiations for an amendedregarding the COW.

The following provides additional information on the continued development of the Common Infrastructure project, the Grasberg Block Cave underground mine and the 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

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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. Production from the Big Gossan mine is currently suspended and expected to restart production in the second half of 2016. 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 early 2018, 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 $5.7 billion (incurred between 2008 and 2021), with PT-FI’s share totaling approximately $5.1 billion. Aggregate project costs totaling $1.92.0 billion have been incurred through March 31,June 30, 2015 ($0.10.2 billion during first-quarterthe first six months of 2015).

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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 late 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 $2.7 billion (incurred between 2009 and 2020), with PT-FI’s share totaling approximately $1.6 billion. Aggregate project costs totaling $1.3 billion have been incurred through March 31,June 30, 2015 ($0.10.2 billion during first-quarter 2015)the first six months of 2015).

Operating Data. Following is summary operating data for our Indonesia mining operations for the firstsecond quarters of 2015 and 2014:first six months of 2015 and 2014:
Three Months Ended Three Months Ended Six Months Ended
March 31, June 30, June 30,
2015 2014 2015 2014 2015 2014
Operating Data, Net of Joint Venture Interest           
Copper (recoverable)
           
Production (millions of pounds)154
 140
 205
 122
 359
 262
Sales (millions of pounds)155
 109
 196
 117
 351
 226
Average realized price per pound$2.74
 $3.04
 $2.61
 $3.19
 $2.66
 $3.15
           
Gold (thousands of recoverable ounces)
           
Production (thousands of ounces)255
 208
 360
 142
 615
 350
Sales (thousands of ounces)260
 162
 346
 135
 606
 297
Average realized price per ounce$1,186
 $1,299
 $1,173
 $1,294
 $1,183
 $1,299
           
100% Operating Data           
Ore milled (metric tons per day):a
           
Grasberg open pit107,900
 65,800
 134,200
 50,700
 121,200
 58,200
DOZ underground mineb
49,000
 50,300
 42,700
 50,500
 45,800
 50,400
Big Gossan underground minec
—
 1,900
 —
 1,700
 —
 1,800
Total156,900
 118,000
 176,900
 102,900
 167,000
 110,400
Average ore grades:           
Copper (percent)0.57
 0.73
 0.67
 0.73
 0.63
 0.72
Gold (grams per metric ton)0.68
 0.79
 0.86
 0.65
 0.78
 0.72
Recovery rates (percent):           
Copper90.5
 88.5
 90.6
 89.0
 90.6
 88.7
Gold84.5
 79.4
 83.5
 76.3
 83.9
 78.1
Production (recoverable):           
Copper (millions of pounds)154
 144
 205
 125
 359
 269
Gold (thousands of ounces)255
 209
 360
 142
 615
 351
a.Amounts represent the approximate average daily throughput processed at PT-FI’s mill facilities from each producing mine.

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b.Ore milled from the DOZ underground mine is expected to ramp up to 70,000 metric tons of ore per day in the second half of 2015.
c.Production from the Big Gossan underground mine is expected to restart in the second half of 2016 and ramp up to 7,000 metric tons of ore per day in 2018.

Indonesia's sales volumes increased to 155196 million pounds of copper and 260346 thousand ounces of gold in first-quartersecond-quarter 2015, and 351 million pounds of copper and 606 thousand ounces of gold for the first six months of 2015, compared with 109117 million pounds of copper and 162135 thousand ounces of gold in first-quartersecond-quarter 2014, and 226 million pounds of copper and 297 thousand ounces of gold for the first six months of 2014, primarily reflecting higher operating rates as Indonesia's first-quarter 2014 mill rates were negatively impacted by the export ban, partly offset by lowerand higher ore grades.grades for gold.

At the Grasberg mine, the sequencing of mining areas with varying ore grades causes fluctuations in quarterly and annual production of copper and gold. PT-FI expects ore grades to increase beginning in fourth-quarter 2015 through 2017 as high-grade sections of the Grasberg open pit are mined. Consolidated sales volumes from our Indonesia mining operations are expected to approximate 885860 million pounds of copper and 1.3 million ounces of

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gold for the year 2015, compared with 664 million pounds of copper and 1.2 million ounces of gold for the year 2014.

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.

Gross Profit (Loss) per Pound of Copper and per Ounce of Gold

The following table summarizes the unit net cash costs and gross profit (loss) per pound of copper and per ounce of gold at our Indonesia mining operations for the second quarters and first quarterssix months of 2015 and 2014.2014. 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 EndedThree Months Ended Three Months Ended
March 31, 2015 March 31, 2014June 30, 2015 June 30, 2014
By-Product Method Co-Product Method By-Product Method Co-Product MethodBy-Product Method Co-Product Method By-Product Method Co-Product Method
 Copper Gold Copper Gold Copper Gold Copper Gold
Revenues, excluding adjustments$2.74
 $2.74
 $1,186
 $3.04
 $3.04
 $1,299
$2.61
 $2.61
 $1,173
 $3.19
 $3.19
 $1,294
                      
Site production and delivery, before net noncash and other costs shown below2.84
 1.63
 705
 3.33
a 
2.01
 859
2.26
 1.25
 560
 3.86
a 
2.59
 1,050
Gold and silver credits(2.09) —
 —
 (2.15) —
 —
(2.13) —
 —
 (1.57) —
 —
Treatment charges0.29
 0.17
 73
 0.24
 0.15
 62
0.32
 0.18
 79
 0.26
 0.17
 70
Export duties0.14
 0.08
 35
 —
 —
 —
0.18
 0.10
 45
 —
 —
 —
Royalty on metals0.16
b 
0.09
 40
 0.11
 0.07
 31
0.18
b 
0.10
 45
 0.11
 0.08
 31
Unit net cash costs1.34
 1.97
 853
 1.53
 2.23
 952
0.81
 1.63
 729
 2.66
 2.84
 1,151
Depreciation and amortization0.45
 0.26
 112
 0.44
 0.26
 114
0.40
 0.22
 100
 0.47
 0.31
 127
Noncash and other costs, net0.04
 0.02
 9
 0.67
a 
0.41
 174
0.04
 0.02
 10
 0.55
a 
0.37
 151
Total unit costs1.83
 2.25
 974
 2.64
 2.90
 1,240
1.25
 1.87
 839
 3.68
 3.52
 1,429
Revenue adjustments, primarily for pricing on prior period open sales(0.32) (0.32) 33
 (0.53) (0.53) 107
(0.02) (0.02) 7
 0.09
 0.09
 5
PT Smelting intercompany profit0.04
 0.02
 11
 0.49
 0.30
 129
Gross profit per pound/ounce$0.63
 $0.19
 $256
 $0.36
 $(0.09) $295
PT Smelting intercompany (loss) profit(0.02) (0.01) (5) 0.03
 0.02
 9
Gross profit (loss) per pound/ounce$1.32
 $0.71
 $336
 $(0.37) $(0.22) $(121)
                      
Copper sales (millions of recoverable pounds)155
 155
   109
 109
  196
 196
   117
 117
  
Gold sales (thousands of recoverable ounces)    260
     162
    346
     135

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 Six Months Ended Six Months Ended
 June 30, 2015 June 30, 2014
 By-Product Method Co-Product Method By-Product Method Co-Product Method
  Copper Gold  Copper Gold
Revenues, excluding adjustments$2.66
 $2.66
 $1,183
 $3.15
 $3.15
 $1,299
            
Site production and delivery, before net noncash and other costs shown below2.51
 1.41
 626
 3.60
a 
2.31
 950
Gold and silver credits(2.11) —
 —
 (1.85) —
 —
Treatment charges0.31
 0.17
 77
 0.25
 0.16
 65
Export duties0.16
 0.09
 41
 —
 —
 —
Royalty on metals0.17
b 
0.10
 42
 0.12
 0.07
 31
Unit net cash costs1.04
 1.77
 786
 2.12
 2.54
 1,046
Depreciation and amortization0.42
 0.24
 106
 0.45
 0.29
 120
Noncash and other costs, net0.04
 0.02
 10
 0.61
a 
0.39
 161
Total unit costs1.50
 2.03
 902
 3.18
 3.22
 1,327
Revenue adjustments, primarily for pricing on prior period open sales(0.15) (0.15) 14
 (0.24) (0.24) 59
PT Smelting intercompany profit0.01
 0.01
 2
 0.26
 0.16
 68
Gross profit (loss) per pound/ounce$1.02
 $0.49
 $297
 $(0.01) $(0.15) $99
            
Copper sales (millions of recoverable pounds)351
 351
   226
 226
  
Gold sales (thousands of recoverable ounces)    606
     297
a.Fixed costs totaling $0.49$0.48 per pound of copper charged directly to cost of sales as a result of the impact of export restrictions on PT-FI's operating rates are excluded from site production and delivery and included in net noncash and other costs.costs for the second quarter and first six months of 2014.
b.Includes $0.07 per pound of copper for the second quarter and first six months of 2015 associated with PT-FI's increased royalty rates pursuant to the MOU.rates.

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A significant portion of PT-FI's costs are fixed and unit costs vary depending on sales volumes. Indonesia's unit net cash costs (net of gold and silver credits) totaled $1.340.81 per pound of copper in first-quartersecond-quarter 2015, and $1.04 per pound of copper for the first six months of 2015, compared with $1.532.66 per pound in first-quartersecond-quarter 2014, and $2.12 per pound of copper for the first six months of 2014, primarily reflecting higher gold and silver credits and higher copper sales volumes, partly offset by the impact of export duties and increased royalty rates.

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.

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.

PT Smelting intercompany profit represents the change in the deferral 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, and assuming an average gold price of $1,2001,150 per ounce for the remaindersecond half of 2015, Indonesia's unit net cash costs (net of gold and silver credits) are expected to approximate $1.091.08 per pound of copper for the year 2015, compared with $1.06 for the year 2014. Indonesia's projected unit net cash costs would change by approximately $0.060.05 per pound for each $50 per ounce change in the average price of gold for the remaindersecond half of 2015. 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.

Africa Mining
Africa mining includes the 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 Tenke Fungurume Mining S.A. (TFM), and we are the operator of Tenke.

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The Tenke operation includes surfaceopen-pit 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.

As further discussed in “Overview,” we are currently reviewing operating plans at each of our copper and molybdenum mining operations and will revise operating and capital plans to strengthen our financial position in a weak copper price environment. The revised plans will target lower operating and capital costs to achieve maximum cash flow under the current market conditions. Production at certain operations challenged by low commodity prices will be curtailed. We expect to complete this review promptly and will report our revised plans during third-quarter 2015. Accordingly, our sales volume and unit costs estimates discussed below are subject to change as a result of this review and other factors.

Operating and Development Activities. TFM completed its second phase expansion project in early 2013, which included increasing mine, mill and processing capacity. Construction of a second sulphuric acid plant is under way, with completion expected in the first half of 2016. 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 power availability, economic and market conditions, and the business and investment climate in the DRC.


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Operating Data. Following is summary operating data for our Africa mining operations for the second quarters and first quarterssix months of 2015 and 2014:2014:
Three Months Ended Three Months Ended Six Months Ended
March 31, June 30, June 30,
2015 2014 2015 2014 2015 2014
Copper (recoverable)
           
Production (millions of pounds)116
 109
 115
 114
 231
 223
Sales (millions of pounds)133
 84
 104
 118
 237
 202
Average realized price per pounda
$2.66
 $3.07
 $2.63
 $3.08
 $2.66
 $3.08
           
Cobalt (contained)
           
Production (millions of pounds)7
 7
 9
 7
 16
 14
Sales (millions of pounds)8
 8
 8
 7
 16
 15
Average realized price per pound$8.72
 $9.21
 $9.27
 $9.58
 $9.23
 $9.29
           
Ore milled (metric tons per day)14,500
 14,500
 15,300
 15,200
 14,900
 14,800
Average ore grades (percent):           
Copper4.36
 4.05
 4.02
 4.08
 4.18
 4.07
Cobalt0.35
 0.33
 0.44
 0.34
 0.40
 0.33
Copper recovery rate (percent)94.0
 94.7
 93.9
 92.7
 93.9
 93.7
a.Includes point-of-sale transportation costs as negotiated in customer contracts.

TFM's copper sales of 133104 million pounds in first-quartersecond-quarter 2015 were lower than second-quarter 2014 copper sales of 118 million pounds primarily because of timing of shipments. TFM's copper sales for the first six months of 2015 of 237 million were higher than copper sales of 84202 million pounds in first-quarter for the first six months of 2014,, primarily because ofreflecting higher ore grades and timing of shipments and higher ore grades.shipments.

For the year 2015, we expect sales volumes from TFM to approximate 455460 million pounds of copper and 3436 million pounds of cobalt, compared with 425 million pounds of copper and 30 million pounds of cobalt for the year 2014.

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

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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.


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Gross Profit per Pound of Copper and Cobalt

The following table summarizes the unit net cash costs and gross profit per pound of copper and cobalt at our Africa mining operations for the second quarters and first quarterssix months of2015 and 2014.2014. 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 EndedThree Months Ended Three Months Ended
March 31, 2015 March 31, 2014June 30, 2015 June 30, 2014
By-Product Method Co-Product Method By-Product Method Co-Product MethodBy-Product Method Co-Product Method By-Product Method Co-Product Method
 Copper Cobalt Copper Cobalt Copper Cobalt Copper Cobalt
Revenues, excluding adjustmentsa
$2.66
 $2.66
 $8.72
 $3.07
 $3.07
 $9.21
$2.63
 $2.63
 $9.27
 $3.08
 $3.08
 $9.58
                      
Site production and delivery, before net noncash and other costs shown below1.57
 1.39
 5.61
 1.48
 1.22
 5.16
1.54
 1.35
 5.48
 1.46
 1.35
 5.22
Cobalt creditsb
(0.37) —
 —
 (0.66) —
 —
(0.53) —
 —
 (0.34) —
 —
Royalty on metals0.06
 0.05
 0.14
 0.07
 0.06
 0.16
0.06
 0.05
 0.16
 0.06
 0.06
 0.15
Unit net cash costs1.26
 1.44
 5.75
 0.89
 1.28
 5.32
1.07
 1.40
 5.64
 1.18
 1.41
 5.37
Depreciation, depletion and amortization0.55
 0.48
 1.18
 0.61
 0.53
 0.80
0.55
 0.43
 1.42
 0.54
 0.46
 1.30
Noncash and other costs, net0.03
 0.02
 0.06
 0.08
 0.08
 0.12
0.03
 0.03
 0.10
 0.03
 0.03
 0.08
Total unit costs1.84
 1.94
 6.99
 1.58
 1.89
 6.24
1.65
 1.86
 7.16
 1.75
 1.90
 6.75
Revenue adjustments, primarily for pricing on prior period open sales(0.05) (0.05) (0.10) (0.01) (0.01) 0.24
0.02
 0.02
 0.50
 —
 —
 (0.19)
Gross profit per pound$0.77
 $0.67
 $1.63
 $1.48
 $1.17
 $3.21
$1.00
 $0.79
 $2.61
 $1.33
 $1.18
 $2.64
                      
Copper sales (millions of recoverable pounds)133
 133
   84
 84
  104
 104
   118
 118
  
Cobalt sales (millions of contained pounds)    8
     8
    8
     7
            
 Six Months Ended Six Months Ended
 June 30, 2015 June 30, 2014
 By-Product Method Co-Product Method By-Product Method Co-Product Method
  Copper Cobalt  Copper Cobalt
Revenues, excluding adjustmentsa
$2.66
 $2.66
 $9.23
 $3.08
 $3.08
 $9.29
            
Site production and delivery, before net noncash and other costs shown below1.56
 1.37
 5.54
 1.47
 1.30
 5.19
Cobalt creditsb
(0.44) —
 —
 (0.48) —
 —
Royalty on metals0.06
 0.05
 0.15
 0.07
 0.06
 0.16
Unit net cash costs1.18
 1.42
 5.69
 1.06
 1.36
 5.35
Depreciation, depletion and amortization0.55
 0.46
 1.31
 0.57
 0.49
 1.03
Noncash and other costs, net0.03
 0.03
 0.08
 0.05
 0.04
 0.09
Total unit costs1.76
 1.91
 7.08
 1.68
 1.89
 6.47
Revenue adjustments, primarily for pricing on prior period open sales(0.03) (0.03) (0.04) (0.01) (0.01) 0.13
Gross profit per pound$0.87
 $0.72
 $2.11
 $1.39
 $1.18
 $2.95
            
Copper sales (millions of recoverable pounds)237
 237
   202
 202
  
Cobalt sales (millions of contained pounds)    16
     15
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 $1.261.07 per pound of copper in first-quartersecond-quarter 2015 were lower than unit net cash costs of $1.18 per pound in second-quarter 2014, primarily reflecting higher cobalt credits, partly offset by lower copper sales volumes. Africa's unit net cash costs of $1.18 per pound of copper

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for the first six months of 2015 were higher than unit net cash costs of $0.89$1.06 per pound in first-quarter for the first six months of 2014,, primarily reflecting lower cobalt credits.higher site production and delivery costs, partly offset by higher copper sales volumes.

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

Assuming achievement of current sales volume and cost estimates, and an average cobalt market price of $13 per pound for the remaindersecond half of 2015, average unit net cash costs (net of cobalt credits) are expected to approximate $1.261.12 per pound of copper for the year 2015, compared with $1.15 per pound in 2014. Africa's projected unit net cash costs would change by $0.070.05 per pound for each $2 per pound change in the average price of cobalt during the remaindersecond half of 2015.

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 our North and South America copper mines, are processed at our own conversion facilities.

Production from the Molybdenum mines totaled 13 million pounds of molybdenum in second-quarter 2015, 26 million pounds of molybdenum for the first-quartersfirst six months of 2015, 14 million pounds of molybdenum in second-quarter 2014 and 27 million pounds of molybdenum for the first six months of 2014. Refer to "Consolidated Results" for our consolidated molybdenum operating data, which includes sales of molybdenum produced at our Molybdenum mines, and from our North and South America copper mines, and refer to "Outlook" for projected consolidated molybdenum sales volumes.

Unit Net Cash 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

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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.

Average unit net cash costs for our Molybdenum mines wereof $7.177.19 per pound of molybdenum in first-quartersecond-quarter 2015 and $6.71$7.18 per pound of molybdenum for the first six months of 2015 were higher than average unit net cash costs of $6.47 per pound in first-quartersecond-quarter 2014. and $6.58 per pound of molybdenum for the first six months of 2014, primarily reflecting lower production volumes from the Henderson mine. Assuming achievement of current sales volume and cost estimates, we estimate unit net cash costs for the Molybdenum mines to average $7.50 per pound of molybdenum for the year 2015, compared with $7.08 per pound in 2014.

We continue to monitor market conditions and may make adjustments to our primary molybdenum production as market conditions warrant. 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.

As further discussed in “Overview,” we are currently reviewing operating plans at each of our copper and molybdenum mining operations and will revise operating and capital plans to strengthen our financial position in a weak copper price environment. The revised plans will target lower operating and capital costs to achieve maximum cash flow under the current market conditions. Production at certain operations challenged by low commodity prices will be curtailed. We expect to complete this review promptly and will report our revised plans during third-quarter 2015. Accordingly, our molybdenum sales volume and unit costs estimates are subject to change as a result of this review and other factors.

Smelting & Refining
We wholly own and operate a smelter in Arizona (Miami smelter) and a smelter and refinery in Spain (Atlantic Copper). Additionally, PT-FI owns 25 percent of a smelter and refinery in Gresik, Indonesia (PT Smelting). Treatment charges for smelting and refining copper concentrates consist of a base rate and, in certain contracts, price participation based on copper prices. Treatment charges represent a cost to our mining operations and income to Atlantic Copper and PT Smelting. Thus, higher treatment charges benefit our smelter operations and adversely affect our mining operations. Our North America copper mines are less significantly affected by changes

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in treatment charges because these operations are largely integrated with our Miami smelter. Through this form of downstream integration, we are assured placement of a significant portion of our concentrate production.

Atlantic Copper smelts and refines copper concentrates and markets refined copper and precious metals in slimes. During first-quarterthe first six months of 2015,, Atlantic Copper purchased 3025 percent of its concentrate requirements from our North America mining operations and 5 percent of its concentrate requirements from our South America mining operations, with the remainder purchased from third parties.

PT-FI's contract with PT Smelting provides for PT-FI to supply 100 percent of the copper concentrate requirements (subject to a minimum or maximum rate) necessary for PT Smelting to produce 205,000 metric tons of copper annually on a priority basis. PT-FI also sells copper concentrate to PT Smelting at market rates for quantities in excess of 205,000 metric tons of copper annually. During the first six months of 2015, PT-FI sold approximately half of its copper concentrate production to PT SmeltingSmelting. In July 2015, PT Smelting's operations were temporarily suspended pending completion of required repairs, which are expected to be completed in first-quarterSeptember 2015.

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 additions to net income attributable to common stockholders of $2413 million in first-quartersecond-quarter 2015 and $16$37 million for the first six months of 2015, compared with $41 million in first-quartersecond-quarter 2014. and $56 million for the first six months of 2014. 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 $3828 million at March 31,June 30, 2015. Quarterly variations in ore grades, the timing of intercompany shipments and changes in product prices will result in variability in our net deferred profits and quarterly earnings.

Oil and Gas
Through our wholly owned oil and gas subsidiary FMFCX Oil & Gas Inc. (FM O&G,&G), our portfolio of oil and gas assets includes significant oil production facilities and growth potential in the Deepwater GOM, established oil production facilities 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-leadinga position in the emerging Inboard Lower Tertiary/Cretaceous natural gas trend located in the shallow waters of the GOM and onshore in South Louisiana. During first-quarterFor the first six months of 2015, 8688 percent of our oil and gas revenues, excluding the impact of derivative contracts, were from oil and NGLs.

On June 23, 2015, our wholly owned subsidiary, Freeport-McMoRan Oil & Gas Inc., filed a registration statement on Form S-1 with the U.S. SEC related to its potential IPO of Class A common stock, representing a minority interest in the entity. Freeport-McMoRan Oil & Gas Inc. intends to apply to list the common stock on the New York Stock Exchange under the ticker “FMOG.” The registration statement has not yet become effective, and securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective.

On August 5, 2015, we announced the deferral of investments in several long-term projects in our oil and gas business, which will result in a reduction of $0.9 billion in projected capital expenditures for each of the years 2016 and 2017. We have also revised our estimate of the start-up of initial production from its recent drilling success in the Horn Mountain area to 2016 from the previously estimated start-up in 2017. This revised operating plan will allow FM O&G to continue to grow production and enhance cash flow in a weak oil and gas price environment. The revised plans, together with the potential IPO of a minority interest in Freeport-McMoRan Oil & Gas Inc., and potential other actions, will be pursued as required to fund oil and gas capital spending with cash flow for 2016 and subsequent years.

Impairment of Oil and Gas Properties.We follow the full cost method of accounting for our oil and gas operations, whereby all costs associated with oil and gas property acquisition, exploration and development activities are capitalized and amortized to expense under the UOP method on a country-by-country basis using estimates of proved oil and natural gas reserves relating to each country where such activities are conducted. The costs of unproved oil and gas properties are excluded from amortization until the properties are evaluated. Our depletion, depreciation and amortizationDD&A rate is affected by changes to estimates of proved reserves and costs subject to amortization, as further discussed in

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"Critical "Critical Accounting Estimates" in Part II, Items 7. and 7A. of our annual report on Form 10-K for the year ended December 31, 2014.

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. The SEC requires the twelve-month average of the first-day-of-the-month historical reference oil price be used in determining the ceiling test limitation. Using West Texas Intermediate (WTI) as the

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reference oil price, the average price was $71.68 per barrel at June 30, 2015, compared with $82.72 per barrel at March 31, 2015. As of June 30, 2015, and March 31, 2015, net capitalized costs with respect to FM O&G's proved U.S. oil and gas properties exceeded the ceiling amounttest limitation specified by the SEC's full cost accounting rules, which resulted in the recognition of an impairment chargecharges totaling $3.1$2.7 billion ($1.91.7 billion to net loss attributable to common stock) in second-quarter 2015 and $5.8 billion ($3.6 billion to net loss attributable to common stock) for first-quarterthe first six months of 2015. The SEC requires the twelve-month average of the first-day-of-the-month historical reference oil price be used in determining the ceiling amount under its full cost accounting rules. This price, using West Texas Intermediate (WTI) as the reference oil price, was $82.72 per barrel at March 31, 2015 (the twelve-month average was $94.99 per barrel at December 31, 2014).

BecauseIf the ceiling limitation uses a twelve-month historical average price if WTI oil prices remainremains below the June 30, 2015, twelve-month average of $82.72$71.68 per barrel, the ceiling test limitation will decrease resulting in potentially significant additional ceiling test impairments of our oil and gas properties during the remainder of 2015.properties. The twelve-month average WTI spot oil price was $78.58$47.12 per barrel at AprilJuly 31, 2015.

If the trailing twelve-month average prices for the period ended June 30, 2015, had been $59.35 per barrel of oil and $3.07 per MMBtu for natural gas, while all other inputs and assumptions remained constant, an additional pre-tax impairment charge of $1.8 billion would have been recorded to our oil and gas properties in second-quarter 2015. These oil and natural gas prices were determined using a twelve-month simple average of the first day of the month for the eleven months ended August 2015, and the August 2015, prices were held constant for the remaining one month. The additional pre-tax impairment is partly the result of a 26 percent decrease in proved undeveloped reserves because certain locations would not be economic at these prices. This calculation solely reflects the impact of hypothetical lower oil and natural gas prices on our ceiling test limitation and proved reserves as of June 30, 2015, and does not reflect the reduction in oil and gas capital expenditures that was announced on August 5, 2015. The oil and natural gas price is a single variable in the estimation of our proved reserves and other factors could have a significant impact on future reserves and the present value of future cash flows.

As further discussed in "Critical Accounting Estimates" in Part II, Items 7. and 7A. of our annual report on Form 10-K for the year ended December 31, 2014, eventsin addition to declines in the trailing twelve-month average oil and natural gas prices, other factors that could result in future 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, costs transferred from unevaluated properties to the full cost pool without corresponding proved oil and natural gas reserve additions, negative reserve revisions and increased future development or production costs. As FM O&G completes activities to assess its $9.3 billion in unevaluated properties, related costs currently recorded as unevaluated properties not subject to amortization will be transferred intoto 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), additional ceiling test impairments may occur.

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U.S. Oil and Gas Operations. Following is summary operating results for the U.S. oil and gas operations for the second quarters and first quarterssix months of2015 and 2014:2014:
 Three Months Ended  Three Months Ended Six Months Ended 
 March 31,  June 30, June 30, 
 2015 2014  2015 
2014a
 2015 
2014a
 
Sales Volumes              
Oil (MMBbls) 8.4
 11.8
  8.6
 11.7
 17.0
 23.5
 
Natural gas (Bcf) 21.8
 19.5
  23.5
 20.3
 45.3
 39.8
 
NGLs (MMBbls) 0.5
 1.1
  0.6
 1.0
 1.1
 2.1
 
MMBOE 12.5
 16.1
a 
 13.1
 16.0
 25.6
 32.2
 
              
Average Realizationsb
     
Average Realized Pricesb
         
Oil (per barrel) $56.51
 $93.76
  $67.61
 $95.50
 $62.13
 $94.63
 
Natural gas (per MMBtu)
 $2.86
 $4.67
  $2.66
 $4.44
 $2.75
 $4.55
 
NGLs (per barrel) $23.06
 $45.47
  $20.50
 $38.79
 $21.71
 $42.35
 
              
Gross (Loss) Profit per BOE              
Realized revenuesb
 $43.71
 $77.22
  $50.04
 $77.53
 $46.95
 $77.37
 
Less: cash production costsb
 20.26
 18.51
a 
 19.04
 19.57
 19.62
 19.03
 
Cash operating marginb
 23.45
 58.71
  31.00
 57.96
 27.33
 58.34
 
Less: depreciation, depletion and amortization 42.30
 38.21
  36.99
 38.39
 39.59
 38.30
 
Less: impairment of oil and gas properties 247.84
 —
  204.91
 —
 225.89
 —
 
Less: accretion and other costs 2.31
 0.78
  2.46
 0.94
 2.39
 0.87
 
Plus: net noncash mark-to-market (losses) gains on derivative contracts (3.87) 0.90
  (7.26) (0.44) (5.60) 0.23
 
Plus: other net adjustments 0.06
 0.04
  0.61
 0.04
 0.34
 0.04
 
Gross (loss) profit $(272.81) $20.66
  $(220.01) $18.23
 $(245.80) $19.44
 
a.IncludesThe 2014 periods include results from the Eagle Ford whichfield through June 19, 2014. Eagle Ford had sales volumes totaling 4.74.0 MMBOE in first-quarter 2014. Excludingfor second-quarter 2014 and 8.7 MMBOE for the first six months of 2014; excluding Eagle Ford, properties, first-quarter 2014 oil and gas cash production costs were $20.89$21.66 per BOE.BOE for second-quarter 2014 and $21.29 per BOE for the first six months of 2014.
b.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. For reconciliations of realized revenues (including average realized prices for oil, natural gas and NGLs) and cash production costs to revenues and production and delivery costs reported in our consolidated financial statements, refer to the supplemental schedule, "Product Revenues and Production Costs."

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(including average realizations for oil, natural gas and NGLs) and cash production costs to revenues and production and delivery costs reported in our consolidated financial statements, refer to the supplemental schedule, "Product Revenues and Production Costs."

In first-quarter2015, FM O&G's average realized price for crude oil was $56.51$67.61 per barrel, including $11.97$11.79 per barrel of realized cash gains on derivative contracts.contracts, in second-quarter 2015 and $62.13 per barrel, including $11.88 per barrel of cash gains on derivative contracts, for the first six months of 2015. Excluding the impact of derivative contracts, the first-quartersecond-quarter 2015 average realized price for crude oil was $44.54$55.82 per barrel (8188 percent of the average Brent crude oil price of $55.1963.57 per barrel). and $50.25 per barrel (85 percent of the average Brent crude oil price of $59.41 per barrel) for the first six months of 2015.

FM O&G has derivative contracts that provide price protection averaging between approximately $70 and $90 per barrel of Brent crude oil for more than 80 percent of estimated 2015 oil production. Assuming an average price of $65$56 per barrel for Brent crude oil, we would receive a benefit of $20 per barrel on remaining 2015 derivative contract volumes of 23.1 million barrels,15.5 MMBbls, before taking into account weighted-average premiums of $6.89 per barrel. See Note 67 for further discussion.

In first-quarter2015, FM O&G's average realized price for natural gas was $2.86$2.66 per MMBtu in second-quarter 2015, compared to the NYMEX natural gas price average of $2.98$2.65 per MMBtu for the April through June 2015 contracts; and $2.75 per MMBtu for the first six months of 2015, compared to the NYMEX natural gas price average of $2.81 per MMBtu for the January through MarchJune 2015 contracts.

Realized revenues for oil and gas operations of $43.71$50.04 per BOE in first-quartersecond-quarter 2015 and $46.95 per BOE for the first six months of 2015 were lower than realized revenues of $77.22$77.53 per BOE in first-quartersecond-quarter 2014 and $77.37 per BOE for the first six months of 2014, primarily reflecting lower oil prices, partly offset by the impact of higher realized cash gains on derivative contracts (realized cash(cash gains were $100$101 million or $8.00$7.73 per BOE in first-quartersecond-

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quarter 2015, and $201 million or $7.87 per BOE for the first six months of 2015, compared with losses of $65$63 million or $4.01$3.94 per BOE in first-quartersecond-quarter 2014 and $128 million or $3.97 per BOE for the first six months of 2014).

Cash production costs for oil and gas operations of $20.26$19.04 per BOE in first-quartersecond-quarter 2015 were lower than cash production costs of $19.57 per BOE in second-quarter 2014, primarily reflecting lower cash production costs in California related to reductions in repair and maintenance costs and well workover expense, partly offset by the impact of the sale of lower-cost Eagle Ford properties in June 2014. Cash production costs for oil and gas properties of $19.62 per BOE for the first six months of 2015 were higher than cash production costs of $18.51$19.03 per BOE in first-quarterfor the first six months of 2014, primarily reflecting the sale of lower-cost Eagle Ford properties.properties in June 2014, partly offset by lower cash production costs in California related to reductions in repair and maintenance costs and well workover expense.

Following is a summary of average sales volumes per day by region for oil and gas operations for the second quarters and first quarterssix months of2015 and 2014:
Three Months Ended Three Months Ended Six Months Ended
March 31, June 30, June 30,
2015 2014 2015 2014 2015 
2014a
Sales Volumes (MBOE per day):           
GOMa
74
 70
 80
 75
 77
 73
California39
 39
 38
 39
 39
 39
Haynesville/Madden/Other26
 17
 26
 18
 26
 18
Eagle Fordb
—
 53
 —
 44
 —
 48
Total oil and gas operations139
 179
 144
 176
 142
 178
a.Includes sales from properties on the GOM Shelf and in the Deepwater GOM and on the GOM Shelf.GOM.
b.FM O&G completed the sale of Eagle Ford in June 2014.

Daily sales volumes averaged 139144 MBOE in first-quartersecond-quarter 2015, including 9395 thousand barrels (MBbls)MBbls of crude oil, 242259 million cubic feet (MMcf) of natural gas and 65 MBbls of NGLs, and 142 MBOE for the first six months of 2015, including 94 MBbls of crude oil, 250 MMcf of natural gas and 6 MBbls of NGLs. Oil and gas sales volumes are expected to average 143145 MBOE per day for the year 2015, comprised of 6768 percent oil, 2927 percent natural gas and 45 percent NGLs.

Based on current sales volume and cost estimates, cash production costs are expected to approximate $19$20 per BOE for the year 2015.

Exploration, Operating and Development Activities. Our oil and gas business has significant proved, probable and possible reserves, a broad range of development opportunities and high-potential exploration prospects. The business is managed to reinvest its cash flows in projects with attractive rates of return and risk profiles. Following the recent sharp decline in oil prices in late 2014, we have taken steps to significantly reduce capital spending plans and near-term oil and gas growth initiatives and are evaluating funding opportunities for capital expenditures for our oil and gas business, including consideration of a sale of public equitythe potential IPO for a minority interest in FM O&G.Freeport-McMoRan Oil & Gas Inc.


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FM O&G has a largeis focused on growing its strategic position in the Deepwater GOM with significant current oil production, strong cash margins and existing infrastructure and facilities with excess production and handling 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. FM O&G’s capital allocation strategy is principally focused on drilling and development opportunities that can be tied back to existing facilities.

During second-quarter 2015, FM O&G achieved several important accomplishments, principally in its Deepwater GOM focus areas, that are expected to contribute to future growth. Production reached full capacity at the Lucius facility and development advanced at the Heidelberg field. Positive drilling results were achieved at the Holstein Deep and Quebec/Victory (QV), Kilo/Oscar (KO) and Horn Mountain Updip tieback prospects. Since commencing development activities in 2014 at its three 100-percent-owned production platforms in the Deepwater GOM, FM O&G has drilled 10 wells with positive results. Three of these wells have been brought on production, and FM O&G plans to complete and place in production six wells over the next 12 months and the remaining well in 2017. Longer term, FM O&G's production is expected to benefit from the success in the Atwater Valley focus area, where multiple

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discoveries have been drilled to date. During second-quarter 2015, FM O&G commenced drilling at the Deep Sleep exploration well in the Atwater Valley focus area.

U.S. Oil and Gas Capital Expenditures. First-quarter 2015 capitalCapital expenditures for our U.S. oil and gas operations totaled $1.0$0.8 billion (including $0.6 billion incurred for the Deepwater GOM and $0.1 billion for the Inboard Lower Tertiary/Cretaceous natural gas trendtrend) for second-quarter 2015 and $0.3$1.8 billion primarily associated with prior period costs).(including $1.2 billion incurred for Deepwater GOM and $0.2 billion for the Inboard Lower Tertiary/Cretaceous natural gas trend) for the first six months of 2015.

Capital expenditures for oil and gas operations are estimated to total $2.8 billion for the year 2015. Approximately, with approximately 85 percent of the 2015 capital budget is expected to be directed to the highest potential return focus areas in the GOM. Capital expenditures for 2015 have been revised from the estimate of $2.3 billion, provided in our annual report on Form 10-K for the year ended December 31, 2014, reflecting increased development drilling and activities following success from first-quarter 2015 exploration results.

Deepwater GOM. GOMMultiple. The drilling and evaluation of multiple development and exploration opportunities have been identified in the Deepwater GOM thatis in progress. These prospects benefit from tieback opportunities to significant available production capacity at the FM O&G operated large-scale Holstein, Marlin and Horn Mountain deepwater production platforms. In addition, FM O&G has interests in the Lucius and Heidelberg oil fields, and in the Vito basinAtwater Valley focus area.

During first-quarter 2015, FM O&G achieved several important accomplishments. Positive drilling results were achieved at the Holstein Deep and King tie-back projects and the Power Nap prospect in the Vito area. Production commenced at the Lucius facility, the Dorado development well and Highlander, with aggregate rates of approximately 25 MBOE per day by the end of March 2015. Development progressed at the Heidelberg field.

InitialAfter successfully commencing first production was successfully established in January 2015, at the Lucius oil facility in Keathley Canyon. The facility has aCanyon reached capacity of 80 MBbls of oil per day and is scheduled to ramp up to full capacity in second-quarter 2015. Lucius consists of six subsea wells tied back to a truss spar hull located in 7,200 feet of water. FM O&G has a 25.1 percent working interest in Lucius.Lucius, which consists of six subsea wells located in 7,200 feet of water tied back to a truss spar hull.

During first-quarter 2015,Field development activities advancedcontinued at Heidelberg which is a large, high-quality oil development project located in 5,300 feet of water in the Green Canyon area.focus area during second-quarter 2015. Fabrication of the main topsides module is more than 85 percent complete, and the operator plans to install the hull in second-quarter 2015.is on location, and mooring lines are completed. The Heidelberg truss spar was designed as a Lucius-look-alike facility with capacity of 80 MBbls of oil per day. Development drilling continues,in the field is ongoing and the project remains on track for first production is anticipated in 2016. Completion activities on the three initial wells are in progress. FM O&G has a 12.5 percent working interest in Heidelberg.Heidelberg, which is a large, high-quality oil development project located in 5,300 feet of water.

FollowingIn July 2015, FM O&G logged its third successful drilling resultssubsalt Miocene delineation well at the 100-percent-owned Holstein Deep delineation welldevelopment project in the Green Canyon focus area since commencing drilling in the area in late 2014 that logged 444 feet of net oil pay, FM O&G achieved positive results at the second delineation well in first-quarter 2015. Wireline logs indicated that the well encountered approximately 482 feet of net oil pay and established sand continuity across the primary reservoir encountered in the first delineation well.third-quarter 2014. The second well, which is updip to the discovery well, was drilled to 32,260 feet in February 2015. In April 2015, FM O&G commenced drilling the third delineation well, which is the most updip in the reservoir, was drilled to 29,440 feet and is currently drilling below 7,200wireline logs indicated that the well encountered approximately 200 feet towards a proposed total depth of approximately 30,800 feet. Productionnet oil pay. Drilling results from this initial three-well development program successfully established sand continuity across the plannedprimary reservoir.

Completion activities for the initial three-well subsea tieback development program are expected to commence in third-quarter 2015 and production is expected to reach approximately 15 MBOE per daybegin in 2016. Successful results from the first half of 2016.

Drilling results, logs and accompanying other data received to date continues to supportinitial three-well drilling program established opportunities for additional wells. When fully developed, this project will have the potential for additional development opportunities at Holstein Deep to achieve production ofproduce up to 75 MBOE per day by 2020.day. The Holstein Deep development is located in Green Canyon Block 643, west of the Holstein platform in 3,890 feet of water. FM O&G has identified multiple additional development opportunities in the Green Canyon area that could be tied back to the Holstein facility.water with production facilities capable of processing 113 MBbls of oil per day.

Marlin, in which FM O&G has a 100 percent working interest,&G’s 100-percent-owned Marlin Hub is located in Viosca Knollthe Mississippi Canyon focus area and has production facilities capable of producing in excess ofprocessing 60 MBbls of oil per day. Several tieback opportunities in the area have been identified, including the 100-percent-owned Dorado and King development projects.

Future wells can be brought on-line using existing infrastructure with the potential to utilize subsea enhancement technologies that could increase total recovery efficiencies. In Marchsecond-quarter 2015, FM O&G performedcompleted maintenance activities, including the installation of new export flow line flex joints, which will extend the life of the Marlin platform.

The initial FM O&G drilled Dorado well was placed in production in March 2015 after a successful production test with gross volumes in excess of 8 MBOE per day and established production on the first of three planned subsea tieback wells from the 100-percent-owned Dorado development

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project.continues to produce at strong rates. Drilling operations for the second and third wells, which are targeting similar undrained fault blocks and updip resource potential south of the Marlin facility, are expected to begin in 2016. The Dorado development is located on Viosca Knoll Block 915 in 3,860 feet of water.

In first-quarter 2015, sidetrack drillingInitial production from the first exploration well at the 100-percent-owned King prospect encountered the optimum oil take point in the M66 reservoir, and completion operations are under way. The well is expected to commence production in latefourth-quarter 2015, and additional drilling is planned in the area starting in the second-half of 2015. King is located in Mississippi Canyon south of the Marlin facility in 5,200 feet of water.


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FM O&G’s 100-percent-owned Horn Mountain in which FM O&G has a 100 percent working interest,field is also located in the Mississippi Canyon focus area and has production facilities capable of producingprocessing 75 MBbls of oil per day. SeveralTo enhance recovery of remaining oil in place, future development plans will target subsea tieback opportunitiesfrom multiple stacked sands in the area have been identified including Kilo/Oscar/Quebec/Victory (KOQV), whicharea. In second-quarter 2015, the QV well, the first location of this program, was drilled to 14,780 feet and successfully logged 355 net feet of oil and gas pay. In June 2015, drilling operations commenced at the KO and Horn Mountain Updip wells. At KO, the well was drilled to a total depth of 14,250 feet in July 2015 and successfully logged 166 net feet of oil pay. FM O&G plans to complete the KO and QV wells and place them in production in 2016. At Horn Mountain Updip, the well was drilled to a total depth of 14,780 feet in July 2015 and successfully logged 112 net feet of oil and gas pay. These infill wells are expected to commence drilling in mid-2015. This infill drilling program will targettargeting undrained fault blocks and updip resource potential just east and west of the Horn Mountain facility. KOQVfacility, which is located in approximately 5,5005,400 feet of water.

In first-quarter 2015, sidetrack drilling at the Power Nap exploration well in the Vito area successfully extended the known oil reservoir downdip. A second sidetrack well was drilled to a favorable position to acquire core data from the primary pay sand. The operator is preparing to drill the Deep Sleep exploration well, which is a key offset to the Vito and Power Nap discoveries. Deep Sleep is located in 4,200 feet of water approximately 5 miles south of Power Nap. FM O&G owns a 50 percent working interest in Power Nap and Deep Sleep.

FM O&G has an 18.67 percent working interest in the Vito oil discovery in the Mississippi Canyon area and a significant lease position in the Vito basin in the Mississippi Canyon and Atwater Valley areas.focus area. Vito is a large, deep subsalt Miocene oil discovery made in 2009, is located in approximately 4,000 feet of water. Exploration and appraisaldelineation drilling in recent years confirmed a significant resource in high-quality, subsalt Miocene sands. Development options are under evaluation.evaluation and FM O&G expects the operator to propose a sanctioning development plan in 2016.

As previously reported, success at the Power Nap exploration well and appraisal sidetracks, which are located in close proximity to Vito, produced positive results and development options are being assessed. The neighboring Deep Sleep exploration well in the greater Mars/Ursa basin commenced drilling in June 2015. Deep Sleep is located in 4,200 feet of water approximately five miles south of Power Nap. FM O&G owns a 50 percent working interest in the Power Nap and Deep Sleep prospects.

Inboard Lower Tertiary/Cretaceous. Cretaceous. FM O&G has an industry-leadinga position in the emerging Inboard Lower Tertiary/Cretaceous natural gas trend, located on the Shelf of the GOM and onshore in South Louisiana.

TheIn second-quarter 2015, the Highlander discovery,well, which is located onshore in South Louisiana, began production on February 25, 2015, followinghas been restricted because of limited processing facilities, averaged a gross rate of 22 MMcf per day (approximately 11 MMcf per day net to FM O&G). As previously reported production testing thatin February 2015 indicated a flow rate of 75 MMcf per day (approximately 37 MMcf per day net to FM O&G). The well has been restricted to approximately 24 MMcf per day because of limited processing facilities. FM O&G is currently developing additional processing facilities to accommodate the higher flow rates andwith installation is expected by year-end 2015. In July 2015, the Highlander well was shut in for remedial workover operations to address a mechanical issue encountered in the wellbore. A second well location has been identified, and future plans are being considered. FM O&G is the operator and has a 72 percent working interest and an approximate 49 percent net revenue interest in Highlander. FM O&G has identified multiple prospects inadditional locations on the Highlander areastructure, which is located onshore in South Louisiana where itFM O&G controls rights to more than 50,000 gross acres.

The Farthest Gate West onshore exploration prospect was drilled to a total depth of approximately 22,000 feet in March 2015. In May 2015, and wireline logs indicatedwe completed our assessment of the well encountered hydrocarbon bearing sands in the Eocene section. FM O&G plans to complete and flow test the well in second-quarter 2015. FM O&G is the operator and has a 90 percent working interest in Farthest Gate West which is located onshore in Cameron Parish, Louisiana.well and commenced plug and abandonment activities. No proved reserves were identified.

California. FM O&G'sSales volumes from California assets benefit from an established oil production baseaveraged 38 MBOE per day for second-quarter 2015, compared 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.39 MBOE per day for second-quarter 2014. 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. During second-quarter 2015, production from Point Arguello platforms, which produced approximately 2 MBOE per day in first-quarter 2015, was temporarily shut in following the shutdown of a third-party operated pipeline system that transports oil to various California refineries.

Haynesville. Haynesville. FM O&G has rights to a substantial natural gas resource, located in the Haynesville shale play in North Louisiana. Drilling activities remain constrained in recent years have been reducedresponse to maximize cash flows in a low natural gas price environmentprices in order to maximize near-term cash flows and to benefit frompreserve the resource for 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. In May 2015, FM O&G expects to commencecommenced drilling the MZ-1 well associated with the Ouanoukrim prospect in May 2015. First-quarterprospect. In early August 2015, capital expendituresdrilling of the well was completed to its targeted depth below 20,000 feet to evaluate the primary objectives, which did not contain hydrocarbons. As of June 30, 2015, capitalized costs for international oil and gas exploration activities in Morocco totaled $15 million.approximated $111 million and additional costs have

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been incurred subsequent to June 30, 2015, all of which will be transferred to the Moroccan full cost pool in third-quarter 2015. FM O&G currently has no proved reserves or production in Morocco.

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. Since December 31, 2014, our debt has increased primarily reflecting the impact of lower commodity prices and capital expenditures for our oil and gas exploration and development projects and mining expansion projects. Capital expenditures are expected to decline in future years as major mining projects near completion. We remain committed to a strong balance sheet and will take prudent actions in response to market conditions. We have taken steps to sellsold assets, deferdeferred capital spending and reducereduced dividends on our common stock.

In July 2015, we announced that we are undertaking a comprehensive review of operating plans in our mining and oil and gas businesses to target significant additional reductions in capital spending and operating and administrative costs in response to weak market conditions for our major products. On August 5, 2015, we provided an update on our progress and announced the deferral of investments in several long-term projects in our oil and gas business, which will result in a reduction of $0.9 billion in projected capital expenditures for each of the years 2016 and 2017. The revised plans, together with the potential IPO of a minority interest in our wholly owned subsidiary, Freeport-McMoRan Oil & Gas Inc., and potential other actions, will be pursued as required to fund oil and gas capital spending with cash flow for 2016 and subsequent years. Refer to “Operations - Oil and Gas” for further discussion of the potential IPO.

We are completing the review of operating plans at each of our copper and molybdenum mining operations and will revise operating and capital plans to strengthen our financial position in a weak copper price environment. The revised plans will target lower operating and capital costs to achieve maximum cash flow under the current market conditions. Production at certain operations challenged by low commodity prices will be curtailed. We expect to complete this review promptly and will report our revised plans during third-quarter 2015. We will also continue to evaluateassess opportunities to partner with strategic investors potentially interested in investing capital with FCX in the development of our portfolio for future actions.oil and gas and mining properties. We have a broad set of assets with valuable infrastructure and associated resources with attractive long-term production and development potential.

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 March 31, 2015(in millions):
  June 30, 2015 December 31, 2014
Cash at domestic companies$53
 $29
 $78
Cash at international operations496
 437
 386
Total consolidated cash and cash equivalents549
 466
 464
Less: noncontrolling interests’ share(143) (119) (91)
Cash, net of noncontrolling interests’ share406
 347
 373
Less: withholding taxes and other(18) (19) (16)
Net cash available$388
 $328
 $357

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 (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.


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Debt
Following is a summary of our total debt and the related weighted-average interest rates at March 31, 2015(in billions, except percentages):
June 30, 2015 December 31, 2014 
  Weighted-   Weighted-   Weighted- 
  Average   Average   Average 
  Interest Rate   Interest Rate   Interest Rate 
FCX Senior Notes$11.9
 3.8% $11.9
 3.8% $12.0
 3.8% 
FCX Term Loan3.0
 1.9% 3.0
 1.9% 3.1
 1.7% 
FM O&G Senior Notes2.6
 6.6% 2.6
 6.6% 2.6
 6.6% 
Cerro Verde Term Loan1.3
a 
2.1% 0.4
 2.1% 
Other FCX debt2.8
 2.6% 2.1
b 
2.7% 0.9
 3.9% 
Total debt$20.3
 3.7% $20.9
 3.6% $19.0
 3.8% 
        

At March 31,
a.At June 30, 2015, Cerro Verde had $1.3 billion of borrowings outstanding and no letters of credit issued under its $1.8 billion senior unsecured credit facility to fund a portion of its expansion project (see "Operations - South America Mining") and for Cerro Verde's general corporate purposes.
b.At June 30, 2015,, we had $985 million of borrowings outstanding and $42 million in letters of credit issued under our $4 billion revolving credit facility. We also have uncommitted and short-term lines of credit with certain financial institutions that are unsecured, which have terms and pricing that are generally more favorable than our revolving credit facility. At June 30, 2015, there was $410 million of borrowings drawn on these lines of credit.

As further discussed in Note 18 in our annual report on Form 10-K for the year ended December 31, 2014, in February 2015, our revolving credit facility. At March 31, 2015, there was $350 million of borrowings drawn on these lines of credit.facility and term loan were modified to amend the maximum total leverage ratio.

In addition, Cerro Verde has a $1.8 billion senior unsecuredOur revolving credit facility and term loan contain financial ratio covenants governing maximum total leverage and minimum interest coverage, which limits our ability to fund a portionincur additional debt. We are taking steps to enhance our financial position in response to recent declines in commodity prices. Further actions are being considered, such as additional equity capital or other transactions, including opportunities to partner with strategic investors potentially interested in investing capital in the development of its expansion project (see "Operations - South America Mining")our oil and for Cerro Verde's general corporate purposes. At March 31, 2015, there was $847 million of borrowingsgas and no letters ofmining properties. We may also be required to seek an amendment to the covenants in our revolving credit issued under Cerro Verde’s credit facility.facility and term loan.

Refer to Note 5 forFor further discussion of our debt.debt, refer to Note 6 in this report, and Note 8 in our annual report on Form 10-K for the year ended December 31, 2014.


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Operating Activities
During first-quarterthe first six months of 2015,, we generated consolidated operating cash flows totaling $717 million$1.8 billion (net of $86$190 million for working capital uses and changes in other tax payments), compared with consolidated operating cash flows for the first six months of $1.22014 of $2.6 billion (net of $413$777 million for working capital uses and changes in other tax payments) for first-quarter2014. ConsolidatedLower consolidated operating cash flows for first-quarterthe first six months of 2015, compared with the first six months of 2014, primarily reflected the impact of lower oil volumes, lower commodity price realizations and changeslower oil volumes, partly offset by a decrease in inventory.working capital uses mostly associated with oil and gas derivative contracts and lower commodity prices.

Based on current operating plans and subject to futurecurrent commodity prices for copper, gold, molybdenum and crude oil, prices, we expect estimated consolidated operating cash flows for the year 2015, plus available cash and availability under our 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 2015.

Investing Activities
Capital Expenditures. Capital expenditures, including capitalized interest, totaled $1.93.5 billion for first-quarterthe first six months of 2015, including $0.6$1.2 billion for major projects at mining operations and $1.0$1.8 billion for oil and gas operations, compared with $1.6$3.6 billion for first-quarterthe first six months of 2014, including $0.7$1.4 billion for major projects at mining operations and $0.6$1.5 billion for oil and gas operations. IncreasedLower capital expenditures for the first six months of2015 were primarily associated with decreased spending for the Morenci mill expansion, partly offset by increased capital expenditures at our oil and gas operations and increased capital expenditures for first-quarter2015 was primarily associated with our highest return focus areas in the GOM.Cerro Verde expansion. Refer to “Operations” for further discussion.

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Capital expenditures are currently expected to approximate $6.56.3 billion for the year 2015, including $2.5 billion for major projects at mining operations (primarily for the Cerro Verde expansion and underground development activities at Grasberg) and $2.8 billion for oil and gas operations.operations, primarily at our highest potential return focus areas in the GOM. Projected 2015 capital expenditures for mining operations are subject to change as a result of the review of operating plans discussed above. We have taken actionsmade substantial progress toward the completion of our major mining development projects, which are expected to reduce or deferresult in increased near-term production, lower unit costs, declining capital expenditures and other costs and are evaluating funding alternatives to advance growth projectscontribute to cash flow from operations after capital expenditures in ourfuture years. In addition, positive oil and gas business, including consideration ofdrilling and development activities are expected to result in a growing oil production profile.

Acquisitions and Dispositions. In June 2014, we acquired additional interests in the Deepwater GOM, for $0.9 billion, and also completed the sale of public equityour Eagle Ford shale assets for $3.1 billion (before closing adjustments). The Deepwater GOM acquisition was funded with a minority interest in our oil and gas subsidiary. Additional capital cost reductions, potential additional divestitures or monetizations and other actions will be pursued as required to maintain a strong balance sheet while preserving a strong resource position and portfolioportion of assets with attractive long-term growth prospects. We have a broad setthe net proceeds from the sale of natural resource assets that provide many alternatives for future actions to enhance our financial flexibility.Eagle Ford. The estimated combined after-tax net proceeds from these transactions approximated $1.8 billion, before purchase price adjustments. Refer to "Operations"Note 2 for further discussion.discussion of our acquisition and disposal transactions.

Financing Activities
Debt Transactions. Net proceeds from debt for the first six months of 2015 primarily included net borrowings of $1.0 billion under our revolving credit facility and borrowings of $0.8 billion under Cerro Verde's senior unsecured credit facility to fund its expansion project.

On April 30, 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. Refer to Note 6 for further discussion of debt transactions.

Dividends. We paid dividends on our common stock totaling $327380 million for the first six months of first-quarter2015 and $326653 million for the first six months of first-quarter2014. In response to the impact of lower commodity prices, in March 2015, the annual dividend rate for our common stock was reduced to $0.20 per share from the previous rate of $1.25 per share. On MarchJune 24, 2015, our Board of Directors (the Board) declared a regular quarterly dividend of $0.05 per share which wasand a one-time special dividend of $0.1105 per share in accordance with the approved settlement terms of shareholder derivative litigation (refer to Note 9). Both the regular quarterly dividend and the special dividend were paid on May 1,August 3, 2015. The declaration of dividends is at the discretion of the Board and will depend upon our financial results, cash requirements, future prospects and other factors deemed relevant by the Board. The Board will continueRefer to review our financial policy on an ongoing basis and anticipates increasing cash returns to shareholders as market and business conditions warrant.

AsNote 6 for further discussed in Note 8, on April 7, 2015, the Delaware Court of Chancery approved the settlement of our stockholder derivative litigation and awarded the plaintiffs' legal fees and expenses. In accordance with the settlement terms, we expect the Board to declare a special dividend of approximately $115 million ($0.11 per share) that would be payable in early August 2015, corresponding with the timing of our next regular quarterly dividend. This special dividend will be primarily funded with insurance proceeds, net of plaintiffs’ legal fees and expenses, that were deposited in an escrow account in first-quarter 2015.discussion.

Cash dividends and other distributions paid to noncontrolling interests totaled $2360 million for the first threesix months of 2015 and $77250 million for the first threesix months of 2014. These payments will vary based on the cash requirements of ourthe related consolidated subsidiaries.


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CONTRACTUAL OBLIGATIONS

ThereAs of June 30, 2015, we have current maturities of debt totaling $791 million, including $658 million for the second half of 2015 and $133 million for the first half of 2016, primarily reflecting bank lines of credit, which are extended to us on a uncommitted basis. As of June 30, 2015, debt maturities total $260 million for the year 2016 and $1.5 billion for the year 2017. With the exception of debt maturities and the related impact on scheduled interest payment obligations, there have been no material changes in our contractual obligations since December 31, 2014. Refer to Item 7Part II, Items 7. and 7A. in our annual report on Form 10-K for the year ended December 31, 2014, 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 asset retirement obligations since December 31, 2014. Updated cost assumptions, including increases and decreases to cost estimates, changes in the anticipated

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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, 2014, for further information regarding our environmental and asset retirement obligations.

Litigation and Other Contingencies
Other than as discussed in Note 8,9, and contained in "Legal Proceedings" in Part II, Item 1. of this quarterly report, there have been no material changes to our contingencies associated with legal proceedings and other matters since December 31, 2014. 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, 2014, for further information regarding legal proceedings and other matters..

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. Refer to Note 1112 for discussion of a recently adopted Accounting Standards Update.


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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. generally accepted accounting principles (GAAP) and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. 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 presentations 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, LCM inventory adjustments, 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.

Oil and 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 charges for asset retirement obligations 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.


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

Three Months Ended March 31, 2015   
Three Months Ended June 30, 2015   
(In millions)By-Product Co-Product MethodBy-Product Co-Product Method
Method Copper 
Molybdenuma
 
Otherb
 TotalMethod Copper 
Molybdenuma
 
Otherb
 Total
Revenues, excluding adjustments$1,285
 $1,285
 $82
 $26
 $1,393
$1,341
 $1,341
 $80
 $28
 $1,449
Site production and delivery, before net noncash and other costs shown below854
 802
 58
 19
 879
862
 804
 64
 22
 890
By-product credits(83) —
 —
 —
 —
(80) —
 —
 —
 —
Treatment charges60
 59
 —
 1
 60
60
 58
 —
 2
 60
Net cash costs831
 861
 58
 20
 939
842
 862
 64
 24
 950
Depreciation, depletion and amortization133
 125
 6
 2
 133
137
 129
 5
 3
 137
Noncash and other costs, net31
 30
 1
 —
 31
46
c 
45
 1
 —
 46
Total costs995
 1,016
 65
 22
 1,103
1,025
 1,036
 70
 27
 1,133
Revenue adjustments, primarily for pricing on prior period open sales(29) (29) —
 —
 (29)(13) (13) —
 —
 (13)
Gross profit$261
 $240
 $17
 $4
 $261
$303
 $292
 $10
 $1
 $303
                  
Copper sales (millions of recoverable pounds)471
 471
      485
 485
      
Molybdenum sales (millions of recoverable pounds)a
    9
        10
    
                  
Gross profit per pound of copper/molybdenum:Gross profit per pound of copper/molybdenum:     Gross profit per pound of copper/molybdenum:     
                  
Revenues, excluding adjustments$2.73
 $2.73
 $8.81
    $2.77
 $2.77
 $7.80
    
Site production and delivery, before net noncash
and other costs shown below
1.81
 1.70
 6.25
    1.78
 1.66
 6.24
    
By-product credits(0.18) —
 —
    (0.16) —
 —
    
Treatment charges0.13
 0.13
 —
    0.12
 0.12
 —
    
Unit net cash costs1.76
 1.83
 6.25
    1.74
 1.78
 6.24
    
Depreciation, depletion and amortization0.28
 0.27
 0.63
    0.28
 0.27
 0.53
    
Noncash and other costs, net0.07
 0.06
 0.05
    0.10
c 
0.09
 0.06
    
Total unit costs2.11
 2.16
 6.93
    2.12
 2.14
 6.83
    
Revenue adjustments, primarily for pricing                  
on prior period open sales(0.06) (0.06) —
    (0.03) (0.03) —
    
Gross profit per pound$0.56
 $0.51
 $1.88
    $0.62
 $0.60
 $0.97
    
                  
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$1,393
 $879
 $133
    $1,449
 $890
 $137
    
Treatment charges—
 60
 —
    —
 60
c 
—
    
Noncash and other costs, net—
 31
 —
    —
 46
 —
    
Revenue adjustments, primarily for pricing on prior period open sales(29) —
 —
    (13) —
 —
    
Eliminations and other(29) (27) —
    (31) (34) 2
    
North America copper mines1,335
 943
 133
    1,405
 962
 139
    
Other mining & eliminationsc
2,318
 1,683
 272
    
Other mining & eliminationsd
2,274
 1,603
 263
    
Total mining3,653
 2,626
 405
    3,679
 2,565
 402
    
U.S. oil & gas operations500
 283
 3,634
d 
   569
 281
 3,171
e 
   
Corporate, other & eliminations—
 3
 4
    —
 2
 3
    
As reported in FCX’s consolidated financial statements$4,153
 $2,912
 $4,043
d 
   $4,248
 $2,848
 $3,576
e 
   
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.
Includes charges totaling $11 million ($0.02 per pound) for LCM inventory adjustments.
d.Represents the combined total for all other mining operations and the related eliminations, as presented in Note 9.10.
d.e.
Includes impairment of oil and gas properties of $3.1 billion.
$2.7 billion.


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

Three Months Ended March 31, 2014   
Three Months Ended June 30, 2014   
(In millions)By-Product Co-Product MethodBy-Product Co-Product Method
Method Copper 
Molybdenuma
 
Otherb
 TotalMethod Copper 
Molybdenuma
 
Otherb
 Total
Revenues, excluding adjustments$1,194
 $1,194
 $82
 $28
 $1,304
$1,332
 $1,332
 $112
 $30
 $1,474
Site production and delivery, before net noncash and other costs shown below695
 655
 50
 19
 724
786
 733
 60
 19
 812
By-product credits(81) —
 —
 —
 —
(116) —
 —
 —
 —
Treatment charges47
 46
 —
 1
 47
46
 45
 —
 1
 46
Net cash costs661
 701
 50
 20
 771
716
 778
 60
 20
 858
Depreciation, depletion and amortization104
 99
 4
 1
 104
125
 117
 6
 2
 125
Noncash and other costs, net30
 30
 —
 —
 30
29
 29
 —
 —
 29
Total costs795
 830
 54
 21
 905
870
 924
 66
 22
 1,012
Revenue adjustments, primarily for pricing on prior period open sales(7) (7) —
 —
 (7)9
 9
 —
 —
 9
Gross profit$392
 $357
 $28
 $7
 $392
$471
 $417
 $46
 $8
 $471
                  
Copper sales (millions of recoverable pounds)369
 369
      421
 421
      
Molybdenum sales (millions of recoverable pounds)a
Molybdenum sales (millions of recoverable pounds)a
   8
    
Molybdenum sales (millions of recoverable pounds)a
   9
    
                  
Gross profit per pound of copper/molybdenum:Gross profit per pound of copper/molybdenum:     Gross profit per pound of copper/molybdenum:     
                  
Revenues, excluding adjustments$3.24
 $3.24
 $10.17
    $3.16
 $3.16
 $12.49
    
Site production and delivery, before net noncash
and other costs shown below
1.88
 1.78
 6.14
    1.87
 1.74
 6.73
    
By-product credits(0.22) —
 —
    (0.28) —
 —
    
Treatment charges0.13
 0.12
 —
    0.11
 0.11
 —
    
Unit net cash costs1.79
 1.90
 6.14
    1.70
 1.85
 6.73
    
Depreciation, depletion and amortization0.29
 0.27
 0.53
    0.30
 0.28
 0.64
    
Noncash and other costs, net0.08
 0.08
 0.02
    0.07
 0.06
 0.05
    
Total unit costs2.16
 2.25
 6.69
    2.07
 2.19
 7.42
    
Revenue adjustments, primarily for pricing                  
on prior period open sales(0.02) (0.02) —
    0.02
 0.02
 —
    
Gross profit per pound$1.06
 $0.97
 $3.48
    $1.11
 $0.99
 $5.07
    
                  
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$1,304
 $724
 $104
    $1,474
 $812
 $125
    
Treatment charges—
 47
 —
    —
 46
 —
    
Noncash and other costs, net—
 30
 —
    —
 29
 —
    
Revenue adjustments, primarily for pricing on prior period open sales(7) —
 —
    9
 —
 —
    
Eliminations and other(11) (15) 3
    (14) (17) 3
    
North America copper mines1,286
 786
 107
    1,469
 870
 128
    
Other mining & eliminationsc
2,438
 1,640
 239
    2,817
 1,884
 266
    
Total mining3,724
 2,426
 346
    4,286
 2,754
 394
    
U.S. oil & gas operations1,261
 311
 616
    1,236
 329
 616
    
Corporate, other & eliminations—
 —
 4
    —
 (1) 3
    
As reported in FCX’s consolidated financial statements$4,985
 $2,737
 $966
    $5,522
 $3,082
 $1,013
    
 
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 9.
10.




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North America Copper Mines Product Revenues, Production Costs and Unit Net Cash Costs (continued)
          
Six Months Ended June 30, 2015   
(In millions)By-Product Co-Product Method
 Method Copper 
Molybdenuma
 
Otherb
 Total
Revenues, excluding adjustments$2,612
 $2,612
 $162
 $54
 $2,828
Site production and delivery, before net noncash
    and other costs shown below
1,715
 1,605
 122
 41
 1,768
By-product credits(163) —
 —
 —
 —
Treatment charges121
 118
 —
 3
 121
Net cash costs1,673
 1,723
 122
 44
 1,889
Depreciation, depletion and amortization270
 254
 11
 5
 270
Noncash and other costs, net77
c 
76
 1
 —
 77
Total costs2,020
 2,053
 134
 49
 2,236
Revenue adjustments, primarily for pricing
    on prior period open sales
(28) (28) —
 —
 (28)
Gross profit$564
 $531
 $28
 $5
 $564
          
Copper sales (millions of recoverable pounds)956
 956
      
Molybdenum sales (millions of recoverable pounds)a
    19
    
          
Gross profit per pound of copper/molybdenum:         
          
Revenues, excluding adjustments$2.73
 $2.73
 $8.28
    
Site production and delivery, before net noncash         
and other costs shown below1.79
 1.68
 6.24
    
By-product credits(0.17) —
 —
    
Treatment charges0.13
 0.12
 —
    
Unit net cash costs1.75
 1.80
 6.24
    
Depreciation, depletion and amortization0.28
 0.27
 0.58
    
Noncash and other costs, net0.08
c 
0.08
 0.06
    
Total unit costs2.11
 2.15
 6.88
    
Revenue adjustments, primarily for pricing         
on prior period open sales(0.03) (0.03) —
    
Gross profit per pound$0.59
 $0.55
 $1.40
    
          
Reconciliation to Amounts Reported         
(In millions)Revenues Production and Delivery Depreciation, Depletion and Amortization    
Totals presented above$2,828
 $1,768
 $270
    
Treatment charges—
 121
 —
    
Noncash and other costs, net—
 77
c 
—
    
Revenue adjustments, primarily for pricing
    on prior period open sales
(28) —
 —
    
Eliminations and other(60) (61) 2
    
North America copper mines2,740
 1,905
 272
    
Other mining & eliminationsd
4,592
 3,286
 535
    
Total mining7,332
 5,191
 807
    
U.S. oil & gas operations1,069
 564
 6,805
e 
   
Corporate, other & eliminations—
 5
 7
    
As reported in FCX’s consolidated financial statements$8,401
 $5,760
 $7,619
e 
   
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.Includes charges totaling $11 million ($0.01 per pound) for LCM inventory adjustments.
d.Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10.
e.Includes impairment of oil and gas properties of $5.8 billion.


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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 
Molybdenuma
 
Otherb
 Total
Revenues, excluding adjustments$2,535
 $2,535
 $194
 $59
 $2,788
Site production and delivery, before net noncash
    and other costs shown below
1,481
 1,388
 110
 38
 1,536
By-product credits(198) —
 —
 —
 —
Treatment charges93
 91
 —
 2
 93
Net cash costs1,376
 1,479
 110
 40
 1,629
Depreciation, depletion and amortization229
 217
 10
 2
 229
Noncash and other costs, net59
 58
 —
 1
 59
Total costs1,664
 1,754
 120
 43
 1,917
Revenue adjustments, primarily for pricing
    on prior period open sales
(7) (7) —
 —
 (7)
Gross profit$864
 $774
 $74
 $16
 $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
 $11.39
    
Site production and delivery, before net noncash         
and other costs shown below1.87
 1.76
 6.45
    
By-product credits(0.25) —
 —
    
Treatment charges0.12
 0.12
 —
    
Unit net cash costs1.74
 1.88
 6.45
    
Depreciation, depletion and amortization0.29
 0.27
 0.58
    
Noncash and other costs, net0.08
 0.07
 0.04
    
Total unit costs2.11
 2.22
 7.07
    
Revenue adjustments, primarily for pricing         
 on prior period open sales(0.01) (0.01) —
    
Gross profit per pound$1.09
 $0.98
 $4.32
    
          
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 mines2,755
 1,656
 235
    
Other mining & eliminationsc
5,255
 3,524
 505
    
Total mining8,010
 5,180
 740
    
U.S. oil & gas operations2,497
 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.


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South America Mining Product Revenues, Production Costs and Unit Net Cash Costs
Three Months Ended March 31, 2015       
Three Months Ended June 30, 2015       
(In millions)By-Product Co-Product MethodBy-Product Co-Product Method
Method Copper 
Othera
 TotalMethod Copper 
Othera
 Total
Revenues, excluding adjustments$542
 $542
 $21
 $563
$479
 $479
 $14
 $493
Site production and delivery, before net noncash and other costs shown below350
 337
 18
 355
314
 305
 15
 320
By-product credits(16) —
 —
 —
(8) —
 —
 —
Treatment charges33
 33
 —
 33
30
 30
 —
 30
Royalty on metals1
 1
 —
 1
1
 1
 —
 1
Net cash costs368
 371
 18
 389
337
 336
 15
 351
Depreciation, depletion and amortization75
 72
 3
 75
72
 70
 2
 72
Noncash and other costs, net4
 6
 (2) 4
Noncash and other (credits) costs, net(4) (5) 1
 (4)
Total costs447
 449
 19
 468
405
 401
 18
 419
Revenue adjustments, primarily for pricing on prior period open sales(30) (30) —
 (30)(8) (8) —
 (8)
Gross profit$65
 $63
 $2
 $65
Gross profit (loss)$66
 $70
 $(4) $66
              
Copper sales (millions of recoverable pounds)200
 200
    178
 178
    
              
Gross profit per pound of copper:Gross profit per pound of copper:   Gross profit per pound of copper:   
              
Revenues, excluding adjustments$2.71
 $2.71
    $2.69
 $2.69
    
Site production and delivery, before net noncash
and other costs shown below
1.75
 1.69
    1.77
 1.72
    
By-product credits(0.08) —
    (0.04) —
    
Treatment charges0.17
 0.17
    0.17
 0.17
    
Royalty on metals—
 —
    —
 —
    
Unit net cash costs1.84
 1.86
    1.90
 1.89
    
Depreciation, depletion and amortization0.38
 0.36
    0.40
 0.39
    
Noncash and other costs, net0.02
 0.03
    
Noncash and other (credits) costs, net(0.02) (0.03)    
Total unit costs2.24
 2.25
    2.28
 2.25
    
Revenue adjustments, primarily for pricing              
on prior period open sales(0.15) (0.15)    (0.05) (0.05)    
Gross profit per pound$0.32
 $0.31
    $0.36
 $0.39
    
              
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$563
 $355
 $75
  $493
 $320
 $72
  
Treatment charges(33) —
 —
  (30) —
 —
  
Royalty on metals(1) —
 —
  (1) —
 —
  
Noncash and other costs, net—
 4
 —
  
Noncash and other (credits) costs, net—
 (4) —
  
Revenue adjustments, primarily for pricing on prior period open sales(30) —
 —
  (8) —
 —
  
Eliminations and other(13) (14) —
  (1) (1) —
  
South America mining486
 345
 75
  453
 315
 72
  
Other mining & eliminationsb
3,167
 2,281
 330
  3,226
 2,250
 330
  
Total mining3,653
 2,626
 405
  3,679
 2,565
 402
  
U.S. oil & gas operations500
 283
 3,634
c 
 569
 281
 3,171
c 
 
Corporate, other & eliminations—
 3
 4
  —
 2
 3
  
As reported in FCX’s consolidated financial statements$4,153
 $2,912
 $4,043
c 
 $4,248
 $2,848
 $3,576
c 
 
 
a.
Includes silver sales of 386373 thousand ounces ($14.79($15.15 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 9.
10.
c.
Includes impairment of oil and gas properties of $3.1 billion.
$2.7 billion.



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South America Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued)
Three Months Ended March 31, 2014       
Three Months Ended June 30, 2014       
(In millions)By-Product Co-Product MethodBy-Product Co-Product Method
Method Copper 
Othera
 TotalMethod Copper 
Othera
 Total
Revenues, excluding adjustments$941
 $941
 $84
 $1,025
$984
 $984
 $75
 $1,059
Site production and delivery, before net noncash and other costs shown below461
 426
 40
 466
511
 474
 41
 515
By-product credits(79) —
 —
 —
(71) —
 —
 —
Treatment charges53
 53
 —
 53
55
 55
 —
 55
Royalty on metals3
 3
 —
 3
Net cash costs435
b 
479
 40
 519
498
b 
532
 41
 573
Depreciation, depletion and amortization87
 80
 7
 87
95
 90
 5
 95
Noncash and other costs, net17
 19
 (2) 17
23
 19
 4
 23
Total costs539
 578
 45
 623
616
 641
 50
 691
Revenue adjustments, primarily for pricing on prior period open sales(73) (73) —
 (73)32
 32
 —
 32
Gross profit$329
 $290
 $39
 $329
$400
 $375
 $25
 $400
              
Copper sales (millions of recoverable pounds)307
b 
307
    310
b 
310
    
              
Gross profit per pound of copper:Gross profit per pound of copper:   Gross profit per pound of copper:   
              
Revenues, excluding adjustments$3.07
 $3.07
    $3.17
 $3.17
    
Site production and delivery, before net noncash
and other costs shown below
1.50
 1.39
    1.64
 1.52
    
By-product credits(0.25) —
    (0.23) —
    
Treatment charges0.17
 0.17
    0.18
 0.18
    
Royalty on metals0.01
 0.01
    
Unit net cash costs1.42
b 
1.56
    1.60
b 
1.71
    
Depreciation, depletion and amortization0.28
 0.27
    0.30
 0.29
    
Noncash and other costs, net0.06
 0.06
    0.08
 0.06
    
Total unit costs1.76
 1.89
    1.98
 2.06
    
Revenue adjustments, primarily for pricing              
on prior period open sales(0.24) (0.24)    0.10
 0.10
    
Gross profit per pound$1.07
 $0.94
    $1.29
 $1.21
    
              
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$1,025
 $466
 $87
  $1,059
 $515
 $95
  
Treatment charges(53) —
 —
  (55) —
 —
  
Royalty on metals(3) —
 —
  
Noncash and other costs, net—
 17
 —
  —
 23
 —
  
Revenue adjustments, primarily for pricing on prior period open sales(73) —
 —
  32
 —
 —
  
Eliminations and other(1) (7) —
  (2) (8) —
  
South America mining898
 476
 87
  1,031
 530
 95
  
Other mining & eliminationsc
2,826
 1,950
 259
  3,255
 2,224
 299
  
Total mining3,724
 2,426
 346
  4,286
 2,754
 394
  
U.S. oil & gas operations1,261
 311
 616
  1,236
 329
 616
  
Corporate, other & eliminations—
 —
 4
  —
 (1) 3
  
As reported in FCX’s consolidated financial statements$4,985
 $2,737
 $966
  $5,522
 $3,082
 $1,013
  
 
a.Includes gold sales of 2320 thousand ounces ($1,3071,302 per ounce average realized price) and silver sales of 796748 thousand ounces ($19.8218.83 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.
b.Following is a reconciliation of South America mining's first-quartersecond-quarter 2014 unit net cash costs, excluding the Candelaria and Ojos del Salado mines:
Net Cash Costs
(in millions)
 
Copper Sales
(millions of recoverable pounds)
 
Unit Net
Cash Costs
(per pound
of copper)
 
Net Cash Costs
(in millions)
 
Copper Sales
(millions of recoverable pounds)
 
Unit Net
Cash Costs
(per pound
of copper)
 
Presented above$435
 307
 $1.42
 $498
 310
 $1.60
 
Less: Candelaria and Ojos del Salado122
 94
   140
 80
   
$313
 213
 $1.47
 $358
 230
 $1.55
 
c.Represents the combined total for all other mining operations and the related eliminations, as presented in Note 9.10.

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

        
Six Months Ended June 30, 2015       
(In millions)By-Product Co-Product Method
 Method Copper 
Othera
 Total
Revenues, excluding adjustments$1,013
 $1,013
 $35
 $1,048
Site production and delivery, before net noncash
    and other costs shown below
664
 642
 33
 675
By-product credits(24) —
 —
 —
Treatment charges64
 64
 —
 64
Royalty on metals1
 1
 —
 1
Net cash costs705
 707
 33
 740
Depreciation, depletion and amortization147
 143
 4
 147
Noncash and other costs, net—
 —
 —
 —
Total costs852
 850
 37
 887
Revenue adjustments, primarily for pricing
    on prior period open sales
(31) (31) —
 (31)
Gross profit (loss)$130
 $132
 $(2) $130
        
Copper sales (millions of recoverable pounds)378
 378
    
        
Gross profit per pound of copper:   
        
Revenues, excluding adjustments$2.68
 $2.68
    
Site production and delivery, before net noncash       
and other costs shown below1.76
 1.70
    
By-product credits(0.06) —
    
Treatment charges0.17
 0.17
    
Royalty on metals—
 —
    
Unit net cash costs1.87
 1.87
    
Depreciation, depletion and amortization0.39
 0.38
    
Noncash and other costs, net—
 —
    
Total unit costs2.26
 2.25
    
Revenue adjustments, primarily for pricing       
on prior period open sales(0.08) (0.08)    
Gross profit per pound$0.34
 $0.35
    
        
Reconciliation to Amounts Reported       
(In millions)Revenues Production and Delivery Depreciation, Depletion and Amortization  
Totals presented above$1,048
 $675
 $147
  
Treatment charges(64) —
 —
  
Royalty on metals(1) —
 —
  
Noncash and other costs, net—
 —
 —
  
Revenue adjustments, primarily for pricing
    on prior period open sales
(31) —
 —
  
Eliminations and other(13) (15) —
  
South America mining939
 660
 147
  
Other mining & eliminationsb
6,393
 4,531
 660
  
Total mining7,332
 5,191
 807
  
U.S. oil & gas operations1,069
 564
 6,805
c 
 
Corporate, other & eliminations—
 5
 7
  
As reported in FCX’s consolidated financial statements$8,401
 $5,760
 $7,619
c 
 
a.Includes silver sales of 759 thousand ounces ($14.97 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.
c.Includes impairment of oil and gas properties of $5.8 billion.



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South America 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 
Othera
 Total
Revenues, excluding adjustments$1,951
 $1,951
 $159
 $2,110
Site production and delivery, before net noncash
    and other costs shown below
972
 900
 81
 981
By-product credits(150) —
 —
 —
Treatment charges108
 108
 —
 108
Royalty on metals3
 3
 —
 3
Net cash costs933
b 
1,011
 81
 1,092
Depreciation, depletion and amortization182
 170
 12
 182
Noncash and other costs, net40
 38
 2
 40
Total costs1,155
 1,219
 95
 1,314
Revenue adjustments, primarily for pricing
    on prior period open sales
(67) (67) —
 (67)
Gross profit$729
 $665
 $64
 $729
        
Copper sales (millions of recoverable pounds)617
b 
617
    
        
Gross profit per pound of copper:   
        
Revenues, excluding adjustments$3.16
 $3.16
    
Site production and delivery, before net noncash       
and other costs shown below1.57
 1.46
    
By-product credits(0.24) —
    
Treatment charges0.18
 0.18
    
Royalty on metals—
 —
    
Unit net cash costs1.51
b 
1.64
    
Depreciation, depletion and amortization0.29
 0.27
    
Noncash and other costs, net0.07
 0.06
    
Total unit costs1.87
 1.97
    
Revenue adjustments, primarily for pricing       
on prior period open sales(0.11) (0.11)    
Gross profit per pound$1.18
 $1.08
    
        
Reconciliation to Amounts Reported       
(In millions)Revenues Production and Delivery Depreciation, Depletion and Amortization  
Totals presented above$2,110
 $981
 $182
  
Treatment charges(108) —
 —
  
Royalty on metals(3) —
 —
  
Noncash and other costs, net—
 40
 —
  
Revenue adjustments, primarily for pricing
    on prior period open sales
(67) —
 —
  
Eliminations and other(3) (15) —
  
South America mining1,929
 1,006
 182
  
Other mining & eliminationsc
6,081
 4,174
 558
  
Total mining8,010
 5,180
 740
  
U.S. oil & gas operations2,497
 640
 1,232
  
Corporate, other & eliminations—
 (1) 7
  
As reported in FCX’s consolidated financial statements$10,507
 $5,819
 $1,979
  
a.Includes gold sales of 43 thousand ounces ($1,302 per ounce average realized price) and silver sales of 1.5 million ounces ($19.34 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.
b.Following is a reconciliation of South America mining's unit net cash costs for the first six months of 2014, excluding the Candelaria and Ojos del Salado mines:
 
Net Cash Costs
(in millions)
 
Copper Sales
(millions of recoverable pounds)
 
Unit Net
Cash Costs
(per pound
of copper)
 
Presented above$933
 617
 $1.51
 
Less: Candelaria and Ojos del Salado263
 174
 
 
 $670
 443
 $1.51
 
c. Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10.

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

Three Months Ended March 31, 2015   
Three Months Ended June 30, 2015   
(In millions)By-Product Co-Product MethodBy-Product Co-Product Method
Method Copper Gold 
Silvera
 TotalMethod Copper Gold 
Silvera
 Total
Revenues, excluding adjustments$425
 $425
 $308
 $7
 $740
$511
 $511
 $406
 $8
 $925
Site production and delivery, before net noncash
and other costs shown below
440
 252
 183
 5
 440
442
 244
 194
 4
 442
Gold and silver credits(324) —
 —
 —
 —
(416) —
 —
 —
 —
Treatment charges45
 26
 19
 —
 45
62
 34
 27
 1
 62
Export duties22
 13
 9
 —
 22
36
 20
 16
 —
 36
Royalty on metals25
 15
 10
 —
 25
35
 19
 16
 —
 35
Net cash costs208
 306
 221
 5
 532
159
 317
 253
 5
 575
Depreciation and amortization70
 40
 29
 1
 70
78
 43
 34
 1
 78
Noncash and other costs, net6
 3
 3
 —
 6
8
 5
 3
 —
 8
Total costs284
 349
 253
 6
 608
245
 365
 290
 6
 661
Revenue adjustments, primarily for pricing
on prior period open sales
(50) (50) 8
 1
 (41)(4) (4) 2
 —
 (2)
PT Smelting intercompany profit7
 4
 3
 —
 7
PT Smelting intercompany loss(5) (3) (2) —
 (5)
Gross profit$98
 $30
 $66
 $2
 $98
$257
 $139
 $116
 $2
 $257
                  
Copper sales (millions of recoverable pounds)155
 155
      196
 196
      
Gold sales (thousands of recoverable ounces)    260
        346
    
                  
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$2.74
 $2.74
 $1,186
    $2.61
 $2.61
 $1,173
    
Site production and delivery, before net noncash
and other costs shown below
2.84
 1.63
 705
    2.26
 1.25
 560
    
Gold and silver credits(2.09) —
 —
    (2.13) —
 —
    
Treatment charges0.29
 0.17
 73
    0.32
 0.18
 79
    
Export duties0.14
 0.08
 35
    0.18
 0.10
 45
    
Royalty on metals0.16
 0.09
 40
    0.18
 0.10
 45
    
Unit net cash costs1.34
 1.97
 853
    0.81
 1.63
 729
    
Depreciation and amortization0.45
 0.26
 112
    0.40
 0.22
 100
    
Noncash and other costs, net0.04
 0.02
 9
    0.04
 0.02
 10
    
Total unit costs1.83
 2.25
 974
    1.25
 1.87
 839
    
Revenue adjustments, primarily for pricing                  
on prior period open sales(0.32) (0.32) 33
    (0.02) (0.02) 7
    
PT Smelting intercompany profit0.04
 0.02
 11
    
PT Smelting intercompany loss(0.02) (0.01) (5)    
Gross profit per pound/ounce$0.63
 $0.19
 $256
    $1.32
 $0.71
 $336
    
                  
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$740
 $440
 $70
    $925
 $442
 $78
    
Treatment charges(45) —
 —
    (62) —
 —
    
Export duties(22) —
 —
    (36) —
 —
    
Royalty on metals(25) —
 —
    (35) —
 —
    
Noncash and other costs, net—
 6
 —
    —
 8
 —
    
Revenue adjustments, primarily for pricing
on prior period open sales
(41) —
 —
    (2) —
 —
    
PT Smelting intercompany profit—
 (7) —
    
PT Smelting intercompany loss—
 5
 —
    
Indonesia mining607
 439
 70
    790
 455
 78
    
Other mining & eliminationsb
3,046
 2,187
 335
    2,889
 2,110
 324
    
Total mining3,653
 2,626
 405
    3,679
 2,565
 402
    
U.S. oil & gas operations500
 283
 3,634
c 
   569
 281
 3,171
c 
   
Corporate, other & eliminations—
 3
 4
    —
 2
 3
    
As reported in FCX’s consolidated financial statements$4,153
 $2,912
 $4,043
c 
   $4,248
 $2,848
 $3,576
c 
   
a.Includes silver sales of 435558 thousand ounces ($16.1615.48 per ounce average realized price).
b.Represents the combined total for all other mining operations and the related eliminations, as presented in Note 9.10.
c.Includes impairment of oil and gas properties of $3.1$2.7 billion.


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

Three Months Ended March 31, 2014   
Three Months Ended June 30, 2014   
(In millions)By-Product Co-Product MethodBy-Product Co-Product Method
Method Copper Gold 
Silvera
 TotalMethod Copper Gold 
Silvera
 Total
Revenues, excluding adjustments$331
 $331
 $211
 $7
 $549
$372
 $372
 $176
 $7
 $555
Site production and delivery, before net noncash and other costs shown below363
 219
 139
 5
 363
451
 303
 142
 6
 451
Gold and silver credits(235) —
 —
 —
 —
(184) —
 —
 —
 —
Treatment charges26
 16
 10
 —
 26
30
 20
 10
 —
 30
Royalty on metals13
 8
 5
 —
 13
14
 9
 5
 —
 14
Net cash costs167
 243
 154
 5
 402
311
 332
 157
 6
 495
Depreciation and amortization48
 29
 19
 —
 48
54
 36
 17
 1
 54
Noncash and other costs, net74
b 
45
 28
 1
 74
64
b 
43
 20
 1
 64
Total costs289
 317
 201
 6
 524
429
 411
 194
 8
 613
Revenue adjustments, primarily for pricing on prior period open sales(57) (57) 17
 —
 (40)11
 11
 1
 —
 12
PT Smelting intercompany profit54
 33
 21
 —
 54
4
 3
 1
 —
 4
Gross profit (loss)$39
 $(10) $48
 $1
 $39
Gross loss$(42) $(25) $(16) $(1) $(42)
                  
Copper sales (millions of recoverable pounds)109
 109
      117
 117
      
Gold sales (thousands of recoverable ounces)    162
        135
    
                  
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$3.04
 $3.04
 $1,299
    $3.19
 $3.19
 $1,294
    
Site production and delivery, before net noncash
and other costs shown below
3.33
 2.01
 859
    3.86
 2.59
 1,050
    
Gold and silver credits(2.15) —
 —
    (1.57) —
 —
    
Treatment charges0.24
 0.15
 62
    0.26
 0.17
 70
    
Royalty on metals0.11
 0.07
 31
    0.11
 0.08
 31
    
Unit net cash costs1.53
 2.23
 952
    2.66
 2.84
 1,151
    
Depreciation and amortization0.44
 0.26
 114
    0.47
 0.31
 127
    
Noncash and other costs, net0.67
b 
0.41
 174
    0.55
b 
0.37
 151
    
Total unit costs2.64
 2.90
 1,240
    3.68
 3.52
 1,429
    
Revenue adjustments, primarily for pricing                  
on prior period open sales(0.53) (0.53) 107
    0.09
 0.09
 5
    
PT Smelting intercompany profit0.49
 0.30
 129
    0.03
 0.02
 9
    
Gross profit (loss) per pound/ounce$0.36
 $(0.09) $295
    
Gross loss per pound/ounce$(0.37) $(0.22) $(121)    
                  
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$549
 $363
 $48
    $555
 $451
 $54
    
Treatment charges(26) —
 —
    (30) —
 —
    
Royalty on metals(13) —
 —
    (14) —
 —
    
Noncash and other costs, net—
 74
b 
—
    —
 64
b 
—
    
Revenue adjustments, primarily for pricing on prior period open sales(40) —
 —
    12
 —
 —
    
PT Smelting intercompany profit—
 (54) —
    —
 (4) —
    
Indonesia mining470
 383
 48
    523
 511
 54
    
Other mining & eliminationsc
3,254
 2,043
 298
    3,763
 2,243
 340
    
Total mining3,724
 2,426
 346
    4,286
 2,754
 394
    
U.S. oil & gas operations1,261
 311
 616
    1,236
 329
 616
    
Corporate, other & eliminations—
 —
 4
    —
 (1) 3
    
As reported in FCX’s consolidated financial statements$4,985
 $2,737
 $966
    $5,522
 $3,082
 $1,013
    
a.Includes silver sales of 333367 thousand ounces ($20.1319.67 per ounce average realized price).
b.Includes $53$56 million ($0.490.48 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 9.
c.Represents the combined total for all other mining operations and the related eliminations, as presented in Note 10.

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Indonesia Mining Product Revenues, Production Costs and Unit Net Cash Costs (continued)
          
Six Months Ended June 30, 2015   
(In millions)By-Product Co-Product Method
 Method Copper Gold 
Silvera
 Total
Revenues, excluding adjustments$933
 $933
 $716
 $16
a 
$1,665
Site production and delivery, before net noncash
   and other costs shown below
882
 494
 380
 8
 882
Gold and silver credits(741) —
 —
 —
 —
Treatment charges108
 61
 46
 1
 108
Export duties57
 32
 24
 1
 57
Royalty on metals60
 33
 26
 1
 60
Net cash costs366
 620
 476
 11
 1,107
Depreciation and amortization148
 83
 64
 1
 148
Noncash and other costs, net14
 8
 6
 —
 14
Total costs528
 711
 546
 12
 1,269
Revenue adjustments, primarily for pricing
    on prior period open sales
(52) (52) 9
 —
 (43)
PT Smelting intercompany profit2
 2
 —
 —
 2
Gross profit$355
 $172
 $179
 $4
 $355
          
Copper sales (millions of recoverable pounds)351
 351
      
Gold sales (thousands of recoverable ounces)    606
    
          
Gross profit per pound of copper/per ounce of gold:     
          
Revenues, excluding adjustments$2.66
 $2.66
 $1,183
    
Site production and delivery, before net noncash         
and other costs shown below2.51
 1.41
 626
    
Gold and silver credits(2.11) —
 —
    
Treatment charges0.31
 0.17
 77
    
Export duties0.16
 0.09
 41
    
Royalty on metals0.17
 0.10
 42
    
Unit net cash costs1.04
 1.77
 786
    
Depreciation and amortization0.42
 0.24
 106
    
Noncash and other costs, net0.04
 0.02
 10
    
Total unit costs1.50
 2.03
 902
    
Revenue adjustments, primarily for pricing         
on prior period open sales(0.15) (0.15) 14
    
PT Smelting intercompany profit0.01
 0.01
 2
    
Gross profit per pound/ounce$1.02
 $0.49
 $297
    
          
Reconciliation to Amounts Reported         
(In millions)Revenues Production and Delivery Depreciation, Depletion and Amortization    
Totals presented above$1,665
 $882
 $148
    
Treatment charges(108) —
 —
    
Export duties(57) —
 —
    
Royalty on metals(60) —
 —
    
Noncash and other costs, net—
 14
 —
    
Revenue adjustments, primarily for pricing
    on prior period open sales
(43) —
 —
    
PT Smelting intercompany profit—
 (2) —
    
Indonesia mining1,397
 894
 148
    
Other mining & eliminationsb
5,935
 4,297
 659
    
Total mining7,332
 5,191
 807
    
U.S. oil & gas operations1,069
 564
 6,805
c 
   
Corporate, other & eliminations—
 5
 7
    
As reported in FCX’s consolidated financial statements$8,401
 $5,760
 $7,619
c 
   
a.Includes silver sales of 993 thousand ounces ($15.75 per ounce average realized price).
b.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 $5.8 billion.



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Indonesia 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 Gold 
Silvera
 Total
Revenues, excluding adjustments$713
 $713
 $386
 $14
 $1,113
Site production and delivery, before net noncash
    and other costs shown below
814
 521
 283
 10
 814
Gold and silver credits(419) —
 —
 —
 —
Treatment charges56
 36
 19
 1
 56
Royalty on metals27
 17
 9
 1
 27
Net cash costs478
 574
 311
 12
 897
Depreciation and amortization102
 65
 36
 1
 102
Noncash and other costs, net138
b 
88
 48
 2
 138
Total costs718
 727
 395
 15
 1,137
Revenue adjustments, primarily for pricing
    on prior period open sales
(56) (56) 18
 1
 (37)
PT Smelting intercompany profit58
 37
 20
 1
 58
Gross (loss) profit$(3) $(33) $29
 $1
 $(3)
          
Copper sales (millions of recoverable pounds)226
 226
      
Gold sales (thousands of recoverable ounces)    297
    
          
Gross profit per pound of copper/per ounce of gold:     
          
Revenues, excluding adjustments$3.15
 $3.15
 $1,299
    
Site production and delivery, before net noncash         
and other costs shown below3.60
 2.31
 950
    
Gold and silver credits(1.85) —
 —
    
Treatment charges0.25
 0.16
 65
    
Royalty on metals0.12
 0.07
 31
    
Unit net cash costs2.12
 2.54
 1,046
    
Depreciation and amortization0.45
 0.29
 120
    
Noncash and other costs, net0.61
b 
0.39
 161
    
Total unit costs3.18
 3.22
 1,327
    
Revenue adjustments, primarily for pricing         
on prior period open sales(0.24) (0.24) 59
    
PT Smelting intercompany profit0.26
 0.16
 68
    
Gross (loss) profit per pound/ounce$(0.01) $(0.15) $99
    
          
Reconciliation to Amounts Reported         
(In millions)Revenues Production and Delivery Depreciation, Depletion and Amortization    
Totals presented above$1,113
 $814
 $102
    
Treatment charges(56) —
 —
    
Royalty on metals(27) —
 —
    
Noncash and other costs, net—
 138
b 
—
    
Revenue adjustments, primarily for pricing
    on prior period open sales
(37) —
 —
    
PT Smelting intercompany profit—
 (58) —
    
Indonesia mining993
 894
 102
    
Other mining & eliminationsc
7,017
 4,286
 638
    
Total mining8,010
 5,180
 740
    
U.S. oil & gas operations2,497
 640
 1,232
    
Corporate, other & eliminations—
 (1) 7
    
As reported in FCX’s consolidated financial statements$10,507
 $5,819
 $1,979
    
a.Includes silver sales of 700 thousand ounces ($19.84 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.


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

Three Months Ended March 31, 2015       
Three Months Ended June 30, 2015       
(In millions)By-Product Co-Product MethodBy-Product Co-Product Method
Method Copper Cobalt TotalMethod Copper Cobalt Total
Revenues, excluding adjustmentsa
$354
 $354
 $72
 $426
$275
 $275
 $76
 $351
Site production and delivery, before net noncash and other costs shown below208
 185
 46
 231
161
 141
 45
 186
Cobalt creditsb
(48) —
 —
 —
(55) —
 —
 —
Royalty on metals8
 6
 2
 8
6
 5
 1
 6
Net cash costs168
 191
 48
 239
112
 146
 46
 192
Depreciation, depletion and amortization73
 63
 10
 73
57
 45
 12
 57
Noncash and other costs, net4
 4
 —
 4
4
 3
 1
 4
Total costs245
 258
 58
 316
173
 194
 59
 253
Revenue adjustments, primarily for pricing on prior period open sales(7) (7) (1) (8)2
 2
 4
 6
Gross profit$102
 $89
 $13
 $102
$104
 $83
 $21
 $104
              
Copper sales (millions of recoverable pounds)133
 133
    104
 104
    
Cobalt sales (millions of contained pounds)    8
      8
  
              
Gross profit per pound of copper/cobalt:Gross profit per pound of copper/cobalt:   Gross profit per pound of copper/cobalt:   
              
Revenues, excluding adjustmentsa
$2.66
 $2.66
 $8.72
  $2.63
 $2.63
 $9.27
  
Site production and delivery, before net noncash
and other costs shown below
1.57
 1.39
 5.61
  1.54
 1.35
 5.48
  
Cobalt creditsb
(0.37) —
 —
  (0.53) —
 —
  
Royalty on metals0.06
 0.05
 0.14
  0.06
 0.05
 0.16
  
Unit net cash costs1.26
 1.44
 5.75
  1.07
 1.40
 5.64
  
Depreciation, depletion and amortization0.55
 0.48
 1.18
  0.55
 0.43
 1.42
  
Noncash and other costs, net0.03
 0.02
 0.06
  0.03
 0.03
 0.10
  
Total unit costs1.84
 1.94
 6.99
  1.65
 1.86
 7.16
  
Revenue adjustments, primarily for pricing              
on prior period open sales(0.05) (0.05) (0.10)  0.02
 0.02
 0.50
  
Gross profit per pound$0.77
 $0.67
 $1.63
  $1.00
 $0.79
 $2.61
  
              
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$426
 $231
 $73
  $351
 $186
 $57
  
Royalty on metals(8) —
 —
  (6) —
 —
  
Noncash and other costs, net—
 4
 —
  —
 4
 —
  
Revenue adjustments, primarily for pricing on prior period open sales(8) —
 —
  6
 —
 —
  
Africa mining410
 235
 73
  351
 190
 57
  
Other mining & eliminationsc
3,243
 2,391
 332
  3,328
 2,375
 345
  
Total mining3,653
 2,626
 405
  3,679
 2,565
 402
  
U.S. oil & gas operations500
 283
 3,634
d 
 569
 281
 3,171
d 
 
Corporate, other & eliminations—
 3
 4
  —
 2
 3
  
As reported in FCX’s consolidated financial statements$4,153
 $2,912
 $4,043
d 
 $4,248
 $2,848
 $3,576
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 9.
10.
d.
Includes impairment of oil and gas properties of $3.1 billion.
$2.7 billion.



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

Three Months Ended March 31, 2014       
Three Months Ended June 30, 2014       
(In millions)By-Product Co-Product MethodBy-Product Co-Product Method
Method Copper Cobalt TotalMethod Copper Cobalt Total
Revenues, excluding adjustmentsa
$258
 $258
 $74
 $332
$362
 $362
 $65
 $427
Site production and delivery, before net noncash and other costs shown below125
 103
 42
 145
171
 159
 35
 194
Cobalt creditsb
(56) —
 —
 —
(41) —
 —
 —
Royalty on metals6
 5
 1
 6
8
 7
 1
 8
Net cash costs75
 108
 43
 151
138
 166
 36
 202
Depreciation, depletion and amortization51
 45
 6
 51
63
 54
 9
 63
Noncash and other costs, net7
 6
 1
 7
4
 3
 1
 4
Total costs133
 159
 50
 209
205
 223
 46
 269
Revenue adjustments, primarily for pricing on prior period open sales(1) (1) 2
 1
—
 —
 (1) (1)
Gross profit$124
 $98
 $26
 $124
$157
 $139
 $18
 $157
              
Copper sales (millions of recoverable pounds)84
 84
    118
 118
    
Cobalt sales (millions of contained pounds)    8
      7
  
              
Gross profit per pound of copper/cobalt:Gross profit per pound of copper/cobalt:   Gross profit per pound of copper/cobalt:   
              
Revenues, excluding adjustmentsa
$3.07
 $3.07
 $9.21
  $3.08
 $3.08
 $9.58
  
Site production and delivery, before net noncash
and other costs shown below
1.48
 1.22
 5.16
  1.46
 1.35
 5.22
  
Cobalt creditsb
(0.66) —
 —
  (0.34) —
 —
  
Royalty on metals0.07
 0.06
 0.16
  0.06
 0.06
 0.15
  
Unit net cash costs0.89
 1.28
 5.32
  1.18
 1.41
 5.37
  
Depreciation, depletion and amortization0.61
 0.53
 0.80
  0.54
 0.46
 1.30
  
Noncash and other costs, net0.08
 0.08
 0.12
  0.03
 0.03
 0.08
  
Total unit costs1.58
 1.89
 6.24
  1.75
 1.90
 6.75
  
Revenue adjustments, primarily for pricing              
on prior period open sales(0.01) (0.01) 0.24
  —
 —
 (0.19)  
Gross profit per pound$1.48
 $1.17
 $3.21
  $1.33
 $1.18
 $2.64
  
              
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$332
 $145
 $51
  $427
 $194
 $63
  
Royalty on metals(6) —
 —
  (8) —
 —
  
Noncash and other costs, net—
 7
 —
  —
 4
 —
  
Revenue adjustments, primarily for pricing on prior period open sales1
 —
 —
  (1) —
 —
  
Africa mining327
 152
 51
  418
 198
 63
  
Other mining & eliminationsc
3,397
 2,274
 295
  3,868
 2,556
 331
  
Total mining3,724
 2,426
 346
  4,286
 2,754
 394
  
U.S. oil & gas operations1,261
 311
 616
  1,236
 329
 616
  
Corporate, other & eliminations—
 —
 4
  —
 (1) 3
  
As reported in FCX’s consolidated financial statements$4,985
 $2,737
 $966
  $5,522
 $3,082
 $1,013
  
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 9.
10.

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

        
Six Months Ended June 30, 2015       
(In millions)By-Product Co-Product Method
 Method Copper Cobalt Total
Revenues, excluding adjustmentsa
$631
 $631
 $152
 $783
Site production and delivery, before net noncash
    and other costs shown below
370
 325
 92
 417
Cobalt creditsb
(104) —
 —
 —
Royalty on metals14
 12
 2
 14
Net cash costs280
 337
 94
 431
Depreciation, depletion and amortization130
 109
 21
 130
Noncash and other costs, net8
 6
 2
 8
Total costs418
 452
 117
 569
Revenue adjustments, primarily for pricing
    on prior period open sales
(7) (7) (1) (8)
Gross profit$206
 $172
 $34
 $206
        
Copper sales (millions of recoverable pounds)237
 237
    
Cobalt sales (millions of contained pounds)    16
  
        
Gross profit per pound of copper/cobalt:   
        
Revenues, excluding adjustmentsa
$2.66
 $2.66
 $9.23
  
Site production and delivery, before net noncash       
and other costs shown below1.56
 1.37
 5.54
  
Cobalt creditsb
(0.44) —
 —
  
Royalty on metals0.06
 0.05
 0.15
  
Unit net cash costs1.18
 1.42
 5.69
  
Depreciation, depletion and amortization0.55
 0.46
 1.31
  
Noncash and other costs, net0.03
 0.03
 0.08
  
Total unit costs1.76
 1.91
 7.08
  
Revenue adjustments, primarily for pricing       
on prior period open sales(0.03) (0.03) (0.04)  
Gross profit per pound$0.87
 $0.72
 $2.11
  
        
Reconciliation to Amounts Reported       
(In millions)Revenues Production and Delivery Depreciation, Depletion and Amortization  
Totals presented above$783
 $417
 $130
  
Royalty on metals(14) —
 —
  
Noncash and other costs, net—
 8
 —
  
Revenue adjustments, primarily for pricing
    on prior period open sales
(8) —
 —
  
Africa mining761
 425
 130
  
Other mining & eliminationsc
6,571
 4,766
 677
  
Total mining7,332
 5,191
 807
  
U.S. oil & gas operations1,069
 564
 6,805
d 
 
Corporate, other & eliminations—
 5
 7
  
As reported in FCX’s consolidated financial statements$8,401
 $5,760
 $7,619
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 $5.8 billion.


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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 adjustmentsa
$621
 $621
 $137
 $758
Site production and delivery, before net noncash
    and other costs shown below
296
 262
 77
 339
Cobalt creditsb
(96) —
 —
 —
Royalty on metals14
 12
 2
 14
Net cash costs214
 274
 79
 353
Depreciation, depletion and amortization114
 99
 15
 114
Noncash and other costs, net11
 10
 1
 11
Total costs339
 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 adjustmentsa
$3.08
 $3.08
 $9.29
  
Site production and delivery, before net noncash       
and other costs shown below1.47
 1.30
 5.19
  
Cobalt creditsb
(0.48) —
 —
  
Royalty on metals0.07
 0.06
 0.16
  
Unit net cash costs1.06
 1.36
 5.35
  
Depreciation, depletion and amortization0.57
 0.49
 1.03
  
Noncash and other costs, net0.05
 0.04
 0.09
  
Total unit costs1.68
 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 mining745
 350
 114
  
Other mining & eliminationsc
7,265
 4,830
 626
  
Total mining8,010
 5,180
 740
  
U.S. oil & gas operations2,497
 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.


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Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs

Three Months Ended March 31,   Three Months Ended June 30,   
(In millions)2015 2014   2015 2014   
Revenues, excluding adjustmentsa
$124
 $137
   $112
 $181
   
Site production and delivery, before net noncash and other costs shown below81
 75
   80
 79
   
Treatment charges and other11
 11
   10
 11
   
Net cash costs92
 86
   90
 90
   
Depreciation, depletion and amortization26
 22
   25
 24
   
Noncash and other costs, net2
 1
   4
b 
2
   
Total costs120
 109
   119
 116
   
Gross profit$4
 $28
   
Gross (loss) profit$(7) $65
   
            
Molybdenum sales (millions of recoverable pounds)a
13
 13
   13
 14
   
            
Gross profit per pound of molybdenum:Gross profit per pound of molybdenum:   Gross profit per pound of molybdenum:   
            
Revenues, excluding adjustmentsa
$9.68
 $10.76
   $9.00
 $12.90
   
Site production and delivery, before net noncash and other costs shown below6.33
 5.87
   6.35
 5.64
   
Treatment charges and other0.84
 0.84
   0.84
 0.83
   
Unit net cash costs7.17
 6.71
   7.19
 6.47
   
Depreciation, depletion and amortization2.03
 1.75
   1.97
 1.69
   
Noncash and other costs, net0.14
 0.11
   0.37
b 
0.10
   
Total unit costs9.34
 8.57
   9.53
 8.26
   
Gross profit per pound$0.34
 $2.19
   
Gross (loss) profit per pound$(0.53) $4.64
   
            
Reconciliation to Amounts Reported            
(In millions)            
Three Months Ended March 31, 2015Revenues Production and Delivery Depreciation, Depletion and Amortization 
Three Months Ended June 30, 2015Revenues Production and Delivery Depreciation, Depletion and Amortization 
Totals presented above$124
 $81
 $26
 $112
 $80
 $25
 
Treatment charges and other(11) —
 —
 (10) —
 —
 
Noncash and other costs, net—
 2
 —
 —
 4
b 
—
 
Molybdenum mines113
 83
 26
 102
 84
 25
 
Other mining & eliminationsb
3,540
 2,543
 379
 
Other mining & eliminationsc
3,577
 2,481
 377
 
Total mining3,653
 2,626
 405
 3,679
 2,565
 402
 
U.S. oil & gas operations500
 283
 3,634
c 
569
 281
 3,171
d 
Corporate, other & eliminations—
 3
 4
 —
 2
 3
 
As reported in FCX’s consolidated financial statements$4,153
 $2,912
 $4,043
c 
$4,248
 $2,848
 $3,576
d 
            
Three Months Ended March 31, 2014      
Three Months Ended June 30, 2014      
Totals presented above$137
 $75
 $22
 $181
 $79
 $24
 
Treatment charges and other(11) —
 —
 (11) —
 —
 
Noncash and other costs, net—
 1
 —
 —
 2
 —
 
Molybdenum mines126
 76
 22
 170
 81
 24
 
Other mining & eliminationsb
3,598
 2,350
 324
 
Other mining & eliminationsc
4,116
 2,673
 370
 
Total mining3,724
 2,426
 346
 4,286
 2,754
 394
 
U.S. oil & gas operations1,261
 311
 616
 1,236
 329
 616
 
Corporate, other & eliminations—
 —
 4
 —
 (1) 3
 
As reported in FCX’s consolidated financial statements$4,985
 $2,737
 $966
 $5,522
 $3,082
 $1,013
 
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.Includes charges totaling $3 million ($0.21 per pound) for LCM inventory adjustments.
c.Represents the combined total for all other mining operations and the related eliminations, as presented in Note 9.10. 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.d.Includes impairment of oil and gas properties of $3.1$2.7 billion.


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Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs (continued)
       
 Six Months Ended June 30,   
(In millions)2015 2014   
Revenues, excluding adjustmentsa
$236
 $318
   
       
Site production and delivery, before net noncash
   and other costs shown below
161
 154
   
Treatment charges and other21
 22
   
Net cash costs182
 176
   
Depreciation, depletion and amortization51
 46
   
Noncash and other costs, net6
b 
3
   
Total costs239
 225
   
Gross (loss) profit$(3) $93
   
       
Molybdenum sales (millions of recoverable pounds)a
26
 27
   
       
Gross profit per pound of molybdenum:   
       
Revenues, excluding adjustmentsa
$9.34
 $11.88
   
       
Site production and delivery, before net noncash
   and other costs shown below
6.34
 5.75
   
Treatment charges and other0.84
 0.83
   
Unit net cash costs7.18
 6.58
   
Depreciation, depletion and amortization2.00
 1.72
   
Noncash and other costs, net0.25
b 
0.10
   
Total unit costs9.43
 8.40
   
Gross (loss) profit per pound$(0.09) $3.48
   
       
Reconciliation to Amounts Reported      
(In millions)      
Six Months Ended June 30, 2015Revenues Production and Delivery Depreciation, Depletion and Amortization 
Totals presented above$236
 $161
 $51
 
Treatment charges and other(21) —
 —
 
Noncash and other costs, net—
 6
b 
—
 
Molybdenum mines215
 167
 51
 
Other mining & eliminationsc
7,117
 5,024
 756
 
Total mining7,332
 5,191
 807
 
U.S. oil & gas operations1,069
 564
 6,805
d 
Corporate, other & eliminations—
 5
 7
 
As reported in FCX’s consolidated financial statements$8,401
 $5,760
 $7,619
d 
       
Six Months Ended June 30, 2014      
Totals presented above$318
 $154
 $46
 
Treatment charges and other(22) —
 —
 
Noncash and other costs,net—
 3
 —
 
Molybdenum mines296
 157
 46
 
Other mining & eliminationsc
7,714
 5,023
 694
 
Total mining8,010
 5,180
 740
 
U.S. oil & gas operations2,497
 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 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.Includes charges totaling $3 million ($0.11 per pound) for LCM inventory adjustments.
c.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.
d.Includes impairment of oil and gas properties of $5.8 billion.


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U.S. Oil & Gas Product Revenues, Cash Production Costs and Realizations

Three Months Ended March 31, 2015        
Three Months Ended June 30, 2015        
                
(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$373
 $62
 $12
 $447
 $480
 $63
 $12
 $555
 
Realized cash gains on derivative contracts100
 —
 —
 100
 
Cash gains on derivative contracts101
 —
 —
 101
 
Realized revenues$473
 $62
 $12
 547
 $581
 $63
 $12
 656
 
Less: cash production costs      254
       249
 
Cash operating margin      293
       407
 
Less: depreciation, depletion and amortization      530
       485
 
Less: impairment of oil and gas properties      3,104
       2,686
 
Less: accretion and other costs      29
       32
 
Plus: net noncash mark-to-market losses on derivative contracts      (48)       (95) 
Plus: other net adjustments      1
       8
 
Gross loss      $(3,417)       $(2,883) 
                
Oil (MMBbls)8.4
       8.6
       
Gas (Bcf)  21.8
       23.5
     
NGLs (MMBbls)    0.5
       0.6
   
Oil Equivalents (MMBOE)      12.5
       13.1
 
                
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$44.54
 $2.86
 $23.06
 $35.71
 $55.82
 $2.66
 $20.50
 $42.31
 
Realized cash gains on derivative contracts11.97
 —
 —
 8.00
 
Cash gains on derivative contracts11.79
 —
 —
 7.73
 
Realized revenues$56.51
 $2.86
 $23.06
 43.71
 $67.61
 $2.66
 $20.50
 50.04
 
Less: cash production costs      20.26
       19.04
 
Cash operating margin      23.45
       31.00
 
Less: depreciation, depletion and amortization      42.30
       36.99
 
Less: impairment of oil and gas properties      247.84
       204.91
 
Less: accretion and other costs      2.31
       2.46
 
Plus: net noncash mark-to-market losses on derivative contracts      (3.87)       (7.26) 
Plus: other net adjustments      0.06
       0.61
 
Gross loss      $(272.81)       $(220.01) 
                
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$447
 $254
 $530
   $555
 $249
 $485
   
Realized cash gains on derivative contracts100
 —
 —
   
Cash gains on derivative contracts101
 —
 —
   
Net noncash mark-to-market losses on derivative contracts(48) —
 —
   (95) —
 —
   
Accretion and other costs—
 29
 —
   —
 32
 —
   
Impairment of oil and gas properties—
 —
 3,104
   —
 —
 2,686
   
Other net adjustments1
 —
 —
   8
 —
 —
   
U.S. oil & gas operations500
 283
 3,634
   569
 281
 3,171
   
Total mininga
3,653
 2,626
 405
   3,679
 2,565
 402
   
Corporate, other & eliminations—
 3
 4
   —
 2
 3
   
As reported in FCX's consolidated financial statements$4,153
 $2,912
 $4,043
   $4,248
 $2,848
 $3,576
   
a.Represents the combined total for mining operations and the related eliminations, as presented in Note 9.10.



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U.S. Oil & Gas Product Revenues, Cash Production Costs and Realizations (continued)

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 March 31, 2014        
Three Months Ended June 30, 2014        
      Total       Total 
  Natural   U.S. Oil   Natural   U.S. Oil 
(In millions)Oil Gas NGLs & Gas Oil Gas NGLs & Gas 
Oil and gas revenues before derivatives$1,162
 $98
 $50
 $1,310
 $1,172
 $96
 $38
 $1,306
a 
Realized cash losses on derivative contracts(58) (7) —
 (65) 
Cash losses on derivative contracts(57) (6) —
 (63) 
Realized revenues$1,104
 $91
 $50
 1,245
 $1,115
 $90
 $38
 1,243
 
Less: cash production costs      298
a 
      314
a 
Cash operating margin      947
       929
 
Less: depreciation, depletion and amortization      616
       616
 
Less: accretion and other costs      13
       15
 
Plus: net noncash mark-to-market gains on derivative contracts      15
 
Plus: net noncash mark-to-market losses on derivative contracts      (7) 
Plus: other net adjustments      1
       —
 
Gross profit      $334
       $291
 
                
Oil (MMBbls)11.8
       11.7
       
Gas (Bcf)  19.5
       20.3
     
NGLs (MMBbls)    1.1
       1.0
   
Oil Equivalents (MMBOE)      16.1
       16.0
 
                
Oil Natural Gas NGLs   Oil Natural Gas NGLs   
(per barrel) (per MMBtu) (per barrel) Per BOE (per barrel) (per MMBtu) (per barrel) Per BOE 
Oil and gas revenues before derivatives$98.62
 $5.05
 $45.47
 $81.23
 $100.46
 $4.70
 $38.79
 $81.47
a 
Realized cash losses on derivative contracts(4.86) (0.38) —
 (4.01) 
Cash losses on derivative contracts(4.96) (0.26) —
 (3.94) 
Realized revenues$93.76
 $4.67
 $45.47
 77.22
 $95.50
 $4.44
 $38.79
 77.53
 
Less: cash production costs      18.51
a 
      19.57
a 
Cash operating margin      58.71
       57.96
 
Less: depreciation, depletion and amortization      38.21
       38.39
 
Less: accretion and other costs      0.78
       0.94
 
Plus: net noncash mark-to-market gains on derivative contracts      0.90
 
Plus: net noncash mark-to-market losses on derivative contracts      (0.44) 
Plus: other net adjustments      0.04
       0.04
 
Gross profit      $20.66
       $18.23
 
                
Reconciliation to Amounts ReportedReconciliation 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$1,310
 $298
 $616
   $1,306
 $314
 $616
   
Realized cash losses on derivative contracts(65) —
 —
   
Net noncash mark-to-market gains on derivative contracts15
 —
 —
   
Cash losses on derivative contracts(63) —
 —
   
Net noncash mark-to-market losses on derivative contracts(7) —
 —
   
Accretion and other costs—
 13
 —
   —
 15
 —
   
Other net adjustments1
 —
 —
   —
 —
 —
   
U.S. oil & gas operations1,261
 311
 616
   1,236
 329
 616
   
Total miningb
3,724
 2,426
 346
   4,286
 2,754
 394
   
Corporate, other & eliminations—
 —
 4
   —
 (1) 3
   
As reported in FCX's consolidated financial statements$4,985
 $2,737
 $966
   $5,522
 $3,082
 $1,013
   
                
a.Following is a reconciliation of FM O&G's first-quartersecond-quarter 2014 cash production costs per BOE, excluding Eagle Ford:
Cash Production Costs
(in millions)
 Oil Equivalents (MMBOE) Cash Production Costs Per BOE
Cash Production Costs
(in millions)
 Oil Equivalents (MMBOE) Cash Production Costs Per BOE
Presented above$298
 16.1
 $18.51
$314
 16.0
 $19.57
Less: Eagle Ford60
 4.7
 12.75
53
 4.0
 13.23
$238
 11.4
 $20.89
$261
 12.0
 $21.66
b.
Represents the combined total for mining operations and the related eliminations, as presented in Note 9.
10.

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U.S. Oil & Gas Product Revenues, Cash Production Costs and Realizations (continued)
         
Six Months Ended June 30, 2015      
         
(In millions)Oil Natural Gas NGLs 
Total
U.S. Oil
& Gas
 
Oil and gas revenues before derivatives$853
 $125
 $24
 $1,002
 
Cash gains on derivative contracts201
 —
 —
 201
 
Realized revenues$1,054
 $125
 $24
 1,203
 
Less: cash production costs      503
 
Cash operating margin      700
 
Less: depreciation, depletion and amortization      1,015
 
Less: impairment of oil and gas properties      5,790
 
Less: accretion and other costs      61
 
Plus: net noncash mark-to-market losses on derivative
  contracts
      (143) 
Plus: other net adjustments      9
 
Gross loss      $(6,300) 
         
Oil (MMBbls)17.0
       
Gas (Bcf)  45.3
     
NGLs (MMBbls)    1.1
   
Oil Equivalents (MMBOE)      25.6
 
         
 Oil
(per barrel)		 Natural Gas
(per MMBtu)		 NGLs
(per barrel)		 Per BOE 
Oil and gas revenues before derivatives$50.25
 $2.75
 $21.71
 $39.08
 
Cash gains on derivative contracts11.88
 —
 —
 7.87
 
Realized revenues$62.13
 $2.75
 $21.71
 46.95
 
Less: cash production costs      19.62
 
Cash operating margin      27.33
 
Less: depreciation, depletion and amortization      39.59
 
Less: impairment of oil and gas properties      225.89
 
Less: accretion and other costs      2.39
 
Plus: net noncash mark-to-market losses on derivative
  contracts
      (5.60) 
Plus: other net adjustments      0.34
 
Gross loss      $(245.80) 
         
Reconciliation to Amounts Reported
(In Millions)Revenues Production and Delivery Depreciation, Depletion and Amortization   
Totals presented above$1,002
 $503
 $1,015
   
Cash gains on derivative contracts201
 —
 —
   
Net noncash mark-to-market losses on derivative contracts

(143) —
 —
   
Accretion and other costs—
 61
 —
   
Impairment of oil and gas properties—
 —
 5,790
   
Other net adjustments9
 —
 —
   
U.S. oil & gas operations1,069
 564
 6,805
   
Total mininga
7,332
 5,191
 807
   
Corporate, other & eliminations—
 5
 7
   
As reported in FCX's consolidated financial statements$8,401
 $5,760
 $7,619
   
a.Represents the combined total for mining operations and the related eliminations, as presented in Note 10.


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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
a 
Cash losses on derivative contracts(115) (13) —
 (128) 
Realized revenues$2,219
 $181
 $88
 2,488
 
Less: cash production costs      612
a 
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
a 
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
a 
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 for the Six Months Ended June 30, 2014
(In millions)Revenues Production and Delivery Depreciation, Depletion and Amortization   
Totals presented above$2,616
 $612
 $1,232
   
Cash losses on derivative contracts(128) —
 —
   
Net noncash mark-to-market gains on derivative contracts8
 —
 —
   
Accretion and other costs—
 28
 —
   
Other net adjustments1
 —
 —
   
U.S. oil & gas operations2,497
 640
 1,232
   
Total miningb
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.Following is a reconciliation of FM O&G's cash production costs per BOE for the first six months of 2014, excluding Eagle Ford:
 
Cash Production Costs
(in millions)
 Oil Equivalents (MMBOE) Cash Production Costs Per BOE
Presented above$612
 32.2
 $19.03
Less: Eagle Ford113
 8.7
 12.97
 $499
 23.5
 $21.29
b.Represents the combined total for mining operations and the related eliminations, as presented in Note 10.

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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; 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. In particular, on July 28, 2015, we announced that we are undertaking a comprehensive review of operating plans to target significant additional reductions in capital spending, and operating and administrative costs. As part of this process, on August 5, 2015, we announced revisions to our oil and gas capital expenditure and production outlook. We expect to report revised plans for our mining operations during third-quarter 2015.

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, crude oil and natural gas, mine sequencing, production rates, industry risks, regulatory changes, political risks, drilling results, potential additional oil and gas property impairment charges, potential LCM inventory adjustments, potential impairment of long-lived mining assets, the outcome of negotiations with the Indonesian government regarding an amendment to PT-FI's COW, PT-FI's ability to obtain renewal of its export license after July 25,January 28, 2016, PT-FI's ability to renew its bi-annual labor agreement expiring in September 2015, PT Smelting's ability to restart smelter operations as expected in September 2015, the potential effects of violence in Indonesia, the resolution of administrative disputes in the DRC, weather- and climate-related risks, labor relations, environmental risks, litigation results and other factors described in more detail in Part I, Item 1A. “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2014, as updated by our subsequent filings with the SEC.

Investors are cautioned that many of the assumptions onupon which our forward-looking statements are based are likely to change after ourthe 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, except for our expectation that we will report revised plans for our mining operations during third-quarter 2015, 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.


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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 March 31,June 30, 2015. 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, 2014. 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 March 31,June 30, 2015; 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 March 31,June 30, 2015.

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 March 31,June 30, 2015.

(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 March 31,June 30, 2015, 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 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, 2014, as updated in Note 89 to the financial statements included in this quarterly report on Form 10-Q for the quarter ended March 31,June 30, 2015, 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.

There have been no material changes to our risk factors during the three-month period ended March 31,June 30, 2015 . For additional information on risk factors, refer to Part I, Item 1A. "Risk Factors" of our annual report on Form 10-K for the year ended December 31, 2014.


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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 March 31,June 30, 2015:
 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 Programsa
 
(d) Maximum Number
of Shares That May
Yet Be Purchased Under the Plans or Programsa
 
 JanuaryApril 1-30, 2015—
$—
—
23,685,500
May 1-31, 2015 —
 $—
 —
 23,685,500
 February 1-28, 2015—
$—
—
23,685,500
March 1-31,June 1-30, 2015 —
 $—
 —
 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.
 
Item 6.Exhibits.

The exhibits to this report are listed in the Exhibit Index beginning on Page E-1 hereof.


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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:  May 8,August 10, 2015

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FREEPORT-McMoRan INC.
EXHIBIT INDEX
  Filed 
Exhibit with thisIncorporated by Reference
NumberExhibit TitleForm 10-QFormFile No.Date Filed
3.1Composite Certificate of Incorporation of FCX 10-Q001-11307-018/8/2014
3.2Composite By-Laws of FCX as of July 14, 2014 8-K001-11307-017/2/2014
4.1Indenture 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, the 3.55% Senior Notes due 2022, the 2.30% Senior Notes due 2017, the 4.00% Senior Notes due 2021, the 4.55% Senior Notes due 2024, and the 5.40% Senior Notes due 2034). 8-K001-11307-012/13/2012
4.2Second 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-K001-11307-012/13/2012
4.3Third 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-K001-11307-012/13/2012
4.4Fourth 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 2.15% Senior Notes due 2017, and the 3.55% Senior Notes due 2022, the 2.30% Senior Notes due 2017, the 4.00% Senior Notes due 2021, the 4.55% Senior Notes due 2024, and the 5.40% Senior Notes due 2034). 8-K001-11307-016/3/2013
4.5
Fifth Supplemental Indenture dated as of November 14, 2014 among FCX, Freeport-McMoRan Oil & Gas LLC and U.S. Bank National Association, as Trustee (relating to the 2.30% Senior Notes due 2017).

 8-K001-11307-0111/14/2014
4.6
Sixth Supplemental Indenture dated as of November 14, 2014 among FCX, Freeport-McMoRan Oil & Gas LLC and U.S. Bank National Association, as Trustee (relating to the 4.00% Senior Notes due 2021).

 8-K001-11307-0111/14/2014
4.7
Seventh Supplemental Indenture dated as of November 14, 2014 among FCX, Freeport-McMoRan Oil & Gas LLC and U.S. Bank National Association, as Trustee. (relating to the 4.55% Senior Notes due 2024).

 8-K001-11307-0111/14/2014
4.8
Eighth Supplemental Indenture dated as of November 14, 2014 among FCX, Freeport-McMoRan Oil & Gas LLC and U.S. Bank National Association, as Trustee (relating to the 5.40% Senior Notes due 2034).

 8-K001-11307-0111/14/2014
4.9Indenture 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-K001-11307-013/7/2013
4.10Supplemental 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-K001-11307-016/3/2013
      
      

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Table of Contents                 


FREEPORT-McMoRan INC.
EXHIBIT INDEX
  Filed 
Exhibit with thisIncorporated by Reference
NumberExhibit TitleForm 10-QFormFile No.Date Filed
4.11Indenture 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, 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-K001-314703/13/2007
4.12Twelfth 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-K001-314703/29/2011
4.13Thirteenth 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-K001-3147011/22/2011
4.14Fourteenth 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-K001-314704/27/2012
4.15Sixteenth 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-K001-3147010/26/2012
4.16Seventeenth 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-K001-3147010/26/2012
4.17Eighteenth 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 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-K001-11307-016/3/2013
4.18Form 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-3333-364159/25/1997
      
      
      
      

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Table of Contents                 


FREEPORT-McMoRan INC.
EXHIBIT INDEX
  Filed 
Exhibit with thisIncorporated by Reference
NumberExhibit TitleForm 10-QFormFile No.Date Filed
4.19Form 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-K01-0008211/3/1997
4.20Form 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-K01-000825/30/2001
4.21Form 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-K01-000823/7/2005
10.1
ExtensionAmendment dated July 21, 2015, to the Restated Trust Agreement dated as of January 23, 2015, to Memorandum of Understanding Between the Government of the Republic of Indonesia andOctober 11, 1996, among PT Freeport Indonesia, datedPT Rio Tinto Indonesia (formerly P.T. RTZ-CRA Indonesia), U.S. Bank National Association, as of July 25, 2014.10-K001-11307-012/27/2015
10.2#
First Amendment, dated January 1, 2014, totrustee, JP Morgan Chase Bank, N.A., as depository, and the Crude Oil Purchase Agreement dated January 1, 2012, between Freeport-McMoRan Oil & Gas LLC (formerly Plains Exploration & Production Company) and ConocoPhillips Company.X
10.3#
Second Amendment, dated July 1, 2014, to the Crude Oil Purchase Agreement dated January 1, 2012, between Freeport-McMoRan Oil & Gas LLC and ConocoPhillips Company.Secured Creditors.X   
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.INSXBRL Instance Document.X   
101.SCHXBRL Taxonomy Extension Schema.X   
101.CALXBRL Taxonomy Extension Calculation Linkbase.X   
101.DEFXBRL Taxonomy Extension Definition Linkbase.X   
101.LABXBRL Taxonomy Extension Label Linkbase.X   
101.PREXBRL Taxonomy Extension Presentation Linkbase.X   
      
Note: Certain instruments with respect to long-term debt of FCX have not been filed as exhibits to this Quarterly Report on Form 10-Q since the total amount of securities authorized under any such instrument does not exceed 10 percent of the total assets of FCX and its subsidiaries on a consolidated basis. FCX agrees to furnish a copy of each such instrument upon request of the Securities and Exchange Commission.

# Pursuant to a request for confidential treatment, portions of this exhibit have been redacted from the publicly filed document and have been furnished separately to the Securities and Exchange Commission.

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