

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 September 30, ~~2015~~2016
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from		to
Commission File Number: 001-11307-01

Freeport-McMoRan Inc.

(Exact name of registrant as specified in its charter)



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

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

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

þ Yes 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 October ~~30, 2015~~,31, 2016, there were issued and outstanding ~~1,155,870,213~~1,361,688,305 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:	3

~~Condensed~~ Consolidated Balance Sheets (Unaudited)	3

Consolidated Statements of Operations (Unaudited)	4

Consolidated Statements of Comprehensive Income (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	3135

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	3236

Item 3. Quantitative and Qualitative Disclosures About Market Risk	9293

Item 4. Controls and Procedures	9293

Part II. Other Information	9293

Item 1. Legal Proceedings	9293

Item 1A. Risk Factors	9293

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	9395

Item 4. Mine Safety ~~Disclosure~~Disclosures	9395

Item 6. Exhibits	9395

Signature	94S-1

Exhibit Index	E-1

Table of Contents


Part I.	FINANCIAL INFORMATION


Item 1.	Financial Statements.

FREEPORT-McMoRan INC.

~~CONDENSED~~ CONSOLIDATED BALANCE SHEETS (Unaudited)


	September 30, 2015			December 31, 2014			September 30, 2016			December 31, 2015
	(In millions)						(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	338		$	464		$	1,108		$	195
Trade accounts receivable	626			953			788			660
Income and other tax receivables							865			1,341
Other accounts receivable	1,276			1,610			97			154
Inventories:
Materials and supplies, net	2,071			1,886			1,348			1,594
Mill and leach stockpiles	1,895			1,914			1,312			1,539
Product	1,379			1,561			1,025			1,071
Other current assets	570			657			299			164
Assets held for sale							4,663			744
Total current assets	8,155			9,045			11,505			7,462
Property, plant, equipment and mining development costs, net	27,355			26,220			23,415			24,246
Oil and gas properties, net - full cost method
Subject to amortization, less accumulated amortization	3,002			9,187
Subject to amortization, less accumulated amortization and impairment							979			2,262
Not subject to amortization	7,568			10,087			1,644			4,831
Long-term mill and leach stockpiles	2,326			2,179			1,723			1,663
Other assets	1,977			1,956			2,134			1,989
Assets held for sale							—			4,124
Total assets	$	50,383		$	58,674		$	41,400		$	46,577

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	3,445		$	3,653		$	2,347		$	3,255
Current portion of debt	906			478			802			649
Current portion of environmental and asset retirement obligations	336			296			357			272
Accrued income taxes	75			410			161			23
Dividends payable	65			335
Liabilities held for sale							821			108
Total current liabilities	4,827			5,172			4,488			4,307
Long-term debt, less current portion	19,792			18,371			18,180			19,779
Deferred income taxes	4,363			6,398			3,549			3,607
Environmental and asset retirement obligations, less current portion	3,708			3,647			3,725			3,717
Other liabilities	1,727			1,861			1,618			1,641
Liabilities held for sale							—			718
Total liabilities	34,417			35,449			31,560			33,769

Redeemable noncontrolling interest	761			751			774			764

Equity:
Stockholders’ equity:
Common stock	127			117			149			137
Capital in excess of par value	23,335			22,281			25,601			24,283
(Accumulated deficit) retained earnings	(8,305		)	128
Accumulated deficit							(16,832		)	(12,387		)
Accumulated other comprehensive loss	(509		)	(544		)	(476		)	(503		)
Common stock held in treasury	(3,702		)	(3,695		)	(3,710		)	(3,702		)
Total stockholders’ equity	10,946			18,287			4,732			7,828
Noncontrolling interests	4,259			4,187			4,334			4,216
Total equity	15,205			22,474			9,066			12,044
Total liabilities and equity	$	50,383		$	58,674		$	41,400		$	46,577

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

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FREEPORT-McMoRan INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2015			2014			2015			2014			2016			2015			2016			2015
	(In millions, except per share amounts)												(In millions, except per share amounts)
Revenues	$	3,681		$	5,696		$	12,082		$	16,203		$	3,877		$	3,382		$	10,453		$	11,091
Cost of sales:
Production and delivery	2,893			3,152			8,653			8,971			2,509			2,595			7,957			7,862
Depreciation, depletion and amortization	888			945			2,717			2,924			643			823			1,937			2,522
Impairment of oil and gas properties	3,652			308			9,442			308			239			3,652			4,317			9,442
Metals inventory adjustments													20			91			27			154
Total cost of sales	7,433			4,405			20,812			12,203			3,411			7,161			14,238			19,980
Selling, general and administrative expenses	124			158			429			457			110			122			408			421
Mining exploration and research expenses	32			29			101			93			13			26			46			83
Environmental obligations and shutdown costs	37			18			61			100
Environmental obligations and shutdown (credits) costs													(3		)	37			18			61
Net gain on sales of assets	—			(46		)	(39		)	(46		)	(13		)	—			(762		)	(39		)
Total costs and expenses	7,626			4,564			21,364			12,807			3,518			7,346			13,948			20,506
Operating (loss) income	(3,945		)	1,132			(9,282		)	3,396
Operating income (loss)													359			(3,964		)	(3,495		)	(9,415		)
Interest expense, net	(163		)	(158		)	(458		)	(483		)	(187		)	(157		)	(574		)	(438		)
Insurance and other third-party recoveries	—			—			92			—
Net gain on early extinguishment of debt	—			58			—			63			15			—			51			—
Other (expense) income, net	(40		)	23			(88		)	48			(10		)	(41		)	54			2
(Loss) income before income taxes and equity in affiliated companies' net losses	(4,148		)	1,055			(9,736		)	3,024
Income (loss) before income taxes and equity in affiliated companies' net earnings (losses)													177			(4,162		)	(3,964		)	(9,851		)
Benefit from (provision for) income taxes	360			(349		)	1,742			(1,034		)	114			349			(79		)	1,762
Equity in affiliated companies’ net losses	(2		)	(2		)	(1		)	—
Net (loss) income	(3,790		)	704			(7,995		)	1,990
Net income attributable to noncontrolling interests	(29		)	(142		)	(129		)	(416		)
Equity in affiliated companies’ net earnings (losses)													1			(2		)	9			(1		)
Net income (loss) from continuing operations													292			(3,815		)	(4,034		)	(8,090		)
Net (loss) income from discontinued operations													(6		)	25			(191		)	95
Net income (loss)													286			(3,790		)	(4,225		)	(7,995		)
Net income attributable to noncontrolling interests:
Continuing operations													(37		)	(13		)	(146		)	(61		)
Discontinued operations													(22		)	(16		)	(44		)	(68		)
Preferred dividends attributable to redeemable noncontrolling interest	(11		)	(10		)	(31		)	(30		)	(10		)	(11		)	(31		)	(31		)
Net (loss) income attributable to common stockholders	$	(3,830	)	$	552		$	(8,155	)	$	1,544
Net income (loss) attributable to common stockholders													$	217		$	(3,830	)	$	(4,446	)	$	(8,155	)

Net (loss) income per share attributable to common stockholders:
Basic	$	(3.58	)	$	0.53		$	(7.77	)	$	1.48
Diluted	$	(3.58	)	$	0.53		$	(7.77	)	$	1.47
Basic and diluted net income (loss) per share attributable to common stockholders:
Continuing operations													$	0.18		$	(3.59	)	$	(3.27	)	$	(7.80	)
Discontinued operations													(0.02		)	0.01			(0.18		)	0.03
													$	0.16		$	(3.58	)	$	(3.45	)	$	(7.77	)

Weighted-average common shares outstanding:
Basic	1,071			1,039			1,050			1,039			1,346			1,071			1,289			1,050
Diluted	1,071			1,046			1,050			1,045			1,351			1,071			1,289			1,050

Dividends declared per share of common stock	$	0.0500		$	0.3125		$	0.2605		$	0.9375		$	—		$	0.0500		$	—		$	0.2605

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

Table of Contents

FREEPORT-McMoRan INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) ~~INCOME~~ (Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2015			2014			2015			2014			2016			2015			2016			2015
	(In millions)												(In millions)
Net (loss) income	$	(3,790	)	$	704		$	(7,995	)	$	1,990
Net income (loss)													$	286		$	(3,790	)	$	(4,225	)	$	(7,995	)

Other comprehensive income, net of taxes:
Unrealized gains on securities													2			—			3			—
Defined benefit plans:
Amortization of unrecognized amounts included in net periodic benefit costs	8			5			24			12			11			8			34			24
Foreign exchange gains (losses)	7			2			12			(1		)
Foreign exchange (losses) gains													(1		)	7			(11		)	12
Other comprehensive income	15			7			36			11			12			15			26			36

Total comprehensive (loss) income	(3,775		)	711			(7,959		)	2,001
Total comprehensive income (loss)													298			(3,775		)	(4,199		)	(7,959		)
Total comprehensive income attributable to noncontrolling interests	(30		)	(142		)	(130		)	(416		)	(59		)	(30		)	(189		)	(130		)
Preferred dividends attributable to redeemable noncontrolling interest	(11		)	(10		)	(31		)	(30		)	(10		)	(11		)	(31		)	(31		)
Total comprehensive (loss) income attributable to common stockholders	$	(3,816	)	$	559		$	(8,120	)	$	1,555
Total comprehensive income (loss) attributable to common stockholders													$	229		$	(3,816	)	$	(4,419	)	$	(8,120	)

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

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FREEPORT-McMoRan INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Nine Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2016			2015
	(In millions)						(In millions)
Cash flow from operating activities:
Net (loss) income	$	(7,995	)	$	1,990
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Net loss							$	(4,225	)	$	(7,995	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, depletion and amortization	2,717			2,924			2,017			2,717
Impairment of oil and gas properties	9,442			308			4,317			9,442
Inventory adjustments	154			—
Non-cash oil and gas drillship settlements							606			—
Other asset impairments, inventory adjustments, restructuring and other							119			104
Metals inventory adjustments							27			154
Net gain on sales of assets	(39		)	(46		)	(762		)	(39		)
Net (gains) losses on crude oil and natural gas derivative contracts	(87		)	56
Net charges for environmental and asset retirement obligations, including accretion	174			146			149			174
Payments for environmental and asset retirement obligations	(135		)	(134		)	(190		)	(135		)
Net gain on early extinguishment of debt	—			(63		)	(51		)	—
Deferred income taxes	(1,926		)	107			(22		)	(1,926		)
Estimated loss on disposal of discontinued operations							182			—
Increase in long-term mill and leach stockpiles	(183		)	(182		)	(84		)	(183		)
Net gains on crude oil derivative contracts							—			(87		)
Other, net	144			106			48			40
Changes in working capital and other tax payments, excluding amounts from acquisitions and dispositions:
Changes in working capital and other tax payments, excluding amounts from dispositions:
Accounts receivable	990			200			257			990
Inventories	83			(267		)	251			83
Other current assets	(13		)	(26		)	(120		)	(13		)
Accounts payable and accrued liabilities	(150		)	(379		)	(80		)	(150		)
Accrued income taxes and changes in other tax payments	(568		)	(227		)	155			(568		)
Net cash provided by operating activities	2,608			4,513			2,594			2,608

Cash flow from investing activities:
Capital expenditures:
North America copper mines	(308		)	(815		)	(87		)	(308		)
South America	(1,339		)	(1,278		)	(332		)	(1,339		)
Indonesia	(660		)	(722		)	(715		)	(660		)
Africa	(166		)	(100		)
Molybdenum mines	(10		)	(45		)	(2		)	(10		)
United States oil and gas operations	(2,430		)	(2,392		)	(1,028		)	(2,430		)
Other	(142		)	(63		)	(145		)	(308		)
Acquisitions of Deepwater Gulf of Mexico interests	—			(1,421		)
Net proceeds from sale of Eagle Ford shale assets	—			2,971
Net proceeds from sale of additional interest in Morenci							996			—
Net proceeds from sales of other assets							410			151
Other, net	114			221			9			(37		)
Net cash used in investing activities	(4,941		)	(3,644		)	(894		)	(4,941		)

Cash flow from financing activities:
Proceeds from debt	6,552			3,346			3,463			6,552
Repayments of debt	(4,693		)	(4,196		)	(4,539		)	(4,693		)
Net proceeds from sale of common stock	999			—			442			999
Cash dividends and distributions paid:
Common stock	(547		)	(979		)	(5		)	(547		)
Noncontrolling interests	(89		)	(365		)	(87		)	(89		)
Stock-based awards net (payments) proceeds, including excess tax benefit	(8		)	7
Stock-based awards net payments, including excess tax benefit							(5		)	(8		)
Debt financing costs and other, net	(7		)	(9		)	(17		)	(7		)
Net cash provided by (used in) financing activities	2,207			(2,196		)
Net cash (used in) provided by financing activities							(748		)	2,207

Net decrease in cash and cash equivalents	(126		)	(1,327		)
Net increase (decrease) in cash and cash equivalents							952			(126		)
(Increase) decrease in cash and cash equivalents in assets held for sale							(39		)	42
Cash and cash equivalents at beginning of year	464			1,985			195			317
Cash and cash equivalents at end of period	$	338		$	658		$	1,108		$	233

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

Table of Contents

FREEPORT-McMoRan INC.

CONSOLIDATED STATEMENT OF EQUITY (Unaudited)

Stockholders’ 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

(In millions)
Balance at December 31, 2014 1,167
$ 117
$ 22,281
$ 128
$ (544 ) 128
$ (3,695 ) $ 18,287
$ 4,187
$ 22,474
Sale of common stock 98
10
989
—
—
—
—
999
—
999
Exercised and issued stock-based awards 1
—
3
—
—
—
—
3
—
3
Stock-based compensation —
—
70
—
—
—
—
70
7
77
Reserve of tax benefit for stock-based awards —
—
(4 ) —
—
—
—
(4 ) —
(4 )
Tender of shares for stock-based awards —
—
—
—
—
—
(7 ) (7 ) —
(7 )
Dividends on common stock —
—
—
(278 ) —
—
—
(278 ) —
(278 )
Dividends to noncontrolling interests —
—
—
—
—
—
—
—
(68 ) (68 )
Noncontrolling interests' share of contributed capital in subsidiary —
—
(4 ) —
—
—
—
(4 ) 3
(1 )
Net loss attributable to common stockholders —
—
—
(8,155 ) —
—
—
(8,155 ) —
(8,155 )
Net income attributable to noncontrolling interests —
—
—
—
—
—
—
—
129
129
Other comprehensive income —
—
—
—
35
—
—
35
1
36
Balance at September 30, 2015 1,266
$ 127
$ 23,335
$ (8,305 ) $ (509 ) 128
$ (3,702 ) $ 10,946
$ 4,259
$ 15,205



	Stockholders’ Equity
	Common Stock						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
	(In millions)
Balance at December 31, 2015	1,374	$	137	$	24,283		$	(12,387	)	$	(503	)	128	$	(3,702	)	$	7,828		$	4,216		$	12,044
Issuance of common stock	114	12		1,285			—			—			—	(3		)	1,294			—			1,294
Exercised and issued stock-based awards	3	—		—			—			—			—	—			—			—			—
Stock-based compensation	—	—		37			—			—			—	—			37			—			37
Reserve on tax benefit for stock-based awards	—	—		(4		)	—			—			—	—			(4		)	—			(4		)
Tender of shares for stock-based awards	—	—		—			—			—			1	(5		)	(5		)	—			(5		)
Dividends on common stock	—	—		—			1			—			—	—			1			—			1
Dividends to noncontrolling interests	—	—		—			—			—			—	—			—			(66		)	(66		)
Changes in noncontrolling interests	—	—		—			—			—			—	—			—			(5		)	(5		)
Net loss attributable to common stockholders	—	—		—			(4,446		)	—			—	—			(4,446		)	—			(4,446		)
Net income attributable to noncontrolling interests, including discontinued operations	—	—		��			—			—			—	—			—			190			190
Other comprehensive income (loss)	—	—		—			—			27			—	—			27			(1		)	26
Balance at September 30, 2016	1,491	$	149	$	25,601		$	(16,832	)	$	(476	)	129	$	(3,710	)	$	4,732		$	4,334		$	9,066

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.~~2015, as recast in the Form 8-K filed on November 9, 2016, for the presentation of TF Holdings Limited (TFHL) as discontinued operations. 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 accounting for discontinued operations, and the oil and gas properties impairment discussed below and the related tax charges to establish a deferred tax valuation allowance (refer to Note 5), ~~the Tyrone mine impairment and special retirement benefits and restructuring charges discussed below, and adjustments to inventories (refer to Note 4),~~ all such adjustments are, in the opinion of management, of a normal recurring nature. As a result of FCX's second-quarter 2016 agreement to sell its interest in TFHL, FCX has reported TFHL as discontinued operations for all periods presented in the unaudited consolidated financial statements (refer to Note 2). Operating results for the ~~quarter and nine months~~nine-month period ended September 30, ~~2015~~2016, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2015~~2016.

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 in the full cost pool for impairment 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 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 September 30, 2015, and~~In addition, following the evaluation of alternatives for the ~~previous two quarters of 2015, net capitalized costs with respect to FCX's proved~~ oil and gas business and the then-current limitations and cost of capital available for future drilling, FCX Oil & Gas LLC (FM O&G, a wholly owned subsidiary of FCX formerly known as FCX Oil & Gas Inc.) determined in first-quarter 2016 that the carrying values of certain of its unevaluated properties were impaired. For the first nine months of 2016, FM O&G transferred $3.2 billion of costs (including $3.1 billion in first-quarter 2016) associated with unevaluated properties to the full cost pool, mostly reflecting impairment of the carrying values of unevaluated properties. Combined with the impact of the reduction in twelve-month historical prices and reserve revisions, net capitalized costs exceeded the related ceiling test ~~limitation; therefore,~~limitation under full cost accounting rules, which resulted in the recognition of a $239 million impairment ~~charges of $3.7 billion~~charge in third-quarter ~~2015~~2016 and ~~$9.4~~$4.3 billion for the first nine months of 2015 were recorded, primarily because of the lower twelve-month average of the first-day-of-the-month historical reference oil price and additional capitalized costs. 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.2016. The twelve-month average price (using WTI as the reference oil price) was ~~$59.21~~$41.68 per barrel at September 30, ~~2015,~~2016, compared with ~~$71.68~~$43.12 per barrel at June 30, ~~2015.~~2016.

FCX periodically (and at least annually) assesses the carrying value of its unevaluated properties to determine whether impairment has occurred. Following a review of the carrying values of unevaluated properties during third-quarter 2015, FCX determined that the carrying value of its unevaluated properties in the onshore California area was impaired, primarily resulting from declines in oil prices. As a result, $837 million of costs were transferred to the full cost pool, which was included in the September 30, 2015, ceiling test discussed above.

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NOTE 2. DISPOSITIONS

~~The fair value estimates~~Timok.On May 2, 2016, Freeport Minerals Corporation (FMC), a wholly owned subsidiary of FCX, sold an interest in the Timok exploration project in Serbia to Reservoir Minerals Inc. for consideration of $135 million in cash and contingent consideration of up to $107 million payable to FCX in stages upon achievement of defined development milestones (no amounts are recorded for the ~~unevaluated properties in the onshore California area were based on expected future cash flows based on estimated crude oil and natural gas forward prices~~contingent consideration as of September 30, ~~2015; risk adjusted probable and possible reserve quantities; costs to produce and develop reserves; and appropriate discount rates. Crude oil prices and FCX's estimates~~2016). As a result of ~~oil reserves at September 30, 2015, represented the most significant assumptions used~~this transaction, FCX recorded a gain of $133 million in ~~the evaluation of the carrying value of these unevaluated properties.~~second-quarter 2016.

Morenci. On May 31, 2016, FCX sold a 13 percent undivided interest in its Morenci unincorporated joint venture to Sumitomo Metal Mining ~~Operations.~~ ~~Because of~~Co., Ltd. (SMM) for $1.0 billion in cash. FCX recorded a $576 million gain on the ~~recent decline in commodity prices, FCX made adjustments~~transaction and used losses to ~~its operating plans for its mining operations in third-quarter 2015. Although FCX’s long-term strategy of developing its mining resources~~offset cash taxes on the transaction. Proceeds from the transaction were used to ~~their full potential remains in place, the decline in copper~~repay borrowings under FCX's unsecured bank term loan (Term Loan) and molybdenum prices has limited FCX’s ability to invest in growth projects and caused FCX to make adjustments to its near-term plans. FCX responded to the decline in commodity prices by revising its near-term strategy to protect liquidity while preserving its mineral resources and growth options for the longer term. Accordingly, operating plans were revised primarily to reflect: (a) suspension of mining operations at the Miami mine in Arizona; (b) a 50 percent reduction in mining rates at the Tyrone mine in New Mexico; (c) adjustments to mining rates at other North America copper mines; (d) an approximate 50 percent reduction in mining and stacking rates at the El Abra mine in Chile; (e) a 35 percent reduction in molybdenum production volumes at the Henderson primary molybdenum mine in Colorado; (f) capital cost reductions, including project deferrals associated with future development and expansion opportunities at the Tenke Fungurume minerals district in the Democratic Republic of Congo in Africa; and (g) reductions in operating, administrative and exploration costs, including workforce reductions.revolving credit facility.

~~During October 2015,~~The Morenci unincorporated joint venture was owned 85 percent by FCX ~~initiated a plan to reduce operating rates at its Sierrita mine in~~and 15 percent by Sumitomo Metal Mining Arizona in response to low copper and molybdenum prices. Initially, the plan involves operating the Sierrita mine at 50 percent of its current operating rate. FCX is also evaluating the economics of a full shutdown.

In connection with the decline in copper and molybdenum prices and the revised operating plans discussed above, FCX evaluated its long-lived assets, other than indefinite-lived intangible assets, for impairment as of September 30, 2015. Indefinite-lived intangible assets are evaluated annually as of December 31. FCX’s long-lived asset impairment evaluations required FCX to make several assumptions in determining estimates of future cash flows of its individual mining operations, including: near- and long-term metal price assumptions; estimates of commodity-based and other input costs; proven and probable mineral reserves estimates, including the timing and costs to develop and produce the reserves; and the use of appropriate current escalation and discount rates. Projected long-term average metal prices represented the most significant assumption used in the cash flow estimates.

FCX’s evaluation of long-lived assets (other than indefinite-lived intangible assets) resulted in the recognition of a charge to production costs for the impairment of the Tyrone mine totaling $59 million in third-quarter 2015.Inc. (Sumitomo). As a result of the ~~third-quarter 2015 revisions to its operating plans,~~transaction, the unincorporated joint venture is owned 72 percent by FCX, ~~also recorded charges to production costs of $36 million in third-quarter 2015 related to special retirement benefits~~15 percent by Sumitomo and ~~restructuring charges, primarily for employee severance and benefit costs. Refer to Note 10 for long-lived asset impairments and restructuring charges~~13 percent by ~~business segment.~~an affiliate that is wholly owned by SMM.

~~NOTE 2. ACQUISITIONS AND DISPOSITIONS~~

~~Eagle Ford Disposition.~~ Oil and Gas Operations.On June ~~20, 2014, FCX completed the sale of its Eagle Ford shale assets~~17, 2016, FM O&G sold certain oil and gas royalty interests to ~~a subsidiary of Encana Corporation~~Black Stone Minerals, L.P. for cash consideration of ~~$3.1 billion,~~$102 million, before closing ~~adjustments from~~adjustments. In addition, on July 25, 2016, FM O&G sold its Haynesville shale assets for cash consideration of $87 million, before closing adjustments. Under the ~~April 1, 2014, effective date. Under~~ full cost accounting rules, the proceeds from these transactions were recorded as a reduction of capitalized oil and gas properties, with no gain or loss ~~recognition, except for $62 million of deferred tax expense recorded through~~recognition.

On September ~~30, 2014, in connection with the allocation of $221 million of goodwill (for which deferred taxes were not previously provided)~~12, 2016, FM O&G entered into an agreement 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~~sell its Deepwater Gulf of Mexico (GOM) ~~oil~~properties to Anadarko Petroleum Corporation (Anadarko) for cash consideration of $2.0 billion (before closing adjustments) and ~~gas interests,~~up to $150 million in contingent payments. The contingent payments would be received over time as Anadarko realizes future cash flows in connection with FM O&G’s third-party production handling agreement for the Marlin platform. Anadarko will assume future abandonment obligations associated with these properties. The transaction has an effective date of August 1, 2016, and is expected to close in fourth-quarter 2016, subject to customary closing conditions. Under the full cost accounting rules, this transaction will require gain (loss) recognition because of its significance to the full cost pool, but the amount is not expected to be material. In accordance with the mandatory prepayment provisions of FCX's Term Loan, one half of the proceeds from this transaction must be applied toward repaying FCX's Term Loan.

In connection with the sale of the Deepwater GOM properties, FM O&G entered into an agreement to amend the terms of the Plains Offshore Operations Inc. (Plains Offshore, a subsidiary of FM O&G) preferred stock that is reported as redeemable noncontrolling interest on FCX's consolidated balance sheets. The amendment provides FM O&G the right to call these securities any time between September 12, 2016, and January 10, 2017, for $582 million. FM O&G expects to exercise this option at the time the Deepwater GOM sale closes. If the option is not exercised, the terms will revert to the original purchase agreement 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~~2015, as recast in the Form 8-K filed on November 9, 2016. No other terms of the Plains Offshore preferred stock were ~~used to repay debt.~~changed by this amendment.

On October 14, 2016, FM O&G entered into an agreement to sell its onshore California oil and gas properties to Sentinel Peak Resources California LLC (Sentinel) for cash consideration of $592 million (before closing adjustments) and contingent consideration of up to $150 million, consisting of $50 million per year for 2018, 2019 and 2020 if the price of Brent crude oil averages $70 per barrel or higher in each of these calendar years. Sentinel will assume future abandonment obligations associated with the properties. The transaction has an effective date of July 1, 2016, and is expected to close in fourth-quarter 2016, subject to customary closing conditions. Under the full cost accounting rules, this transaction will require gain (loss) recognition because of its significance to the full cost pool, but the amount is not expected to be material. In accordance with the mandatory prepayment provisions of FCX's Term Loan, one half of the proceeds from this transaction must be applied toward repaying FCX's Term Loan.

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~~Deepwater GOM Acquisitions.~~ ~~On June 30, 2014, FCX completed~~As part of the ~~acquisition of interests in~~terms to sell 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~~onshore California oil and gas properties, FM O&G entered into derivative contracts during October 2016 for a portion of the projected sales of oil from the properties and projected purchases of natural gas. Sentinel will assume these contracts upon completion of the sale. These derivative contracts consist of crude oil swaps and costless collars, and natural gas swaps, none of which were designated as hedges for accounting purposes. The derivatives will be recorded at fair value with the mark-to-market gains and losses recorded in revenues (oil contracts) and production costs (natural gas contracts).

As of October 31, 2016, FM O&G had hedged (i) approximately 72 percent of its forecasted crude oil sales through 2020 with fixed-rate swaps for 19.4 million barrels from November 2016 through December 2020 at a price of $56.04 per barrel and costless collars for 5.2 million barrels from January 2018 through December 2020 at a put price of $50.00 per barrel and a call price of $63.69 per barrel, and (ii) approximately 48 percent of its forecasted natural gas purchases through 2020 with fixed-rate swaps for 28.9 million British thermal units (MMBtu) from November 2016 through December 2020 at a price of $3.1445 per MMBtu related to its onshore California properties that are being sold to Sentinel.

TF Holdings Limited - Discontinued Operations.On May 9, 2016, FCX entered into a definitive agreement to sell its 70 percent interest in TFHL to China Molybdenum Co., Ltd. (CMOC) for $2.65 billion in cash and contingent consideration of up to $120 million in cash, consisting of $60 million if the average copper price exceeds $3.50 per pound and $60 million if the average cobalt price exceeds $20 per pound, both during calendar years 2018 and 2019 (no amounts were recorded for the contingent consideration as of September 30, 2016). Through its interest in TFHL, FCX has an effective 56 percent interest in Tenke Fungurume Mining S.A. (TFM or Tenke) located in the Democratic Republic of Congo (DRC). The closing of the transaction is currently subject to ~~amortization~~customary closing conditions, including the resolution of the right of first offer (which expires on November 15, 2016) of Lundin Mining Corporation (which holds a 30 percent interest in TFHL), and ~~$477 million for costs not subject~~the parties are working towards a satisfactory resolution in order to ~~amortization, including~~complete the transaction ~~costs and $10 million of asset retirement costs). The Deepwater GOM acquisition was funded~~in fourth-quarter 2016. In addition, La Générale des Carrières et des Mines (Gécamines), which is wholly owned by the ~~like-kind exchange escrow.~~DRC government and holds a 20 percent non-dilutable interest in TFM, recently filed an arbitration proceeding with the International Chamber of Commerce (ICC) International Court of Arbitration challenging the transaction; however, FCX believes that Gécamines’ claims have no legal basis. In accordance with the mandatory prepayment provisions of FCX's Term Loan, one half of the proceeds from this transaction will be applied toward repaying FCX's Term Loan.

~~On September 8, 2014,~~In accordance with accounting guidance, FCX ~~completed~~has reported the ~~acquisition~~results of ~~additional Deepwater GOM~~operations of TFHL as discontinued operations in the consolidated statements of operations and presented the assets and liabilities of TFHL as held for sale in the consolidated balance sheets for all periods presented. The consolidated statements of comprehensive income (loss) were not impacted by discontinued operations as TFHL did not have any other comprehensive income (loss), and the consolidated statements of cash flows are reported on a combined basis without separately presenting discontinued operations.

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The carrying amounts of TFHL's major classes of assets, liabilities and noncontrolling interests, which are presented as held for ~~$496 million ($509 million for oil and gas properties not subject~~sale in the consolidated balance sheets, follow (in millions):



	September 30, 2016			December 31, 2015
Assets
Cash and cash equivalents	$	68		$	29
Inventories	1,129			584
Receivables and other current assets	140			131
Property, plant, equipment and mining development costs, net	3,062			—
Other assets	250			—
Total current assets held for sale	$	4,649	^a	$	744

Property, plant, equipment and mining development costs, net	$	—		$	3,261
Inventories	—			608
Other assets	—			241
Total long-term assets held for sale	$	—		$	4,110	^a

Liabilities
Accounts payable and accrued liabilities	$	84		$	108
Deferred income taxes	691			—
Asset retirement obligations and other liabilities	46			—
Total current liabilities held for sale	$	821		$	108

Deferred income taxes	$	—		$	681
Asset retirement obligations and other liabilities	—			37
Total long-term liabilities held for sale	$	—		$	718

Noncontrolling interests	$	1,192		$	1,178


a.	Amount differs from the totals on FCX's consolidated balance sheets because of other assets held for sale.

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Net (loss) income from discontinued operations in the consolidated statements of operations consists of the following (in millions):



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016				2015		2016				2015
Revenues^a	$	261			$	299	$	819			$	991
Costs and expenses:
Production and delivery costs	248				207		730				637
Depreciation, depletion and amortization	—			^b	65		80			^b	195
Interest expense allocated from parent^c	12				6		33				20
Other costs and expenses, net	4				7		10				24
(Loss) income before income taxes and estimated loss on disposal	(3		)		14		(34		)		115
Estimated loss on disposal^d	(5		)		—		(182		)		—
Net (loss) income before income taxes	(8		)		14		(216		)		115
Benefit from (provision for) income taxes	2				11		25				(20		)
Net (loss) income from discontinued operations	$	(6	)		$	25	$	(191	)		$	95


a.	In accordance with accounting guidance, amounts are net of eliminations of intercompany sales totaling $53 million in third-quarter 2016, $29 million in third-quarter 2015, $125 million for the first nine months of 2016 and $98 million for the first nine months of 2015.


b.	In accordance with accounting guidance, depreciation, depletion and amortization is not recognized subsequent to classification as assets held for sale.


c.	In accordance with accounting guidance, interest associated with FCX's Term Loan that will be required to be repaid as a result of the sale of TFHL has been allocated to discontinued operations.


d.	In accordance with accounting guidance, an estimated loss on disposal was recorded, which will be adjusted through closing of the transaction.

Cash flows from discontinued operations included in the consolidated statements of cash flows follow (in millions):



	Nine Months Ended
	September 30,
	2016			2015
Net cash provided by operating activities	$	213		$	186
Net cash used in investing activities	(71		)	(173		)
Net cash used in financing activities	(103		)	(55		)
Increase (decrease) in cash and cash equivalents in assets held for sale	$	39		$	(42	)

FCX has also agreed to ~~amortization, including purchase price adjustments and transaction costs), including an~~negotiate exclusively with CMOC (until December 31, 2016) to enter into a definitive agreement to sell its interest in Freeport Cobalt for $100 million and the ~~Vito oil discovery~~Kisanfu exploration project in the ~~Mississippi Canyon area~~DRC for $50 million in separate transactions. Freeport Cobalt includes the large-scale cobalt refinery in Kokkola, Finland, and the related sales and marketing business, in which FCX owns an effective 56 percent interest. Kisanfu is a ~~significant lease position~~copper and cobalt exploration project, located near Tenke, in ~~the Vito basin area. This acquisition was funded in part with the remaining $414 million of funds from the like-kind exchange escrow.~~which FCX holds a 100 percent interest.

NOTE 3. EARNINGS PER SHARE

FCX’s basic net income (loss) ~~income~~ per share ofattributable to common ~~stock~~stockholders was computed by dividing net income (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 income (loss) ~~income~~ and weighted-average shares of common stock outstanding for purposes of calculating basic and diluted net income (loss) ~~income~~ per share follows (in millions, except per share amounts):

Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
Net (loss) income $ (3,790 ) $ 704
$ (7,995 ) $ 1,990

Net income attributable to noncontrolling interests (29 ) (142 ) (129 ) (416 )
Preferred dividends on redeemable noncontrolling interest (11 ) (10 ) (31 ) (30 )
Undistributed earnings allocable to participating securities (3 ) (2 ) (3 ) (4 )
Net (loss) income allocable to common stockholders $ (3,833 ) $ 550
$ (8,158 ) $ 1,540

Basic weighted-average shares of common stock outstanding 1,071
1,039
1,050
1,039

Add shares issuable upon exercise or vesting of dilutive stock options and RSUs —
^a
7
^a
—
^a
6
^a
Diluted weighted-average shares of common stock outstanding 1,071
1,046
1,050
1,045

Basic net (loss) income per share attributable to common stockholders $ (3.58 ) $ 0.53
$ (7.77 ) $ 1.48

Diluted net (loss) income per share attributable to common stockholders $ (3.58 ) $ 0.53
$ (7.77 ) $ 1.47



	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2016				2015				2016				2015
Net income (loss) from continuing operations	$	292			$	(3,815	)		$	(4,034	)		$	(8,090	)
Net income from continuing operations attributable to noncontrolling interests	(37		)		(13		)		(146		)		(61		)
Preferred dividends on redeemable noncontrolling interest	(10		)		(11		)		(31		)		(31		)
Undistributed earnings allocated to participating securities	(3		)		(3		)		(3		)		(3		)
Net income (loss) from continuing operations attributable to common stockholders	$	242			$	(3,842	)		$	(4,214	)		$	(8,185	)

Net (loss) income from discontinued operations	$	(6	)		$	25			$	(191	)		$	95
Net income from discontinued operations attributable to noncontrolling interests	(22		)		(16		)		(44		)		(68		)
Net (loss) income from discontinued operations attributable to common stockholders	$	(28	)		$	9			$	(235	)		$	27


Net income (loss) attributable to common stockholders	$	214			$	(3,833	)		$	(4,449	)		$	(8,158	)


Basic weighted-average shares of common stock outstanding	1,346				1,071				1,289				1,050
Add shares issuable upon exercise or vesting of dilutive stock options and RSUs	5			^a	—			^a	—			^a	—			^a
Diluted weighted-average shares of common stock outstanding	1,351				1,071				1,289				1,050


Basic and diluted net income (loss) per share attributable to common stockholders:
Continuing operations	$	0.18			$	(3.59	)		$	(3.27	)		$	(7.80	)
Discontinued operations	(0.02		)		0.01				(0.18		)		0.03
	$	0.16			$	(3.58	)		$	(3.45	)		$	(7.77	)

Excludes ~~approximately 7~~6 million shares of common stock ~~for~~in third-quarter 2016, 7 million in third-quarter 2015, 512 million for ~~third-quarter 2014,~~the first nine months of 2016 and 10 million for the first nine months ~~ended September 30,~~of 2015 ~~and 3 millionfor the nine months ended September 30, 2014,~~ associated with outstanding stock options with exercise prices less than the average market price of FCX's common stock and RSUs 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~~Stock options ~~totaled~~for 4846 million shares of common stock were excluded for both the third quarter and first nine months of 2016, 48 million in third-quarter 2015 ~~25 million for third-quarter 2014~~, and 45 million for the first nine months ~~ended September 30, 2015, and 28 million for the nine months ended September 30, 2014.~~of 2015.

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

The components of inventories follow (in millions):


	September 30, 2015		December 31, 2014		September 30, 2016		December 31, 2015
Current inventories:
Total materials and supplies, net^a	$	2,071	$	1,886	$	1,348	$	1,594

Mill stockpiles	$	118	$	86	$	172	$	137
Leach stockpiles	1,777		1,828		1,140		1,402
Total current mill and leach stockpiles	$	1,895	$	1,914	$	1,312	$	1,539

Raw materials (primarily concentrates)	$	281	$	288
Raw materials (primarily concentrate)					$	209	$	220
Work-in-process	102		174		94		108
Finished goods	996		1,099		722		743
Total product inventories	$	1,379	$	1,561	$	1,025	$	1,071

Long-term inventories:
Mill stockpiles	$	444	$	360	$	580	$	480
Leach stockpiles	1,882		1,819		1,143		1,183
Total long-term mill and leach stockpiles^b	$	2,326	$	2,179	$	1,723	$	1,663


a.	Materials and supplies inventory was net of obsolescence reserves totaling ~~$26~~$31 million at September 30, ~~2015~~2016, and ~~$20~~$26 million at December 31, ~~2014~~2015.


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

Beginning in third-quarter 2015, FCX adopted new accounting guidance for the subsequent measurement of inventories (refer to Note 12), which resulted in a change in accounting principle, whereby inventories are stated at the lower of weighted-average cost or net realizable value. Prior to third-quarter 2015, FCX's inventories were stated at the lower of weighted-average cost or market.

FCX recorded charges ~~to production costs~~ for adjustments to metals inventory carrying values of ~~$91~~$20 million ~~($37~~in third-quarter 2016 and $27 million ~~for molybdenum inventories and $54 million for copper inventories) for third-quarter 2015 and $154 million ($89 million for molybdenum inventories and $65 million for copper inventories)~~ for the first nine months of 2016, primarily for molybdenum because of lower molybdenum prices and higher average inventory costs, and $91 million in third-quarter 2015, and $154 million for the first nine months of 2015, primarily because of lower molybdenum and copper prices (refer to Note 10 for 2015 inventory adjustments by business segment).

NOTE 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 (2) percent for the first nine months of 2016 and 18 percent for the first nine months of ~~2015 and 34 percent for the first nine monthsof 2014.~~2015. Geographic sources of FCX's benefit from (provision for) income taxes follow (in millions):



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
U.S. operations	$	331		$	356		$	293		$	2,020
International operations	(217		)	(7		)	(372		)	(258		)
Total	$	114		$	349		$	(79	)	$	1,762

As a result of the impairment to U.S. oil and gas properties, FCX recorded tax charges of $1.6 billion for the first nine months of 2016 and $2.0 billion for the first nine months of 2015 to establish a valuation allowance primarily against U.S. federal and state deferred tax assets that will not generate a future benefit. In addition, FCX recorded net tax credits of $290 million for the first nine months of 2016 associated with alternative minimum tax credits, changes to valuation allowances and net operating loss carryback claims. Excluding these net charges, FCX's consolidated effective income tax rate was 32 percent for the first nine months of 2016 and 37 percent for the first nine months of 2015.

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As of December 31, 2015, FCX had determined that undistributed earnings of TFM were reinvested indefinitely and were allocated toward specifically identifiable needs of the local operations. In connection with the announced sale of its interest in TFHL, management concluded that its share of undistributed earnings of TFM were no longer reinvested indefinitely. This change did not have a material impact on FCX's results of operations.

Applicable accounting standards require that FCX estimate an annual effective tax rate and apply that rate to each year-to-date interim period. However, because FCX’s estimated effective income tax rate for 2016 is highly variable (i.e., minor changes in FCX’s estimated annual (loss) income would have a significant effect on the consolidated annual effective income tax rate), the actual effective income tax rate for the year-to-date reporting period represents a better estimate of the consolidated annual effective income tax rate. Accordingly, for the nine months ended September 30, 2016, the actual consolidated effective income tax rate was used to determine FCX’s income tax provision.

NOTE 6. DEBT AND EQUITY

Debt. The components of debt follow (in millions):

Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
U.S. operations $ 309
^a
$ (38 ) $ 2,020
^a
$ (323 )
^b
International operations 51
(311 )
^c
(278 ) (711 )
^c
Total $ 360
$ (349 ) $ 1,742
$ (1,034 )



	September 30, 2016			December 31, 2015
Term Loan	$	2,448		$	3,032
Revolving credit facility	—			—
Cerro Verde credit facility	1,612			1,781
Cerro Verde shareholder loans	261			259
Lines of credit	129			442
Senior notes and debentures:
Issued by FCX	11,552			11,908
Issued by Freeport-McMoRan Oil & Gas LLC (FM O&G LLC)	2,517			2,539
Issued by FMC	359			359
Other (including equipment capital leases and other short-term borrowings)	104			108
Total debt^a	18,982			20,428
Less current portion of debt	(802		)	(649		)
Long-term debt	$	18,180		$	19,779

~~As a result of the impairment to U.S. oil~~Includes additions for unamortized fair value adjustments totaling $187 million at September 30, 2016, and ~~gas properties, FCX recorded tax charges of $1.2 billion for third-quarter~~$210 million at December 31, 2015, and ~~$2.0 billion~~net reductions for ~~the first nine months~~unamortized debt issuance costs and unamortized discounts of ~~2015 to establish a valuation allowance primarily against U.S. federal alternative minimum tax credits~~$111 million at September 30, 2016, and ~~foreign tax credits, partly offset by a tax benefit of $56~~$129 million ~~related to the impairment of the Morocco oil and gas properties. Excluding these charges, FCX's consolidated effective income tax rate was 38 percent for the first nine months of~~at December 31, 2015.


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

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

On February 26, 2016, FCX amended its revolving credit facility and Term Loan. The amendments included (i) modification of the maximum leverage ratio and the minimum interest expense coverage ratio, and (ii) the addition of a springing collateral and guarantee trigger. In addition, the commitment under the revolving credit facility was reduced from $4.0 billion to $3.5 billion, and the mandatory prepayment provision was modified under the Term Loan, which requires one-half of proceeds from asset sales to be applied toward repaying the Term Loan. Refer to Note 18 of FCX's annual report on Form 10-K for the year ended December 31, 2015, as recast in the Form 8-K filed on November 9, 2016, for further discussion of these amendments.

In second-quarter 2016, FCX prepaid $568 million on the Term Loan with a portion of the proceeds from the sale of the 13 percent undivided interest in Morenci and the interest in the Timok exploration project.

With closed and pending asset sales exceeding the required $3 billion threshold under FCX's revolving credit facility and Term Loan as of June 30, 2016, the springing collateral requirement under these agreements was not triggered on that date. Since the closing of the transactions necessary to reach the $3 billion threshold is not expected to occur until fourth-quarter 2016, FCX was required to pledge its shares in FMC on June 30, 2016, which will be released upon closing of transactions necessary to reach the required threshold. If the required $3 billion threshold for asset sale closings has not been reached by December 31, 2016, the springing collateral requirement will be triggered.

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During third-quarter 2015, PT Freeport Indonesia's (PT-FI) Delaware domestication was terminated. As a result, PT-FI will no longer be a U.S. income tax filer, and tax attributes related to PT-FI, which currently are fully reserved with a related valuation allowance, will no longer be available for use within FCX's U.S. federal consolidated income tax return. PT-FI remains a limited liability company organized under Indonesian law.

~~NOTE 6. DEBT AND EQUITY TRANSACTIONS~~

~~Debt Transactions.~~ ~~At September 30, 2015, FCX had $20.7 billion in debt, which included additions for unamortized fair value adjustments of~~ ~~$218 million~~ ~~(primarily from the oil and gas acquisitions in 2013), and is net of reductions attributable to unamortized net discounts of~~ ~~$20 million~~ ~~and unamortized debt issuance costs of~~ ~~$111 million. Refer to Note 12 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 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 September 30, ~~2015,~~ ~~$458 million~~ ~~was~~2016, there were no borrowings outstanding and $4243 million ofin letters of credit ~~were~~ issued under FCX's revolving credit facility, resulting in availability of approximately $3.5 billion, of which approximately $1.5 billion could be used for additional letters of credit.

~~At September 30, 2015, $1.5 billion was outstanding~~Early Extinguishment of Debt

During the second and ~~no letters~~third quarters of ~~credit were issued~~2016, FCX redeemed certain senior notes in exchange for its common stock (refer to the discussion under ~~Sociedad Minera Cerro Verde S.A.A.'s (Cerro Verde, FCX's mining subsidiary~~"Equity" in ~~Peru) credit facility, resulting in availability~~this note). A summary of ~~$301 million. Cerro Verde's five-year, $1.8 billion senior unsecured credit facility is nonrecourse to FCX and the other shareholders of Cerro Verde.~~these debt extinguishments follows (in millions):



	Principal Amount		Discounts/Deferred Debt Issuance Costs		Book Value		Redemption Value		Gain
3.55% Senior Notes due 2022	$	108	$	1	$	107	$	96	$	11
3.875% Senior Notes due 2023	77		—		77		68		9
5.40% Senior Notes due 2034	50		1		49		41		8
5.450% Senior Notes due 2043	134		2		132		106		26
Total	$	369	$	4	$	365	$	311	$	54

In December 2014, Cerro Verde entered into a loan agreement with its shareholders for borrowings up to $800 million. Cerro Verde can designate all or a portion of the shareholder loans as subordinated. If the loans are not designated as subordinated, they bear interest at the ~~London Interbank Offered Rate plus the current spread on Cerro Verde’s senior unsecured committed credit facility~~. If they are designated as subordinated, they bear interest at the same rate plus 0.5 percent. The loans mature on December 22, 2019, unless at that time there is senior financing associated with the Cerro Verde expansion project that is senior to the shareholder loans, in which case the shareholder loans mature two years following the maturity of the senior financing. During third-quarter 2015, Cerro Verde borrowed $100 million under these shareholder loans (which included $57 million from Freeport Minerals Corporation, a wholly owned subsidiary of FCX), and this amount remained outstanding as of September 30, 2015.

~~In July 2014, FCX redeemed $1.7 billion~~of the aggregate principal amount of FCX Oil & Gas Inc.'s (FM O&G, FCX's oil and gas subsidiary) outstanding senior notes, which included $263 million for the 6.125% Senior Notes due 2019, $525 million for the 6½% Senior Notes due 2020, $350 million for the 6.75% Senior Notes due 2022 and $525 million for the 6⅞% Senior Notes due 2023. At the redemption date, these senior notes had an aggregate book value of $1.8 billion, which included purchase accounting fair value adjustments of $167 million. Holders of these senior notes received the principal amount together with the redemption premium and accrued and unpaid interest to the redemption date. As a result of these redemptions,addition, FCX recorded a ~~gain~~loss on early extinguishment of debt ~~of $58~~totaling $3 million associated with the modifications to its Term Loan and revolving credit facility in ~~third-quarter 2014.~~first-quarter 2016.

In April 2014, FCX redeemed $210 million of the aggregate principal amount of FM O&G's outstanding 6.625% Senior Notes due 2021. Holders of these senior notes received the principal amount together with the redemption premium and accrued and unpaid interest to the redemption date. As a result of the redemption, FCX recorded a gain on early extinguishment of debt of $6 million in second-quarter 2014.

In accordance with the terms of the senior notes, the April 2014 and July 2014 redemptions were funded with cash contributions to FM O&G by FCX in exchange for additional equity, which is eliminated in the consolidated financial statements.

Interest Expense, Net

Consolidated interest expense from continuing operations (excluding capitalized interest) totaled ~~$217~~$211 million in ~~third-quarter~~both the third quarter of 2016 and 2015,, ~~$212 million in third-quarter 2014, $642~~ $647 million for the first nine months of ~~2015~~2016 and ~~$661~~$622 million for the first nine months of ~~2014.~~2015. Capitalized interest added to property, plant, equipment and mining development costs, net, totaled $24 million in third-quarter 2016, $42 million in third-quarter 2015, ~~$34~~$66 million ~~in third-quarter 2014,~~ for the first nine months of 2016 and $134 million for the first nine months of ~~2015 and~~

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~~$113 million for the first nine months of 2014.~~2015. Capitalized interest added to oil and gas properties not subject to amortization totaled $12 million in third-quarter 2015 ~~$20 million~~(none in third-quarter ~~2014,~~2016), $7 million for the first nine months of 2016 and $50 million for the first nine months of ~~2015 and $65 million for the first nine months of 2014.~~2015.

~~Equity Transactions.~~Equity. In ~~September~~ 2015 and through January 5, 2016, FCX ~~completed~~generated approximately $2 billion in gross proceeds (proceeds of $1.97 billion net of $20 million of commissions and expenses) through the sale of 210 million shares of common stock (206 million shares through December 31, 2015, and 4 million shares (with a ~~$1.0 billion~~value of $32 million) in January 2016) under its 2015 at-the-market equity ~~program and announced an additional $1.0 billion~~programs. At October 31, 2016, FCX has approximately $12 million remaining under these at-the-market equity ~~program.~~programs. FCX used the proceeds to repay outstanding indebtedness.

On July 27, 2016, FCX commenced a new registered at-the-market equity offering of up to $1.5 billion of common stock. Through September 30, ~~2015,~~2016, FCX sold ~~97.5~~33.5 million shares of its common stock at an average price of ~~$10.35~~$12.39 per share, ~~under these programs,~~ which generated gross proceeds of ~~$1.01 billion~~$415 million (net proceeds of ~~$1.00 billion~~$411 million after ~~commissions~~$4 million of ~~$10 million~~commissions and expenses). From October 1, ~~2015,~~2016, through November ~~5, 2015,~~8, 2016, FCX sold ~~34.1~~26.3 million shares of its common stock at an average price of ~~$12.15~~$11.54 per share, which generated gross proceeds of ~~$414~~$304 million (net proceeds of ~~$410~~$301 million after ~~commissions~~$3 million of ~~$4 million~~commissions and expenses). FCX ~~used~~will use the ~~net~~ proceeds ~~for general corporate purposes, including the repayment of amounts~~to repay outstanding ~~under its revolving credit facility and other borrowings, and the financing of working capital and capital expenditures. At October 30, 2015,~~indebtedness.

During second-quarter 2016, FCX ~~had 1.2 billion~~issued 48 million shares of its common stock ~~outstanding.~~(with a value of $540 million, excluding $5 million of commissions paid by FCX) in connection with the settlement of two drilling rig contracts (refer to Note 9 for further discussion).

~~On September 30, 2015,~~During second-quarter 2016 and through August 4, 2016, FCX negotiated private exchange transactions exempt from registration under the Securities Act of 1933, as amended, whereby 28 million shares of FCX's ~~Board~~common stock were issued (with an aggregate value of ~~Directors (the Board) declared a dividend~~$311 million), in exchange for $369 million principal amount of ~~$0.05 per share, which was paid on November 2, 2015, to common shareholders of record at the close of business on October 15, 2015.~~FCX’s senior notes.

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NOTE 7. FINANCIAL INSTRUMENTS

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

Commodity Contracts. From time to time, FCX has entered into derivative contracts to hedge the market risk associated with fluctuations in the prices of commodities it purchases and sells. As a result of the acquisition of 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 September 30, ~~2015,~~2016, and December 31, ~~2014,~~2015, FCX had no price protection contracts relating to its mine ~~production.~~production or future sales of oil and gas. In connection with the agreement to sell FM O&G's onshore California properties, FCX entered into derivative contracts for oil and gas (see Note 2). A discussion of FCX’s derivative contracts and programs, except for the oil and gas derivative contracts discussed in Note 2, follows.

Derivatives Designated as Hedging Instruments – Fair Value Hedges

Copper Futures and Swap Contracts. Some of FCX’s U.S. copper rod customers request a fixed market price instead of the Commodity Exchange Inc. (COMEX), a division of ~~the New York Mercantile Exchange,~~NYMEX, average copper price in the month of shipment. FCX hedges this price exposure in a manner that allows it to receive the COMEX average price in the month of shipment while the customers pay the fixed price they requested. FCX accomplishes this by entering into copper futures or swap contracts. Hedging gains or losses from these copper futures and swap contracts are recorded in revenues. FCX did not have any significant gains or losses during the ~~quarters or nine months~~nine-month periods ended September 30, ~~2015~~2016 and ~~2014~~2015, resulting from hedge ineffectiveness. At September 30, ~~2015~~2016, FCX held copper futures and swap contracts that qualified for hedge accounting for 5953 million pounds at an average contract price of $~~2.46~~2.18 per pound, with maturities through ~~September 2017~~April 2018.

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


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2015			2014			2015			2014			2016			2015			2016			2015
Copper futures and swap contracts:
Unrealized gains (losses):
Derivative financial instruments	$	(2	)	$	(10	)	$	—		$	(10	)	$	1		$	(2	)	$	11		$	—
Hedged item – firm sales commitments	2			10			—			10			(1		)	2			(11		)	—

Realized (losses) gains:
Realized losses:
Matured derivative financial instruments	(12		)	1			(23		)	(3		)	—			(12		)	(8		)	(23		)

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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,~~2015, as recast in the Form 8-K filed on November 9, 2016, 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~~concentrate or ~~cathodes~~cathode 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 related to continuing operations 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. Mark-to-market price fluctuations associated with embedded derivatives for discontinued operations, which were minimal, are included in discontinued operations for all periods presented in these financial statements.

A summary of FCX’s embedded ~~commodity~~ derivatives at September 30, ~~2015~~2016, follows:


	Open Positions	Average Price Per Unit				Maturities Through	Open Positions	Average Price Per Unit				Maturities Through
	Open Positions	Contract		Market		Maturities Through	Open Positions	Contract		Market		Maturities Through
Embedded derivatives in provisional sales contracts:
Copper (millions of pounds)	536	$	2.45	$	2.34	March 2016	752	$	2.15	$	2.21	February 2017
Gold (thousands of ounces)	149	1,125		1,118		December 2015	162	1,329		1,328		January 2017
Embedded derivatives in provisional purchase contracts:
Copper (millions of pounds)	87	2.45		2.35		January 2016	133	2.16		2.20		January 2017

Crude Oil Contracts. As a result of the acquisition of the oil and gas business, FCX ~~has~~had derivative contracts ~~extending through~~in 2015 that ~~consist~~consisted of crude oil options. These ~~crude oil~~ derivatives ~~are~~were not designated as hedging instruments and ~~are~~were 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 September 30, 2015, these~~The remaining 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 September 30, 2015, the deferred option premiums and accrued interest associated with the crude oil option contracts totaled ~~$53 million, which was included as a component of the fair value of the crude oil options contracts. At~~ ~~September 30, 2015, the outstanding 2015 crude oil option contracts, which settle monthly and cover approximately 7.7 million barrels over the remainder of 2015, follow:~~matured in 2015.

Daily Volumes (thousand barrels)
Average Strike Price (per barrel)^a

Weighted-Average Deferred Premium
(per barrel)

2015 Period Instrument Type Floor Floor Limit Index

October - December
Put options^b
84
$ 90
$ 70
$ 6.89
Brent


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


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

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 September 30, ~~2015~~2016, Atlantic Copper held net copper forward ~~sales~~purchase contracts for 410 million pounds at an average contract price of $~~2.31~~2.17 per pound, with maturities through November ~~2015~~2016.

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


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2015			2014			2015			2014			2016			2015			2016		2015
Embedded derivatives in provisional copper and gold
sales contracts^a	$	(170	)	$	(99	)	$	(320	)	$	(184	)	$	12		$	(155	)	$	88	$	(299	)
Copper forward contracts^b													(1		)	(8		)	4		(15		)
Crude oil options^a	29			57			87			(47		)	—			29			—		87
Natural gas swaps^a	—			7			—			(9		)
Copper forward contracts^b	(8		)	(4		)	(15		)	1


a.	Amounts recorded in revenues.


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

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Unsettled Derivative Financial Instruments

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


	September 30, 2015		December 31, 2014		September 30, 2016		December 31, 2015
Commodity Derivative Assets:
Derivatives designated as hedging instruments:
Derivatives designated as hedging instruments:
Copper futures and swap contracts^a	$	1	$	—	$	3	$	1
Derivatives not designated as hedging instruments:
Derivatives not designated as hedging instruments:
Embedded derivatives in provisional copper and gold
sales/purchase contracts	17		15		47		19
Crude oil options^b	101		316
Total derivative assets	$	119	$	331	$	50	$	20

Commodity Derivative Liabilities:
Derivatives designated as hedging instruments:
Derivatives designated as hedging instruments:
Copper futures and swap contracts^a	$	8	$	7	$	1	$	11
Derivatives not designated as hedging instruments:
Derivatives not designated as hedging instruments:
Embedded derivatives in provisional copper and gold
sales/purchase contracts	69		93		9		81
Total derivative liabilities	$	77	$	100	$	10	$	92


a.	FCX had paid ~~$16 million~~a minimal amount to brokers at September 30, ~~2015,~~2016, and $10 million at December 31, ~~2014,~~2015, for margin requirements (recorded in other current assets).


b.	~~Amounts are net of~~ ~~$53 million~~ at ~~September 30, 2015, and $210 million at~~ ~~December 31, 2014, for deferred premiums and accrued interest.~~

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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 its 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
	September 30, 2015		December 31, 2014		September 30, 2015		December 31, 2014		September 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015

Gross amounts recognized:
Commodity contracts:
Embedded derivatives in provisional
sales/purchase contracts	$	17	$	15	$	69	$	93	$	47	$	19	$	9	$	81
Crude oil derivatives	101		316		—		—
Copper derivatives	1		—		8		7		3		1		1		11
	119		331		77		100		50		20		10		92

Less gross amounts of offset:
Commodity contracts:
Embedded derivatives in provisional
sales/purchase contracts	2		1		2		1		1		5		1		5
Crude oil derivatives	—		—		—		—
Copper derivatives	1		—		1		—		1		1		1		1
	3		1		3		1		2		6		2		6

Net amounts presented in balance sheet:
Commodity contracts:
Embedded derivatives in provisional
sales/purchase contracts	15		14		67		92		46		14		8		76
Crude oil derivatives	101		316		—		—
Copper derivatives	—		—		7		7		2		—		—		10
	$	116	$	330	$	74	$	99	$	48	$	14	$	8	$	86

Balance sheet classification:
Trade accounts receivable	$	6	$	5	$	50	$	56	$	48	$	9	$	4	$	51
Other current assets	101		316		—		—
Accounts payable and accrued liabilities	9		9		24		43		—		5		4		35
	$	116	$	330	$	74	$	99	$	48	$	14	$	8	$	86

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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 September 30, ~~2015~~2016, the maximum amount of credit exposure associated with derivative transactions was $~~146~~48 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 ~~$44~~$58 million at September 30, ~~2015~~2016, and ~~$48~~$34 million at December 31, ~~2014)~~2015), accounts receivable, restricted cash, and accounts payable and accrued liabilities ~~and dividends payable~~ approximates fair value because of their short-term nature and generally negligible credit losses (refer to Note 8 for the fair values of investment securities, legally restricted funds and long-term debt).

In addition, FCX has contingent liabilities related to the settlement of FM O&G's drilling rig contracts (refer to Note 8 for the fair value and Note 9 for further discussion of these instruments).

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NOTE 8. FAIR VALUE MEASUREMENT

Fair value accounting guidance includes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level ~~1 inputs)~~1) and the lowest priority to unobservable inputs (Level ~~3 inputs)~~3).

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 third-quarter ~~2015~~2016.

Effective January 1, 2016, FCX retrospectively adopted the Accounting Standards Update (ASU) associated with investments for which fair value is measured using the net asset value (NAV) per share as a practical expedient. As a result, investments valued using NAV per share are shown in the tables below in a column separate from the levels within the fair value hierarchy. A summary of the carrying amount and fair value of FCX’s financial instruments, other than cash and cash equivalents, accounts receivable, restricted cash, and accounts payable and accrued liabilities ~~and dividends payable~~ (refer to Note 7), follows (in millions):


	At September 30, 2015										At September 30, 2016
	Carrying		Fair Value								Carrying		Fair Value
	Amount		Total		Level 1		Level 2		Level 3		Amount		Total		NAV		Level 1		Level 2		Level 3
Assets
Investment securities:^a,b
U.S. core fixed income fund	$	23	$	23	$	—	$	23	$	—
U.S. core fixed income fund at NAV											$	24	$	24	$	24	$	—	$	—	$	—
Money market funds	22		22		22		—		—		22		22		—		22		—		—
Equity securities	3		3		3		—		—		5		5		—		5		—		—
Total	48		48		25		23		—		51		51		24		27		—		—

Legally restricted funds:^a,b,c,d
U.S. core fixed income fund	52		52		—		52		—
Legally restricted funds:^a,b,c
U.S. core fixed income fund at NAV											55		55		55		—		—		—
Government bonds and notes	41		41		—		41		—		37		37		—		—		37		—
Corporate bonds											32		32		—		—		32		—
Government mortgage-backed securities	28		28		—		28		—		27		27		—		—		27		—
Corporate bonds	26		26		—		26		—
Asset-backed securities	12		12		—		12		—		16		16		—		—		16		—
Money market funds											13		13		—		13		—		—
Collateralized mortgage-backed securities	8		8		—		8		—		7		7		—		—		7		—
Money market funds	4		4		4		—		—
Municipal bonds	1		1		—		1		—		1		1		—		—		1		—
Total	172		172		4		168		—		188		188		55		13		120		—

Derivatives:^a,e
Embedded derivatives in provisional sales/purchase
contracts in a gross asset position	17		17		—		17		—
Crude oil options	101		101		—		—		101
Derivatives:^a,d
Embedded derivatives in provisional sales/
purchase contracts in a gross asset position											47		47		—		—		47		—
Copper futures and swap contracts	1		1		1		—		—		3		3		—		3		—		—
Total	119		119		1		17		101		50		50		—		3		47		—

Total assets			$	339	$	30	$	208	$	101			$	289	$	79	$	43	$	167	$	—

Liabilities
Derivatives:^a,e
Embedded derivatives in provisional sales/purchase
contracts in a gross liability position	$	69	$	69	$	—	$	69	$	—
Derivatives:^a,d
Embedded derivatives in provisional sales/
purchase contracts in a gross liability position											$	9	$	9	$	—	$	—	$	9	$	—
Copper futures and swap contracts	8		8		7		1		—		1		1		—		—		1		—
Total	77		77		7		70		—		10		10		—		—		10		—

Contingent consideration for the settlements of
drilling rig contracts^e											18		18		—		—		18		—

Long-term debt, including current portion^f	20,698		17,291		—		17,291		—		18,982		17,926		—		—		17,926		—

Total liabilities			$	17,368	$	7	$	17,361	$	—			$	17,954	$	—	$	—	$	17,954	$	—

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	At December 31, 2014										At December 31, 2015
	Carrying		Fair Value								Carrying		Fair Value
	Amount		Total		Level 1		Level 2		Level 3		Amount		Total		NAV		Level 1		Level 2		Level 3
Assets
Investment securities:^a,b
U.S. core fixed income fund	$	23	$	23	$	—	$	23	$	—
U.S. core fixed income fund at NAV											$	23	$	23	$	23	$	—	$	—	$	—
Money market funds	20		20		20		—		—		21		21		—		21		—		—
Equity securities	3		3		3		—		—		3		3		—		3		—		—
Total	46		46		23		23		—		47		47		23		24		—		—

Legally restricted funds:^a,b,c,d
U.S. core fixed income fund	52		52		—		52		—
Legally restricted funds:^a,b,c
U.S. core fixed income fund at NAV											52		52		52		—		—		—
Government bonds and notes	39		39		—		39		—		37		37		—		—		37		—
Government mortgage-backed securities											28		28		—		—		28		—
Corporate bonds	27		27		—		27		—		26		26		—		—		26		—
Government mortgage-backed securities	19		19		—		19		—
Asset-backed securities	17		17		—		17		—		13		13		—		—		13		—
Collateralized mortgage-backed securities											7		7		—		—		7		—
Money market funds	11		11		11		—		—		7		7		—		7		—		—
Collateralized mortgage-backed securities	6		6		—		6		—
Municipal bonds	1		1		—		1		—		1		1		—		—		1		—
Total	172		172		11		161		—		171		171		52		7		112		—

Derivatives:^a,e
Embedded derivatives in provisional sales/purchase
contracts in a gross asset position	15		15		—		15		—
Crude oil options	316		316		—		—		316
Derivatives:^a,d
Embedded derivatives in provisional sales/
purchase contracts in a gross asset position											19		19		—		—		19		—
Copper futures and swap contracts											1		1		—		1		—		—
Total	331		331		—		15		316		20		20		—		1		19		—

Total assets			$	549	$	34	$	199	$	316			$	238	$	75	$	32	$	131	$	—

Liabilities
Derivatives:^a,e
Embedded derivatives in provisional sales/purchase
contracts in a gross liability position	$	93	$	93	$	—	$	93	$	—
Derivatives:^a,d
Embedded derivatives in provisional sales/
purchase contracts in a gross liability position											$	81	$	81	$	—	$	—	$	81	$	—
Copper futures and swap contracts	7		7		6		1		—		11		11		—		7		4		—
Total	100		100		6		94		—		92		92		—		7		85		—

Long-term debt, including current portion^f	18,849		18,735		—		18,735		—		20,428		13,987		—		—		13,987		—

Total liabilities			$	18,835	$	6	$	18,829	$	—			$	14,079	$	—	$	7	$	14,072	$	—


a.	Recorded at fair value.


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

Excludes time deposits (which approximated fair value) included in (i) other current assets of $28 million at September 30, 2016, and December 31, 2015, and (ii) other assets of ~~$117~~$120 million at September 30, ~~2015~~,2016, and ~~$115~~$118 million at December 31, ~~2014,~~2015, primarily associated with an assurance bond to support ~~PT-FI's~~PT Freeport Indonesia's (PT-FI) commitment for smelter development in Indonesia.

~~Excludes time deposits (which approximated fair value) included in other current assets of $30 million at~~ ~~September 30, 2015, associated with PT-FI's commitment~~Refer to Note 7 for ~~smelter development in Indonesia of $20 million~~further discussion and a reclamation guarantee at PT-FI of $10 million. Excludes time deposits of $17 million at December 31, 2014, associated with a customs audit assessment at PT-FI of $9 million and a reclamation guarantee at PT-FI of $8 million.

balance sheet classifications.


e.	~~Refer to Note~~ 7 ~~for further discussion and balance sheet classifications. Crude oil options are net of~~ ~~$53 million~~ at ~~September 30, 2015, and $210 million at December 31, 2014, for deferred premiums~~Included in accounts payable and accrued ~~interest.~~ liabilities.


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~~

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~~Equity securities are 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~~the closing price reported on the active market on which the individual 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)~~traded and, as such, ~~this fund is~~are classified within Level 21 of the fair value hierarchy.

Fixed income securities (government securities, corporate bonds, asset-backed securities, collateralized mortgage-backed securities and municipal bonds) are valued using a ~~bid evaluation~~bid-evaluation price or a mid-evaluation price. A ~~bid evaluation~~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 only 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 7 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 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 ~~38 percent~~ to ~~66 percent, with a weighted average of~~ ~~49 percent. The weighted-average cost of deferred premiums totals~~ ~~$6.89~~ ~~per barrel at September 30, 2015. Refer to Note~~ 7 ~~for further discussion of these derivative financial instruments~~.

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

Contingent liabilities for the settlement of drilling rig contracts (refer to Note 9 for further discussion) are based on the average price forecasts of WTI crude oil over the 12-month period ending June 30, 2017. The fair value is estimated using a Monte Carlo simulation model that uses various observable inputs, including WTI crude oil forward prices, volatilities, discount rate and settlement terms. As a result, these contingent liabilities are classified within Level 2 of the fair value hierarchy.

Long-term debt, including ~~the~~ current portion, is valued using available market quotes and, as such, is classified within Level 2 of the fair value hierarchy.

The U.S. core fixed income fund is valued at NAV. 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).

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 September 30, ~~2015~~.2016.

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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
Options
Fair value at December 31, 2014 $ 316

Net realized gains 50
^a
Net unrealized gains included in earnings related to assets and liabilities
still held at the end of the period
36

Net settlement receipts (301 )
^b
Fair value at September 30, 2015 $ 101



a.	~~Includes net realized gains of $51 million, partially offset by $1 million of interest expense associated with the deferred premiums.~~


b.	~~Includes interest payments of~~ ~~$3 million~~.

Refer to Note 1 for a discussion of the fair value estimates utilized in the impairment assessments during third-quarter 2015. Fair values were determined based on inputs not observable in the market and thus represent Level 3 measurements.

NOTE 9. CONTINGENCIES AND COMMITMENTS

Litigation. During third-quarter ~~2015,~~2016, there were no significant 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,~~2015, as ~~updated~~recast in ~~FCX's quarterly reports~~the Form 8-K filed on ~~Form 10-Q in Note 8 for the quarterly period ended March 31, 2015, and Note~~November 9, ~~for the quarterly period ended June 30, 2015.~~2016.

Tax and Other ~~Matters.~~ Matters

Cerro Verde Royalty Dispute

As reported in Note 12 of FCX’s annual report on Form 10-K for the year ended December 31, 2015, as recast in the Form 8-K filed on November 9, 2016, SUNAT, the Peru national tax authority, has assessed mining royalties on ore processed by the Cerro Verde concentrator, which commenced operations in late 2006, for the period December 2006 to December 2007 and the years 2008 and 2009. In April 2016, SUNAT issued assessments for the year 2010 and the period January 2011 to September 2011. Cerro Verde has contested the assessments, of which

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the aggregate amount covering the period December 2006 to September 2011 totals $430 million (based on the exchange rate as of September 30, 2016), including estimated accumulated interest and penalties. Additionally, in April 2016, Peru’s Twentieth Contentious Administrative Court, which specializes in taxation matters, rendered its decision upholding the Peru Tax Tribunal’s July 2013 decision affirming SUNAT’s assessments for the period December 2006 through December 2007. On May 2, 2016, Cerro Verde appealed this decision to Peru’s Twentieth Contentious Administrative Court.

SUNAT may make additional assessments for mining royalties and associated penalties and interest for the period from October 2011 through December 2013, which Cerro Verde will contest. As of September 30, 2016, FCX estimates the total exposure associated with these mining royalties for the period from December 2006 through December 2013 approximates $537 million (based on the exchange rate as of September 30, 2016), including estimated accumulated interest and penalties. No amounts have been accrued for these assessments as of September 30, 2016, because Cerro Verde believes its 1998 stability agreement exempts it from these royalties and believes any payments will be recoverable.

Other Peru Tax ~~Matters.~~ Matters

There were no significant changes to ~~the Cerro Verde royalty dispute or~~ other ~~Peruvian~~Peru tax matters during third-quarter ~~of 2015~~2016 (refer to Note 12 of FCX’s annual report on Form 10-K for the year ended December 31, ~~2014~~,2015, as recast in the Form 8-K filed on November 9, 2016, for further discussion of these matters).

Indonesia Tax ~~Matters.~~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, 2015, as recast in the Form 8-K filed on November 9, 2016.

In December 2009, PT-FI was notified by Indonesian tax authorities that it was obligated to pay value-added taxes on certain goods imported after the year 2000. In December 2014, ~~as updated in FCX's quarterly reports on Form 10-Q in Note 8~~PT-FI paid $269 million for valued-added taxes for the ~~quarterly~~ period ~~ended~~from November 2005 through the year 2009 and sought a refund. In March ~~31, 2015,~~2016, PT-FI collected a cash refund of $196 million and ~~Note 9~~$38 million was offset against other tax liabilities. The remaining balance of the amount originally paid was reduced by currency exchange and other losses.

Required estimated income tax payments for 2014 significantly exceeded PT-FI’s 2014 reported income tax liability, which resulted in a $284 million overpayment. During second-quarter 2016, the ~~quarterly period ended June 30, 2015.~~Indonesian tax authorities issued tax assessments for 2014 of $156 million and agreed to refund $128 million associated with income tax overpayments made by PT-FI in 2014. PT-FI filed objections for $152 million of the tax assessments in third-quarter 2016.

PT-FI received assessments from the local regional tax authority in Papua, Indonesia, for additional taxes and penalties related to surface water ~~rights~~ taxes for the period from January 2011 through ~~September 2015.~~August 2016. PT-FI has filed or will file objections to these assessments. The local government of Papua rejected PT-FI’s objections to the assessments related to the period from January 2011 through ~~July 2015,~~April 2016, and PT-FI has filed or will file appeals with the ~~Indonesian tax court for periods through May 2015.~~Indonesia Tax Court. The aggregate amount of all assessments received through ~~October 31, 2015,~~September 30, 2016, including penalties, was ~~2.6~~3.0 trillion Indonesian rupiah ($~~177~~231 million based on the exchange ~~rates at~~rate as of September 30, ~~2015)~~2016). 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 September 30, ~~2015,~~2016, because PT-FI believes its Contract of Work (COW) exempts it from these payments and that it has the right to contest these assessments in the ~~tax court~~Indonesia Tax Court and ultimately the ~~Indonesian~~Indonesia Supreme Court.

Indonesia Mining Contract. ~~The following information includes a discussion of~~There were no significant updates related to ~~previously reported information on~~ PT-FI's COW ~~included in~~during third-quarter 2016 (refer to Note 13 of FCX’s annual report on Form 10-K for the year ended December 31, ~~2014,~~2015, as ~~updated~~recast in ~~Note 13 of FCX's quarterly report~~the Form 8-K filed on ~~Form 10-Q~~November 9, 2016, for ~~the quarterly period ended June 30, 2015.~~further discussion).

~~PT-FI has advanced discussions with~~In August 2016, PT-FI's export permit was renewed through January 11, 2017, and the Indonesian government ~~regarding its COW and long-term operating rights. The Indonesian government is currently developing economic stimulus measures, which include revisions~~continues to ~~mining~~impose a five percent export duty while it reviews PT-FI's smelter development plans. Current regulations to promote economic and employment growth. In consideration of PT-FI's major investments, and prior and ongoing commitments to increase benefits to Indonesia, including previously agreed higher royalties, domestic processing, divestment and local content,published by the Indonesian government ~~provided a letter~~prohibit exports of ~~assurance~~copper concentrate and anode slimes after January 12, 2017. Indonesian government officials have indicated an intent to revise this regulation to protect employment and government revenues. The nature of any potential revisions of the regulation is currently uncertain. PT-FI in October 2015 indicating that it will approve the extension of PT-FI's operations beyond 2021, and provide the same rights and the same level of legal and fiscal certainty provided under its current COW.is actively engaged with Indonesian government officials on this matter.

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Other. During second-quarter 2016, FCX negotiated the termination and settlement of FM O&G's drilling rig contracts with Noble Drilling (U.S.) LLC (Noble) and Rowan Companies plc (Rowan). Under the settlement with Noble, FCX issued 48 million shares of its common stock (representing a value of $540 million) during second-quarter 2016, and Noble immediately sold these shares. Under the settlement with Rowan, FCX paid $85 million in cash during second-quarter 2016 and FCX paid the remaining $130 million during third-quarter 2016. FCX also agreed to provide contingent payments of up to $75 million to Noble and $30 million to Rowan, depending on the average price of crude oil over the 12-month period ending June 30, 2017. The fair value of these contingent payments totaled $18 million as of September 30, 2016 (refer to Note 8). As a result of the settlements, FM O&G was released from a total of $1.1 billion in payment obligations under its three drilling rig contracts.

NOTE 10. BUSINESS SEGMENTS

FCX has organized its continuing mining operations into ~~five~~four primary divisions – North America copper mines, South America mining, Indonesia mining ~~Africa mining~~ and Molybdenum ~~mines. Notwithstanding this structure, FCX internally reports information on a mine-by-mine basis for its mining operations. Therefore, FCX concluded that its~~mines, and operating segments ~~include individual mines or operations relative to its mining operations.~~that meet certain thresholds are reportable segments. 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~~Separately disclosed in the following ~~table.~~table are FCX's reportable segments, which include the Morenci, Cerro Verde and Grasberg copper mines, the Rod & Refining operations, the Atlantic Copper Smelting & Refining operation and U.S. Oil & Gas operations.

FCX's reportable segments previously included Africa mining, which consisted of the Tenke mine located in the DRC. As discussed in Note 2, FCX has entered into a definitive agreement to sell its interest in TFHL, and as a result, Tenke has been removed from continuing operations and reported as discontinued operations for all periods presented.

On May 31, 2016, FCX completed the sale of an additional 13 percent undivided interest in the Morenci unincorporated joint venture. As a result, FCX's undivided interest in Morenci was prospectively reduced from 85 percent to 72 percent.

~~Intersegment Sales.~~Intersegment sales between FCX’s mining operations are based on similar arms-length transactions with third parties at the time of the sale. Intersegment sales may not be reflective of the actual prices ultimately realized because of a variety of factors, including additional processing, timing of sales to unaffiliated customers and transportation premiums. In addition, intersegment sales from Tenke to FCX's other consolidated subsidiaries have been eliminated in discontinued operations (refer to Note 2).

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 (PT-FI'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~~Corporate, Other & ~~eliminations)~~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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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
																													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											Cerro											denum				Rod &		Smelting		& Elimi-				Total			Oil & Gas				& Elimi-				FCX
	Morenci		Mines			Total				Verde		Mines^a				Total		Grasberg			Tenke		Mines				Refining		& Refining		nations				Mining			Operations				nations				Total			Morenci		Other				Total		Verde		Other				Total		Grasberg			Mines				Refining		& Refining		nations				Mining			Operations				nations				Total
Three Months Ended September 30, 2016
Revenues:
Unaffiliated customers																																																	$	115	$	112			$	227	$	505	$	112			$	617	$	984	^a	$	—			$	930	$	445	$	247		^b	$	3,450		$	427			$	—			$	3,877
Intersegment																																																	358		499				857		54		—				54		2			46				7		—		(966		)		—			—				—				—
Production and delivery																																																	275		458				733		333		91				424		478		^c	51				931		416		(777		)		2,256			231			^d	22			^d	2,509
Depreciation, depletion and amortization																																																	51		78				129		109		25				134		110			15				2		7		19				416			223				4				643
Impairment of oil and gas properties																																																	—		—				—		—		—				—		—			—				—		—		—				—			238				1				239
Metals inventory adjustments																																																	—		6				6		—		—				—		—			6				—		—		8				20			—				—				20
Selling, general and administrative expenses																																																	1		—				1		1		1				2		24			—				—		5		3				35			31				44				110
Mining exploration and research expenses																																																	—		1				1		—		—				—		—			—				—		—		12				13			—				—				13
Environmental obligations and
shutdown credits																																																	—		—				—		—		—				—		—			—				—		—		(3		)		(3		)	—				—				(3		)
Net loss (gain) on sales of assets																																																	1		—				1		—		—				—		—			—				—		—		—				1			(7		)		(7		)		(13		)
Operating income (loss)																																																	145		68				213		116		(5		)		111		374			(26		)		4		17		19				712			(289		)		(64		)		359

Interest expense, net																																																	1		—				1		21		—				21		—			—				—		3		21				46			102				39				187
Provision for (benefit from) income taxes																																																	—		—				—		36		(4		)		32		158			—				—		—		—				190			—				(304		)		(114		)
Total assets at September 30, 2016																																																	2,881		4,540				7,421		9,139		1,551				10,690		9,830			1,953				238		565		6,170			^e	36,867			3,462				1,071				41,400			^e
Capital expenditures																																																	6		5				11		38		1				39		256			1				—		5		21			^e	333			160				1				494

Three Months Ended September 30, 2015
Revenues:
Unaffiliated customers	$	165	$	58		$	223			$	238	$	187			$	425	$	557	^b	$	299	$	—			$	946	$	438	$	267		^c	$	3,155		$	525		^d	$	1			$	3,681		$	165	$	58			$	223	$	238	$	187			$	425	$	557	^a	$	—			$	946	$	438	$	267		^b	$	2,856		$	525		^f	$	1			$	3,382
Intersegment	332		614			946				13		—				13		52			29		83				5		1		(1,129		)		—			—				—				—			332		614				946		13		—				13		52			83				5		1		(1,100		)		—			—				—				—
Production and delivery	357		671			1,028			^e	177		167			^e	344		417			209		86			^e	946		410		(842		)	^e	2,598			293				2			^e	2,893			357		616			^c	973		177		167			^c	344		417			83			^c	946		410		(873		)	^c	2,300			293			^d	2			^c	2,595
Depreciation, depletion and amortization	51		85			136				57		32				89		90			65		26				2		10		16				434			450				4				888			51		85				136		57		32				89		90			26				2		10		16				369			450				4				823
Impairment of oil and gas properties	—		—			—				—		—				—		—			—		—				—		—		—				—			3,480				172			^f	3,652			—		—				—		—		—				—		—			—				—		—		—				—			3,480				172			^g	3,652
Metals inventory adjustments																																																	—		55				55		—		—				—		—			3				—		—		33				91			—				—				91
Selling, general and administrative expenses	1		—			1				1		—				1		24			2		—				—		4		5				37			37				50				124			1		—				1		1		—				1		24			—				—		4		5				35			37				50				122
Mining exploration and research expenses	—		1			1				—		—				—		—			—		—				—		—		31				32			—				—				32			—		1				1		—		—				—		—			—				—		—		25				26			—				—				26
Environmental obligations and shutdown costs	—		3			3				—		—				—		—			—		—				—		—		33				36			—				1				37			—		3				3		—		—				—		—			—				—		—		33				36			—				1				37
Operating income (loss)	88		(88		)	—				16		(12		)		4		78			52		(29		)		3		15		(105		)		18			(3,735		)		(228		)		(3,945		)	88		(88		)		—		16		(12		)		4		78			(29		)		3		15		(72		)		(1		)	(3,735		)		(228		)		(3,964		)

Interest expense, net	1		—			1				—		—				—		—			—		—				—		3		19				23			51				89				163			1		—				1		—		—				—		—			—				—		3		19				23			51				83				157
Provision for (benefit from) income taxes	—		—			—				—		2				2		21			6		—				—		—		—				29			—				(389		)		(360		)	—		—				—		—		2				2		21			—				—		—		—				23			—				(372		)		(349		)
Total assets at September 30, 2015	3,720		5,159			8,879				9,136		1,843				10,979		8,965			5,100		2,017				235		699		1,326				38,200			11,911				272				50,383			3,720		5,159				8,879		9,136		1,843				10,979		8,965			2,017				235		699		6,426			^e	38,200			11,911				272				50,383			^e
Capital expenditures	61		33			94				421		16				437		222			69		3				1		10		10				846			635			^g	46				1,527			61		33				94		421		16				437		222			3				1		10		78			^e	845			635			^h	47				1,527

Three Months Ended September 30, 2014
Revenues:
Unaffiliated customers	$	140	$	79		$	219			$	295	$	441			$	736	$	1,086	^b	$	379	$	—			$	1,219	$	597	$	470		^c	$	4,706		$	990		^d	$	—			$	5,696
Intersegment	428		843			1,271				63		48				111		167			49		173				8		4		(1,783		)		—			—				—				—
Production and delivery	341		561			902				178		293				471		700			206		86				1,220		578		(1,283		)		2,880			273				(1		)		3,152
Depreciation, depletion and amortization	51		82			133				41		61				102		92			58		25				2		11		15				438			504				3				945
Impairment of oil and gas properties	—		—			—				—		—				—		—			—		—				—		—		—				—			308				—				308
Selling, general and administrative expenses	—		1			1				—		1				1		27			3		—				—		4		7				43			55				60				158
Mining exploration and research expenses	—		2			2				—		—				—		—			—		—				—		—		27				29			—				—				29
Environmental obligations and shutdown costs	—		(5		)	(5		)		—		—				—		—			—		—				—		—		23				18			—				—				18
Net gain on sales of assets	—		(14		)	(14		)		—		—				—		—			—		—				—		—		(32		)		(46		)	—				—				(46		)
Operating income (loss)	176		295			471				139		134				273		434			161		62				5		8		(70		)		1,344			(150		)		(62		)		1,132

Interest expense, net	1		—			1				1		—				1		—			—		—				—		3		19				24			51				83				158
Provision for (benefit from) income taxes	—		—			—				47		95				142		181			36		—				—		—		—				359			—				(10		)		349
Total assets at September 30, 2014	3,689		5,742			9,431				7,006		3,721				10,727		8,537			5,010		2,089				282		948		1,025				38,049			25,328				498				63,875
Capital expenditures	158		30			188				416		23				439		243			40		12				1		3		11				937			908			^g	8				1,853


a.	~~Third-quarter 2014 includes the results of the Candelaria and Ojos del Salado mining operations, which were sold in November 2014.~~


b.	Includes PT-FI’s sales to PT Smelting totaling ~~$61~~$348 million in third-quarter~~2015~~ 2016 and ~~$628~~$61 million in third-quarter~~2014~~. 2015.


c.b.	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.

Third-quarter 2016 includes asset retirement charges of $17 million at Indonesia mining. Third-quarter 2015 includes asset impairment and restructuring charges totaling $75 million at other North America copper mines, and restructuring charges totaling $11 million at other South America copper mines, $2 million at Molybdenum mines, $2 million at Other Mining & Eliminations and $2 million at Corporate, Other & Eliminations.


d.	Includes net ~~mark-to-market gains associated with crude~~charges for oil and ~~natural~~ gas ~~derivative contracts~~operations totaling ~~$29~~$50 million in third-quarter~~2015~~ 2016 and ~~$64~~$21 million in third-quarter~~2014~~. 2015, primarily for idle rig costs, inventory adjustments, asset impairments and other net charges.

Includes ~~charges~~(i) assets held for sale totaling ~~$133~~$4.7 billion at September 30, 2016, and $4.9 billion at September 30, 2015, and (ii) capital expenditures totaling $15 million ~~at North America copper mines~~in third-quarter 2016 and $69 million in third-quarter 2015 associated with discontinued operations. Refer to Note 2 for inventory adjustments, impairments and restructuring, $11 million at other South America mines for restructuring, $5 million at Molybdenum mines and $35 million at other mining & eliminations for inventory adjustments and restructuring, and $2 million for restructuring at corporate, other & eliminations.a summary of the results of discontinued operations.


f.	~~Primarily includes impairment charges for Morocco~~Includes net mark-to-market gains of $29 million associated with crude oil ~~and gas properties.~~derivative contracts.


g.	Reflects impairment charges for international oil and gas properties primarily in Morocco.


h.	Excludes international oil and gas capital expenditures totaling $37 million, ~~in third-quarter 2015 and $7 million in third-quarter 2014~~ primarily related to the Morocco oil and gas properties, which are included in ~~corporate, other~~Corporate, Other & ~~eliminations.~~Eliminations.

Table of Contents



(In millions)	Mining Operations																																																	Mining Operations
	North America Copper Mines									South America								Indonesia			Africa																													North America Copper Mines										South America								Indonesia
																													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													Cerro											denum				Rod &		Smelting		& Elimi-				Total			Oil & Gas				& Elimi-				FCX
	Morenci		Mines			Total				Verde		Mines^a				Total		Grasberg			Tenke		Mines				Refining		& Refining			nations				Mining			Operations^b				nations				Total			Morenci			Other				Total			Verde		Other				Total		Grasberg			Mines				Refining		& Refining		nations				Mining			Operations				nations				Total
Nine Months Ended September 30, 2015
Nine Months Ended September 30, 2016
Revenues:
Unaffiliated customers	$	451	$	265		$	716			$	681	$	639			$	1,320	$	1,969	^c	$	991	$	—			$	3,097	$	1,473		$	921		^d	$	10,487		$	1,594		^e	$	1			$	12,082		$	356		$	211			$	567		$	1,485	$	379			$	1,864	$	2,014	^a	$	—			$	2,820	$	1,360	$	696		^b	$	9,321		$	1,132			$	—			$	10,453
Intersegment	1,209		1,984			3,193				64		(7		)	^f	57		37			98		298				20		12			(3,715		)		—			—				—				—			1,119			1,594				2,713			155		—				155		59			136				22		3		(3,088		)		—			—				—				—
Production and delivery	1,117		1,816			2,933			^g	540		464			^g	1,004		1,311			634		253			^g	3,097		1,397			(2,840		)	^g	7,789			857				7			^g	8,653			913			1,334				2,247			927		313				1,240		1,228		^c	147				2,820		1,275		(2,562		)		6,395			1,527			^d	35			^d	7,957
Depreciation, depletion and amortization	157		251			408				134		102				236		238			195		77				7		29			51				1,241			1,465				11				2,717			170			237				407			319		83				402		284			51				7		22		57				1,230			696				11				1,937
Impairment of oil and gas properties	—		—			—				—		—				—		—			—		—				—		—			—				—			9,270				172			^h	9,442			—			—				—			—		—				—		—			—				—		—		—				—			4,299				18			^e	4,317
Metals inventory adjustments																																																		—			6				6			—		—				—		—			12				—		—		9				27			—				—				27
Selling, general and administrative expenses	2		2			4				2		1				3		74			8		—				—		13			16				118			140				171				429			2			2				4			5		1				6		60			—				—		13		9				92			161			^f	155				408
Mining exploration and research expenses	—		6			6				—		—				—		—			—		—				—		—			95				101			—				—				101			—			2				2			—		—				—		—			—				—		—		44				46			—				—				46
Environmental obligations and shutdown costs	—		3			3				—		—				—		—			—		—				—		—			57				60			—				1				61			—			—				—			—		—				—		—			—				—		—		17				17			—				1				18
Net gain on sales of assets	—		(39		)	(39		)		—		—				—		—			—		—				—		—			—				(39		)	—				—				(39		)	(576		)	—				(576		)	—		—				—		—			—				—		—		(172		)		(748		)	(7		)		(7		)		(762		)
Operating income (loss)	384		210			594				69		65				134		383			252		(32		)		13		46			(173		)		1,217			(10,138		)		(361		)		(9,282		)	966			224				1,190			389		(18		)		371		501			(74		)		15		53		206				2,262			(5,544		)		(213		)		(3,495		)

Interest expense, net	2		1			3				1		—				1		—			—		—				—		8			57				69			129				260				458			2			1				3			63		—				63		—			—				—		11		60				137			266				171				574
Provision for (benefit from) income taxes	—		—			—				—		32				32		145			59		—				—		—			—				236			—				(1,978		)		(1,742		)	—			—				—			126		(12		)		114		212			—				—		—		—				326			—				(247		)		79
Capital expenditures	224		84			308				1,296		43				1,339		660			166		10				2		18			37				2,540			2,430			ⁱ	85				5,055			71			16				87			329		3				332		715			2				1		12		84			^g	1,233			1,028			^h	48				2,309

Nine Months Ended September 30, 2014
Nine Months Ended September 30, 2015
Revenues:
Unaffiliated customers	$	215	$	195		$	410			$	996	$	1,387			$	2,383	$	2,071	^c	$	1,071	$	—			$	3,599	$	1,808		$	1,374		^d	$	12,716		$	3,487		^e	$	—			$	16,203		$	451		$	265			$	716		$	681	$	639			$	1,320	$	1,969	^a	$	—			$	3,097	$	1,473	$	921		^b	$	9,496		$	1,594		ⁱ	$	1			$	11,091
Intersegment	1,346		2,489			3,835				150		243				393		175			102		469				24		15			(5,013		)		—			—				—				—			1,209			1,984				3,193			64		(7		)	^j	57		37			298				20		12		(3,617		)		—			—				—				—
Production and delivery	936		1,622			2,558				538		939				1,477		1,594			556		243				3,601		1,784			(3,753		)		8,060			913				(2		)		8,971			1,117			1,750			^c	2,867			540		464			^c	1,004		1,311			247			^c	3,097		1,397		(2,925		)	^c	6,998			857			^d	7			^c	7,862
Depreciation, depletion and amortization	128		240			368				120		164				284		194			172		71				7		31			51				1,178			1,736				10				2,924			157			251				408			134		102				236		238			77				7		29		51				1,046			1,465				11				2,522
Impairment of oil and gas properties	—		—			—				—		—				—		—			—		—				—		—			—				—			308				—				308			—			—				—			—		—				—		—			—				—		—		—				—			9,270				172			^e	9,442
Metals inventory adjustments																																																		—			66				66			—		—				—		—			6				—		—		82				154			—				—				154
Selling, general and administrative expenses	1		2			3				2		3				5		73			9		—				—		13			20				123			171				163				457			2			2				4			2		1				3		74			—				—		13		16				110			140				171				421
Mining exploration and research expenses	—		6			6				—		—				—		—			—		—				—		—			87				93			—				—				93			—			6				6			—		—				—		—			—				—		—		77				83			—				—				83
Environmental obligations and shutdown costs	—		(5		)	(5		)		—		—				—		—			—		—				—		—			105				100			—				—				100			—			3				3			—		—				—		—			—				—		—		57				60			—				1				61
Net gain on sales of assets	—		(14		)	(14		)		—		—				—		—			—		—				—		—			(32		)		(46		)	—				—				(46		)	—			(39		)		(39		)	—		—				—		—			—				—		—		—				(39		)	—				—				(39		)
Operating income (loss)	496		833			1,329				486		524				1,010		385			436		155				15		(5		)	(117		)		3,208			359				(171		)		3,396			384			210				594			69		65				134		383			(32		)		13		46		(54		)		1,084			(10,138		)		(361		)		(9,415		)

Interest expense, net	2		1			3				1		—				1		—			—		—				—		10			55				69			201				213				483			2			1				3			1		—				1		—			—				—		8		57				69			129				240				438
Provision for (benefit from) income taxes	—		—			—				177		232				409		166			93		—				—		—			—				668			—				366				1,034			—			—				—			—		32				32		145			—				—		—		—				177			—				(1,939		)		(1,762		)
Capital expenditures	691		124			815				1,207		71				1,278		722			100		45				3		9			38				3,010			2,392			ⁱ	13				5,415			224			84				308			1,296		43				1,339		660			10				2		18		197			^g	2,534			2,430			^h	91				5,055


a.	~~For~~Includes PT-FI's sales to PT Smelting totaling $912 million for the first nine months of ~~2014 Other South America Mines include the results of the Candelaria~~2016 and ~~Ojos del Salado mining operations, which were sold in November 2014.~~


b.	~~The first nine 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~~ $704 million for the first nine months of ~~2015 and $1.5 billion for the first nine months of 2014.~~2015.


d.b.	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.c.

~~Includes net mark-to-market gains (losses) associated with crude oil and natural gas derivative contracts totaling $87 million for the~~The first nine months of 2016 include asset retirement charges of $17 million at Indonesia mining. The first nine months of 2015 includes asset impairment and ~~$(56)~~restructuring charges totaling $75 million at other North America copper mines, and restructuring charges totaling $11 million at other South America copper mines, $2 million at Molybdenum mines, $2 million at Other Mining & Eliminations and $2 million at Corporate, Other & Eliminations.


d.	Includes charges for oil and gas operations totaling $942 million for the first nine months of ~~2014.~~2016 and $59 million for the first nine months of 2015, primarily for drillship settlement/idle rig costs, inventory adjustments, asset impairments and other net charges.


e.	Reflects impairment charges for international oil and gas properties primarily in Morocco.


f.	Includes $38 million for net restructuring-related charges.


g.	Includes capital expenditures of $70 million for the first nine months of 2016 and $166 million for the first nine months of 2015 associated with discontinued operations. Refer to Note 2 for a summary of the results of discontinued operations.


h.	Excludes international oil and gas capital expenditures totaling $47 million for the first nine months of 2016 and $81 million for the first nine months of 2015, primarily related to the Morocco oil and gas properties, which are included in Corporate, Other & Eliminations.


i.	Includes net mark-to-market gains of $87 million associated with crude oil derivative contracts.


j.	Reflects net reductions for provisional pricing adjustments to prior period open sales. There were no intersegment sales from El Abra for the first nine months of 2015.


g.	Includes charges totaling $144 million at North America copper mines for inventory adjustments, impairments and restructuring, $11 million at other South America mines for restructuring, $8 million at Molybdenum mines and $84 million at other mining & eliminations for inventory adjustments and restructuring, and $2 million for restructuring at corporate, other & eliminations.


h.	~~Primarily includes impairment charges for Morocco oil and gas properties.~~


i.	Excludes capital expenditures totaling $81 million for the first nine months of 2015 and $7 million for the first nine months of 2014 primarily related to the Morocco oil and gas properties, which are included in corporate, other & eliminations.

Table of Contents

NOTE 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~~FM O&G ~~LLC),~~LLC, as guarantor, which is a ~~100 percent owned~~100-percent-owned subsidiary of FM O&G and FCX. The guarantee is an unsecured obligation of the guarantor and ranks equal in right of payment with all existing and future indebtedness of 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. 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 September 30, ~~2015~~2016, and December 31, ~~2014,~~2015, and the related condensed consolidating statements of comprehensive (loss) income for the three and nine months ended September 30, 2016 and 2015, and ~~2014, and condensed consolidating statements of~~ cash flows for the nine months ended September 30, ~~2015~~2016 and ~~2014~~2015 (in millions), which should be read in conjunction with FCX's notes to the consolidated financial statements.

CONDENSED CONSOLIDATING BALANCE SHEET

September 30, ~~2015~~2016


	FCX			FM O&G LLC		Non-guarantor					Consolidated		FCX			FM O&G LLC			Non-guarantor					Consolidated
	Issuer			Guarantor		Subsidiaries		Eliminations			FCX		Issuer			Guarantor			Subsidiaries		Eliminations			FCX
ASSETS
Current assets	$	139		$	3,619	$	10,291	$	(5,894	)	$	8,155
Current assets, other than assets held for sale													$	320		$	2,463		$	7,914	$	(3,855	)	$	6,842
Current assets held for sale													—			—			4,663		—			4,663
Property, plant, equipment and mining development costs, net	27			55		27,273		—			27,355		22			52			23,339		2			23,415
Oil and gas properties, net - full cost method:
Subject to amortization, less accumulated amortization	—			1,020		1,980		2			3,002
Subject to amortization, less accumulated amortization and impairments													—			266			712		1			979
Not subject to amortization	—			1,648		5,914		6			7,568		—			406			1,237		1			1,644
Investments in consolidated subsidiaries	23,276			—		1,495		(24,771		)	—		20,511			—			—		(20,511		)	—
Other assets	8,426			4,918		4,232		(13,273		)	4,303		891			41			3,776		(851		)	3,857
Total assets	$	31,868		$	11,260	$	51,185	$	(43,930	)	$	50,383	$	21,744		$	3,228		$	41,641	$	(25,213	)	$	41,400

LIABILITIES AND EQUITY
Current liabilities	$	4,546		$	522	$	5,641	$	(5,882	)	$	4,827
Current liabilities, other than liabilities held for sale													$	2,697		$	340		$	4,483	$	(3,853	)	$	3,667
Current liabilities held for sale													—			—			821		—			821
Long-term debt, less current portion	15,256			5,560		10,553		(11,577		)	19,792		13,426			7,624			11,642		(14,512		)	18,180
Deferred income taxes	1,067		^a	—		3,296		—			4,363		845		^a	—			2,704		—			3,549
Environmental and asset retirement obligations, less current portion	—			322		3,386		—			3,708		—			352			3,373		—			3,725
Investments in consolidated subsidiaries													—			828			9,267		(10,095		)	—
Other liabilities	53			3,361		1,805		(3,492		)	1,727		44			3,351			1,710		(3,487		)	1,618
Total liabilities	20,922			9,765		24,681		(20,951		)	34,417		17,012			12,495			34,000		(31,947		)	31,560

Redeemable noncontrolling interest	—			—		761		—			761		—			—			774		—			774

Equity:
Stockholders' equity	10,946			1,495		22,018		(23,513		)	10,946		4,732			(9,267		)	3,108		6,159			4,732
Noncontrolling interests	—			—		3,725		534			4,259		—			—			3,759		575			4,334
Total equity	10,946			1,495		25,743		(22,979		)	15,205		4,732			(9,267		)	6,867		6,734			9,066
Total liabilities and equity	$	31,868		$	11,260	$	51,185	$	(43,930	)	$	50,383	$	21,744		$	3,228		$	41,641	$	(25,213	)	$	41,400


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

Table of Contents

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, ~~2014~~2015


	FCX			FM O&G LLC		Non-guarantor					Consolidated		FCX			FM O&G LLC			Non-guarantor					Consolidated
	Issuer			Guarantor		Subsidiaries		Eliminations			FCX		Issuer			Guarantor			Subsidiaries		Eliminations			FCX
ASSETS
Current assets	$	323		$	2,635	$	8,659	$	(2,572	)	$	9,045
Current assets, other than assets held for sale													$	181		$	3,831		$	10,238	$	(7,532	)	$	6,718
Current assets held for sale													—			—			744		—			744
Property, plant, equipment and mining development costs, net	22			46		26,152		—			26,220		26			57			24,163		—			24,246
Oil and gas properties, net - full cost method:
Subject to amortization, less accumulated amortization	—			3,296		5,907		(16		)	9,187
Subject to amortization, less accumulated amortization and impairments													—			710			1,552		—			2,262
Not subject to amortization	—			2,447		7,640		—			10,087		—			1,393			3,432		6			4,831
Investments in consolidated subsidiaries	28,765			6,460		10,246		(45,471		)	—		24,311			—			—		(24,311		)	—
Other assets	8,914			3,947		4,061		(12,787		)	4,135		5,038			1,826			3,586		(6,798		)	3,652
Assets held for sale													—			—			4,124		—			4,124
Total assets	$	38,024		$	18,831	$	62,665	$	(60,846	)	$	58,674	$	29,556		$	7,817		$	47,839	$	(38,635	)	$	46,577

LIABILITIES AND EQUITY
Current liabilities	$	1,592		$	560	$	5,592	$	(2,572	)	$	5,172
Current liabilities, other than liabilities held for sale													$	6,012		$	666		$	5,047	$	(7,526	)	$	4,199
Current liabilities held for sale													—			—			108		—			108
Long-term debt, less current portion	14,930			3,874		8,879		(9,312		)	18,371		14,735			5,883			11,594		(12,433		)	19,779
Deferred income taxes	3,161		^a	—		3,237		—			6,398		941		^a	—			2,666		—			3,607
Environmental and asset retirement obligations, less current portion	—			302		3,345		—			3,647		—			305			3,412		—			3,717
Investment in consolidated subsidiary													—			—			2,397		(2,397		)	—
Other liabilities	54			3,372		1,910		(3,475		)	1,861		40			3,360			1,732		(3,491		)	1,641
Liabilities held for sale													—			—			718		—			718
Total liabilities	19,737			8,108		22,963		(15,359		)	35,449		21,728			10,214			27,674		(25,847		)	33,769

Redeemable noncontrolling interest	—			—		751		—			751		—			—			764		—			764

Equity:
Stockholders' equity	18,287			10,723		35,268		(45,991		)	18,287		7,828			(2,397		)	15,725		(13,328		)	7,828
Noncontrolling interests	—			—		3,683		504			4,187		—			—			3,676		540			4,216
Total equity	18,287			10,723		38,951		(45,487		)	22,474		7,828			(2,397		)	19,401		(12,788		)	12,044
Total liabilities and equity	$	38,024		$	18,831	$	62,665	$	(60,846	)	$	58,674	$	29,556		$	7,817		$	47,839	$	(38,635	)	$	46,577


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

Table of Contents

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)



Three Months Ended September 30, 2016
	FCX			FM O&G LLC				Non-guarantor							Consolidated
	Issuer			Guarantor				Subsidiaries				Eliminations			FCX
Revenues	$	—		$	110			$	3,767			$	—		$	3,877
Total costs and expenses	12			266			^a	3,239			^a	1			3,518
Operating (loss) income	(12		)	(156		)		528				(1		)	359
Interest expense, net	(126		)	(18		)		(132		)		89			(187		)
Net gain on early extinguishment of debt	15			—				—				—			15
Other income (expense), net	76			—				(10		)		(76		)	(10		)
(Loss) income before income taxes and equity in affiliated companies' net (losses) earnings	(47		)	(174		)		386				12			177
Benefit from (provision for) income taxes	343			(197		)		(40		)		8			114
Equity in affiliated companies' net (losses) earnings	(75		)	(218		)		(589		)		883			1
Net income (loss) from continuing operations	221			(589		)		(243		)		903			292
Net (loss) income from discontinued operations	(4		)	—				10				(12		)	(6		)
Net income (loss)	217			(589		)		(233		)		891			286
Net income and preferred dividends attributable to noncontrolling interests:
Continuing operations	—			—				(24		)		(23		)	(47		)
Discontinued operations	—			—				(22		)		—			(22		)
Net income (loss) attributable to common stockholders	$	217		$	(589	)		$	(279	)		$	868		$	217

Other comprehensive income (loss)	12			—				12				(12		)	12
Total comprehensive income (loss)	$	229		$	(589	)		$	(267	)		$	856		$	229


a.	Includes charges totaling $95 million at the FM O&G LLC guarantor and $0.2 billion at the non-guarantor subsidiaries related to impairment of FCX's oil and gas properties pursuant to full cost accounting rules.




Nine Months Ended September 30, 2016
	FCX			FM O&G LLC				Non-guarantor							Consolidated
	Issuer			Guarantor				Subsidiaries				Eliminations			FCX
Revenues	$	—		$	294			$	10,159			$	—		$	10,453
Total costs and expenses	56			2,859			^a	11,026			^a	7			13,948
Operating loss	(56		)	(2,565		)		(867		)		(7		)	(3,495		)
Interest expense, net	(404		)	(37		)		(370		)		237			(574		)
Net gain on early extinguishment of debt	51			—				—				—			51
Other income (expense), net	197			—				59				(202		)	54
(Loss) income before income taxes and equity in affiliated companies' net (losses) earnings	(212		)	(2,602		)		(1,178		)		28			(3,964		)
(Provision for) benefit from income taxes	(1,785		)	725				979				2			(79		)
Equity in affiliated companies' net (losses) earnings	(2,450		)	(3,202		)		(5,072		)		10,733			9
Net (loss) income from continuing operations	(4,447		)	(5,079		)		(5,271		)		10,763			(4,034		)
Net income (loss) from discontinued operations	1			—				(159		)		(33		)	(191		)
Net (loss) income	(4,446		)	(5,079		)		(5,430		)		10,730			(4,225		)
Net income and preferred dividends attributable to noncontrolling interests:
Continuing operations	—			—				(141		)		(36		)	(177		)
Discontinued operations	—			—				(44		)		—			(44		)
Net (loss) income attributable to common stockholders	$	(4,446	)	$	(5,079	)		$	(5,615	)		$	10,694		$	(4,446	)

Other comprehensive income (loss)	27			—				27				(27		)	27
Total comprehensive (loss) income	$	(4,419	)	$	(5,079	)		$	(5,588	)		$	10,667		$	(4,419	)


a.	Includes charges totaling $1.5 billion at the FM O&G LLC guarantor and $2.8 billion at the non-guarantor subsidiaries related to impairment of FCX's oil and gas properties pursuant to full cost accounting rules.

Table of Contents

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE (LOSS) INCOME


Three Months Ended September 30, 2015
	FCX			FM O&G LLC				Non-guarantor							Consolidated			FCX			FM O&G LLC				Non-guarantor							Consolidated
	Issuer			Guarantor				Subsidiaries				Eliminations			FCX			Issuer			Guarantor				Subsidiaries				Eliminations			FCX
Revenues	$	—		$	158			$	3,523			$	—		$	3,681		$	—		$	158			$	3,224			$	—		$	3,382
Total costs and expenses	12			1,874			^a	5,742			^a	(2		)	7,626			12			1,874			^a	5,462			^a	(2		)	7,346
Operating (loss) income	(12		)	(1,716		)		(2,219		)		2			(3,945		)	(12		)	(1,716		)		(2,238		)		2			(3,964		)
Interest expense, net	(123		)	(1		)		(78		)		39			(163		)	(123		)	(1		)		(72		)		39			(157		)
Other income (expense), net	31			—				(35		)		(36		)	(40		)	31			—				(36		)		(36		)	(41		)
(Loss) income before income taxes and equity in affiliated companies' net (losses) earnings	(104		)	(1,717		)		(2,332		)		5			(4,148		)	(104		)	(1,717		)		(2,346		)		5			(4,162		)
(Provision for) benefit from income taxes	(1,283		)	714				931				(2		)	360			(1,287		)	714				924				(2		)	349
Equity in affiliated companies' net (losses) earnings	(2,443		)	(2,237		)		(2,445		)		7,123			(2		)	(2,443		)	(2,237		)		(2,445		)		7,123			(2		)
Net (loss) income from continuing operations																		(3,834		)	(3,240		)		(3,867		)		7,126			(3,815		)
Net income from discontinued operations																		4			—				21				—			25
Net (loss) income	(3,830		)	(3,240		)		(3,846		)		7,126			(3,790		)	(3,830		)	(3,240		)		(3,846		)		7,126			(3,790		)
Net income and preferred dividends attributable to noncontrolling interests	—			—				(39		)		(1		)	(40		)
Net income and preferred dividends attributable to noncontrolling interests:
Continuing operations																		—			—				(23		)		(1		)	(24		)
Discontinued operations																		—			—				(16		)		—			(16		)
Net (loss) income attributable to common stockholders	$	(3,830	)	$	(3,240	)		$	(3,885	)		$	7,125		$	(3,830	)	$	(3,830	)	$	(3,240	)		$	(3,885	)		$	7,125		$	(3,830	)

Other comprehensive income (loss)	14			—				14				(14		)	14			14			—				14				(14		)	14
Total comprehensive (loss) income	$	(3,816	)	$	(3,240	)		$	(3,871	)		$	7,111		$	(3,816	)	$	(3,816	)	$	(3,240	)		$	(3,871	)		$	7,111		$	(3,816	)


a.	Includes charges totaling $1.7 billion at the FM O&G LLC guarantor and $2.0 billion at the non-guarantor subsidiaries related to impairment of FCX's oil and gas properties pursuant to full cost accounting rules.



Nine Months Ended September 30, 2015
	FCX			FM O&G LLC				Non-guarantor							Consolidated			FCX			FM O&G LLC				Non-guarantor							Consolidated
	Issuer			Guarantor				Subsidiaries				Eliminations			FCX			Issuer			Guarantor				Subsidiaries				Eliminations			FCX
Revenues	$	—		$	508			$	11,574			$	—		$	12,082		$	—		$	508			$	10,583			$	—		$	11,091
Total costs and expenses	47			4,409			^a	16,923			^a	(15		)	21,364			47			4,409			^a	16,065			^a	(15		)	20,506
Operating (loss) income	(47		)	(3,901		)		(5,349		)		15			(9,282		)	(47		)	(3,901		)		(5,482		)		15			(9,415		)
Interest expense, net	(359		)	(7		)		(202		)		110			(458		)	(359		)	(7		)		(182		)		110			(438		)
Other income (expense), net	187			—				(83		)		(100		)	4			187			—				(85		)		(100		)	2
(Loss) income before income taxes and equity in affiliated companies' net (losses) earnings	(219		)	(3,908		)		(5,634		)		25			(9,736		)	(219		)	(3,908		)		(5,749		)		25			(9,851		)
(Provision for) benefit from income taxes	(1,969		)	1,504				2,217				(10		)	1,742			(1,978		)	1,504				2,246				(10		)	1,762
Equity in affiliated companies' net (losses) earnings	(5,967		)	(6,516		)		(8,947		)		21,429			(1		)	(5,967		)	(6,516		)		(8,947		)		21,429			(1		)
Net (loss) income from continuing operations																		(8,164		)	(8,920		)		(12,450		)		21,444			(8,090		)
Net income from discontinued operations																		9			—				86				—			95
Net (loss) income	(8,155		)	(8,920		)		(12,364		)		21,444			(7,995		)	(8,155		)	(8,920		)		(12,364		)		21,444			(7,995		)
Net income and preferred dividends attributable to noncontrolling interests	—			—				(133		)		(27		)	(160		)
Net income and preferred dividends attributable to noncontrolling interests:
Continuing operations																		—			—				(65		)		(27		)	(92		)
Discontinued operations																		—			—				(68		)		—			(68		)
Net (loss) income attributable to common stockholders	$	(8,155	)	$	(8,920	)		$	(12,497	)		$	21,417		$	(8,155	)	$	(8,155	)	$	(8,920	)		$	(12,497	)		$	21,417		$	(8,155	)

Other comprehensive income (loss)	35			—				35				(35		)	35			35			—				35				(35		)	35
Total comprehensive (loss) income	$	(8,120	)	$	(8,920	)		$	(12,462	)		$	21,382		$	(8,120	)	$	(8,120	)	$	(8,920	)		$	(12,462	)		$	21,382		$	(8,120	)


a.	Includes charges totaling $3.7 billion at the FM O&G LLC guarantor and $5.7 billion at the non-guarantor subsidiaries related to impairment of FCX's oil and gas properties pursuant to full cost accounting rules.

Table of Contents

~~CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)~~

Three Months Ended September 30, 2014
FCX FM O&G LLC Non-guarantor Consolidated
Issuer Guarantor Subsidiaries Eliminations FCX
Revenues $ —
$ 370
$ 5,326
$ —
$ 5,696
Total costs and expenses 12
916
^a
3,966
(330 )
^a
4,564
Operating (loss) income (12 ) (546 ) 1,360
330
1,132
Interest expense, net (99 ) (38 ) (37 ) 16
(158 )
Net gain on early extinguishment of debt —
58
—
—
58
Other income (expense), net 15
—
24
(16 ) 23
(Loss) income before income taxes and equity in affiliated companies' net earnings (losses) (96 ) (526 ) 1,347
330
1,055
Benefit from (provision for) income taxes 46
(104 ) (166 ) (125 ) (349 )
Equity in affiliated companies' net earnings (losses) 602
381
(111 ) (874 ) (2 )
Net income (loss) 552
(249 ) 1,070
(669 ) 704
Net income and preferred dividends attributable to noncontrolling interests —
—
(130 ) (22 ) (152 )
Net income (loss) attributable to common stockholders $ 552
$ (249 ) $ 940
$ (691 ) $ 552

Other comprehensive income (loss) 7
—
7
(7 ) 7
Total comprehensive income (loss) $ 559
$ (249 ) $ 947
$ (698 ) $ 559


a.	~~Includes charges totaling $0.6 billion at the FM O&G LLC guarantor and $(0.3) billion of eliminations related to impairment of FCX's oil and gas properties pursuant to full cost accounting rules.~~

Nine Months Ended September 30, 2014
FCX FM O&G LLC Non-guarantor Consolidated
Issuer Guarantor Subsidiaries Eliminations FCX
Revenues $ —
$ 1,584
$ 14,619
$ —
$ 16,203
Total costs and expenses 44
1,931
^a
11,170
(338 )
^a
12,807
Operating (loss) income (44 ) (347 ) 3,449
338
3,396
Interest expense, net (268 ) (123 ) (146 ) 54
(483 )
Net (loss) gain on early extinguishment of debt (1 ) 64
—
—
63
Other income (expense), net 52
1
49
(54 ) 48
(Loss) income before income taxes and equity in affiliated companies' net earnings (losses) (261 ) (405 ) 3,352
338
3,024
Benefit from (provision for) income taxes 51
(121 ) (836 ) (128 ) (1,034 )
Equity in affiliated companies' net earnings (losses) 1,754
637
228
(2,619 ) —
Net income (loss) 1,544
111
2,744
(2,409 ) 1,990
Net income and preferred dividends attributable to noncontrolling interests —
—
(421 ) (25 ) (446 )
Net income (loss) attributable to common stockholders $ 1,544
$ 111
$ 2,323
$ (2,434 ) $ 1,544

Other comprehensive income (loss) 11
—
11
(11 ) 11
Total comprehensive income (loss) $ 1,555
$ 111
$ 2,334
$ (2,445 ) $ 1,555


a.	~~Includes charges totaling $0.6 billion at the FM O&G LLC guarantor and $(0.3) billion of eliminations related to impairment of FCX's oil and gas properties pursuant to full cost accounting rules.~~

~~Table of Contents~~

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended September 30, ~~2015~~2016


	FCX			FM O&G LLC			Non-guarantor						Consolidated			FCX			FM O&G LLC			Non-guarantor						Consolidated
	Issuer			Guarantor			Subsidiaries			Eliminations			FCX			Issuer			Guarantor			Subsidiaries			Eliminations			FCX
Cash flow from operating activities:
Net (loss) income	$	(8,155	)	$	(8,920	)	$	(12,364	)	$	21,444		$	(7,995	)	$	(4,446	)	$	(5,079	)	$	(5,430	)	$	10,730		$	(4,225	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation, depletion and amortization	3			303			2,474			(63		)	2,717			4			146			1,882			(15		)	2,017
Impairment of oil and gas properties	—			3,710			5,684			48			9,442			—			1,531			2,765			21			4,317
Net gains on crude oil derivative contracts	—			(87		)	—			—			(87		)
Equity in losses (earnings) of consolidated subsidiaries	5,967			6,516			8,947			(21,429		)	1
Equity in losses (earnings) of affiliated companies																2,450			3,202			5,072			(10,733		)	(9		)
Other, net	(1,953		)	2			139			—			(1,812		)	(116		)	575			(424		)	(4		)	31
Changes in working capital and other tax payments	4,001			(1,213		)	(2,457		)	11			342
Changes in working capital and other tax payments, excluding amounts from dispositions																1,844			(669		)	(714		)	2			463
Net cash (used in) provided by operating activities	(137		)	311			2,423			11			2,608			(264		)	(294		)	3,151			1			2,594

Cash flow from investing activities:
Capital expenditures	(7		)	(959		)	(4,079		)	(10		)	(5,055		)	—			(497		)	(1,814		)	2			(2,309		)
Intercompany loans	(1,310		)	(955		)	—			2,265			—			(1,021		)	(518		)	—			1,539			—
Dividends from (investments in) consolidated subsidiaries	693			(49		)	102			(748		)	(2		)	1,643			(41		)	124			(1,726		)	—
Other, net	(21		)	(2		)	118			21			116
Net cash (used in) provided by investing activities	(645		)	(1,965		)	(3,859		)	1,528			(4,941		)
Asset sales and other, net																—			208			1,210			(3		)	1,415
Net cash provided by (used in) investing activities																622			(848		)	(480		)	(188		)	(894		)

Cash flow from financing activities:
Proceeds from debt	3,893			—			2,659			—			6,552			1,721			—			1,742			—			3,463
Repayments of debt	(3,550		)	—			(1,143		)	—			(4,693		)	(2,498		)	—			(2,041		)	—			(4,539		)
Intercompany loans	—			1,708			557			(2,265		)	—			—			1,223			316			(1,539		)	—
Net proceeds from sale of common stock	999			—			—			—			999			442			—			374			(374		)	442
Cash dividends and distributions paid, and contributions received	(547		)	(17		)	(749		)	677			(636		)
Cash dividends and distributions paid, and contributions received, net																(5		)	(78		)	(2,096		)	2,087			(92		)
Other, net	(13		)	(37		)	(14		)	49			(15		)	(18		)	(2		)	(15		)	13			(22		)
Net cash provided by (used in) financing activities	782			1,654			1,310			(1,539		)	2,207
Net cash (used in) provided by financing activities																(358		)	1,143			(1,720		)	187			(748		)

Net decrease in cash and cash equivalents	—			—			(126		)	—			(126		)
Net increase in cash and cash equivalents																—			1			951			—			952
Increase in cash and cash equivalents in assets held for sale																—			—			(39		)	—			(39		)
Cash and cash equivalents at beginning of period	—			1			463			—			464			—			—			195			—			195
Cash and cash equivalents at end of period	$	—		$	1		$	337		$	—		$	338		$	—		$	1		$	1,107		$	—		$	1,108

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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended September 30, ~~2014~~2015


	FCX			FM O&G LLC			Non-guarantor							Consolidated			FCX			FM O&G LLC			Non-guarantor						Consolidated
	Issuer			Guarantor			Subsidiaries				Eliminations			FCX			Issuer			Guarantor			Subsidiaries			Eliminations			FCX
Cash flow from operating activities:
Net income (loss)	$	1,544		$	111		$	2,744			$	(2,409	)	$	1,990
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Net (loss) income																	$	(8,155	)	$	(8,920	)	$	(12,364	)	$	21,444		$	(7,995	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation, depletion and amortization	3			673			2,269				(21		)	2,924			3			303			2,474			(63		)	2,717
Impairment of oil and gas properties	—			625			—				(317		)	308			—			3,710			5,684			48			9,442
Net losses on crude oil and natural gas derivative contracts	—			56			—				—			56
Net gain (loss) on early extinguishment of debt	1			(64		)	—				—			(63		)
Equity in (earnings) losses of consolidated subsidiaries	(1,754		)	(637		)	4				2,387			—
Net gains on crude oil derivative contracts																	—			(87		)	—			—			(87		)
Equity in losses (earnings) of affiliated companies																	5,967			6,516			8,947			(21,429		)	1
Other, net	87			(17		)	(73		)		—			(3		)	(1,953		)	2			139			—			(1,812		)
Changes in working capital and other tax payments	(217		)	(1,166		)	684				—			(699		)	4,001			(1,213		)	(2,457		)	11			342
Net cash (used in) provided by operating activities	(336		)	(419		)	5,628				(360		)	4,513			(137		)	311			2,423			11			2,608

Cash flow from investing activities:
Capital expenditures	—			(1,771		)	(3,644		)		—			(5,415		)	(7		)	(959		)	(4,079		)	(10		)	(5,055		)
Acquisition of Deepwater GOM interests	—			—			(1,421		)		—			(1,421		)
Intercompany loans	1,151			734			—			—	(1,885		)	—			(1,310		)	(955		)	—			2,265			—
(Investments in) dividends from consolidated subsidiaries	(959		)	(97		)	(696		)		1,752			—
Net proceeds from sale of Eagle Ford shale assets	—			2,971			—				—			2,971
Dividends from (investments in) consolidated subsidiaries																	693			(49		)	102			(748		)	(2		)
Other, net	—			32			189				—			221			(21		)	(2		)	118			21			116
Net cash provided by (used in) investing activities	192			1,869			(5,572		)		(133		)	(3,644		)
Net cash (used in) provided by investing activities																	(645		)	(1,965		)	(3,859		)	1,528			(4,941		)

Cash flow from financing activities:
Proceeds from debt	2,806			—			540				—			3,346			3,893			—			2,659			—			6,552
Repayments of debt	(1,686		)	(1,996		)	(514		)		—			(4,196		)	(3,550		)	—			(1,143		)	—			(4,693		)
Intercompany loans	—			213			(2,098		)		1,885			—			—			1,708			557			(2,265		)	—
Cash dividends and distributions paid, and contributions received	(979		)	336			691				(1,392		)	(1,344		)
Net proceeds from sale of common stock																	999			—			—			—			999
Cash dividends and distributions paid, and contributions received, net																	(547		)	(17		)	(749		)	677			(636		)
Other, net	3			(2		)	(3		)		—			(2		)	(13		)	(37		)	(14		)	49			(15		)
Net cash provided by (used in) financing activities	144			(1,449		)	(1,384		)		493			(2,196		)	782			1,654			1,310			(1,539		)	2,207

Net increase (decrease) in cash and cash equivalents	—			1			(1,328		)		—			(1,327		)
Net (decrease) increase in cash and cash equivalents																	—			—			(126		)	—			(126		)
Decrease in cash and cash equivalents in assets held for sale																	—			—			42			—			42
Cash and cash equivalents at beginning of period	—			—			1,985				—			1,985			—			1			316			—			317
Cash and cash equivalents at end of period	$	—		$	1		$	657			$	—		$	658		$	—		$	1		$	232		$	—		$	233

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NOTE 12. NEW ACCOUNTING STANDARDS

In ~~July~~May 2015, the Financial Accounting Standards Board (FASB) issued an ~~Accounting Standards Update (ASU)~~ASU that ~~simplifies~~removes the ~~subsequent measurement of inventory by requiring entities~~requirement to ~~measure inventory at~~categorize within the ~~lower of cost or net realizable~~fair value ~~except~~hierarchy all investments for ~~inventory~~which fair value is measured using the ~~last-in, first-out (LIFO) or~~NAV per share (or its equivalent) as a practical expedient. FCX adopted this ASU effective January 1, 2016, and the ~~retail inventory methods. Under~~prior period disclosures have been restated to remove these investments from the ~~new~~levels within the fair value hierarchy (refer to Note 8).

In January 2016, FASB issued an ASU that amends the current guidance ~~entities are only required~~on the classification and measurement of financial instruments. This ASU makes limited changes to compare the cost of inventory to one measure - net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposalexisting guidance and ~~transportation.~~amends certain disclosure requirements. For public entities, this ASU is effective for interim and annual periods beginning after December 15, 2017. Early adoption is not permitted, except for the provision on recording fair value changes for financial liabilities under the fair value option. FCX is currently evaluating the impact this ASU will have on its financial reporting and disclosures, but at this time does not expect the adoption of this ASU will have a material impact on its financial statements.

In February 2016, FASB issued an ASU that will require lessees to recognize most leases on the balance sheet. This ASU allows lessees to make an accounting policy election to not recognize a lease asset and liability for leases with a term of 12 months or less and do not have a purchase option that is expected to be exercised. For public entities, this ASU is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. This ASU must be applied using the modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. FCX is currently evaluating the impact this guidance will have on its financial statements.

In March 2016, FASB issued an ASU that simplifies various aspects of the accounting for share-based payment transactions, including the income tax consequences, statutory tax withholding requirements, an accounting policy election for forfeitures and the classification on the statement of cash flows. For public entities, this ASU is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. Each of the amendments in this ASU provides specific transition requirements. FCX expects to adopt this ASU effective January 1, 2017, and does not expect adoption to have a material impact on its financial statements.

In June 2016, FASB issued an ASU that changes the impairment model for most financial assets and certain other instruments, and will also require expanded disclosures. For public entities, this ASU is effective for interim and annual reporting periods ~~within those fiscal years. Early~~beginning after December 15, 2019, with early adoption ~~is permitted~~permitted. The provisions of the ASU must be applied as a cumulative-effect adjustment to retained earnings as of the beginning of ~~an interim or annual~~the first reporting ~~period. This ASU must be applied prospectively.~~period in which the guidance is effective. FCX ~~adopted~~is currently evaluating the impact this ASU ~~effective July 1, 2015, and it had no impact~~will have on its ~~results of operations.~~

In April and August 2015, FASB issued ASUs to simplify the presentation of debt issuance costs. These ASUs require 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, these ASUs are 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 these ASUs 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 13. SUBSEQUENT EVENTS

On October 14, 2016, FM O&G entered into an agreement to sell its onshore California oil and gas properties. Refer to Note 2 for further discussion.

FCX evaluated events after September 30, ~~2015~~2016, 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 September 30, ~~2015~~,2016, and the related consolidated statements of operations and comprehensive income (loss) ~~income~~ for the three- and nine-month periods ended September 30, ~~2015~~2016 and ~~2014,~~2015, the consolidated statements of cash flows for the nine-month periods ended September 30, ~~2015~~2016 and ~~2014~~,2015, and the consolidated statement of equity for the nine-month period ended September 30, ~~2015~~2016. 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~~2015, 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.~~26, 2016, except for Note 2, as to which the date is November 9, 2016. In our opinion, the accompanying ~~condensed~~ consolidated balance sheet of Freeport-McMoRan Inc. as of December 31, ~~2014~~,2015, 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

November ~~6, 2015~~9, 2016

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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~~2015, filed with the United States (U.S.) Securities and Exchange Commission (SEC)., as recast in the Form 8-K filed on November 9, 2016, for the presentation of TF Holdings Limited (TFHL) as discontinued operations. 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. Additionally, in accordance with accounting guidelines, TFHL, through which we hold an interest in the Tenke Fungurume (Tenke) mine, is reported as a discontinued operation for all periods presented.

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.~~assets. 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;~~deposits, and significant mining operations in ~~North and South America;~~ the ~~Tenke Fungurume (Tenke)~~Americas, including the large-scale Morenci minerals district in North America and 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, the Haynesville shale play in Louisiana, the Madden area in Central Wyoming and a position in the Inboard Lower Tertiary/Cretaceous natural gas trend onshoreCerro Verde operation in South ~~Louisiana.~~America.

~~Our results~~Net income (loss) attributable to common stock totaled $217 million in third-quarter 2016 and $(4.4) billion for the first nine months of 2016, compared with $(3.8) billion in third-quarter 2015 and $(8.2) billion for the first nine months of 2015. The third quarter and first nine months of ~~2015, compared with~~ ~~2014~~ periods, were significantly affected by lower commodity price realizations. Third-quarter 2015, compared with third-quarter 2014, also reflects lower copper and gold sales volumes, partly offset by higher oil sales volumes. The first nine months of 2015,2016, compared with the ~~first nine months~~2015 periods, benefited from lower charges for the impairment of ~~2014, reflects~~oil and gas properties and higher copper ~~and gold~~ sales volumes, partly offset by lower oil sales volumes. Results for the 2015 periods were impacted by net charges of $4.0 billion ($3.7 billion to net loss attributable to common stockholders) in third-quarter 2015 and $9.9 billion ($8.1 billion to net loss attributable to common stockholders) for thecopper price realizations. The first nine months of ~~2015 primarily for~~2016 also reflected net gains on sales of assets, mostly offset by net charges associated with the ~~impairment~~termination and settlements of ~~our oil and gas properties pursuant to full cost accounting rules and related charges to establish a deferred tax valuation allowance.~~drilling rig contracts. Refer to “Consolidated Results” for further ~~discussion of our consolidated financial results for the three- and nine-month periods ended September 30, 2015 and 2014.~~discussion.

~~REVISED OPERATING PLANS AND OIL AND GAS REVIEW~~

At September 30, ~~2015,~~2016, we had ~~$338 million~~$1.1 billion in consolidated cash and cash equivalents and ~~$20.7~~$19.0 billion in total debt. ~~During third-quarter 2015, we took aggressive~~We had no borrowings and $3.5 billion available under our $3.5 billion revolving credit facility. Refer to Note 6 for further discussion of debt.

We are taking actions to ~~enhance the outlook for the generation~~strengthen our balance sheet through a combination of asset sale transactions, cash flow from operations ~~after~~and capital ~~expenditures~~market transactions. During 2016, we have announced $6.6 billion in asset sale transactions and have received aggregate cash consideration of $1.4 billion. The remaining $5.2 billion in gross proceeds associated with the pending sale of our interest in TFHL and the sales of our Deepwater Gulf of Mexico (GOM) and onshore California oil and gas properties is expected to be received in fourth-quarter 2016. As further discussed in Note 2, we have entered into agreements to sell (i) our Deepwater GOM properties for cash consideration of $2.0 billion (before closing adjustments) and up to $150 million in contingent payments, (ii) our onshore California oil and gas properties for cash consideration of $592 million (before closing adjustments) and up to $150 million of contingent consideration and (iii) our interest in TFHL for $2.65 billion and contingent consideration of up to $120 million. In connection with the sale of the Deepwater GOM properties, Freeport McMoRan Oil & Gas LLC (FM O&G) entered into an agreement to amend the terms of the Plains Offshore Operations Inc. (Plains Offshore) preferred stock to provide FM O&G the option to call these securities for $582 million, which FM O&G expects to exercise at low commodity prices, including further reductions in capital spending, production curtailments at certain mining operations and actions to reduce operating, exploration and administrative costs. These actions include:the time the Deepwater GOM sale closes.


▪	~~A 29 percent reduction in estimated 2016 capital expenditures (from $5.6 billion to $4.0 billion), including:~~


▪	~~A 25 percent reduction in estimated mining capital expenditures (from $2.7 billion to $2.0 billion)~~


▪	~~A 30 percent reduction in estimated oil and gas capital expenditures (from $2.9 billion to $2.0 billion)~~


▪	~~Production curtailments at certain North and South America copper mines~~


▪	~~Reductions in mining operating costs~~

In July 2016, we commenced a registered at-the-market offering of up to $1.5 billion of common stock. Through November 8, 2016, we have sold 59.8 million shares of our common stock for gross proceeds of $719 million ($12.02 per share average price). Additionally, through August 4, 2016, FCX redeemed $369 million in senior notes (including $101 million in third-quarter 2016) for 28 million shares of its common stock in a series of privately negotiated transactions. Refer to Note 6 for further discussion.

During second-quarter 2016, we terminated contracts for FM O&G's deepwater drillships, and settled aggregate commitments totaling $1.1 billion for $755 million, of which $540 million was funded with shares of our common stock. We ~~continue~~also agreed to ~~review our capital projects and costs~~provide contingent payments of up to ~~maximize cash flow in a weak market environment and~~$105 million, depending on the average price of crude oil over the 12-month period ending June 30, 2017. Refer to ~~preserve our resources~~Note 9 for improved market conditions. During October 2015, we initiated a plan to reduce operating rates at our Sierrita mine in Arizona in response to low copper and molybdenum prices. Initially the plan involves operating the Sierrita mine at 50 percent of its current operating rate. We are also evaluating the economics of a full shutdown. The impact of a 50 percent curtailment is approximately 100 million pounds of copper and 10 million pounds of molybdenum per year. Combined with the previously announced curtailments, the consolidated impact is an aggregate reduction of 250 million pounds of copper and 20 million pounds of molybdenum per year.further discussion.

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FCX continues to aggressively manage production, exploration and administrative costs and capital spending. With the successful completion of the Cerro Verde expansion and anticipated access to higher grade ore from the Grasberg mine in future quarters, we expect to generate cash flows for debt reduction.

~~As previously announced~~We remain focused on ~~October 6, 2015,~~ our ~~Board~~high-quality portfolio of ~~Directors (the Board) is also undertaking a strategic review~~long-lived copper assets positioned to generate value as market conditions improve. In addition to debt reduction plans, we are pursuing opportunities to create additional value through mine designs that would increase copper reserves, reduce costs and provide opportunities to enhance net present values, and we continue to advance studies for future development of our oil and gas business (FCX Oil & Gas Inc., or FM O&G) to evaluate alternatives designed to enhance value to our shareholders and achieve self funding of our oil and gas business from its cash flows and resources. The previously announced potential initial public offering (IPO) of a minority interest in our oil and gas business remains an alternative for future consideration,copper resources, the timing of which ~~is subject to~~will be dependent on market conditions. Other alternatives currently under consideration include a spinoff of the oil and gas business to our shareholders, joint venture arrangements and further spending reductions. FM O&G’s high-quality asset base, substantial underutilized Deepwater GOM infrastructure, large inventory of low-risk development opportunities and experienced personnel and management team provide opportunities to generate value.

Our strategy will focus on our global leading position in the copper industry. Near term, this strategy will involve managing our production activities, spending on capital projects and operations, and the administration of our business to enhance cash flows and protect liquidity. While taking prudent near-term steps responsive to the currently weak market conditions, we remain confident about the longer term outlook for copper prices based on the global demand and supply fundamentals. A primary objective of our strategy will be a significant reduction over time of our current debt level. With our established reserves and large-scale current production base, our significant portfolio of undeveloped resources, and our global organization of highly qualified dedicated workers and management, we are well positioned to build value for our shareholders.

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~~equivalents (BOE) for our oil and gas operations, ~~and~~ operating cash ~~flow.~~flow and capital expenditures.

Projections and other forward-looking statements included in this quarterly report on Form 10-Q assume a resolution with respect to Indonesian regulations prohibiting exports of concentrate and anode slimes after January 12, 2017 (refer to "Operations – Indonesia Mining" for further discussion).

Sales ~~Volumes.~~Volumes

Following are our projected consolidated sales volumes for the year ~~2015~~2016:



Copper (millions of recoverable pounds):
North America copper mines	~~1,945~~1,825
South America mining	~~885~~1,325
Indonesia mining	~~760~~1,170
~~Africa mining~~ Consolidated - continuing operations	~~465~~4,320
Discontinued operations - Africa mining	~~4,055~~485
Total	4,805
Gold (thousands of recoverable ounces)	~~1,200~~1,264
Molybdenum (millions of recoverable pounds)	9073	^a
Oil Equivalents (million BOE or MMBOE)	~~52.7~~48.1


a.	Projected molybdenum sales include 4723 million pounds produced by our Molybdenum mines and 4350 million pounds produced by our North and South America copper mines.

Consolidated sales volumes for fourth-quarter ~~fourth-quarter2015~~2016 (excluding 120 million pounds of copper for Tenke) are expected to approximate ~~1.1~~1.2 billion pounds of copper, ~~310~~590 thousand ounces of gold, 21 million pounds of molybdenum and ~~13.3~~11.5 MMBOE. Projected 2015 sales volumes are approximately 130 million pounds of copper and 90 thousand ounces of gold below the estimates reported in our quarterly report on Form 10-Q for the quarter ended June 30, 2015, reflecting revised operating plans and ongoing El Niño weather conditions in Indonesia. With the completion of the Cerro Verde expansion project and access to higher grade ore at Grasberg in 2016, we expect sales volumes to approximate 5.2 billion pounds of copper for the year 2016. Projected sales volumes are dependent on a number of factors, including operational performance, shipping schedules and ~~other factors.~~the completion of pending asset sale transactions. For other important factors that could cause results to differ materially from projections, refer to "Cautionary ~~Statement.~~Statement" and Part II, Item IA. "Risk Factors."

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Mining Unit Net Cash ~~Costs.~~Costs

Assuming average prices of $~~1,150~~1,250 per ounce of gold and $~~5.50~~7 per pound of molybdenum for fourth-quarter ~~2015~~2016, and achievement of current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for our copper mines (both including and excluding Tenke) are expected to average ~~$1.52~~$1.20 per pound of copper for the year ~~2015~~2016 ~~and $1.43 for fourth-quarter 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 fourth-quarter ~~2015~~2016 on consolidated unit net cash costs ~~for the year 2015~~ would approximate ~~$0.006~~$0.0075 per pound for each $50 per ounce change in the average price of gold and ~~$0.003~~$0.004 per pound for each $2 per pound change in the average price of molybdenum. Quarterly unit net cash costs vary with fluctuations in sales volumes and realized prices primarily for gold and molybdenum. Refer to “Consolidated Results

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– Production and Delivery Costs” for further discussion of consolidated production and delivery costs for our mining operations.

Unit net cash costs are expected to decline significantly in 2016, principally reflecting higher anticipated copper and gold volumes. Using the same metals price assumptions and assuming achievement of current sales and cost estimates, consolidated unit net cash costs (net of by-product credits) for copper mines are expected to average $1.15 per pound of copper for the year 2016.

Oil and Gas Cash Production Costs per ~~BOE.~~BOE

Based on current sales volume and cost estimates, cash production costs for ~~the year 2015,~~our oil and gas ~~cash production costs~~operations are expected to approximate $1916.00 per BOE for the year ~~2015~~2016. ~~Oil and gas production costs per BOE are expected to decline in 2016 with the addition of production from new GOM wells.~~ Refer to “Operations – Oil and Gas” for further discussion of oil and gas production costs.

Consolidated Operating Cash ~~Flow.~~Flow

Our consolidated operating cash flows vary with volumes, 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 $~~2.40~~2.10 per pound of copper, $~~1,150~~1,250 per ounce of gold, $~~5.50~~7 per pound of molybdenum and ~~$50~~$51 per barrel of Brent crude oil for fourth-quarter ~~2015,~~2016, consolidated operating cash flows are estimated to approximate ~~$3.3~~$3.6 billion for the year ~~2015~~2016 (including $0.3 billion in working capital sources and other tax payments). Projected consolidated operating cash flows for the year 2016 also reflect an estimated income tax provision of $0.5 billion, primarily associated with income from our international mining operations (refer to "Consolidated Results - Income Taxes" for further discussion of our projected income tax rate for the year 2016). The impact of price changes during fourth-quarter ~~2015~~2016 on operating cash flows would approximate $~~110~~150 million for each $0.10 per pound change in the average price of copper, $1520 million for each $50 per ounce change in the average price of gold, $2015 million for each $2 per pound change in the average price of molybdenum and ~~$30~~$28 million for each $5 per barrel change in the average price of Brent crude ~~oil price.~~oil.

Based on projected 2016 sales volumes of 5.2 billion pounds of copper, 1.9 million ounces of gold, 75 million pounds of molybdenum and 58.9 MMBOE and using the same metals price assumptions and the recent 2016 future price of $54 per barrel of Brent crude oil, our consolidated operating cash flowsConsolidated Capital Expenditures

Consolidated capital expenditures are ~~estimated~~expected to approximate ~~$6.8~~$2.8 billion for the year 2016, ~~including $1.3~~consisting of $1.6 billion ~~of working capital sources, providing cash flow~~ for ~~required capital investments, dividends and repayment of debt. The impact of price changes on operating cash flows~~mining operations (including $1.2 billion for major projects, primarily for the ~~year 2016 would approximate $350 million~~development of underground mines by PT Freeport Indonesia (PT-FI) and for ~~each $0.10 per pound change~~the Cerro Verde expansion, which was completed earlier in the ~~average price of copper, $50 million~~year) and $1.2 billion for ~~each $50 per ounce change in the average price of gold, $60 million for each $2 per pound change in the average price of molybdenum~~oil and ~~$130 million for each $5 per barrel change in the average Brent crude oil price.~~gas operations.

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MARKETS

~~Metals.~~Metals

World prices for copper, gold and molybdenum can fluctuate significantly. During the period from January ~~2005~~2006 through October ~~2015~~,2016, 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~~525 per ounce in ~~2005~~2006 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 $~~4.83~~4.46 per pound in 2015 to a ~~record~~ high of $~~39.25~~33.88 per pound in ~~2005.~~2008. 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~~2015.

This graph presents LME spot copper prices and the combined reported stocks of copper at the LME, Commodity Exchange Inc. (COMEX), a division of the New York Mercantile Exchange (NYMEX), and the Shanghai Futures Exchange from January ~~2005~~2006 through October ~~2015~~.2016. 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. Copper prices remain largely driven by Chinese demand, which has been negatively impacted by soft export demand for electronics, a weak construction market and slow progress on implementing investment in electric grid infrastructure.During third-quarter 2016, LME spot copper prices ranged from a low of $~~2.22~~2.07 per pound to a high of $~~2.61~~2.25 per pound, ~~during third-quarter 2015,~~ averaged $~~2.39~~2.16 per pound, and closed at $~~2.31~~2.19 per pound on September 30, ~~2015~~2016. The LME spot copper ~~prices closed at~~price was $~~2.33~~2.19 per pound on October ~~30, 2015~~.31, 2016.

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 output of existing large ~~mines' output~~mines 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~~2006 through October ~~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.~~2016. During third-quarter ~~2015~~2016, London PM gold prices ranged from a low of $~~1,081~~1,308 per ounce to a high of $~~1,168~~1,366 per ounce, averaged $~~1,124~~1,335 per ounce, and closed at $~~1,114~~1,323 per ounce on September 30, ~~2015~~2016. ~~Gold prices closed at~~The London PM gold price was $~~1,142~~1,272 per ounce on October ~~30, 2015~~.31, 2016.

This graph presents the Metals Week Molybdenum Dealer Oxide weekly average prices from January ~~2005~~2006 through October ~~2015~~.2016. Molybdenum prices have declined since mid-2014 because of weaker demand from global steel and stainless steel producers. During third-quarter ~~2015~~2016, the weekly average price of molybdenum ranged from a low of $~~5.64~~6.41 per pound to a high of $~~6.23~~7.55 per pound, averaged $~~5.85~~7.04 per pound, and was $~~5.71~~6.87 per pound on September 30, ~~2015~~2016. The Metals Week Molybdenum Dealer Oxide weekly average price ~~has declined further during October 2015 and~~ was $~~4.83~~6.33 per pound on October ~~30, 2015~~.31, 2016.

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Oil and ~~Gas.~~Gas

Market prices for crude oil and natural gas can fluctuate significantly. During the period from January ~~2005~~2006 through October ~~2015~~,2016, the Brent crude oil price ranged from a low of $~~36.61~~27.88 per barrel in 2016 to a high of $146.08 per barrel in 2008 and the NYMEX natural gas price fluctuated from a low of $~~2.04~~1.71 per million British thermal units (MMBtu) in ~~2012~~2016 to a high of $~~13.91~~13.11 per MMBtu in ~~2005.~~2008. 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~~2015.

This graph presents Brent crude oil prices and NYMEX natural gas contract prices from January ~~2005~~2006 through October ~~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.~~2016. Since mid-2014, oil prices have significantly declined ~~associated~~in connection with concerns of global oversupply primarily attributable to continued strong production from U.S. shale plays, the Organization of Petroleum Exporting Countries and Russia, coupled with weak economic data in Europe and slowing Chinese demand.oversupply. During third-quarter ~~2015,~~2016, the Brent crude oil ~~prices~~price ranged from a low of ~~$42.69~~$41.80 per barrel to a high of ~~$62.07~~$50.89 per barrel, averaged ~~$51.31~~$46.99 per barrel, and ~~were $48.37~~was $49.06 per barrel on September 30, ~~2015.~~2016. The Brent crude oil price was ~~$49.56~~$48.30 per barrel on October ~~30, 2015.~~31, 2016.

~~CRITICAL ACCOUNTING ESTIMATES~~

Following reflects updates to certain of our critical accounting estimates described further 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.

~~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 unit-of-production (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 depreciation, depletion and amortization (DD&A) rate is affected by changes to estimates of proved reserves and costs subject to amortization.

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 reference oil price, the average price was $59.21 per barrel at September 30, 2015, compared with $71.68 at June

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30, 2015, and $82.72 per barrel at March 31, 2015. As of September 30, 2015, 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 test limitation specified by the SEC's full cost accounting rules, which resulted in the recognition of impairment charges totaling $3.5 billion in third-quarter 2015 and $9.3 billion for the first nine months of 2015.

If in future months the twelve-month historical average price remains below the September 30, 2015, twelve-month average of $59.21 per barrel, the ceiling test limitation will decrease resulting in potentially significant additional ceiling test impairments of our oil and gas properties. The WTI spot oil price was $46.59 per barrel at October 30, 2015.

If the trailing twelve-month average prices for the period ended September 30, 2015, had been $50.37 per barrel of oil and $2.66 per MMBtu for natural gas, while all other inputs and assumptions remained constant, an additional pre-tax impairment charge of $1.2 billion would have been recorded to our oil and gas properties in third-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 ten months ended October 2015, and the October 2015 prices were held constant for the remaining two months. The additional pre-tax impairment charge is partly the result of a 16 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 September 30, 2015. The oil and natural gas price is a single variable in the estimation of our proved reserves, and other factors, as described below, could have a significant impact on future reserves and the present value of future cash flows.

FM O&G periodically (and at least annually) assesses the carrying value of its unevaluated properties to determine whether impairment has occurred. Following a review of the carrying values of unevaluated properties during third-quarter 2015, FM O&G determined that the carrying value of its unevaluated properties in the onshore California area were impaired primarily resulting from declines in oil prices. As a result, FM O&G transferred $837 million of costs to the full cost pool, which were included in the September 30, 2015, ceiling test discussed above.

In 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, include costs transferred from unevaluated properties to the full cost pool without corresponding proved oil and natural gas reserve additions, negative reserve revisions and the future incurrence of exploration, development and production costs. As FM O&G completes activities to assess its $7.6 billion in unevaluated properties, related costs currently recorded as unevaluated properties not subject to amortization will be transferred to 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.

FM O&G also has a farm-in arrangement to earn interests in exploration blocks located in the Mazagan permit area offshore Morocco. In August 2015, drilling was completed to its targeted depth below 20,000 feet to evaluate the primary objectives, which did not contain hydrocarbons. During third-quarter 2015, costs associated with the well were transferred to the Morocco full cost pool. As FM O&G does not have proved reserves or production in Morocco, an impairment charge of $0.2 billion was recorded in third-quarter 2015. If FM O&G's future exploration prospects do not establish proved reserves or production, future impairment charges of this nature may occur.

~~Impairment of Long-Lived Mining Assets~~

We assess the carrying values of our long-lived mining assets when events or changes in circumstances indicate that the related carrying amount of such assets may not be recoverable. In evaluating our long-lived assets for recoverability, estimates of after-tax undiscounted future cash flows of our individual mining operations are used, with impairment losses measured by reference to fair value. As quoted market prices are unavailable for our individual mining operations, fair value is determined through the use of discounted estimated future cash flows. The estimated cash flows used to assess recoverability of our long-lived assets and measure fair value of our mining operations are derived from current business plans, which are developed using near-term price forecasts reflective of the current price environment and management's projections for long-term average metal prices. In addition to near- and long-term metal price assumptions, other key assumptions include estimates of commodity-based and other input costs; proven and probable mineral reserves estimates, including the timing and cost to develop and produce the reserves; and the use of appropriate current escalation and discount rates. We believe our estimates and models used to determine fair value are similar to what a market participant would use.

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During third-quarter 2015, we evaluated our long-lived mining assets for impairment as the current price environment indicated that the related carrying amounts may not be recoverable. These evaluations resulted in asset impairment charges at our Tyrone mine totaling $59 million for the third quarter and first nine months of 2015. Events that could result in additional impairments of our long-lived assets include, but are not limited to, decreases in future current and long-term metal price assumptions, decreases in estimated recoverable proven and probable mineral reserves and any event that might otherwise have a material adverse effect on mine site production levels or costs.

CONSOLIDATED RESULTS


	Three Months Ended							Nine Months Ended
	September 30,							September 30,							Three Months Ended September 30,								Nine Months Ended September 30,
	2015				2014^a			2015				2014^a			2016				2015				2016				2015
SUMMARY FINANCIAL DATA	(in millions, except per share amounts)														(in millions, except per share amounts)
Revenues^b,c,d	$	3,681			$	5,696		$	12,082			$	16,203
Operating (loss) income^b,c,d,e,f	$	(3,945	)	^g,h	$	1,132	ⁱ	$	(9,282	)	^g,h,i	$	3,396	ⁱ
Net (loss) income attributable to common stock^c,d,e,f,j	$	(3,830	)	^g,h	$	552	^i,k,l	$	(8,155	)	^g,h,i,m	$	1,544	^i,k,l
Diluted net (loss) income per share attributable to common stock^c,d,e,f,j	$	(3.58	)	^g,h	$	0.53	^i,k,l	$	(7.77	)	^g,h,i,m	$	1.47	^i,k,l
Revenues^a,b															$	3,877			$	3,382		^c	$	10,453			$	11,091		^c
Operating income (loss)^a,d,e,f,g															$	359		^h,i	$	(3,964	)		$	(3,495	)	^h,i	$	(9,415	)	ⁱ
Net income (loss) from continuing operations^j															$	292		^k,l	$	(3,815	)		$	(4,034	)	^k,l	$	(8,090	)	^m
Net (loss) income from discontinued operationsⁿ															$	(6	)		$	25			$	(191	)		$	95
Net income (loss) attributable to common stock															$	217			$	(3,830	)		$	(4,446	)		$	(8,155	)
Diluted net income (loss) per share of common stock:
Continuing operations															$	0.18			$	(3.59	)		$	(3.27	)		$	(7.80	)
Discontinued operations															(0.02		)		0.01				(0.18		)		0.03
															$	0.16			$	(3.58	)		$	(3.45	)		$	(7.77	)
Diluted weighted-average common shares outstanding	1,071				1,046			1,050				1,045			1,351				1,071				1,289				1,050
Operating cash flowsⁿ	$	822			$	1,926		$	2,608			$	4,513
Operating cash flows^o															$	980			$	822			$	2,594			$	2,608
Capital expenditures	$	1,527			$	1,853		$	5,055			$	5,415		$	494			$	1,527			$	2,309			$	5,055
At September 30:
Cash and cash equivalents	$	338			$	658		$	338			$	658		$	1,108			$	233			$	1,108			$	233
Total debt, including current portion	$	20,698			$	19,636		$	20,698			$	19,636		$	18,982			$	20,698			$	18,982			$	20,698


a.	~~Includes the results of the Candelaria and Ojos del Salado mines that were sold in November 2014, and the first nine months of 2014 also includes Eagle Ford properties that were sold in June 2014.~~

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


	Three Months Ended						Nine Months Ended
	September 30,						September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
Revenues	2015			2014			2015			2014			2016			2015			2016			2015
North America copper mines	$	1,169		$	1,490		$	3,909		$	4,245		$	1,084		$	1,169		$	3,280		$	3,909
South America mining	438			847			1,377			2,776			671			438			2,019			1,377
Indonesia mining	609			1,253			2,006			2,246			986			609			2,073			2,006
Africa mining	328			428			1,089			1,173
Molybdenum mines	83			173			298			469			46			83			136			298
Rod & Refining	951			1,227			3,117			3,623			937			951			2,842			3,117
Atlantic Copper Smelting & Refining	439			601			1,485			1,823			445			439			1,363			1,485
U.S. oil & gas operations	525			990			1,594			3,487			427			525			1,132			1,594
Other mining, corporate, other & eliminations	(861		)	(1,313		)	(2,793		)	(3,639		)
Other & eliminations													(719		)	(832		)	(2,392		)	(2,695		)
Total revenues	$	3,681		$	5,696		$	12,082		$	16,203		$	3,877		$	3,382		$	10,453		$	11,091

Operating income (loss)
North America copper mines	$	—		$	471		$	594		$	1,329		$	213		$	—		$	1,190		$	594
South America mining	4			273			134			1,010			111			4			371			134
Indonesia mining	78			434			383			385			374			78			501			383
Africa mining	52			161			252			436
Molybdenum mines	(29		)	62			(32		)	155			(26		)	(29		)	(74		)	(32		)
Rod & Refining	3			5			13			15			4			3			15			13
Atlantic Copper Smelting & Refining	15			8			46			(5		)	17			15			53			46
U.S. oil & gas operations	(3,735		)	(150		)	(10,138		)	359			(289		)	(3,735		)	(5,544		)	(10,138		)
Other mining, corporate, other & eliminations	(333		)	(132		)	(534		)	(288		)
Total operating (loss) income	$	(3,945	)	$	1,132		$	(9,282	)	$	3,396
Other & eliminations													(45		)	(300		)	(7		)	(415		)
Total operating income (loss)													$	359		$	(3,964	)	$	(3,495	)	$	(9,415	)

c.b.

Includes ~~unfavorable~~(unfavorable) favorable adjustments to provisionally priced concentrate and cathode copper sales recognized in prior periods totaling ~~$126~~$(15) million ($62(7) million to net income attributable to common stock from continuing operations or $(0.01) per share) in third-quarter 2016, $(117) million ($(58) million to net loss attributable to common stock from continuing operations or $(0.05) per share) in third-quarter 2015, $5 million ($2 million to net loss attributable to common stock from continuing operations or less than $0.01 per share) for the first nine months of 2016 and $(100) million ($(48) million to net loss attributable to common stock from continuing operations or $(0.05) per share) for the first nine months of 2015. Refer to “Revenues” for further discussion.


c.	Includes net noncash mark-to-market losses associated with crude oil derivative contracts totaling $74 million ($46 million to net loss attributable to common stock or ~~$0.06~~$0.04 per share) ~~for~~in third-quarter 2015 ~~$22~~and $217 million ($~~10 million to net income attributable to common stock or $0.01 per share) for third-quarter 2014, $107 million ($50~~

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million to net loss attributable to common stock or $0.05 per share) for the first nine months of 2015 and $118 million ($65 million to net income attributable to common stock or $0.06 per share) for the first nine months of 2014. Refer to “Revenues” for further discussion.

~~Includes net noncash mark-to-market (losses) gains associated with crude oil and natural gas derivative contracts totaling $(74) million ($(46)~~135 million to net loss attributable to common stock or $(0.04) per share) for third-quarter 2015, $122 million ($76 million to net income attributable to common stock or $0.07 per share) for third-quarter 2014, $(217) million ($(135) million to net loss attributable to common stock or $(0.13)$0.13 per share) for the first nine months of ~~2015 and $130 million ($80 million to net income attributable to common stock or $0.08 per share) for the first nine months of 2014. Refer to "Revenues" for further discussion.~~2015.

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e.d.

Includes the following charges to reduce the carrying value of oil and gas properties pursuant to full cost accounting rules ~~of $3.7 billion ($3.5 billion to net loss attributable to common stock or $3.25~~(in millions, except per share) for third-quarter 2015 and $9.4 billion ($7.9 billion to net loss attributable to common stock or $7.48 per share) for the first nine months of 2015.The after-tax impacts to net loss include net tax charges of $1.1 billion for third-quarter 2015 and $1.9 billion for the first nine months of 2015 to establish a valuation allowance primarily against U.S. federal alternative minimum tax credits and foreign tax credits, partly offset by a tax benefit related to the impairment of the Morocco oil and gas properties. The third quarter and first nine months of 2014 also includes charges of $308 million ($192 million to net income attributable to common stock of $0.18 per share) to reduce the carrying value of oil and gas properties. See Note 1 and "Critical Accounting Estimates" for further discussion.share amounts):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Operating income (loss)	$	239	$	3,652	$	4,317	$	9,442
Net income (loss) attributable to common stock	$	239	$	3,481	$	4,317	$	7,855
Net income (loss) per share of common stock	$	0.18	$	3.25	$	3.35	$	7.48

As a result of impairments to oil and gas properties, we recorded tax charges to establish valuation allowances against U.S. federal and state deferred tax assets that are not expected to generate a future benefit, which have been reflected in the after-tax impacts for the impairment of oil and gas properties (refer to “Income Taxes” for these amounts).

f.e.

Includes net ~~(charges) credits for adjustments to environmental obligations~~charges at oil and ~~related litigation reserves~~gas operations totaling ~~$(28)~~$50 million ($~~(18) million to net loss attributable to common stock or $(0.02) per share) for third-quarter 2015~~, ~~$1 million ($1~~50 million to net income attributable to common stock or ~~less than $0.01~~$0.03 per share) ~~for~~in third-quarter 2014, $(36) million ($(23) million to net loss attributable to common stock or $(0.02) per share) for the first nine months of 2015 and $(68) million ($(67) million to net income attributable to common stock or $(0.06) per share) for the first nine months of 2014.

Includes charges at mining operations for (i) adjustments to copper and molybdenum inventories totaling $91 million ($58 million to net loss attributable to common stock or $0.05 per share) for third-quarter 2015 and $154 million ($99 million to net loss attributable to common stock or $0.09 per share) for the first nine months of 2015 and (ii) impairment and restructuring charges totaling $95 million ($58 million to net loss attributable to common stock or $0.05 per share) for the third quarter and first nine months of 2015. See Notes 1 and 4 for further discussion.

~~Includes charges at oil and gas operations for tax assessments related to prior periods at the California properties, idle/terminated rig costs and inventory write-downs totaling~~2016, $21 million ($13 million to net loss attributable to common stock or $0.01 per share) ~~for~~in third-quarter 2015, $942 million ($942 million to net loss attributable to common stock or $0.73 per share) for the first nine months of 2016 and $59 million ($3637 million to net loss attributable to common stock or $0.04 per share) for the first nine months of 2015, primarily for drillship settlements/idle rig costs, inventory adjustments and asset impairments. The 2016 periods also include charges for the termination of the Morocco well commitment and the 2015 periods include charges for prior period property tax assessments related to California properties.

Includes charges at mining operations for metals inventory adjustments, asset retirement/impairment and restructuring totaling $40 million ($40 million to net income attributable to common stock or $0.02 per share) in third-quarter 2016, $183 million ($114 million to net loss attributable to common stock or $0.10 per share) in third-quarter 2015, $44 million ($44 million to net loss attributable to common stock or $0.03 per share) for the first nine months of 2016, and $246 million ($155 million to net loss attributable to common stock or $0.14 per share) for the first nine months of 2015.

Includes net (credits) charges to environmental obligations and related litigation reserves totaling $(12) million ($(12) million to net income attributable to common stock or $(0.01) per share) in third-quarter 2016, $28 million ($18 million to net loss attributable to common stock or $0.02 per share) in third-quarter 2015, $(11) million ($(11) million to net loss attributable to common stock or $(0.01) per share) for the first nine months of 2016 and $36 million ($23 million to net loss attributable to common stock or $0.02 per share) for the first nine months of 2015.


h.	Includes net restructuring-related (credits) charges at oil and gas operations totaling $(1) million ($(1) million to net income attributable to common stock or less than $0.01 per share) in third-quarter 2016 and $38 million ($38 million to net loss attributable to common stock or $0.03 per share) for the first nine months of 2016.

Includes net gains on ~~the sale~~sales of assets totaling $13 million ($13 million to net income attributable to common stock or $0.01 per share) in third-quarter 2016and$762 million ($757 million to net loss attributable to common stock or $0.59 per share) for the first nine months of 2016, primarily associated with the Morenci and Timok transactions, and $39 million ($25 million to net loss attributable to common stock or $0.02 per share) for the first nine months of 2015 associated with the sale of our ~~one-third~~ interest in the Luna Energy power ~~facility in New Mexico and $46 million ($31 million~~facility. Refer to ~~net income attributable to common stock or $0.03 per share)~~Note 2 for further discussion of the ~~third quarter and first nine months of 2014 associated with the sale of a metals injection molding plant.~~2016 dispositions.


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

Includes a net ~~gains~~gain on early extinguishment of debt ~~totaling~~ ~~$58 million~~ (~~$17 million~~ ~~to net income attributable to common stock or~~ ~~$0.02~~ ~~per year) in third-quarter 2014 and $63~~of $15 million ($2115 million to net income attributable to common stock or ~~$0.02~~$0.01 per share) in third-quarter 2016 and $51 million ($51 million to net loss attributable to common stock or $0.04 per share) for the first nine months of ~~2014 related~~2016. Refer to ~~the redemption of senior notes.~~

Note 6 for further discussion.

~~The third quarter~~Includes net tax credits of $332 million ($0.24 per share) in third-quarter 2016 and $290 million ($0.22 per share) for the first nine months of 2014 include a tax charge of $54 million ($47 million net of noncontrolling interests or $0.04 per share) related to changes in Chilean tax rules. The first nine months of 2014 also includes a tax charge of $62 million ($0.06 per share)2016, primarily associated with ~~deferred taxes recorded in connection with the allocation of goodwill~~alternative minimum tax credits, changes to ~~the sale of Eagle Ford.~~valuation allowances and net operating loss carryback claims. Refer to Note 5 for further discussion.


m.	~~The~~Includes a gain of $92 million ($92 million to net loss attributable to common stock or $0.09 per share) for the first nine months of 2015 ~~includes a gain of $92 million ($0.09 per share)~~ related to ~~net~~the proceeds received from insurance carriers and other third parties related to ~~the~~a shareholder derivative litigation settlement.

Net (loss) income from discontinued operations includes charges for (i) allocated interest expense totaling $12 million in third-quarter 2016, $6 million in third-quarter 2015, $33 million for the first nine months of 2016 and $20 million for the first nine months of 2015 associated with the portion of the FCX term loan that is required to be repaid as a result of the sale of our interest in TFHL and (ii) an income tax (benefit) provision totaling $(2) million in third-quarter 2016, $(11) million in third-quarter 2015, $(25) million for the first nine months of 2016 and $20 million for the first nine months of 2015. In accordance with accounting guidelines, net (loss) income from discontinued operations includes an estimated loss on disposal totaling $5 million in third-quarter 2016and $182 million for the first nine months of 2016, which will be adjusted through closing of the transaction.


o.	Includes net working capital (uses) sources ~~(uses)~~ and changes in other tax payments of $(3) million in third-quarter 2016, $507 million ~~for~~in third-quarter 2015, ~~$78~~$463 million for ~~third-quarter 2014,~~the first nine months of 2016 and $342 million for the first nine months of 2015.

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	Three Months Ended September 30,							Nine Months Ended September 30,
	2016			2015				2016			2015
SUMMARY OPERATING DATA
Copper (millions of recoverable pounds)^a
Production	1,093			895				3,091			2,556
Sales, excluding purchases	1,113			888				3,100			2,575
Average realized price per pound	$	2.19		$	2.39			$	2.17		$	2.54
Site production and delivery costs per pound^b	$	1.37		$	1.75			$	1.42		$	1.88
Unit net cash costs per pound^b	$	1.14		$	1.57			$	1.28		$	1.61
Gold (thousands of recoverable ounces)
Production	308			281				658			907
Sales, excluding purchases	317			294				674			909
Average realized price per ounce	$	1,327		$	1,117			$	1,292		$	1,149
Molybdenum (millions of recoverable pounds)
Production	19			23				58			72
Sales, excluding purchases	16			23				52			69
Average realized price per pound	$	9.14		$	7.91			$	8.36		$	9.21
Oil Equivalents
Sales volumes
MMBOE	12.0			13.8				36.6			39.4
Thousand BOE (MBOE) per day	131			150				133			144
Cash operating margin per BOE^c
Realized revenues	$	34.99		$	43.00		^d	$	30.50		$	45.57		^d
Cash production costs	(15.00		)	(18.85		)		(15.28		)	(19.42		)
Cash operating margin	$	19.99		$	24.15			$	15.22		$	26.15


a.	Excludes production and sales volumes from the Tenke mine, which is reported as a discontinued operation. Copper sales volumes from Tenke totaled 118 million pounds in third-quarter 2016, 113 million pounds in third-quarter 2015, ~~and $(699)~~365 million pounds for the first nine months of ~~2014.~~

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Three Months Ended Nine Months Ended
September 30, September 30,
2015
2014^a
2015
2014^a,b

SUMMARY OPERATING DATA
Copper
Production (millions of recoverable pounds) 1,003
1,027
2,895
2,906

Sales, excluding purchases (millions of recoverable pounds) 1,001
1,077
2,925
2,916

Average realized price per pound $ 2.38
$ 3.12
$ 2.54
$ 3.14

Site production and delivery costs per pound^c
$ 1.74
$ 1.91
$ 1.84
$ 1.92

Unit net cash costs per pound^c
$ 1.52
$ 1.34
$ 1.56
$ 1.52

Gold
Production (thousands of recoverable ounces) 281
449
907
846

Sales, excluding purchases (thousands of recoverable ounces) 294
525
909
871

Average realized price per ounce $ 1,117
$ 1,220
$ 1,149
$ 1,251

Molybdenum
Production (millions of recoverable pounds) 23
24
72
73

Sales, excluding purchases (millions of recoverable pounds) 23
22
69
74

Average realized price per pound $ 7.91
$ 14.71
$ 9.21
$ 13.01

Oil Equivalents
Sales volumes
MMBOE 13.8
12.5
39.4
44.7

Thousand BOE (MBOE) per day 150
136
144
164

Cash operating margin per BOE^d

Realized revenues $ 43.00
$ 69.08
$ 45.57
$ 75.04

Cash production costs 18.85
20.93
19.42
19.57

Cash operating margin $ 24.15
$ 48.15
$ 26.15
$ 55.47

~~The 2014 periods include the results of the Candelaria~~2016 and ~~Ojos del Salado mines that were sold in November 2014. Sales volumes from Candelaria and Ojos del Salado totaled 62~~350 million pounds ~~of copper and 16 thousand ounces of gold for third-quarter 2014 and 236 million pounds of copper and 59 thousand ounces of gold~~ for the first nine months of ~~2014.~~2015. Average realized copper prices (including Tenke) were $2.18 per pound in third-quarter 2016, $2.38 per pound in third-quarter 2015, $2.16 per pound for the first nine months of 2016 and $2.54 per pound for the first nine months of 2015. Refer to "Discontinued Operations" for discussion of Tenke's operating results.


b.	The first nine months of 2014 include the results of the Eagle Ford properties that were sold in June 2014. Sales volumes from Eagle Ford totaled 8.7 MMBOE (32 MBOE per day) for the first nine months of 2014; excluding Eagle Ford, oil and gas cash production costs were $21.16 per BOE for the first nine months of 2014.

Reflects per pound weighted-average production and delivery costs and unit net cash costs (net of by-product credits) for all copper ~~mines.~~mines (excluding Tenke), before net noncash and other costs. Including Tenke, mining unit net cash costs averaged $1.14 per pound in third-quarter 2016, $1.52 per pound in third-quarter 2015, $1.28 per pound for the first nine months of 2016 and $1.56 per pound for the first nine months of 2015. 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."

d.c.

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


d.	Includes realized cash gains on crude oil derivative contracts of $7.44 per BOE in third-quarter 2015 and $7.72 per BOE for the first nine months of 2015.

Revenues

Consolidated revenues totaled $~~3.7~~3.9 billion in third-quarter2016 and $10.5 billion for the first nine months of 2016, compared with $3.4 billion in third-quarter 2015 and ~~$12.1~~$11.1 billion for the first nine months of ~~2015, compared with~~ ~~$5.7 billion~~2015 in ~~third-quarter~~. Revenues from our mining operations primarily include the sale of copper concentrate, copper cathode, copper rod, gold and molybdenum. During ~~2014~~ ~~and $16.2 billion for~~ the first nine months of ~~2014.~~2016, our mined copper (excluding volumes from Tenke) was sold 56 percent in concentrate, 22 percent as cathode and 22 percent as rod from North America operations. Revenues ~~include the sale of copper concentrates, copper cathodes, copper rod, gold, molybdenum, silver~~from our oil and ~~cobalt by our mining~~gas operations ~~and~~include the sale of oil, natural gas and natural gas liquids (NGLs) by. During the first nine months of 2016, approximately 90 percent of our oil and gas ~~operations.~~revenues were from oil and NGLs.

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


	Three Months Ended September 30,			Nine Months Ended September 30,			Three Months Ended September 30			Nine Months Ended September 30

Consolidated revenues - 2014 periods	$	5,696		$	16,203
Revenues - 2015 period							$	3,382		$	11,091
Mining operations:
(Lower) higher sales volumes from mining operations:
Higher (lower) sales volumes:
Copper	(237		)	28			536			1,334
Gold	(282		)	48			26			(270		)
Molybdenum	5			(64		)	(48		)	(154		)
Lower average realized prices from mining operations:
(Lower) higher average realized prices:
Copper	(741		)	(1,755		)	(223		)	(1,147		)
Gold	(30		)	(92		)	67			96
Molybdenum	(154		)	(262		)	21			(45		)
Net adjustments for prior period provisionally priced copper sales	(104		)	11			102			105
Lower revenues from purchased copper	(8		)	(61		)
Lower Atlantic Copper revenues	(162		)	(338		)
Higher treatment charges							(66		)	(127		)
Higher revenues from purchased copper							67			44
Higher (lower) Atlantic Copper revenues							6			(122		)
Oil and gas operations:
Higher (lower) oil sales volumes	60			(540		)
Lower oil average realized prices, including cash gains (losses) on derivative contacts	(304		)	(869		)
Net noncash mark-to-market adjustments on derivative contracts	(196		)	(347		)
Lower oil sales volumes							(6		)	(8		)
Lower oil average realized price, excluding derivative contracts							(39		)	(293		)
Net mark-to-market gains on crude oil derivative contracts for 2015 periods							(29		)	(87		)
Other, including intercompany eliminations	138			120			81			36
Consolidated revenues - 2015 periods	$	3,681		$	12,082
Revenues - 2016 period							$	3,877		$	10,453

Mining Operations

Sales Volumes.Consolidated copper sales ~~volumes decreased~~increased to ~~1.0 billion pounds in third-quarter 2015, compared with~~ 1.1 billion pounds in third-quarter ~~2014, primarily reflecting lower volumes from South America as a result~~2016 and 3.1 billion pounds for the first nine months of ~~the sale of Candelaria and Ojos del Salado in fourth-quarter 2014 and lower volumes at PT Freeport Indonesia (PT-FI) associated~~2016, compared with ~~lower ore grades and the impact of El Niño weather conditions~~888 million pounds in third-quarter 2015 ~~partly offset by higher volumes from North America. For~~and 2.6 billion pounds for the first nine months of 2015, primarily reflecting higher volumes from Cerro Verde and ~~2014, consolidated copper~~PT Freeport Indonesia (PT-FI).

Consolidated gold sales volumes totaled ~~2.9 billion pounds of copper. Consolidated gold sales decreased to~~317 thousand ounces in third-quarter 2016, 294 thousand ounces in third-quarter 2015, compared with 525 thousand ounces in third-quarter 2014, primarily reflecting lower volumes at PT-FI associated with lower ore grades and the impacts of El Niño weather conditions. For the first nine months of 2015, consolidated gold sales totaled 909 thousand ounces, compared with 871674 thousand ounces for the first nine months of ~~2014,~~2016 and 909 thousand ounces for the first nine months of 2015. Lower gold sales volumes in the first nine months of 2016, compared with the 2015 period, primarily ~~reflecting higher milling and recovery rates at PT-FI, partly offset by~~reflects lower ore grades ~~and the impact of El Niño weather conditions.~~ at PT-FI.

Consolidated molybdenum sales volumes ~~totaled~~decreased to 16 million pounds in third-quarter 2016 and 52 million pounds for the first nine months of 2016, compared with 23 million pounds in third-quarter 2015 and 69 million pounds for the first nine months of 2015, ~~compared with 22 million pounds in~~ primarily reflecting weak demand.~~third-quarter2014~~ ~~and 74 million pounds for the first nine months of 2014.~~

Refer to “Operations” for further discussion of sales volumes at our mining operations.

Metals Realized Prices.Our consolidated revenues can vary significantly as a result of fluctuations in the market prices of copper, gold and molybdenum, ~~silver~~ and ~~cobalt. As presented above in the summary operating data table, metals price realizations~~to a lesser extent silver. Third-quarter 2016 average realized prices, compared with third-quarter 2015, were 8 percent lower for copper, 19 percent higher for gold and 16 percent higher for molybdenum. Average realized prices for the ~~third quarter and~~first nine months of 2016, compared with the first nine months of 2015, ~~compared with the 2014 periods.~~were 15 percent lower for copper, 12 percent higher for gold and 9 percent lower for molybdenum. Refer to "Markets" for further discussion.

Provisionally Priced Copper Sales.~~During the first nine months of~~ ~~2015~~, ~~42 percent~~ ~~of our mined copper was sold in concentrate,~~ ~~32 percent~~ ~~as cathode and~~ ~~26 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

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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

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pricing. Accordingly, in times of rising copper prices, our revenues benefit from adjustments to the final pricing of provisionally priced sales pursuant to contracts entered into in prior periods; in times of falling copper prices, the opposite occurs. ~~The unfavorable~~(Unfavorable) favorable impacts of net adjustments to ~~the~~ prior periods' provisionally priced copper sales from continuing operations totaled ~~$126~~$(15) million for third-quarter ~~2015~~2016 and ~~$107~~$5 million for the first nine months of ~~2015,~~2016, compared with ~~$22~~$(117) million for third-quarter ~~2014~~2015 and ~~$118~~$(100) million for the first nine months of ~~2014.~~2015.

At September 30, ~~2015~~2016, we had provisionally priced copper sales at our copper mining operations ~~primarily South America and Indonesia,~~(excluding Tenke) totaling ~~417~~521 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average of $~~2.34~~2.20 per pound, subject to final pricing over the next several months. We estimate that each $0.05 change in the price realized from the September 30, ~~2015~~2016, provisional price recorded would have an approximate $1317 million effect on ~~2015~~2016 net ~~income~~loss attributable to common stock. The LME spot copper price was $~~2.33~~2.19 per pound on October 31, 2016.

Treatment Charges.~~October 30,~~ Revenues from our South America and Indonesia concentrate sales are recorded net of treatment charges. Higher treatment charges for the 2016 periods, compared with the 2015. periods, primarily reflect higher sales volumes from our Cerro Verde and PT-FI mining operations.

Purchased Copper.We ~~purchased~~purchase copper cathode primarily for processing by our Rod & Refining ~~segment totaling~~operations. Purchased copper volumes of 61 million pounds in third-quarter 2016 and 131 million pounds for the first nine months of 2016 were higher than purchased volumes of 28 million pounds in third-quarter 2015 and 92 million pounds for the first nine months of ~~2015, compared with 23~~2015.

Atlantic Copper Revenues. Atlantic Copper revenues totaled $445 million ~~pounds~~ in third-quarter ~~2014 and 89~~2016, $439 million ~~pounds~~in third-quarter2015, $1.4 billion for the first nine months of ~~2014. Lower purchased copper revenues primarily~~2016 and $1.5 billion for the first nine months of 2015. Revenues for the 2016 periods, compared with the 2015 periods, reflect lower copper prices ~~partly offset by~~and higher ~~purchased copper~~sales volumes.

Oil and Gas Operations

Oil Sales Volumes.Oil sales volumes of ~~9.3~~9.1 million barrels (MMBbls) in third-quarter ~~2015~~2016 and 26.1 MMBbls for the first nine months of 2016 were ~~higher~~lower than oil sales volumes of ~~8.6~~9.3 MMBbls in third-quarter ~~2014, primarily reflecting higher volumes in the GOM, partly offset by lower volumes in California. Oil sales volumes of~~2015 and 26.3 MMBbls for the first nine months of 2015, ~~were~~primarily reflecting lower volumes from California.

Realized Oil Prices Excluding Derivative Contracts. The average realized price for oil of $40.63 per barrel in third-quarter2016 was 9 percent lower than ~~sales volumes~~our average realized price of ~~32.1 MMBbls~~$44.85 per barrel in third-quarter 2015 (excluding cash gains on derivative contracts). Our average realized price for oil of $37.11 per barrel for the first nine months of ~~2014, primarily reflecting the sale of the Eagle Ford properties in June 2014.~~

~~Realized Oil Prices and Derivative Contracts.~~2016 ~~Lower~~was 23 percent lower than our average realized ~~prices for oil, excluding cash gains on derivative contracts,~~price of ~~$44.85 per barrel in~~ ~~third-quarter2015~~$48.34 ~~and $48.34~~ per barrel for the first nine months of 2015 ~~compared with $95.35 per barrel in third-quarter~~(excluding cash gains on derivative contracts).

Crude Oil Derivative Contracts. ~~2014~~ and $98.41 per barrel for the first nine months of 2014, primarily reflected lower oil prices. Refer to “Operations” for further discussion of average realized prices and sales volumes at our oil and gas operations.

~~In connection with the acquisition of our oil and gas business,~~During 2015, we ~~have derivative contracts for~~ ~~2015~~ ~~consisting of~~had crude oil ~~options, and for~~ ~~2014, we had~~ derivative contracts that ~~consisted of crude oil options and natural gas swaps. These crude oil and natural gas derivative contracts are~~were not designated as hedging instruments; accordingly, they ~~are~~were recorded at fair value with the mark-to-market gains and losses recorded in revenues each period. ~~Cash~~Net mark-to-market gains ~~(losses)~~ on crude oil ~~and natural gas~~ derivative contracts totaled $29 million (consisting of cash gains of $103 million, ~~for~~partly offset by net noncash mark-to-market losses of $74 million) in third-quarter 2015 and $87 million (consisting of cash gains of $304 million, partly offset by net noncash mark-to-market losses of $217 million) for the first nine months of 2015, compared with $(58) million for third-quarter 2014 and $(186) million for the first nine months of 2014. Net noncash mark-to-market (losses) gains on crude oil and natural gas derivative contracts totaled $(74) million for third-quarter 2015 and $(217) million for the first nine months of 2015, compared with $122 million for third-quarter 2014 and $130 million for the first nine months of 2014.2015.

The following table 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 ~~September 30, 2015, fair values (in millions):~~

10% Increase 10% Decrease
Crude oil options $ (1 ) $ —

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

Production and Delivery Costs

Consolidated production and delivery costs totaled $~~2.9~~2.5 billion in third-quarter 2016, $2.6 billion in third-quarter2015 ~~and $8.7~~, $8.0 billion for the first nine months of ~~2015, compared with $3.2 billion in~~ ~~third-quarter2014~~2016 and ~~$9.0~~$7.9 billion for the first nine months of ~~2014.~~2015. Production and delivery costs for mining operations were $603 million lower for the ~~2015 periods,~~first nine months of 2016, compared with the ~~2014 periods,~~first nine months of 2015, primarily ~~reflect lower costs at our South America mining operations as a result~~reflecting the impact of the sale of the Candelaria and Ojos del Salado mines in fourth-quarter 2014 and lower costs in Indonesia, partly offset by higher costs at our North America mines related to inventory adjustments, asset impairments and restructuring costs (see below) and higher production volumes.

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~~Consolidated production~~cost reduction initiatives. Production and delivery costs ~~included adjustments attributable to copper~~for our U.S. oil and ~~molybdenum inventories totaling $91~~gas operations were $670 million higher for the first nine months of 2016 compared with the first nine months of 2015, primarily reflecting higher charges for drillship settlements/idle rig costs, which totaled $823 million for ~~third-quarter 2015~~the first nine months of 2016 and ~~$154~~$13 million for the first nine months of 2015, ~~(refer to Note 4 for further discussion). Consolidated production and delivery costs also include impairment and restructuring charges totaling $95 million for~~partly offset by the ~~third quarter and first nine months~~impact of ~~2015. Refer to Note 1 and "Critical Accounting Estimates" for further discussion of mining asset impairments.~~cost reduction efforts.

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Mining Unit Site Production and Delivery ~~Costs~~

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 (excluding Tenke) totaled ~~$1.74~~$1.37 per pound of copper in third-quarter ~~2015~~2016 and ~~$1.84~~$1.42 per pound for the first nine months of ~~2015,~~2016, compared with ~~$1.91~~$1.75 per pound in third-quarter ~~2014~~2015 and ~~$1.92~~$1.88 per pound for the first nine months of ~~2014.~~2015. Lower consolidated ~~average~~unit site production and delivery costs for the ~~2015~~2016 periods, compared with the ~~2014~~2015 periods, primarily ~~reflected~~reflect higher ~~copper sales~~ volumes ~~in North America, partly offset by lower sales volumes in South America. Lower consolidated average site production~~ and ~~delivery costs for~~ the ~~first nine months~~impact of ~~2015 also benefited from higher sales volumes in Indonesia.~~ongoing cost reduction initiatives. 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 for fourth-quarter 2015, consolidated unit site production and delivery costs are expected to average~~ ~~$1.79~~ ~~per pound of copper for the year~~ ~~2015~~.

Oil and Gas Cash Production Costs per ~~BOE~~

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~~Lower cash production costs for our oil and gas operations of ~~$18.85~~$15.00 per BOE in third-quarter ~~2015~~2016 ~~were lower than cash production costs~~and $15.28 per BOE for the first nine months of ~~$20.93~~2016, compared with $18.85 per BOE in third-quarter ~~2014, primarily reflecting lower production costs in California related to reductions in well workover expense~~2015 and ~~steam costs. Cash production costs of~~ $19.42 per BOE for the first nine months of 2015, ~~were lower than $19.57 per BOE for the first nine months of 2014,~~ primarily ~~reflecting lower production costs in California related to reductions in well workover expense and steam costs, partly offset by the sale of lower-cost Eagle Ford properties.~~reflect ongoing cost reduction efforts. Refer to ~~“Operations”~~“Operations - Oil and Gas” for further discussion of cash production costs at our oil and gas operations.

Assuming achievement of current volume and cost estimates for fourth-quarter 2015, cash production costs are expected to approximate $19 per BOE for the year 2015. Oil and gas production costs per BOE are expected to decline in 2016 with the addition of production from new GOM wells.

Depreciation, Depletion and Amortization

Depreciation will vary under the ~~UOP~~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 ~~DD&A~~depreciation, depletion and amortization (DD&A) totaled ~~$888~~$643 million in third-quarter 2016, $823 million in third-quarter 2015, ~~and $2.7 billion for first nine months of 2015, compared with $945 million in third-quarter 2014 and $2.9~~$1.9 billion for the first nine months of ~~2014.~~2016 and $2.5 billion for the first nine months of 2015. DD&A from mining operations was $47 million higher in third-quarter 2016 and $184 million higher for the first nine months of 2016, compared with the 2015 periods, ~~compared with the 2014 periods, reflected lower expense~~primarily reflecting higher copper sales volumes from ~~our~~Cerro Verde and PT-FI. DD&A from U.S. oil and gas operations ~~associated~~was $227 million lower in third-quarter 2016 and $769 million lower for the first nine months of 2016, compared with ~~decreased~~the 2015 periods, primarily reflecting lower DD&A rates as a result of ~~impairments of~~reduced oil and gas properties and the sale of the Eagle Ford properties. Lower DD&A from our oil and gas operations for the first nine months of 2015, compared with the first nine 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.property costs subject to amortization following impairment charges.

Impairment of Oil and Gas Properties

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. At September 30, 2015 and 2014, net capitalized costs with respect to our proved oil and gas properties exceeded the related ceiling test limitation,~~impairment, which resulted in the recognition of impairment charges ~~of $3.7 billion~~totaling $239 million in third-quarter ~~2015~~2016, $3.7 billion in third-quarter 2015, $4.3 billion for the first nine months of 2016 and $9.4 billion for the first nine months of 2015, and $308 million for the third quarter and first nine months of 2014, reflecting the lower twelve-month average of the first-day-of-the-month historical reference oil price and additional capitalized costs.2015. Refer to Note 1 and ~~"Critical Accounting Estimates"~~"Operations - Oil and Gas" for further ~~discussion, including discussion of potentially significant additional ceiling test impairments.~~discussion.

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Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses totaled ~~$124~~$110 million in third-quarter 2016, $122 million in third-quarter 2015, ~~and $429~~$408 million for the first nine months of ~~2015, compared with $158 million in third-quarter 2014~~2016 and ~~$457~~$421 million for the first nine months of ~~2014. Lower consolidated selling,~~2015. Selling, general and administrative expenses inincludes net restructuring-related charges of $38 million for the ~~2015 periods, compared~~first nine months of 2016 associated with ~~the 2014 periods, primarily reflects lower incentive compensation.~~ our oil and gas operations.

Consolidated selling, general and administrative expenses were net of capitalized general and administrative ~~expense~~expenses at our oil and gas operations ~~which totaled~~totaling $16 million in third-quarter2016, $27 million in third-quarter 2015, $66 million for the first nine months of 2016 and $97 million for the first nine months of ~~2015, compared with $37 million in~~ ~~third-quarter2014~~ ~~and $111 million for the first nine months of 2014.~~2015.

Mining Exploration and Research Expenses

Consolidated exploration and research expenses for our mining operations totaled $3213 million in third-quarter ~~2015~~2016 ~~and $101 millionfor the first nine months of 2015, compared with $29~~, $26 million in third-quarter ~~2014~~2015 ~~and $93~~, $46 million for the first nine months of ~~2014.~~2016 and $83 million for the first nine months of 2015. Our mining exploration activities are generally ~~near~~associated with our existing mines ~~with a focus~~focusing on opportunities to expand reserves and resources to support development of additional future production ~~capacity in the large mineral districts where we currently operate.~~capacity. 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 provide a long-term pipeline for future growth in reserves and production capacity in established minerals districts.

America. Exploration spending ~~has been reduced in recent years from historical levels as a result of~~continues to be constrained by market conditions and is expected to approximate $~~105~~45 million for the year ~~2015. Our revised plans also include a further reduction to our 2016 minerals exploration costs to approximately $50 million.~~2016.

~~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~~Exploration costs for our oil and gas operations are capitalized to oil and gas properties.

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Environmental Obligations and Shutdown Costs

Environmental obligation costs reflect net revisions to our long-term environmental obligations, which 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~~care-and-maintenance costs and any litigation, remediation or related expenditures associated with closed facilities or operations. Net (credits) charges for environmental obligations and shutdown costs from continuing operations totaled $37(3) million in third-quarter 2016, $37 million in third-quarter 2015, $18 million for the first nine months of 2016 and $61 million for the first nine months of ~~2015, compared with $18 million in~~ ~~third-quarter2014~~ ~~and $100 million for the first nine months of 2014. Refer to "Contingencies" for further discussion of environmental obligations and litigation matters associated with closed facilities or operations.~~2015.

Net Gain on Sales of Assets

Net gain on sales of assets totaled $13 million in third-quarter 2016 and $762 million for the the first nine months of 2016, primarily associated with the Morenci and Timok transactions (refer to Note 2 for further discussion). Net gain on sales of assets totaled $39 million for the first nine months of 2015 related to the ~~January 2015~~ sale of our ~~one-third~~ interest in the Luna Energy power ~~facility in New Mexico for gross proceeds of $140 million. The net gain on sales of assets of $46 million for the 2014 periods related to the sale of a metals injection molding plant.~~facility.

Interest Expense, Net

Consolidated interest expense (excluding capitalized ~~interest)~~interest and interest expense allocated to discontinued operations) totaled ~~$217~~$211 million in both third-quarter ~~2015~~2016 and ~~$642~~2015, $647 million for the first nine months of ~~2015, compared with$212 million~~ in ~~third-quarter2014~~2016 and ~~$661~~$622 million for the first nine months of ~~2014.~~ 2015. Refer to Note 2 for interest allocated to discontinued operations.

Capitalized interest varies with the level of expenditures for our development projects and average interest rates on our borrowings and totaled $5424 million in third-quarter ~~2015~~2016 ~~and $184 millionfor the first nine months of 2015, compared with~~, $54 million in third-quarter ~~2014~~2015 ~~and $178~~, $73 million for the first nine months of ~~2014. Refer to "Operations"~~2016 and ~~“Capital Resources and Liquidity - Investing Activities”~~$184 million for ~~further discussion~~the first nine months of ~~current development projects.~~2015.

~~Insurance and Other Third-party Recoveries~~

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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Net Gain on Early Extinguishment of Debt

Net gain on early extinguishment of debt totaled ~~$58~~$15 million in third-quarter ~~2014~~2016 and ~~$63~~$51 million for the first nine months of ~~2014,~~2016, primarily related to the redemption of certain senior ~~notes.~~notes in exchange for common stock. Refer to Note 6 for further discussion.

Income Taxes

Following is a summary of the approximate amounts used in the calculation of our consolidated income tax benefit

(provision) from continuing operations for the first nine months of ~~2015~~2016 and ~~2014~~2015 ~~periods~~ (in millions, except percentages):


	Nine Months Ended										Nine Months Ended								Nine Months Ended September 30,
	September 30, 2015										September 30, 2014								2016									2015
	Income(Loss)^a				Effective Tax Rate		Income Tax Benefit(Provision)				Income (Loss)^a			Effective Tax Rate	Income Tax Benefit(Provision)				Income(Loss)^a			Effective Tax Rate		Income Tax Benefit (Provision)				Income (Loss)^a				Effective Tax Rate	Income Tax Benefit (Provision)
U.S.	$	(1,054	)	^b	41%		$	435			$	1,473		30%	$	(437	)	^c	$	(616	)	47%		$	292		^b	$	(1,033	)	^c	42%	$	435
South America	76				42%		(32		)		1,014			40%	(409		)	^d	290			39%		(114		)		76				42%	(32		)
Indonesia	327				44%		(145		)		397			42%	(166		)		544			39%		(212		)		327				44%	(145		)
Africa	123				48%		(59		)		305			30%	(93		)
Impairment of oil and gas properties	(9,442		)		37%		3,497				(308		)	38%	116				(4,317		)	38%		1,632				(9,442		)		37%	3,497
Valuation allowance, net	—				N/A		(1,910		)	^e	—			N/A	—
Valuation allowance, net^d																			—			N/A		(1,632		)		—				N/A	(1,910		)
Eliminations and other	234				N/A		(40		)		143			N/A	(14		)		135			N/A		(46		)		221				N/A	(70		)
Annualized rate adjustment^f	—				N/A		(4		)		—			N/A	(31		)
Rate adjustment^e																			—			N/A		1				—				N/A	(13		)
Consolidated FCX	$	(9,736	)		18%	^g	$	1,742			$	3,024		34%	$	(1,034	)		$	(3,964	)	(2)%	^f	$	(79	)		$	(9,851	)		18%	$	1,762


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


b.	Includes net tax credits of $290 million for the first nine months of 2016 primarily associated with alternative minimum tax credits, changes to valuation allowances and net operating loss carryback claims. Refer to Note 5 for further discussion.


c.	Includes a gain of $92 million related to net proceeds received from insurance carriers and other third parties related to the shareholder derivative litigation settlement for which there iswas no related tax provision.


c.	~~Includes a~~ ~~$62 million~~ ~~charge for deferred taxes recorded in connection with the allocation of goodwill to the sale of Eagle Ford.~~


d.	~~Includes a $54 million charge primarily related to changes in Chilean tax rules.~~

As a result of the impairment to U.S. oil and gas properties, we recorded tax charges ~~of $2.0 billion~~ to establish a valuation ~~allowance primarily~~allowances against U.S. federal ~~alternative minimum~~and state deferred tax ~~credits and foreign tax credits, partly offset by~~assets that will not generate a ~~tax benefit of $56 million related to the impairment of the Morocco oil and gas properties.~~future benefit.


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

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g.f.

~~Our~~The 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 $~~2.40~~2.10 per pound for copper, $~~1,150~~1,250 per ounce for gold, $~~5.50~~7 per pound for molybdenum and $5051 per barrel of Brent crude oil for fourth-quarter ~~2015~~2016, we estimate aour consolidated effective tax ~~benefit of $1.8 billion~~rate related to continuing operations for the year 2015, substantially all of which relates to the impairment of oil and gas properties, net of related valuation allowances. See "Critical Accounting Estimates" for discussion regarding the likelihood of potentially significant ceiling charges during the remainder of 2015, which would give rise to additional tax benefits.2016 will approximate 40 percent, excluding U.S. domestic losses.

Net (Loss) Income from Discontinued Operations

In May 2016, we entered into an agreement to sell our interest in TFHL, through which we have an effective 56 percent interest in the Tenke copper and cobalt mining concessions in the Southeast region of the Democratic Republic of Congo (DRC). In accordance with accounting guidelines, the results of Tenke have been reported as discontinued operations for all periods presented. Net (loss) income from discontinued operations totaled $(6) million in third-quarter 2016, $25 million in third-quarter2015, $(191) million for the first nine months of 2016 and $95 million for the first nine months of 2015. The 2016 periods also include an estimated loss on disposal of $5 million for third-quarter2016 and $182 million for the first nine months of 2016, which will be adjusted through closing of the transaction. Refer to Note 2 for a summary of the components of discontinued operations and to "Discontinued Operations" for a discussion of operating results.

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~~undivided joint venture interest in Morenci using the proportionate consolidation method. On May 31, 2016, we completed the sale of an additional 13 percent undivided interest in Morenci for $1.0 billion in cash. As a result of the transaction, our undivided interest in Morenci was prospectively reduced from 85 percent to 72 percent. Refer to Note 2 for further discussion.

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).~~Copper. Molybdenum ~~concentrates~~concentrate and silver are also produced by certain of our North America copper mines.

~~Table of Contents~~

Operating and Development Activities. We have significant undeveloped reserves and resources in North America and a portfolio of ~~potential~~ long-term development projects. In the near term, we are deferring ~~developing~~development of new projects as a result of current market conditions. Future investments will be undertaken based on the results of economic and technical feasibility studies, and market conditions.

The Morenci mill expansion project commenced operations in May 2014 and successfully achieved full rates in second-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, which results in incremental annual production of approximately 225 million pounds of copper and an improvement in Morenci's cost structure. Morenci's copper production is expected to average 900 million pounds per year over the next five years.

~~FCX's~~During 2015, we revised plans for ~~its~~our North America copper mines to incorporate reductions in mining rates to reduce operating and capital ~~costs, including the suspension of mining~~costs. In addition, we curtailed operations at the Miami ~~mine (which produced 33 million pounds of copper for the first nine months of 2015), a 50 percent reduction in mining rates at the~~and Tyrone ~~mine (which produced 65 million pounds of copper for the first nine months of 2015), a 50 percent reduction in~~mines, and we are operating ~~rates at the~~our Sierrita mine ~~(which produced 140 million pounds of copper and 17 million pounds of molybdenum for the first nine months of 2015) as well as adjustments to mining rates~~ at ~~other North America mines.~~reduced rates. The revised plans at each of the operations incorporate the impacts of lower energy, acid and other consumables, reduced labor costs and a significant reduction in capital spending plans. These operating plans will continue to be reviewed and additional adjustments ~~may~~will be made as market conditions warrant. ~~See "Revised Operating Plans and Oil and Gas Review" for further discussion~~

Table of ~~reduced operating rates at the Sierrita mine announced in October 2015.~~Contents

Operating Data. Following is a summary of consolidated operating data for the North America copper mines for the third quarters and first nine months of ~~2015~~2016 and ~~2014~~2015:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014		2016		2015		2016		2015
Operating Data, Net of Joint Venture Interest
Copper (recoverable)
Production (millions of pounds)	499		423		1,420		1,203
Sales (millions of pounds)	483		436		1,441		1,230
Copper
Production (millions of recoverable pounds)									455		499		1,411		1,420
Sales (millions of recoverable pounds)									458		483		1,425		1,441
Average realized price per pound	$	2.42	$	3.17	$	2.59	$	3.19	$	2.19	$	2.42	$	2.18	$	2.59

Molybdenum (recoverable)
Production(millions of pounds)^a	9		8		28		25
Molybdenum
Production(millions of recoverable pounds)^a									9		9		25		28

100% Operating Data
SX/EW operations
Leach ore placed in stockpiles (metric tons per day)	927,900		1,003,900		911,100		1,010,600		681,400		927,900		764,900		911,100
Average copper ore grade (percent)	0.27		0.25		0.26		0.25		0.31		0.27		0.32		0.26
Copper production (millions of recoverable pounds)	300		244		808		707		316		300		921		808

Mill operations
Ore milled (metric tons per day)	311,500		278,000		309,700		264,500		300,500		311,500		299,900		309,700
Average ore grade (percent):
Copper	0.50		0.44		0.48		0.43		0.47		0.50		0.48		0.48
Molybdenum	0.03		0.03		0.03		0.03		0.03		0.03		0.03		0.03
Copper recovery rate (percent)	85.6		87.5		85.6		85.5		87.8		85.6		86.3		85.6
Copper production (millions of recoverable pounds)	240		211		728		581		216		240		661		728


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~~ ~~483~~of 458 million pounds in third-quarter 2016 were less than third-quarter 2015 ~~and 1.4~~ sales of 483 million pounds, primarily attributable to the May 2016 sale of a portion of our interest in Morenci. Copper sales volumes from our North America mines of 1.43 billion pounds for the first nine months of ~~2015, compared with~~ ~~436 million~~ ~~pounds in~~ ~~third-quarter2014~~ ~~and 1.2~~2016 were slightly lower than 1.44 billion pounds for the first nine months of ~~2014, primarily reflecting higher milling rates and ore grades at Morenci and Chino, and higher ore grades at Safford.~~2015.

~~Table of Contents~~

Copper sales from North America are expected to approximate ~~1.95~~1.8 billion pounds for the year ~~2015~~2016, compared with ~~1.66~~2.0 billion pounds in ~~2014~~2015.

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 and Molybdenum

The following tables summarize unit net cash costs and gross profit per pound at our North America copper mines for the third quarters and first nine months of ~~2015~~2016 and ~~2014.~~2015. 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 September 30,
	September 30, 2015										September 30, 2014											2016											2015
	By- Product Method				Co-Product Method						By- Product Method				Co-Product Method							By- Product Method				Co-Product Method							By- Product Method				Co-Product Method
					Copper			Molyb- denum^a						Copper				Molyb- denum^a							Copper				Molyb- denum^a							Copper				Molyb- denum^a
Revenues, excluding adjustments	$	2.42			$	2.42		$	6.18			$	3.17			$	3.17			$	13.83		$	2.19			$	2.19			$	7.39		$	2.42			$	2.42			$	6.18

Site production and delivery, before net noncash and other costs shown below	1.68				1.59			5.51			1.83				1.70				7.87			1.44				1.34				5.51			1.68				1.59				5.51
By-product credits	(0.12		)		—			—			(0.26		)		—				—			(0.17		)		—				—			(0.12		)		—				—
Treatment charges	0.12				0.11			—			0.11				0.11				—			0.10				0.09				—			0.12				0.11				—
Unit net cash costs	1.68				1.70			5.51			1.68				1.81				7.87			1.37				1.43				5.51			1.68				1.70				5.51
Depreciation, depletion and amortization	0.28				0.27			0.51			0.30				0.29				0.72			0.28				0.26				0.70			0.28				0.27				0.51
Metals inventory adjustments																						0.01				0.01				—			0.11				0.11				0.14
Noncash and other costs, net	0.33			^b	0.32			0.33			0.11				0.10				0.06			0.05				0.04				0.13			0.22			^b	0.21				0.19
Total unit costs	2.29				2.29			6.35			2.09				2.20				8.65			1.71				1.74				6.34			2.29				2.29				6.35
Revenue adjustments, primarily for pricing on prior period open sales	(0.12		)		(0.12		)	—			(0.02		)		(0.02		)		—			—				—				—			(0.12		)		(0.12		)		—
Gross profit (loss) per pound	$	0.01			$	0.01		$	(0.17	)	$	1.06			$	0.95			$	5.18		$	0.48			$	0.45			$	1.05		$	0.01			$	0.01			$	(0.17	)

Copper sales (millions of recoverable pounds)	483				483						434				434							457				457							483				483
Molybdenum sales (millions of recoverable pounds)^a								9											8											9											9



	Nine Months Ended									Nine Months Ended											Nine Months Ended September 30,
	September 30, 2015									September 30, 2014											2016											2015
	By- Product Method				Co-Product Method					By- Product Method				Co-Product Method							By- Product Method				Co-Product Method							By- Product Method				Co-Product Method
					Copper			Molyb- denum^a					Copper				Molyb- denum^a							Copper				Molyb- denum^a							Copper				Molyb- denum^a
Revenues, excluding adjustments	$	2.59			$	2.59		$	7.62		$	3.19			$	3.19			$	12.16		$	2.18			$	2.18			$	6.24		$	2.59			$	2.59			$	7.62

Site production and delivery, before net noncash and other costs shown below	1.76				1.65			6.01		1.86				1.74				6.90			1.41				1.34				4.86			1.76				1.65				6.01
By-product credits	(0.15		)		—			—		(0.25		)		—				—			(0.12		)		—				—			(0.15		)		—				—
Treatment charges	0.12				0.12			—		0.11				0.11				—			0.11				0.10				—			0.12				0.12				—
Unit net cash costs	1.73				1.77			6.01		1.72				1.85				6.90			1.40				1.44				4.86			1.73				1.77				6.01
Depreciation, depletion and amortization	0.28				0.27			0.56		0.29				0.28				0.62			0.29				0.27				0.61			0.28				0.27				0.56
Metals inventory adjustments																					—				—				—			0.04				0.04				0.04
Noncash and other costs, net	0.16			^b	0.16			0.14		0.09				0.08				0.05			0.05				0.05				0.06			0.12			^b	0.12				0.10
Total unit costs	2.17				2.20			6.71		2.10				2.21				7.57			1.74				1.76				5.53			2.17				2.20				6.71
Revenue adjustments, primarily for pricing on prior period open sales	(0.02		)		(0.02		)	—		(0.01		)		(0.01		)		—			—				—				—			(0.02		)		(0.02		)		—
Gross profit per pound	$	0.40			$	0.37		$	0.91	$	1.08			$	0.97			$	4.59		$	0.44			$	0.42			$	0.71		$	0.40			$	0.37			$	0.91

Copper sales (millions of recoverable pounds)	1,439				1,439					1,224				1,224							1,421				1,421							1,439				1,439
Molybdenum sales (millions of recoverable pounds)^a								28										25											25											28

~~Table of Contents~~


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 ~~$0.27~~$75 million ($0.16 per pound ~~for~~in third-quarter 2015 and ~~$0.10~~$0.05 per pound for the first nine months of ~~2015~~2015) for ~~inventory adjustments and~~asset impairment and restructuring charges.

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) ~~totaled~~of $~~1.68~~1.37 per pound of copper in third-quarter 2016 and $1.40 per pound for the first nine months of 2016 were lower than unit net cash costs of $1.68 per pound in third-quarter2015, and $1.73 per pound for the first nine months of ~~2015, compared with~~ ~~$1.68~~2015 ~~per pound in~~ , primarily reflecting cost reduction initiatives.~~third-quarter2014~~ ~~and $1.72 per pound for the first nine months~~

Table of ~~2014. The 2015 periods include lower by-product credits, mostly offset by favorable impacts from higher copper sales volumes.~~Contents

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~~ ~~$5.50~~ ~~per pound of molybdenum for fourth-quarter~~ ~~2015, average~~Average unit net cash costs (net of by-product credits) for our North America copper mines are expected to approximate ~~$1.70~~$1.41 per pound of copper for the year ~~2015, compared with~~2016, based on achievement of current sales volume and cost estimates, and assuming an average molybdenum price of $~~1.73~~7 per pound infor fourth-quarter ~~2014~~2016. North America's average unit net cash costs ~~for the year 2015~~ would change by approximately ~~$0.004~~$0.005 per pound for each $2 per pound change in the average price of ~~molybdenum in fourth-quarter 2015.~~molybdenum.

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)~~. These operations in South America~~, which are consolidated in our financial statements.

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~~concentrate and silver.

Operating and Development Activities.

The Cerro Verde expansion project commenced operations in September 2015 and ~~is expected to reach full~~achieved capacity operating rates ~~by early~~during first-quarter 2016. ~~This expansion will enable~~ Cerro ~~Verde to contribute significant cash flows in coming years~~Verde's expanded operations benefit from its large-scale, long-lived reserves and ~~cost-efficient operation.~~cost efficiencies. The project ~~expands~~expanded the concentrator facilities from 120,000 metric tons of ore per day to 360,000 metric tons of ore per day and ~~provides~~is on track to provide incremental annual production of approximately 600 million pounds of copper and 15 million pounds of ~~molybdenum beginning in 2016.~~molybdenum.

During ~~third-quarter~~ 2015, we revised operating plans for our South America ~~copper~~ mines, principally to reflect adjustments to ~~the~~our mine plan at El Abra ~~(which produced 251 million pounds of copper for the first nine months of 2015)~~ to reduce mining and stacking rates by approximately 50 percent to achieve lower operating and labor costs, defer capital expenditures and extend the life of the existing operations.

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.

Table of Contents

Operating Data. Following is a summary of consolidated operating data for our South America mining operations for the third quarters and first nine months of ~~2015~~2016 and ~~2014:~~2015:


	Three Months Ended				Nine Months Ended				Three Months Ended September 30,				Nine Months Ended September 30,
	September 30,				September 30,				2016		2015		2016		2015
	2015		2014^a		2015		2014^a
Copper (recoverable)
Production (millions of pounds)	204		284		585		898
Sales (millions of pounds)	207		271		585		888
Copper
Production (millions of recoverable pounds)									317		204		986		585
Sales (millions of recoverable pounds)									323		207		973		585
Average realized price per pound	$	2.37	$	3.10	$	2.52	$	3.12	$	2.19	$	2.37	$	2.17	$	2.52

Gold (recoverable)
Production (thousands of ounces)	—		20		—		62
Sales (thousands of ounces)	—		16		—		59
Average realized price per ounce	$	—	$	1,234	$	—	$	1,280

Molybdenum (millions of recoverable pounds)
Production^b	1		3		5		8
Molybdenum
Production (millions of recoverable pounds)^a									5		1		14		5

SX/EW operations
Leach ore placed in stockpiles (metric tons per day)	192,300		269,600		220,800		279,300		163,000		192,300		158,100		220,800
Average copper ore grade (percent)	0.46		0.50		0.43		0.50		0.41		0.46		0.41		0.43
Copper production (millions of recoverable pounds)	107		122		330		370		78		107		250		330

Mill operations
Ore milled (metric tons per day)	131,200		192,100		122,400		187,700		355,300		131,200		348,900		122,400
Average ore grade:
Copper (percent)	0.49		0.50		0.46		0.55		0.41		0.49		0.42		0.46
Molybdenum (percent)	0.02		0.02		0.02		0.02		0.02		0.02		0.02		0.02
Gold (grams per metric ton)	—		0.09		—		0.10
Copper recovery rate (percent)	79.2		86.9		79.0		88.6		84.4		79.2		86.1		79.0
Copper production (millions of recoverable pounds)	97		162		255		528		239		97		736		255


a.	The 2014 periods include the results of the Candelaria and Ojos del Salado mines, which were sold in November 2014 and had sales volumes totaling 62 million pounds of copper and 16 thousand ounces of gold in third-quarter 2014 and 236 million pounds of copper and 59 thousand ounces of gold for the first nine months of 2014.


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

Consolidated copper sales volumes from South America of 323 million pounds in third-quarter2016 and 973 million pounds for the first nine months of 2016, were significantly higher than sales of 207 million pounds in third-quarter2015 and 585 million pounds for the first nine months of 2015, ~~were lower than sales of~~ ~~271 million~~ ~~pounds in third-quarter 2014 and 888 million pounds for the first nine months of 2014, primarily~~ reflecting ~~the sale of the Candelaria and Ojos del Salado mines.~~Cerro Verde's expanded operations.

~~For the year 2015, consolidated~~Copper sales ~~volumes~~ from South America mines are expected to approximate ~~885 million~~1.3 billion pounds of copper for the year 2016, compared with ~~1.14 billion~~871 million pounds in ~~2014, which included copper sales volumes of 268 million pounds from the Candelaria and Ojos del Salado mines.~~2015.

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Gross Profit per Pound of Copper

The following tables summarize unit net cash costs and gross profit per pound of copper at the South America mining operations for the third quarters and first nine months of ~~2015~~2016 and ~~2014.~~2015. 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 September 30,
	2016						2015
	By-Product Method			Co-Product Method			By-Product Method				Co-Product Method
Revenues, excluding adjustments	$	2.19		$	2.19		$	2.37			$	2.37

Site production and delivery, before net noncash and other costs shown below	1.27			1.20			1.54				1.50
By-product credits	(0.12		)	—			(0.04		)		—
Treatment charges	0.24			0.24			0.18				0.18
Royalty on metals	0.01			—			—				—
Unit net cash costs	1.40			1.44			1.68				1.68
Depreciation, depletion and amortization	0.41			0.39			0.43				0.42
Noncash and other costs, net	0.01			0.01			0.10			^a	0.10
Total unit costs	1.82			1.84			2.21				2.20
Revenue adjustments, primarily for pricing on prior period open sales	(0.02		)	(0.02		)	(0.14		)		(0.14		)
Gross profit per pound	$	0.35		$	0.33		$	0.02			$	0.03

Copper sales (millions of recoverable pounds)	323			323			207				207



	Three Months Ended							Three Months Ended							Nine Months Ended September 30,
	September 30, 2015							September 30, 2014							2016					2015
	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	$	2.37			$	2.37		$	3.10			$	3.10		$	2.17		$	2.17	$	2.52			$	2.52

Site production and delivery, before net noncash and other costs shown below	1.54				1.50			1.67				1.54			1.23			1.17		1.68				1.63
By-product credits	(0.04		)		—			(0.23		)		—			(0.10		)	—		(0.05		)		—
Treatment charges	0.18				0.18			0.16				0.16			0.24			0.24		0.17				0.17
Royalty on metals															—			—		—				—
Unit net cash costs	1.68				1.68			1.60			^a	1.70			1.37			1.41		1.80				1.80
Depreciation, depletion and amortization	0.43				0.42			0.37				0.34			0.41			0.39		0.40				0.39
Noncash and other costs, net	0.10			^b	0.10			0.07				0.06			0.02			0.02		0.04			^a	0.04
Total unit costs	2.21				2.20			2.04				2.10			1.80			1.82		2.24				2.23
Revenue adjustments, primarily for pricing on prior period open sales	(0.14		)		(0.14		)	(0.06		)		(0.06		)	0.01			0.01		(0.05		)		(0.05		)
Gross profit per pound	$	0.02			$	0.03		$	1.00			$	0.94		$	0.38		$	0.36	$	0.23			$	0.24

Copper sales (millions of recoverable pounds)	207				207			271				271			973			973		585				585

Nine Months Ended Nine Months Ended
September 30, 2015 September 30, 2014

By-Product
Method

Co-Product
Method

By-Product
Method

Co-Product
Method
Revenues, excluding adjustments $ 2.52
$ 2.52
$ 3.12
$ 3.12

Site production and delivery, before net noncash and other costs shown below 1.68
1.63
1.61
1.49
By-product credits (0.05 ) —
(0.24 ) —
Treatment charges 0.17
0.17
0.17
0.17
Unit net cash costs 1.80
1.80
1.54
^a
1.66
Depreciation, depletion and amortization 0.40
0.39
0.32
0.30
Noncash and other costs, net 0.04
^b
0.04
0.06
0.06
Total unit costs 2.24
2.23
1.92
2.02
Revenue adjustments, primarily for pricing on prior period open sales (0.05 ) (0.05 ) (0.07 ) (0.07 )
Gross profit per pound $ 0.23
$ 0.24
$ 1.13
$ 1.03

Copper sales (millions of recoverable pounds) 585
585
888
888


a.	Excluding the results of Candelaria and Ojos del Salado, South America mining's unit net cash costs averaged $1.54 per pound for third-quarter 2014 and $1.52 per pound for the first nine months of 2014.


b.	Includes restructuring charges totaling $11 million ($0.05 per pound ~~for~~in third-quarter 2015 and $0.02 per pound for the first nine months of 2015).

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 $~~1.68~~1.40 per pound of copper in third-quarter2016 and $1.37 per pound for the first nine months of 2016, were lower than unit net cash costs of $1.68 per pound in third-quarter 2015 and $1.80 per pound for the first nine months of ~~2015 were higher than unit net cash costs of~~ ~~$1.60~~2015 ~~per pound in~~ ~~third-quarter2014~~ ~~and $1.54 per pound for the first nine months of 2014,~~, primarily reflecting ~~lower~~higher copper sales volumes and efficiencies associated with the Cerro Verde expansion and higher by-product ~~credits as a result of the sale of Candelaria and Ojos del Salado in fourth-quarter 2014.~~credits.

Revenues from Cerro Verde's concentrate sales are recorded net of treatment and refining charges. Accordingly, treatment charges will vary with Cerro Verde's sales volumes and the price of copper.

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

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

~~Assuming achievement of current sales volume and cost estimates, and average prices of~~ ~~$5.50~~ ~~per pound of molybdenum for fourth-quarter~~ ~~2015, we estimate that average~~Average unit net cash costs (net of by-product credits) for our South America mining operations ~~would~~are expected to approximate ~~$1.73~~$1.42 per pound of copper for the year ~~2015, compared with~~2016, based on current sales volume and cost estimates, and assuming average prices of $~~1.58~~7 per pound inof molybdenum for fourth-quarter ~~2014~~2016.

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 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,~~2015, for discussion of our joint venture with Rio Tinto.

PT-FI produces copper ~~concentrates~~concentrate that ~~contain~~contains significant quantities of gold and silver. Substantially all of PT-FI’s copper ~~concentrates are~~concentrate is sold under long-term contracts, and during the first nine months of ~~2015,~~2016, approximately ~~one-third~~half of PT-FI's ~~copper concentrates~~concentrate production was sold to PT Smelting, its 25-percent-owned smelter and refinery in Gresik. PT Smelting resumed operations in September 2015, following a temporary suspension in July 2015. PT Smelting is currently operating at 80 percent capacity pending completion of required repairs, which are expected to be completed in November 2015.

~~PT-FI and union officials are completing documentation on agreed terms for the biennial labor agreement for the two-year period beginning September 30, 2015.~~Gresik, Indonesia.

Regulatory Matters. ~~In January 2014, the~~PT-FI continues to engage with Indonesian government ~~published regulations that among other things imposed a progressive export duty on copper concentrates. Despite PT-FI’s~~officials regarding its long-term operating rights under its Contract of Work (COW), and its rights to export ~~concentrates~~concentrate 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.~~restriction.

In July 2014, PT-FI and the Indonesian government entered into a Memorandum of Understanding, ~~(MOU) with the Indonesian government. Under the MOU,~~in which subject to concluding an agreement to extend PT-FI's operations beyond 2021 on acceptable terms, PT-FI ~~provided a $115 million assurance bond to support its commitment for smelter development,~~ agreed to ~~increased royalty rates~~construct new smelter capacity in Indonesia and to divest an additional 20.64 percent interest in PT-FI at fair market value. PT-FI also agreed to pay higher royalties and to pay export duties ~~(which were set at 7.5 percent, declining to 5.0 percent when~~until certain 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 dutiesmilestones were ~~changed. In January 2015, the MOU was extended to July 25, 2015, and it expired on that date.~~met.

~~PT-FI is required to apply for renewal of export permits at six-month intervals. On July 29,~~In October 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. The increased royalty rates, export duties and smelter assurance bond remain in effect.

PT-FI has advanced discussions with the Indonesian government regarding its COW and long-term operating rights. The Indonesian government is currently developing economic stimulus measures, which include revisions to mining regulations, to promote economic and employment growth. In consideration of PT-FI's major investments, and prior and ongoing commitments to increase benefits to Indonesia, including previously agreed higher royalties, domestic processing, divestment and local content, the Indonesian government provided a letter of assurance to PT-FI ~~in October 2015~~ indicating that it ~~will~~would revise regulations allowing it to approve the extension of ~~PT-FI's~~ operations beyond 2021, and provide the same rights and the same level of legal and fiscal certainty provided under its current COW.

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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 potential sites and is developing plans for the construction of additional smelter capacity. We are engaged in discussions with potential partners for the project.

~~As previously reported and upon completion of its amended COW, we and PT-FI have agreed to a divestment to~~In August 2016, PT-FI's export permit was renewed through January 11, 2017. Current regulations published by the Indonesian government ~~and/or~~prohibit exports of copper concentrate and anode slimes after January 12, 2017. Indonesian ~~nationals~~government officials have indicated an intent to revise this regulation to protect employment and government revenues. The nature of ~~up to a 30 percent interest (an additional 20.64 percent) in PT-FI at fair market value.~~

~~We expect, but cannot provide~~ any ~~assurance, that PT-FI will be successful in reaching a satisfactory agreement on~~potential revisions of the ~~terms of its long-term mining rights. If~~regulation is currently uncertain. PT-FI is ~~unable to reach agreement~~actively engaged with ~~the~~ Indonesian government officials 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 Indonesian government for breach of contract through international arbitration.

this matter. 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,II, Item ~~1A. of our annual report on Form 10-K~~IA. for ~~the year ended December 31, 2014.~~further discussion.

Operating and Development Activities. ~~PT-FI's revised operating plans incorporate improved operational efficiencies, reductions~~PT-FI is currently mining the final phase of the Grasberg open pit, which contains high copper and gold ore grades. PT-FI expects to mine high-grade ore over the next several quarters prior to transitioning to the Grasberg Block Cave underground mine in ~~input costs, supplies and contractor costs, foreign exchange impacts and a deferral~~the first half of ~~15 percent of capital expenditures in 2016.~~2018.

~~We have~~PT-FI has several projects in progress in the Grasberg minerals district related to the development of ~~our~~its large-scale, long-lived, high-grade underground ore bodies. In aggregate, these underground ore bodies are expected to produce large-scale quantities of copper and gold following the transition from the Grasberg open ~~pit, currently anticipated~~pit. From 2017 to occur in late 2017. Development of the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) underground mines is advancing. Production from the DMLZ mine commenced during September 2015, and the Grasberg Block Cave mine is anticipated to commence production in 2018.

~~Over the period from 2016 to 2019,~~2020, estimated aggregate capital spending on these projects is currently expected to average $1.0 billion per year ($0.8 billion per year net to PT-FI). Considering the long-term nature and size of these projects, actual costs could vary from these estimates. In response to ~~recent~~ market conditions and ~~the uncertain global economic environment,~~Indonesian regulatory uncertainty, the timing of these expenditures ~~is being evaluated.~~continues to be reviewed.

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The following provides additional information on the continued development of the Common Infrastructure project, the Grasberg Block Cave underground mine and the ~~DMLZ~~Deep Mill Level Zone (DMLZ) ore body that lies below the Deep Ore Zone (DOZ) underground mine. Our current plans and mineral reserves in Indonesia assume that PT-FI will be able to continue to export copper concentrate directly and through PT Smelting after January 12, 2017, and that PT-FI's COW will be extended beyond 2021.

Common Infrastructure and Grasberg Block Cave Mine. In 2004, PT-FI commenced its Common Infrastructure project to provide access to its large undeveloped underground ore bodies located in the Grasberg minerals district through a tunnel system located approximately 400 meters deeper than its existing underground tunnel system. In addition to providing access to our underground ore bodies, the tunnel system will enable PT-FI to conduct future exploration in prospective areas associated with currently identified ore bodies. The tunnel system was completed to the Big Gossan terminal, and the Big Gossan mine was brought into production in 2010. Production from the Big Gossan mine, which is currently suspended, ~~and~~is expected to restart ~~production~~ in the ~~second~~first half of ~~2016.~~2017 and ramp up to 7,000 metric tons of ore per day in 2022. 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 4045 percent of our recoverable proven and probable reserves in Indonesia. Production at the Grasberg Block Cave mine is expected to commence in ~~early~~ 2018, atfollowing the end of mining of 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. ~~In consideration~~As a result of current market conditions, PT-FI is reviewing its operating plans to determine the optimum mine plan for the Grasberg Block Cave.

Aggregate mine development capital for the Grasberg Block Cave mine and associated Common Infrastructure is expected to approximate ~~$5.7~~$6.0 billion (incurred between 2008 and 2022), with PT-FI’s share totaling approximately

~~Table of Contents~~

~~$5.1~~ $5.5 billion. Aggregate project costs totaling $~~2.1~~2.6 billion have been incurred through September 30, ~~2015~~2016 ($~~0.3 billion~~416 million during the first nine months of ~~2015~~2016).

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 mine~~In September 2015, PT-FI initiated pre-commercial production that represents ore extracted during the development phase for the purpose of obtaining access to the ore ~~body using a block-cave method. Production from the DMLZ commenced during September 2015.~~body. Targeted production rates once the DMLZ ~~mining operation~~underground mine reaches full capacity are expected to approximate 80,000 metric tons of ore per ~~day.~~ day in 2021.

Drilling efforts continue to determine the extent of ~~this~~the ore body. Aggregate mine development capital costs for the DMLZ underground mine are expected to approximate ~~$2.7~~$2.6 billion (incurred between 2009 and ~~2021)~~2020), with PT-FI’s share totaling approximately $1.6 billion. Aggregate project costs totaling $~~1.4~~1.8 billion have been incurred through September 30, ~~2015~~2016 ($~~0.3 billion~~243 million during the first nine months of ~~2015)~~2016).

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Operating Data. Following is a summary of consolidated operating data for our Indonesia mining operations for the third quarters and first nine months of ~~2015~~2016 and ~~2014:~~2015:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014		2016		2015		2016		2015
Operating Data, Net of Joint Venture Interest
Copper (recoverable)
Production (millions of pounds)	192		203		551		465
Sales (millions of pounds)	198		258		549		484
Copper
Production (millions of recoverable pounds)									321		192		694		551
Sales (millions of recoverable pounds)									332		198		702		549
Average realized price per pound	$	2.35	$	3.05	$	2.45	$	3.09	$	2.20	$	2.35	$	2.17	$	2.45

Gold (thousands of recoverable ounces)
Production (thousands of ounces)	272		426		887		776
Sales (thousands of ounces)	285		505		891		802
Gold
Production (thousands of recoverable ounces)									301		272		637		887
Sales (thousands of recoverable ounces)									307		285		653		891
Average realized price per ounce	$	1,117	$	1,219	$	1,149	$	1,248	$	1,327	$	1,117	$	1,292	$	1,149

100% Operating Data
Ore milled (metric tons per day):^a
Grasberg open pit	117,300		78,100		118,400		64,900		135,600		117,300		117,200		118,400
DOZ underground mine^b	40,400		57,600		44,000		52,800		35,100		40,400		38,700		44,000
DMLZ underground mine^c	3,800		—		2,700		—
Big Gossan underground mine^d	—		—		—		1,200
DMLZ underground mine									6,000		3,800		5,000		2,700
Grasberg Block Cave									2,800		—		2,600		—
Big Gossan underground mine									1,000		—		700		—
Total	161,500		135,700		165,100		118,900		180,500		161,500		164,200		165,100
Average ore grades:
Copper (percent)	0.68		0.88		0.65		0.78		1.02		0.68		0.86		0.65
Gold (grams per metric ton)	0.71		1.28		0.76		0.94		0.69		0.71		0.58		0.76
Recovery rates (percent):
Copper	89.6		91.4		90.2		89.9		91.4		89.6		90.5		90.2
Gold	81.1		84.6		83.1		81.5		82.7		81.1		81.4		83.1
Production (recoverable):
Copper (millions of pounds)	192		207		551		476
Gold (thousands of ounces)	272		426		887		777
Production:
Copper (millions of recoverable pounds)									327		192		736		551
Gold (thousands of recoverable ounces)									300		272		664		887


a.	Amounts represent the approximate average daily throughput processed at PT-FI’s mill facilities from each producing ~~mine.~~mine and from development activities that result in metal production.


b.	Ore milled from the DOZ underground mine is expected to ramp up to ~~over 50,000~~60,000 metric tons of ore per day in ~~fourth-quarter 2015.~~


c.	~~Production from the DMLZ underground mine commenced during September 2015.~~


d.	~~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.~~2017.

Indonesia's consolidated copper sales ~~volumes decreased to~~ ~~198~~of 332 million pounds ~~of copper and~~ ~~285 thousand~~ ~~ounces of gold in~~ ~~third-quarter2015, compared with~~ ~~258 million~~ ~~pounds of copper and~~ ~~505 thousand~~ ~~ounces of gold in~~ ~~third-quarter2014, primarily reflecting lower ore grades and El Niño weather conditions, as well as timing of shipments~~ in third-quarter ~~2014 related to~~2016 and 702 million pounds for the ~~lifting~~first nine months of ~~export restrictions~~2016, were higher than sales of 198 million pounds in ~~late July 2014. Indonesia's sales volumes increased to~~third-quarter 2015 and 549 million pounds ~~of copper and 891 thousand ounces of gold~~ for the first nine months of 2015, ~~compared with 484 million~~

~~Table of Contents~~primarily reflecting higher copper ore grades.

~~pounds of copper and 802~~Indonesia's gold sales totaled 307 thousand ounces ~~of gold~~in third-quarter 2016 and 653 thousand ounces for the first nine months of ~~2014,~~2016, compared with 285 thousand ounces in third-quarter 2015 and 891 thousand ounces for the first nine months of 2015. Lower gold volumes in the first nine months of 2016, compared with the first nine months of 2015, primarily ~~reflecting higher mill and recovery rates, partly offset by~~reflect lower ore ~~grades~~grades. During third-quarter 2016, PT-FI experienced labor productivity issues and a 10-day work stoppage beginning in late September, which affected the ~~impact~~timing of ~~El Niño weather conditions in third-quarter 2015.~~

~~As a result of mill process water limitations because of continuing El Niño weather conditions~~access to higher grade ore and mill maintenance activities, PT-FI has adjusted its forecast to anticipate an approximate 15 percent reduction in fourth-quarter 2015 mill rates from the previous plan. The resulting impact of these factors is a deferral of 70 million pounds of copper and 70 thousand ounces of gold from fourth-quarter 2015 to future periods. In addition, lower than forecasted mining rates in the second half of 2015 are expected to resultresulted in a deferral of ~~high-grade ore to~~production into future periods.

~~PT-FI expects ore grades to improve significantly in 2016 and 2017 with access to higher grade sections of the Grasberg open pit, resulting in higher production and lower unit net cash costs.~~

At the Grasberg mine, the sequencing of mining areas with varying ore grades causes fluctuations in quarterly and annual production of copper and gold. Consolidated sales volumes from our Indonesia mining operations are expected to approximate ~~760 million~~1.2 billion pounds of copper and ~~1.2~~1.24 million ounces of gold for the year ~~2015~~,2016, compared with ~~664~~744 million pounds of copper and 1.2 million ounces of gold for the year ~~2014~~.2015. Ore grades are expected to further improve in 2017 because of increased access to higher grade sections of the Grasberg open pit. Indonesia mining's projected sales volumes are dependent on a number of factors, including operational performance, the timing of shipments and approval by the Indonesian government to continue the export of copper concentrate and anode slimes.

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Gross Profit per Pound of Copper and per Ounce of Gold

The following tables summarize the unit net cash costs and gross profit per pound of copper and per ounce of gold at our Indonesia mining operations for the third quarters and first nine months of ~~2015~~2016 and ~~2014.~~2015. Refer to ~~“Production~~“Product Revenues and Production Costs” for an explanation of “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.


	Three Months Ended										Three Months Ended											Three Months Ended September 30,
	September 30, 2015										September 30, 2014											2016											2015
	By-Product Method				Co-Product Method						By-Product Method				Co-Product Method							By-Product Method				Co-Product Method							By-Product Method				Co-Product Method
					Copper			Gold						Copper				Gold							Copper				Gold							Copper				Gold
Revenues, excluding adjustments	$	2.35			$	2.35		$	1,117			$	3.05			$	3.05			$	1,219		$	2.20			$	2.20			$	1,327		$	2.35			$	2.35			$	1,117

Site production and delivery, before net noncash and other costs shown below	2.16				1.28			604			2.42				1.34				537			1.37				0.86				520			2.16				1.28				604
Gold and silver credits	(1.59		)		—			—			(2.44		)		—				—			(1.29		)		—				—			(1.59		)		—				—
Treatment charges	0.31				0.18			86			0.25				0.14				56			0.27				0.17				104			0.31				0.18				86
Export duties	0.17				0.10			49			0.16				0.09				36			0.10				0.07				39			0.17				0.10				49
Royalty on metals	0.13			^a	0.07			35			0.21			^a	0.12				45			0.12				0.07				50			0.13				0.07				35
Unit net cash costs	1.18				1.63			774			0.60				1.69				674			0.57				1.17				713			1.18				1.63				774
Depreciation and amortization	0.45				0.27			127			0.35				0.20				79			0.33				0.21				125			0.45				0.27				127
Noncash and other costs, net	0.02				0.01			5			0.11				0.06				24			0.05			^a	0.03				19			0.02				0.01				5
Total unit costs	1.65				1.91			906			1.06				1.95				777			0.95				1.41				857			1.65				1.91				906
Revenue adjustments, primarily for pricing on prior period open sales	(0.26		)		(0.26		)	(38		)	(0.01		)		(0.01		)		(1		)	(0.02		)		(0.02		)		1			(0.26		)		(0.26		)		(38		)
PT Smelting intercompany profit (loss)	0.08				0.05			23			(0.19		)		(0.10		)		(42		)
PT Smelting intercompany (loss) profit																						(0.03		)		(0.02		)		(10		)	0.08				0.05				23
Gross profit per pound/ounce	$	0.52			$	0.23		$	196		$	1.79			$	0.99			$	399		$	1.20			$	0.75			$	461		$	0.52			$	0.23			$	196

Copper sales (millions of recoverable pounds)	198				198						258				258							332				332							198				198
Gold sales (thousands of recoverable ounces)								285											505											307											285

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	Nine Months Ended									Nine Months Ended											Nine Months Ended September 30,
	September 30, 2015									September 30, 2014											2016											2015
	By-Product Method				Co-Product Method					By-Product Method				Co-Product Method							By-Product Method				Co-Product Method							By-Product Method				Co-Product Method
					Copper			Gold					Copper				Gold							Copper				Gold							Copper				Gold
Revenues, excluding adjustments	$	2.45			$	2.45		$	1,149		$	3.09			$	3.09			$	1,248		$	2.17			$	2.17			$	1,292		$	2.45			$	2.45			$	1,149

Site production and delivery, before net noncash and other costs shown below	2.39				1.34			630		2.90			^b	1.72				694			1.70				1.08				639			2.39				1.34				630
Gold and silver credits	(1.93		)		—			—		(2.16		)		—				—			(1.28		)		—				—			(1.93		)		—				—
Treatment charges	0.31				0.17			81		0.25				0.15				60			0.29				0.18				109			0.31				0.17				81
Export duties	0.16				0.10			44		0.09				0.05				21			0.09				0.06				34			0.16				0.10				44
Royalty on metals	0.16			^a	0.09			41		0.16			^a	0.09				39			0.12				0.07				48			0.16				0.09				41
Unit net cash costs	1.09				1.70			796		1.24				2.01				814			0.92				1.39				830			1.09				1.70				796
Depreciation and amortization	0.43				0.24			114		0.40				0.24				96			0.40				0.25				152			0.43				0.24				114
Noncash and other costs, net	0.04				0.02			10		0.41			^b	0.25				98			0.04			^a	0.03				16			0.04				0.02				10
Total unit costs	1.56				1.96			920		2.05				2.50				1,008			1.36				1.67				998			1.56				1.96				920
Revenue adjustments, primarily for pricing on prior period open sales	(0.09		)		(0.09		)	10		(0.11		)		(0.11		)		22			—				—				25			(0.09		)		(0.09		)		10
PT Smelting intercompany profit	0.03				0.02			9		0.02				0.01				5
PT Smelting intercompany (loss) profit																					(0.01		)		(0.01		)		(4		)	0.03				0.02				9
Gross profit per pound/ounce	$	0.83			$	0.42		$	248	$	0.95			$	0.49			$	267		$	0.80			$	0.49			$	315		$	0.83			$	0.42			$	248

Copper sales (millions of recoverable pounds)	549				549					484				484							702				702							549				549
Gold sales (thousands of recoverable ounces)								891										802											653											891


a.	Includes ~~increased royalty costs~~asset retirement charges of ~~$0.06 per pound of copper for both the third quarter and first nine months of 2015, $0.08~~$17 million ($0.05 per pound in third-quarter ~~2014~~2016 and ~~$0.04~~$0.02 per pound for the first nine months of ~~2014.~~


b.	Fixed costs totaling $0.30 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 for the first nine months of 2014.2016).

A significant portion of PT-FI's costs are fixed and unit costs vary depending on ~~sales volumes.~~volumes and other factors. Indonesia's unit net cash costs ~~(net of~~(including gold and silver credits) ~~totaled~~of $~~1.18~~0.57 per pound of copper in third-quarter ~~2015~~2016 and $0.92 per pound of copper for the first nine months of 2016, ~~compared with $0.60~~were lower than $1.18 per pound of copper in third-quarter ~~2014, primarily reflecting lower volumes~~2015 and ~~lower gold and silver credits. Indonesia's unit net cash costs totaled~~ $1.09 per pound of copper for the first nine months of 2015, ~~compared with $1.24 per pound for the first nine months of 2014,~~ primarily reflecting ~~lower site production and delivery costs associated with lower input costs,~~higher copper sales volumes, partly offset by lower gold and silver ~~credits and the impact of export duties.~~credits.

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.

Export duties were initially set at 7.5 percent in July 2014 and were reduced to 5.0 percent in July 2015 as a result of smelter development progress. Export duties totaled $34 million in third-quarter 2016, $35 million in third-quarter 2015, $63 million for the first nine months of 2016 and $92 million for the first nine months of 2015.

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

PT Smelting intercompany (loss) 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 ~~$1,150~~$1,250 per ounce for fourth-quarter ~~2015, Indonesia's~~2016, unit net cash costs (net of gold and silver credits) for Indonesia mining are expected to approximate ~~$1.06~~$0.62 per pound of copper for the year ~~2015, approximating the 2014 average. Indonesia's projected~~2016. Indonesia mining's unit net cash costs for the year ~~2015~~2016 would change by approximately $0.03 per pound for each $50 per ounce change in the average price of gold for fourth-quarter ~~2015~~.2016. 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. ~~PT-FI expects~~Anticipated higher ore grades from Grasberg are expected to ~~improve significantly in 2016 and 2017 with access to higher grade sections of the Grasberg open pit, resulting~~result in lower unit net cash ~~costs.~~costs in fourth-quarter 2016 and for the year 2017.

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

Operating and Development Activities. In response to market conditions, the revised plans for our Henderson molybdenum mine incorporate lower operating rates, resulting in an approximate 65 percent reduction in Henderson's annual production volumes. We have also adjusted production plans at our by-product mines, including reduced production at the Sierrita mine. Additionally, we have incorporated changes in the commercial pricing structure for our chemical products to promote continuation of chemical-grade production.

Production from the Molybdenum mines totaled 5 million pounds of molybdenum in third-quarter 2016 and 19 million pounds of molybdenum for the first nine months of 2016, compared with 13 million pounds of molybdenum in third-quarter 2015 and 39 million pounds of molybdenum for the first nine months of 2015. 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 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 of $10.28 per pound of molybdenum in third-quarter2016 and $8.39 per pound of molybdenum for the first nine months of 2016, were higher than average unit net cash costs of $6.93 per pound in third-quarter 2015 and $7.10 for the first nine months of 2015, primarily reflecting lower volumes. Assuming achievement of current sales volume and cost estimates, we estimate unit net cash costs for the Molybdenum mines to average $8.50 per pound of molybdenum for the year 2016. Refer to “Product Revenues and Production Costs” for a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

Smelting and 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 concentrate consist of a base rate per pound of copper and per ounce of gold and are generally fixed. 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 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 concentrate and markets refined copper and precious metals in slimes. During the first nine months of 2016, Atlantic Copper's concentrate purchases from our copper mining operations included 11 percent from our North America copper mines, 9 percent from South America mining and 5 percent from Indonesia mining, 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 may also sell copper concentrate to PT Smelting at market rates for quantities in excess of 205,000 metric tons of copper annually. During the first nine months of 2016, PT-FI supplied approximately 90 percent of PT Smelting's concentrate requirements, and PT Smelting processed approximately half of PT-FI's concentrate production.

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Refer to "Risk Factors" contained in Part II, Item IA. for information regarding current Indonesian regulations that prohibit the export of anode slimes by PT Smelting after January 12, 2017.

We defer recognizing profits on sales from our mining operations to Atlantic Copper and on 25 percent of PT-FI'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 stock of $17 million in third-quarter2016, less than $1 million in third-quarter2015, $6 million for the first nine months of 2016 and $37 million for the first nine months of 2015. Our net deferred profits on our inventories at Atlantic Copper and PT Smelting to be recognized in future periods’ net income attributable to common stock from continuing operations totaled $19 million at September 30, 2016. 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, FM O&G, our principal oil and gas assets include oil production facilities in the Deepwater GOM and in California.

In July 2016, FM O&G completed the sale of its Haynesville shale assets for $87 million (before closing adjustments) and in second-quarter 2016, completed the sale of certain oil and gas royalty interests for $102 million (before closing adjustments). Under full cost accounting rules, the proceeds from these transactions were recorded as a reduction of capitalized oil and gas properties, with no gain or loss recognition.

In September 2016, FM O&G entered into an agreement to sell its Deepwater GOM properties for cash consideration of $2.0 billion (before closing adjustments) and up to $150 million in contingent payments, which would be received over time as the purchaser realizes future cash flows in connection with our third-party production handling agreement for the Marlin platform. The transaction has an effective date of August 1, 2016, and is expected to close in fourth-quarter 2016, subject to customary closing conditions. In connection with the transaction, FM O&G entered into an agreement to amend the terms of the Plains Offshore preferred stock to provide FM O&G the option to call these securities for $582 million, which FM O&G expects to exercise at the time the Deepwater GOM sale closes.

In October 2016, FM O&G entered into an agreement to sell its onshore California oil and gas properties for cash consideration of $592 million (before closing adjustments) and contingent consideration of up to $150 million, consisting of $50 million per year for each of 2018, 2019 and 2020 if the price of Brent crude oil averages $70 per barrel or higher in each of those calendar years. The transaction has an effective date of July 1, 2016, and is expected to close in fourth-quarter 2016, subject to customary closing conditions.

Under full cost accounting rules, the Deepwater GOM and onshore California transactions will require gain or loss recognition because of their significance to the full cost pool, but the amounts are not expected to be material. Refer to Note 2 for further discussion of these oil and gas transactions, including the derivative contracts entered into during October 2016 as part of the sales agreement for the onshore California oil and gas properties.

Impairment of Oil and Gas Properties. As discussed in Note 1, 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. The reference pricing in ceiling test impairment calculations may cause results that do not reflect current market conditions that exist at the end of an accounting period. For example, in periods of increasing oil and gas prices, the use of a twelve-month historical average price in the ceiling test calculation may result in an impairment. Conversely, in times of declining prices, ceiling test calculations may not result in an impairment.

Using West Texas Intermediate (WTI) as the reference oil price, the average price was $41.68 per barrel at September 30, 2016, compared with $43.12 per barrel at June 30, 2016. Combined with the impact of the reduction in twelve-month historical prices and reserve revisions, net capitalized costs exceeded the related ceiling test limitation under full cost accounting rules, which resulted in the recognition of impairment charges totaling $239 million in third-quarter 2016 and $4.3 billion for the first nine months of 2016.

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U.S. Oil & Gas Operating Data. Following is summary operating results for the U.S. oil and gas operations for the third quarters and first nine months of 2016 and 2015:



	Three Months Ended September 30,							Nine Months Ended September 30,
	2016			2015				2016			2015
Sales Volumes
Oil (MMBbls)	9.1			9.3				26.1			26.3
Natural gas (Bcf)	13.8			22.8				52.2			68.1
NGLs (MMBbls)	0.6			0.7				1.8			1.8
MMBOE	12.0			13.8				36.6			39.4

Average Realized Prices^a
Oil (per barrel)	$	40.63		$	55.88		^b	$	37.11		$	59.92		^b
Natural gas(per MMBtu)	$	2.84		$	2.72			$	2.24		$	2.74
NGLs (per barrel)	$	17.65		$	16.68			$	16.85		$	19.78

Gross Loss per BOE
Realized revenues^a	$	34.99		$	43.00		^b	$	30.50		$	45.57		^b
Cash production costs^a	(15.00		)	(18.85		)		(15.28		)	(19.42		)
Cash operating margin^a	19.99			24.15				15.22			26.15
Depreciation, depletion and amortization	(18.54		)	(32.71		)		(19.03		)	(37.18		)
Impairment of oil and gas properties	(19.75		)	(252.58		)		(117.56		)	(235.22		)
Accretion and other costs^c	(4.24		)	(2.38		)		(26.49		)	(2.32		)
Net noncash mark-to-market losses on derivative contracts	—			(5.34		)		—			(5.51		)
Other revenues	0.46			0.49				0.45			0.39
Gross loss	$	(22.08	)	$	(268.37	)		$	(147.41	)	$	(253.69	)

Cash operating margin for oil and gas operations reflects realized revenues less cash production costs. Cash production costs exclude accretion and other costs. For reconciliations of realized revenues (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 "Product Revenues and Production Costs."


b.	Includes realized cash gains on crude oil derivative contracts of $11.03 per barrel of oil ($7.44 per BOE) in third-quarter 2015 and $11.58 per barrel of oil ($7.72 per BOE) for the first nine months of 2015.

Includes charges of $2.81 per BOE in third-quarter 2016 and $25.32 per BOE for the first nine months of 2016, primarily for idle rig/drillship settlements, inventory adjustments and asset impairments and charges of $1.54 per BOE in third-quarter 2015 and $1.48 per BOE for the first nine months of 2015, primarily for idle rig costs, inventory adjustments and prior period property tax assessments related to the California properties.

FM O&G's average realized price for crude oil was $40.63 per barrel (86 percent of the average Brent crude oil price of $46.99 per barrel) in third-quarter 2016 and $37.11 per barrel (86 percent of the average Brent crude oil price of $43.17 per barrel) for the first nine months of 2016.

FM O&G's average realized price for natural gas was $2.84 per MMBtu in third-quarter 2016, compared to the NYMEX natural gas price average of $2.81 per MMBtu for the July through September 2016 contracts; and $2.24 per MMBtu for the first nine months of 2016, compared to the NYMEX natural gas price average of $2.28 per MMBtu for the January through September 2016 contracts.

Realized revenues for oil and gas operations of $34.99 per BOE in third-quarter 2016 and $30.50 per BOE for the first nine months of 2016 were lower than realized revenues of $43.00 per BOE in third-quarter 2015 and $45.57 per BOE for the first nine months of 2015, primarily reflecting lower oil prices and the impact of realized cash gains on derivative contracts of $7.44 per BOE in third-quarter 2015 and $7.72 per BOE for the first nine months of 2015.

Cash production costs for oil and gas operations of $15.00 per BOE in third-quarter 2016 and $15.28 per BOE for the first nine months of 2016 were lower than cash production costs of $18.85 per BOE in third-quarter 2015 and $19.42 per BOE for the first nine months of 2015, primarily reflecting ongoing cost reduction efforts. The first nine months of 2016, compared with the 2015 period, also reflects the impact of higher production from the GOM. Based on current sales volume and cost estimates, cash production costs are expected to approximate $16.00 per BOE for the year 2016.

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Following is a summary of average sales volumes per day by region for oil and gas operations for the third quarters and first nine months of 2016 and 2015:



	Three Months Ended September 30,		Nine Months Ended September 30,
	2016	2015	2016	2015
Sales Volumes (MBOE per day):
GOM^a	92	91	87	82
California^b	33	35	32	37
Haynesville/Madden/Other^c	6	24	14	25
Total oil and gas operations	131	150	133	144


a.	In September 2016, we entered into an agreement to sell the Deepwater GOM properties. This transaction is expected to close in fourth-quarter 2016.


b.	In October 2016, we entered into an agreement to sell the onshore California properties. This transaction is expected to close in fourth-quarter 2016.


c.	In July 2016, we completed the sale of the Haynesville shale assets.

Daily sales volumes averaged 131 MBOE in third-quarter2016, including 99 thousand barrels (MBbls) of crude oil, 150 million cubic feet (MMcf) of natural gas and 7 MBbls of NGLs, and 133 MBOE for the first nine months of 2016, including 95 MBbls of crude oil, 191 MMcf of natural gas and 6 MBbls of NGLs.

Following completion of the Deepwater GOM and onshore California transactions, our portfolio of oil and gas assets would include oil and natural gas production onshore in South Louisiana and on the GOM Shelf, oil production offshore California and natural gas production from the Madden area in Central Wyoming. In third-quarter 2016, these properties produced an average of 7 MBbls of oil and NGLs per day and 74 MMcf of natural gas per day.

Oil and Gas Capital Expenditures. Capital expenditures for our oil and gas operations in third-quarter 2016 totaled $160 million (including $75 million incurred for GOM). Capital expenditures for our oil and gas operations for the first nine months of 2016 totaled $1.0 billion in the U.S. (including $0.6 billion incurred for GOM) and $47 million for international oil and gas properties, primarily associated with Morocco. Capital expenditures for oil and gas operations are estimated to total $1.2 billion for the year 2016.

DISCONTINUED OPERATIONS

~~Africa Mining~~Molybdenum Mines

~~Africa mining includes~~We have two wholly owned molybdenum mines in North America – the ~~Tenke minerals district. We hold an effective 56 percent interest~~Henderson underground mine and the Climax open-pit mine, both in ~~the Tenke copper~~Colorado. The Henderson and ~~cobalt mining concessions in the southeast region~~Climax mines produce high-purity, chemical-grade molybdenum concentrate, which is typically further processed into value-added molybdenum chemical products. The majority of the ~~DRC through~~molybdenum concentrate produced at the Henderson and Climax mines, as well as from our ~~consolidated subsidiary Tenke Fungurume Mining S.A. (TFM),~~North and ~~we are the operator of Tenke.~~

~~The Tenke operation includes open-pit mining, leaching and SX/EW operations. Copper production from the Tenke minerals district~~South America copper mines, is ~~sold as copper cathode. In addition to copper, the Tenke minerals district produces cobalt hydroxide.~~processed at our own conversion facilities.

Operating and Development Activities. ~~TFM completed its second phase expansion project~~In response to market conditions, the revised plans for our Henderson molybdenum mine incorporate lower operating rates, resulting in ~~early 2013, which included increasing mine, mill and processing capacity. Construction of a second sulphuric acid plant is under way, with completion expected~~an approximate 65 percent reduction in Henderson's annual production volumes. We have also adjusted production plans at our by-product mines, including reduced production at the Sierrita mine. Additionally, we have incorporated changes in the ~~first half~~commercial pricing structure for our chemical products to promote continuation of 2016. We continue to engage in exploration activities and metallurgical testing to evaluate the potential of the highly prospective minerals district at Tenke. Future development and expansion opportunities are being deferred pending improved market conditions.chemical-grade production.

~~During~~Production from the Molybdenum mines totaled 5 million pounds of molybdenum in third-quarter ~~2015, we revised plans at Tenke to incorporate a 50 percent reduction in capital spending for~~ 2016 and ~~various initiatives to reduce operating, administrative and exploration costs.~~

~~Operating Data.~~ ~~Following is a summary~~19 million pounds of ~~consolidated operating data for our Africa mining operations for the third quarters and first nine months of 2015 and 2014:~~

Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
Copper (recoverable)

Production (millions of pounds) 108
117
339
340
Sales (millions of pounds) 113
112
350
314
Average realized price per pound^a
$ 2.32
$ 3.11
$ 2.52
$ 3.09

Cobalt (contained)

Production (millions of pounds) 9
8
25
22
Sales (millions of pounds) 10
8
26
23
Average realized price per pound $ 8.96
$ 9.99
$ 9.04
$ 9.68

Ore milled (metric tons per day) 14,000
15,500
14,600
15,100
Average ore grades (percent):
Copper 4.02
4.13
4.13
4.09
Cobalt 0.43
0.33
0.41
0.33
Copper recovery rate (percent) 94.0
91.3
94.0
92.8


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

~~TFM's copper sales of~~ ~~113 million~~ ~~pounds in~~ ~~third-quarter2015~~ ~~approximated third-quarter 2014 sales of 112 million pounds. TFM's copper sales of 350 million pounds~~molybdenum for the first nine months of ~~2015 were higher than sales of 314~~2016, compared with 13 million pounds of molybdenum in third-quarter 2015 and 39 million pounds of molybdenum for the first nine months of ~~2014, primarily reflecting timing~~2015. Refer to "Consolidated Results" for our consolidated molybdenum operating data, which includes sales of ~~shipments.~~

~~For the year~~ ~~2015, we expect~~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 from TFM to approximate~~ ~~465 million~~ ~~pounds of copper and~~ ~~35 million~~ ~~pounds of cobalt, compared with~~ ~~425 million~~ ~~pounds of copper and~~ ~~30 million~~ ~~pounds of cobalt for the year~~ ~~2014~~.volumes.

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

~~Table of Contents~~

~~Gross Profit per Pound of Copper and Cobalt~~

~~The following tables summarize the~~Average unit net cash costs ~~and gross profit~~for our Molybdenum mines of $10.28 per pound of ~~copper~~molybdenum in third-quarter2016 and ~~cobalt at our Africa mining operations~~$8.39 per pound of molybdenum for the ~~third quarters~~first nine months of 2016, were higher than average unit net cash costs of $6.93 per pound in third-quarter 2015 and $7.10 for the first nine months of 2015, primarily reflecting lower volumes. Assuming achievement of current sales volume and ~~2014.~~cost estimates, we estimate unit net cash costs for the Molybdenum mines to average $8.50 per pound of molybdenum for the year 2016. Refer to ~~“Production~~“Product 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.

Smelting and Refining

Table of Contents

Refer to "Risk Factors" contained in Part II, Item IA. for information regarding current Indonesian regulations that prohibit the export of anode slimes by PT Smelting after January 12, 2017.

Oil and Gas

Through our wholly owned oil and gas subsidiary, FM O&G, our principal oil and gas assets include oil production facilities in the Deepwater GOM and in California.

Table of Contents

U.S. Oil & Gas Operating Data. Following is summary operating results for the U.S. oil and gas operations for the third quarters and first nine months of 2016 and 2015:

Three Months Ended Three Months Ended
September 30, 2015 September 30, 2014
By-Product Method Co-Product Method By-Product Method Co-Product Method
Copper Cobalt Copper Cobalt
Revenues, excluding adjustments^a
$ 2.32
$ 2.32
$ 8.96
$ 3.11
$ 3.11
$ 9.99

Site production and delivery, before net noncash and other costs shown below 1.63
1.36
5.58
1.61
1.40
5.32
Cobalt credits^b
(0.53 ) —
—
(0.58 ) —
—
Royalty on metals 0.05
0.04
0.15
0.07
0.06
0.18
Unit net cash costs 1.15
1.40
5.73
1.10
1.46
5.50
Depreciation, depletion and amortization 0.58
0.45
1.52
0.51
0.43
1.06
Noncash and other costs, net 0.03
0.03
0.08
0.05
0.04
0.10
Total unit costs 1.76
1.88
7.33
1.66
1.93
6.66
Revenue adjustments, primarily for pricing on prior period open sales (0.08 ) (0.08 ) (0.25 ) 0.01
0.01
0.39
Gross profit per pound $ 0.48
$ 0.36
$ 1.38
$ 1.46
$ 1.19
$ 3.72

Copper sales (millions of recoverable pounds) 113
113
112
112

Cobalt sales (millions of contained pounds) 10
8

Nine Months Ended Nine Months Ended
September 30, 2015 September 30, 2014
By-Product Method Co-Product Method By-Product Method Co-Product Method
Copper Cobalt Copper Cobalt
Revenues, excluding adjustments^a
$ 2.52
$ 2.52
$ 9.04
$ 3.09
$ 3.09
$ 9.68

Site production and delivery, before net noncash and other costs shown below 1.58
1.37
5.56
1.51
1.33
5.24
Cobalt credits^b
(0.47 ) —
—
(0.51 ) —
—
Royalty on metals 0.06
0.04
0.15
0.07
0.06
0.16
Unit net cash costs 1.17
1.41
5.71
1.07
1.39
5.40
Depreciation, depletion and amortization 0.56
0.45
1.38
0.55
0.47
1.04
Noncash and other costs, net 0.03
0.03
0.08
0.05
0.05
0.10
Total unit costs 1.76
1.89
7.17
1.67
1.91
6.54
Revenue adjustments, primarily for pricing on prior period open sales (0.02 ) (0.02 ) (0.02 ) —
—
0.09
Gross profit per pound $ 0.74
$ 0.61
$ 1.85
$ 1.42
$ 1.18
$ 3.23

Copper sales (millions of recoverable pounds) 350
350
314
314

Cobalt sales (millions of contained pounds) 26
23



	Three Months Ended September 30,							Nine Months Ended September 30,
	2016			2015				2016			2015
Sales Volumes
Oil (MMBbls)	9.1			9.3				26.1			26.3
Natural gas (Bcf)	13.8			22.8				52.2			68.1
NGLs (MMBbls)	0.6			0.7				1.8			1.8
MMBOE	12.0			13.8				36.6			39.4

Average Realized Prices^a
Oil (per barrel)	$	40.63		$	55.88		^b	$	37.11		$	59.92		^b
Natural gas(per MMBtu)	$	2.84		$	2.72			$	2.24		$	2.74
NGLs (per barrel)	$	17.65		$	16.68			$	16.85		$	19.78

Gross Loss per BOE
Realized revenues^a	$	34.99		$	43.00		^b	$	30.50		$	45.57		^b
Cash production costs^a	(15.00		)	(18.85		)		(15.28		)	(19.42		)
Cash operating margin^a	19.99			24.15				15.22			26.15
Depreciation, depletion and amortization	(18.54		)	(32.71		)		(19.03		)	(37.18		)
Impairment of oil and gas properties	(19.75		)	(252.58		)		(117.56		)	(235.22		)
Accretion and other costs^c	(4.24		)	(2.38		)		(26.49		)	(2.32		)
Net noncash mark-to-market losses on derivative contracts	—			(5.34		)		—			(5.51		)
Other revenues	0.46			0.49				0.45			0.39
Gross loss	$	(22.08	)	$	(268.37	)		$	(147.41	)	$	(253.69	)

~~Includes point-of-sale transportation~~Cash operating margin for oil and gas operations reflects realized revenues less cash production costs. Cash production costs ~~as negotiated~~exclude accretion and other costs. 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 ~~customer contracts.~~ our consolidated financial statements, refer to "Product Revenues and Production Costs."


b.	~~Net~~Includes realized cash gains on crude oil derivative contracts of ~~cobalt downstream processing~~$11.03 per barrel of oil ($7.44 per BOE) in third-quarter 2015 and ~~freight costs.~~$11.58 per barrel of oil ($7.72 per BOE) for the first nine months of 2015.

~~Unit net cash costs (net~~FM O&G's average realized price for crude oil was $40.63 per barrel (86 percent of ~~cobalt credits)~~the average Brent crude oil price of $46.99 per barrel) in third-quarter 2016 and $37.11 per barrel (86 percent of the average Brent crude oil price of $43.17 per barrel) for ~~our Africa~~the first nine months of 2016.

Realized revenues for oil and gas operations of $34.99 per BOE in ~~$1.15~~third-quarter 2016 and $30.50 per ~~pound~~BOE for the first nine months of ~~copper~~2016 were lower than realized revenues of $43.00 per BOE in third-quarter 2015 ~~were higher than unit net cash costs of~~ ~~$1.10~~ and $45.57 per ~~pound in third-quarter~~ ~~2014, primarily reflecting lower cobalt credits associated with lower cobalt prices. Africa's unit net cash costs of $1.17 per pound of copper~~BOE for the first nine months of 2015, ~~were higher than unit net~~primarily reflecting lower oil prices and the impact of realized cash ~~costs~~gains on derivative contracts of ~~$1.07~~$7.44 per ~~pound~~BOE in third-quarter 2015 and $7.72 per BOE for the first nine months of ~~2014, primarily reflecting higher site production and delivery costs and lower cobalt credits.~~2015.

~~Table of Contents~~

~~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~~Cash production costs for oil and gas operations of $15.00 per BOE in third-quarter 2016 and $15.28 per BOE for the first nine months of 2016 were lower than cash production costs of $18.85 per BOE in third-quarter 2015 and $19.42 per BOE for the first nine months of 2015, primarily reflecting ongoing cost reduction efforts. The first nine months of 2016, compared with the 2015 period, also reflects the impact of higher production from the GOM. Based on current sales volume and cost estimates, ~~and an average cobalt market price of~~ ~~$13~~ ~~per pound for fourth-quarter~~ ~~2015, average unit net~~ cash production costs ~~(net of cobalt credits)~~ are expected to approximate ~~$1.16~~$16.00 per ~~pound of copper~~BOE for the year 2016.

Table of Contents

Following is a summary of average sales volumes per day by region for oil and gas operations for the third quarters and first nine months of 2016 and 2015:



	Three Months Ended September 30,		Nine Months Ended September 30,
	2016	2015	2016	2015
Sales Volumes (MBOE per day):
GOM^a	92	91	87	82
California^b	33	35	32	37
Haynesville/Madden/Other^c	6	24	14	25
Total oil and gas operations	131	150	133	144


a.	In September 2016, we entered into an agreement to sell the Deepwater GOM properties. This transaction is expected to close in fourth-quarter 2016.


b.	In October 2016, we entered into an agreement to sell the onshore California properties. This transaction is expected to close in fourth-quarter 2016.


c.	In July 2016, we completed the sale of the Haynesville shale assets.

Daily sales volumes averaged ~~2015~~131 MBOE in third-quarter2016, ~~compared with~~including ~~$1.15~~99 thousand barrels (MBbls) of crude oil, 150 million cubic feet (MMcf) of natural gas and 7 MBbls of NGLs, and 133 MBOE for the first nine months of 2016, including 95 MBbls of crude oil, 191 MMcf of natural gas and 6 MBbls of NGLs.

~~2014~~Oil and Gas Capital Expenditures. ~~Africa's projected unit net cash costs~~Capital expenditures for our oil and gas operations in third-quarter 2016 totaled $160 million (including $75 million incurred for GOM). Capital expenditures for our oil and gas operations for the first nine months of 2016 totaled $1.0 billion in the U.S. (including $0.6 billion incurred for GOM) and $47 million for international oil and gas properties, primarily associated with Morocco. Capital expenditures for oil and gas operations are estimated to total $1.2 billion for the year ~~2015 would change by~~ ~~$0.025~~ ~~per pound for each~~ $2 ~~per pound change in the average price of cobalt during fourth-quarter~~ ~~2015~~.2016.

DISCONTINUED OPERATIONS

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

~~Our~~Operating and Development Activities. In response to market conditions, the revised plans for ~~the~~our Henderson molybdenum mine incorporate lower operating rates, resulting in ~~a 35~~an approximate 65 percent reduction in Henderson's annual production volumes. We ~~are~~have also ~~continuing to review our molybdenum~~adjusted production plans at our by-product mines, ~~and have announced plans to reduce~~including reduced production at ~~our~~the Sierrita ~~mine (refer to "Revised Operating Plans and Oil and Gas Review" for further discussion). We are engaged in discussions with our customers to incorporate potential~~mine. Additionally, we have incorporated changes in the commercial pricing structure for our ~~chemicals~~chemical products to ~~ensure~~promote continuation of chemical-grade production.

Production from the Molybdenum mines totaled 5 million pounds of molybdenum in third-quarter 2016 and 19 million pounds of molybdenum for the first nine months of 2016, compared with 13 million pounds of molybdenum in third-quarter 2015 and 39 million pounds of molybdenum for the first nine months of ~~2015, 13 million pounds in third-quarter 2014 and 40 million pounds for the first nine months of 2014.~~2015. 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.

Average unit net cash costs for our Molybdenum mines of $~~6.93~~10.28 per pound of molybdenum in third-quarter ~~2015~~2016 ~~were lower than average unit net cash costs of $7.12 per pound in third-quarter 2014, primarily reflecting lower supply costs. Average unit net cash costs of $7.10~~and $8.39 per pound of molybdenum for the first nine months of ~~2015~~2016, were higher than average unit net cash costs of ~~$6.76~~$6.93 per pound in third-quarter 2015 and $7.10 for the first nine months of ~~2014,~~2015, primarily reflecting ~~increased contract services costs.~~lower volumes. Assuming achievement of current sales volume and cost estimates, we estimate unit net cash costs for the Molybdenum mines to average $~~7.50~~8.50 per pound of molybdenum for the year ~~2015~~2016~~, compared with $7.08 per pound in 2014.~~. Refer to “Product Revenues and Production Costs” for a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

Smelting &and 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~~concentrate consist of a base rate per pound of copper and ~~in certain contracts, price participation based on copper prices.~~per ounce of gold and are generally fixed. 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 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.

~~Table of Contents~~

Atlantic Copper smelts and refines copper ~~concentrates~~concentrate and markets refined copper and precious metals in slimes. During the first nine months of ~~2015,~~2016, Atlantic ~~Copper purchased 24~~Copper's concentrate purchases from our copper mining operations included 11 percent ~~of its concentrate requirements~~ from our North America ~~mining operations, 4~~copper mines, 9 percent from ~~our~~ South America mining ~~operations,~~ and 45 percent from ~~our~~ Indonesia 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 may also ~~sells~~sell copper concentrate to PT Smelting at market rates for quantities in excess of 205,000 metric tons of copper annually. During the first nine months of ~~2015,~~2016, PT-FI ~~sold~~supplied approximately ~~one-third~~90 percent of ~~its copper~~PT Smelting's concentrate ~~production to PT Smelting.~~requirements, and PT Smelting ~~resumed operations~~processed approximately half of PT-FI's concentrate production.

Table of Contents

Refer to "Risk Factors" contained in ~~September 2015, following a temporary suspension in July 2015.~~Part II, Item IA. for information regarding current Indonesian regulations that prohibit the export of anode slimes by PT Smelting ~~is currently operating at 80 percent capacity pending completion of required repairs, which are expected to be completed in November 2015.~~after January 12, 2017.

We defer recognizing profits on sales from our mining operations to Atlantic Copper and on 25 percent of ~~Indonesia mining's~~PT-FI'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 ~~(reductions)~~ to net income attributable to common ~~stockholders~~stock of $17 million in third-quarter2016, less than $1 million in third-quarter 2015, $6 million for the first nine months of 2016 and $37 million for the first nine months of ~~2015, compared with $(20) million in~~ ~~third-quarter2014~~2015 ~~and $36 million for the first nine months of 2014.~~. Our net deferred profits on our inventories at Atlantic Copper and PT Smelting to be recognized in future periods’ net income attributable to common ~~stockholders~~stock from continuing operations totaled $2219 million at September 30, ~~2015~~2016. 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, FM O&G, our ~~portfolio of~~principal oil and gas assets ~~includes significant~~include oil production facilities ~~and growth potential~~ in the Deepwater GOM ~~established oil production facilities onshore~~ and ~~offshore California, large onshore natural gas resources~~ in California.

In July 2016, FM O&G completed the sale of its Haynesville shale ~~play~~assets for $87 million (before closing adjustments) and in ~~Louisiana, natural gas production from~~second-quarter 2016, completed the ~~Madden area in Central Wyoming, and a position in the Inboard Lower Tertiary/Cretaceous natural gas trend onshore in South Louisiana. For the first nine months~~sale of ~~2015, 87 percent of our~~certain oil and gas ~~revenues, excluding~~royalty interests for $102 million (before closing adjustments). Under full cost accounting rules, the ~~impact~~proceeds from these transactions were recorded as a reduction of ~~derivative contracts, were from oil and NGLs.~~

~~During third-quarter 2015, we also announced the deferral of investments in several long-term projects in our~~capitalized oil and gas ~~business,~~properties, with no gain or loss recognition.

In September 2016, FM O&G entered into an agreement to sell its Deepwater GOM properties for cash consideration of $2.0 billion (before closing adjustments) and up to $150 million in contingent payments, which ~~will result~~would be received over time as the purchaser realizes future cash flows in ~~a reduction~~connection with our third-party production handling agreement for the Marlin platform. The transaction has an effective date of ~~$0.9 billion~~August 1, 2016, and is expected to close in ~~projected capital expenditures~~fourth-quarter 2016, subject to customary closing conditions. In connection with the transaction, FM O&G entered into an agreement to amend the terms of the Plains Offshore preferred stock to provide FM O&G the option to call these securities for $582 million, which FM O&G expects to exercise at the time the Deepwater GOM sale closes.

In October 2016, FM O&G entered into an agreement to sell its onshore California oil and gas properties for cash consideration of $592 million (before closing adjustments) and contingent consideration of up to $150 million, consisting of $50 million per year for each of 2018, 2019 and 2020 if the ~~years~~price of Brent crude oil averages $70 per barrel or higher in each of those calendar years. The transaction has an effective date of July 1, 2016, and ~~2017. Additionally, FM O&G revised its estimate~~is expected to close in fourth-quarter 2016, subject to customary closing conditions.

Under full cost accounting rules, the Deepwater GOM and onshore California transactions will require gain or loss recognition because of their significance to the ~~start-up~~full cost pool, but the amounts are not expected to be material. Refer to Note 2 for further discussion of ~~initial tieback production in the Horn Mountain area to 2016, which will allow FM O&G to continue to grow production and enhance cash flow in a weak~~these oil and gas ~~price environment. The revised plans, together with initiatives to obtain third-party financing,~~transactions, including the ~~potential IPO or other alternatives, will be pursued~~derivative contracts entered into during October 2016 as ~~required to fund~~part of the sales agreement for the onshore California oil and gas ~~capital spending for 2016 and subsequent years. Refer to "Revised Operating Plans and Oil and Gas Review" for further discussion.~~properties.

Impairment of Oil and Gas Properties. ~~Under the~~As discussed in Note 1, under full cost accounting rules, a "ceiling test" is conducted each quarter to review the carrying value of ~~the~~our oil and gas properties for impairment. AtThe 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. The reference pricing in ceiling test impairment calculations may cause results that do not reflect current market conditions that exist at the end of an accounting period. For example, in periods of increasing oil and gas prices, the use of a twelve-month historical average price in the ceiling test calculation may result in an impairment. Conversely, in times of declining prices, ceiling test calculations may not result in an impairment.

Using West Texas Intermediate (WTI) as the reference oil price, the average price was $41.68 per barrel at September 30, ~~2015,~~2016, compared with $43.12 per barrel at June 30, 2016. Combined with the impact of the reduction in twelve-month historical prices and reserve revisions, net capitalized costs ~~with respect to FM O&G's proved U.S. oil and gas properties~~ exceeded the related ceiling test limitation ~~specified by the SEC's~~under full cost accounting rules, which resulted in the recognition of impairment charges totaling ~~$3.5 billion~~$239 million in third-quarter ~~2015~~2016 and ~~$9.3~~$4.3 billion for the first nine months of ~~2015.~~2016.

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 August 2015, drilling of the MZ-1 well associated with the Ouanoukrim prospect was completed to its targeted depth below 20,000 feet to evaluate the primary objectives, which did not contain hydrocarbons. During third-quarter 2015, costs associated with the well were transferred to the Morocco full cost pool. As FM O&G does not have proved reserves or production in Morocco, an impairment charge of $0.2 billion was recorded in third-quarter 2015.

~~Refer to "Critical Accounting Estimates" for further discussion.~~

Table of Contents

U.S. Oil ~~and~~& Gas ~~Operations.~~Operating Data. Following is summary operating results for the U.S. oil and gas operations for the third quarters and first nine months of ~~2015~~2016 and ~~2014:~~2015:

Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015
2014^a

Sales Volumes
Oil (MMBbls) 9.3
8.6
26.3
32.1

Natural gas (Bcf) 22.8
20.2
68.1
59.9

NGLs (MMBbls) 0.7
0.6
1.8
2.7

MMBOE 13.8
12.5
39.4
44.7

Average Realized Prices^b

Oil (per barrel) $ 55.88
$ 88.58
$ 59.92
$ 93.00

Natural gas(per MMBtu)
$ 2.72
$ 4.02
$ 2.74
$ 4.37

NGLs (per barrel) $ 16.68
$ 39.69
$ 19.78
$ 41.77

Gross (Loss) Profit per BOE
Realized revenues^b
$ 43.00
$ 69.08
$ 45.57
$ 75.04

Less: cash production costs^b
18.85
20.93
19.42
19.57

Cash operating margin^b
24.15
48.15
26.15
55.47

Less: depreciation, depletion and amortization 32.71
40.12
37.18
38.81

Less: impairment of oil and gas properties 252.58
24.59
235.22
6.90

Less: accretion and other costs 2.38
0.85
2.32
0.86

Plus: net noncash mark-to-market (losses) gains on derivative contracts (5.34 ) 9.73
(5.51 ) 2.90

Plus: other net adjustments 0.49
0.09
0.39
0.05

Gross (loss) profit $ (268.37 ) $ (7.59 ) $ (253.69 ) $ 11.85



	Three Months Ended September 30,							Nine Months Ended September 30,
	2016			2015				2016			2015
Sales Volumes
Oil (MMBbls)	9.1			9.3				26.1			26.3
Natural gas (Bcf)	13.8			22.8				52.2			68.1
NGLs (MMBbls)	0.6			0.7				1.8			1.8
MMBOE	12.0			13.8				36.6			39.4

Average Realized Prices^a
Oil (per barrel)	$	40.63		$	55.88		^b	$	37.11		$	59.92		^b
Natural gas(per MMBtu)	$	2.84		$	2.72			$	2.24		$	2.74
NGLs (per barrel)	$	17.65		$	16.68			$	16.85		$	19.78

Gross Loss per BOE
Realized revenues^a	$	34.99		$	43.00		^b	$	30.50		$	45.57		^b
Cash production costs^a	(15.00		)	(18.85		)		(15.28		)	(19.42		)
Cash operating margin^a	19.99			24.15				15.22			26.15
Depreciation, depletion and amortization	(18.54		)	(32.71		)		(19.03		)	(37.18		)
Impairment of oil and gas properties	(19.75		)	(252.58		)		(117.56		)	(235.22		)
Accretion and other costs^c	(4.24		)	(2.38		)		(26.49		)	(2.32		)
Net noncash mark-to-market losses on derivative contracts	—			(5.34		)		—			(5.51		)
Other revenues	0.46			0.49				0.45			0.39
Gross loss	$	(22.08	)	$	(268.37	)		$	(147.41	)	$	(253.69	)


a.	Include results from the Eagle Ford field through June 19, 2014. Eagle Ford had sales volumes totaling 8.7 MMBOE for the first nine months of 2014; excluding Eagle Ford, oil and gas cash production costs were $21.16 per BOE for the first nine months of 2014.

Cash operating margin for ~~our~~ oil and gas operations reflects realized revenues less cash production costs. ~~Realized revenues~~Cash production costs exclude ~~noncash mark-to-market adjustments on derivative contracts.~~accretion and other costs. 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."


b.	Includes realized cash gains on crude oil derivative contracts of $11.03 per barrel of oil ($7.44 per BOE) in third-quarter 2015 and $11.58 per barrel of oil ($7.72 per BOE) for the first nine months of 2015.

FM O&G's average realized price for crude oil was ~~$55.88~~$40.63 per barrel including $11.03 per barrel of cash gains on derivative contracts, in third-quarter 2015 and $59.92 per barrel, including $11.58 per barrel of cash gains on derivative contracts, for the first nine months of 2015. Excluding the impact of derivative contracts, the ~~third-quarter2015~~ ~~average realized price for crude oil was $44.85 per barrel (87 percent~~ ~~of the average Brent crude oil price of~~ ~~$51.31~~ ~~per barrel) and $48.34 per barrel (85~~(86 percent of the average Brent crude oil price of ~~$56.64~~$46.99 per barrel) in third-quarter 2016 and $37.11 per barrel (86 percent of the average Brent crude oil price of $43.17 per barrel) for the first nine months of ~~2015.~~2016.

FM O&G has derivative contracts that provide price protection averaging between approximately $70 and $90 per barrel of Brent crude oil for approximately 85 percent of estimated 2015 oil production. Assuming an average price of $50 per barrel for Brent crude oil, we would receive a benefit of $20 per barrel on remaining fourth-quarter 2015 derivative contract volumes of 7.7 MMBbls, before taking into account weighted-average premiums of $6.89 per barrel. See Note 7 for further discussion.

FM O&G's average realized price for natural gas was ~~$2.72~~$2.84 per MMBtu in third-quarter ~~2015,~~ 2016, compared to the NYMEX natural gas price average of ~~$2.77~~$2.81 per MMBtu for the July through September ~~2015~~2016 contracts; and ~~$2.74~~$2.24 per MMBtu for the first nine months of ~~2015,~~2016, compared to the NYMEX natural gas price average of ~~$2.80~~$2.28 per MMBtu for the January through September ~~2015~~2016 contracts.

Realized revenues for oil and gas operations of ~~$43.00~~$34.99 per BOE in third-quarter 2016 and $30.50 per BOE for the first nine months of 2016 were lower than realized revenues of $43.00 per BOE in third-quarter 2015 and $45.57 per BOE for the first nine months of 2015, ~~were lower than realized revenues of $69.08 per BOE in third-quarter 2014 and $75.04 per BOE for the first nine months of 2014,~~ primarily reflecting lower oil prices ~~partly offset by~~and the impact of ~~higher~~realized cash gains on derivative contracts ~~(cash gains were $103 million or~~of $7.44 per BOE in third-quarter2015 and ~~$304~~

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~~million or~~ $7.72 per BOE for the first nine months of ~~2015, compared with losses of $58 million or $4.62 per BOE in~~ ~~third-quarter~~ ~~2014 and $186 million or $4.16 per BOE for the first nine months of 2014).~~2015.

Cash production costs for oil and gas operations of ~~$18.85~~$15.00 per BOE in third-quarter~~2015~~ 2016 and $15.28 per BOE for the first nine months of 2016 were lower than cash production costs of ~~$20.93~~$18.85 per BOE in third-quarter ~~2014, primarily reflecting lower production costs in California related to reductions in well workover expense~~2015 and ~~steam costs. Cash production costs for oil and gas operations of~~ $19.42 per BOE for the first nine months of 2015, ~~were lower than~~primarily reflecting ongoing cost reduction efforts. The first nine months of 2016, compared with the 2015 period, also reflects the impact of higher production from the GOM. Based on current sales volume and cost estimates, cash production costs ~~of $19.57~~are expected to approximate $16.00 per BOE for the ~~first nine months~~year 2016.

Table of 2014, primarily reflecting lower production costs in California related to reductions in well workover expense and steam costs, partly offset by the sale of lower-cost Eagle Ford properties in June 2014.Contents

Following is a summary of average sales volumes per day by region for oil and gas operations for the third quarters and first nine months of ~~2015~~2016 and ~~2014:~~2015:


	Three Months Ended			Nine Months Ended
	September 30,			September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
	2015	2014		2015	2014		2016	2015	2016	2015
Sales Volumes (MBOE per day):
GOM^a	91	75		82	74		92	91	87	82
California	35	39		37	39
Haynesville/Madden/Other	24	22	^b	25	19	^b
Eagle Ford^c	—	—		—	32
California^b							33	35	32	37
Haynesville/Madden/Other^c							6	24	14	25
Total oil and gas operations	150	136		144	164		131	150	133	144


a.	~~Includes sales from properties on the GOM Shelf and in~~In September 2016, we entered into an agreement to sell the Deepwater ~~GOM; the 2015 periods also include sales from properties~~GOM properties. This transaction is expected to close in ~~the Inboard Lower Tertiary/Cretaceous natural gas trend.~~fourth-quarter 2016.


b.	~~Results include volume adjustments related~~In October 2016, we entered into an agreement to ~~Eagle Ford's pre-close sales.~~sell the onshore California properties. This transaction is expected to close in fourth-quarter 2016.


c.	~~FM O&G~~In July 2016, we completed the sale of ~~Eagle Ford in June 2014.~~the Haynesville shale assets.

Daily sales volumes averaged ~~150~~131 MBOE in third-quarter ~~2015~~2016, including ~~101~~99 ~~MBbls~~thousand barrels (MBbls) of crude oil, ~~248~~150 million cubic feet (MMcf) of natural gas and 87 MBbls of NGLs, and ~~144~~133 MBOE for the first nine months of ~~2015,~~2016, including 9695 MBbls of crude oil, ~~250~~191 MMcf of natural gas and 6 MBbls of NGLs. ~~Oil and gas sales volumes are expected to average 144 MBOE per day for the year~~ ~~2015, comprised of 67 percent oil, 28 percent natural gas and 5 percent NGLs.~~

~~Based on current sales volume~~Following completion of the Deepwater GOM and ~~cost estimates, cash production costs are expected to approximate $19 per BOE for the year 2015. Oil~~onshore California transactions, our portfolio of oil and gas assets would include oil and natural gas production ~~costs per BOE are expected to decline~~onshore in ~~2016 with~~South Louisiana and on the ~~addition of~~GOM Shelf, oil production offshore California and natural gas production from ~~new GOM wells.~~the Madden area in Central Wyoming. In third-quarter 2016, these properties produced an average of 7 MBbls of oil and NGLs per day and 74 MMcf of natural gas per day.

~~Exploration, Operating~~Oil and ~~Development Activities.~~Gas Capital Expenditures 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 sharp decline in oil prices in late 2014, we have taken steps to significantly reduce capital spending plans and are evaluating opportunities for funding capital. Capital expenditures for our oil and gas ~~business, including the potential IPO~~operations in third-quarter 2016 totaled $160 million (including $75 million incurred for ~~a minority interest in Freeport-McMoRan Oil & Gas Inc. and other funding alternatives.~~

During third-quarter 2015, FM O&G continued its successful strategy to focus on its high-return, low-risk tieback projects using its existing Deepwater GOM infrastructure (total processing capacity of approximately 250 MBbls of oil per day) and large Deepwater GOM project inventory (over 150 undeveloped locations)GOM). FM O&G achieved several important accomplishments, principally in its Deepwater GOM focus areas, that are expected to contribute to future growth. Positive drilling results were achieved at two wells in the King area and at the Horn Mountain Deep well. Since commencing development activities in 2014 at its three 100-percent-owned production platforms in the Deepwater GOM, FM O&G has drilled 13 wells in producing fields with positive results. Three of these wells have been brought on production, and FM O&G plans to complete and place the remaining wells on production in late 2015, 2016 and 2017. We will continue to assess opportunities to partner with strategic investors potentially interested in investing capital with us in the development ofCapital expenditures for our oil and gas ~~properties. FM O&G has a broad set of assets with valuable infrastructure and associated resources with attractive long-term production and development potential.~~

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~~U.S. Oil and Gas Capital Expenditures.~~ ~~Capital expenditures for our U.S. oil and gas~~ operations totaled $0.6 billion for third-quarter 2015, primarily associated with Deepwater GOM and $2.4 billion (including $1.8 billion incurred for Deepwater GOM and $0.2 billion for the Inboard Lower Tertiary/Cretaceous natural gas trend) for the first nine months of ~~2015.~~

2016 totaled $1.0 billion in the U.S. (including $0.6 billion incurred for GOM) and $47 million for international oil and gas properties, primarily associated with Morocco. Capital expenditures for oil and gas operations are estimated to total ~~$2.8~~$1.2 billion for the year ~~2015, with approximately 80 percent of the 2015 capital budget expected to be directed to the highest potential return focus areas in the GOM.~~

~~Deepwater GOM~~. The drilling and evaluation of multiple development and exploration opportunities in the Deepwater GOM is 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 Atwater Valley focus area, as well as interests in the Ram Powell and Hoover deepwater production platforms.2016.

~~During third-quarter 2015, field development continued at Heidelberg~~DISCONTINUED OPERATIONS

Africa Mining

As further discussed in Note 2, in May 2016, we entered into an agreement to sell our interest in TFHL, through which we hold an effective 56 percent interest in the ~~Green Canyon focus area. Installation~~Tenke copper and cobalt mining concessions in the Southeast region of ~~topside equipment and development well completion activities are~~the DRC. In accordance with accounting guidelines, the operating results of Africa mining have been separately reported as discontinued operations in our consolidated statements of operations for all periods presented. The closing of the transaction is currently ~~underway. First production is anticipated in mid-2016. FM O&G has~~subject to customary closing conditions, including the resolution of the right of first offer (which expires on November 15, 2016) of Lundin Mining Corporation (which holds a ~~12.5~~30 percent ~~working~~ interest in ~~Heidelberg,~~TFHL), and the parties are working towards a satisfactory resolution in order to complete the transaction in fourth-quarter 2016. In addition, La Générale des Carrières et des Mines (Gécamines), which is wholly owned by the DRC government and holds a ~~large, high-quality oil development project located~~20 percent non-dilutable interest in ~~5,300 feet of water.~~

At Holstein Deep, completion activities for the initial three-well subsea tieback development program are progressing on schedule, with first production expected by mid-2016. In aggregate, the three wells are estimated to commence production at approximately 24 MBOE per day. Successful results from the initial three-well drilling program established opportunities for additional wells, and a fourth well is being planned as part of the second phase of the Holstein Deep program. The Holstein Deep development is located in Green Canyon Block 643, west of the 100-percent-owned Holstein platform in 3,890 feet of water, with production facilities capable of processing 113 MBbls of oil per day.

FM O&G’s 100-percent-owned Marlin Hub is located in the Mississippi Canyon focus area and has production facilities capable of processing 60 MBbls of oil per day. Several tieback opportunities have been identified, including the 100-percent-owned Dorado and King development projects. Future wells can be brought on-line using existing infrastructureTenke Fungurume Mining S.A.) recently filed an arbitration proceeding with the ~~potential to utilize subsea enhancement technologies~~International Chamber of Commerce (ICC) International Court of Arbitration challenging the transaction; however, we believe that ~~could increase total recovery efficiencies.~~Gécamines’ claims have no legal basis.

The ~~initial FM O&G-drilled Dorado well was placed in~~Tenke operation includes open-pit mining, leaching and SX/EW operations. Copper production ~~in March 2015 after a successful production test with gross volumes in excess of 8 MBOE per day and continues~~from the Tenke minerals district is sold as copper cathode. In addition to ~~produce at strong rates. Drilling operations for~~copper, 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 late 2015/early 2016. The Dorado development is located on Viosca Knoll Block 915 in 3,860 feet of water.Tenke minerals district produces cobalt hydroxide.

During third-quarter 2015, FM O&G drilled its second successful well, D-13, at the King field, which is located in Mississippi Canyon south of the Marlin facility in 5,200 feet of water. During October 2015, the third King well, D-9, was drilled to a total depth of 13,110 feet. Logging tools indicated that the well encountered a total true vertical depth pay count of approximately 288 net feet of Miocene oil pay with excellent reservoir characteristics, including 148 net feet in the primary objective and 140 feet in the secondary objective. FM O&G plans to develop the primary objective in the D-9 well and a fourth well, D-11, is being planned to develop a take point in the secondary objective.

FM O&G’s 100-percent-owned Horn Mountain field is also located in the Mississippi Canyon focus area and has production facilities capable of processing 75 MBbls of oil per day. To enhance recovery of remaining oil in place, future development plans will target subsea tieback from multiple stacked sands in the area. As previously reported, the Horn Mountain Deep well was drilled to a total depth of 16,925 feet in September 2015 and successfully logged 142 net feet of Middle Miocene oil pay with excellent reservoir characteristics. In addition, these results indicate the presence of sand sections deeper than known pay sections in the field. Initial production from this discovery, which will be tied back to existing facilities, is expected in the first half of 2017.

The positive results at Horn Mountain Deep and FM O&G's geophysical data support the existence of prolific Middle Miocene reservoir potential for several additional opportunities in the area, including the 100-percent-owned Sugar, Rose, Fiesta, Platinum and Peach prospects. FM O&G controls rights to over 55,000 acres associated with these prospects.

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The success at Horn Mountain Deep follows the positive drilling results previously announced from the three wells drilled in the Horn Mountain area, including the Quebec/Victory, Kilo/Oscar and Horn Mountain Updip tieback prospects.

FM O&G has an 18.67 percent working interest in the Vito oil discovery and a significant lease position in the Atwater Valley focus area. Vito is a large, deep subsalt Miocene oil discovery made in 2009, located in approximately 4,000 feet of water. Exploration and delineation drilling in recent years confirmed a significant resource in high-quality, subsalt Miocene sands. The operator is evaluating development options.

Success at the Power Nap exploration well and appraisal sidetracks, which are located in close proximity to Vito, produced positive results in the first half of 2015, and the operator is assessing development options. FM O&G owns a 50 percent working interest in the Power Nap prospect.

~~In September 2015, the operator completed its assessment of the Deep Sleep exploration well. No proved reserves were identified, and the well was plugged and abandoned.~~

~~Inboard Lower Tertiary/Cretaceous~~Operating Data.~~. FM O&G has~~ Following is a ~~position in~~summary of consolidated operating data for our Africa mining operations for the ~~Inboard Lower Tertiary/Cretaceous natural gas trend, located onshore in South Louisiana.~~third quarters and first nine months of 2016 and 2015:

In September 2015, workover operations were completed on the Highlander well, and production was re-established. Recent gross rates from the well, which are restricted because of limited production facilities, approximated 25 MMcf per day (approximately 12 MMcf per day net to FM O&G). Production testing in February 2015 indicated a flow rate of 75 MMcf per day (approximately 37 MMcf per day net to FM O&G).



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Copper (recoverable)
Production (millions of pounds)	124		108		356		339
Sales (millions of pounds)	118		113		365		350
Average realized price per pound^a	$	2.07	$	2.32	$	2.07	$	2.52

Cobalt (contained)
Production (millions of pounds)	9		9		28		25
Sales (millions of pounds)	9		10		29		26
Average realized price per pound	$	7.83	$	8.96	$	7.15	$	9.04

Ore milled (metric tons per day)	15,300		14,000		15,400		14,600
Average ore grades (percent):
Copper	4.31		4.02		4.11		4.13
Cobalt	0.43		0.43		0.45		0.41
Copper recovery rate (percent)	93.5		94.0		93.6		94.0

FM O&G expects to complete the installation of additional processing facilities to accommodate higher flow rates from the Highlander well by year-end 2015. 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 additional locations on the Highlander structure, which is located onshore in South Louisiana where FM O&G controls rights to more than 50,000 gross acres.


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

~~California~~Africa mining's copper sales of 118 million pounds in ~~. Sales volumes from California averaged 35 MBOE per day~~third-quarter2016 and 365 million pounds for the first nine months of 2016, were higher than sales of 113 million pounds in third-quarter 2015 and 350 million pounds for the first nine months of 2015, primarily reflecting higher mining and milling rates. The third-quarter 2015, compared with 39 MBOE per day for third-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. Since second-quarter 2015, production from Point Arguello platforms has been shut in following the shutdown of a third-party operated pipeline system that transports oil to various California refineries.2016 also reflects higher copper ore grades.

~~Haynesville~~Africa mining's sales for 2016 are expected to approximate 485 million pounds of copper and 38 million pounds of cobalt, compared with 467 million pounds of copper and 35 million pounds of cobalt for the year 2015. ~~FM O&G has rights to a substantial natural gas resource, located~~Africa mining's projected sales for the year 2016 would be impacted by the timing of the completion of the sale of our interest in the Haynesville shale play in North Louisiana. Drilling activities remain constrained in response to low natural gas prices in order to maximize near-term cash flows and to preserve the resource for potentially higher future natural gas prices.TFHL.

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Gross Profit per Pound of Copper and Cobalt. The following tables summarize the unit net cash costs and gross profit per pound of copper and cobalt at our Africa mining operations for the third quarters and first nine months of 2016 and 2015. Refer to “Product 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 net (loss) income from discontinued operations reported in our consolidated financial statements.



	Three Months Ended September 30,
	2016								2015
	By-Product Method			Co-Product Method					By-Product Method			Co-Product Method
	By-Product Method			Copper			Cobalt		By-Product Method			Copper			Cobalt
Revenues, excluding adjustments^a	$	2.07		$	2.07		$	7.83	$	2.32		$	2.32		$	8.96

Site production and delivery, before net noncash and other costs shown below	1.57			1.34			5.56		1.63			1.36			5.58
Cobalt credits^b	(0.46		)	—			—		(0.53		)	—			—
Royalty on metals	0.05			0.04			0.14		0.05			0.04			0.15
Unit net cash costs	1.16			1.38			5.70		1.15			1.40			5.73
Depreciation, depletion and amortization	0.50			0.40			1.36		0.58			0.45			1.52
Noncash and other costs, net	0.08			0.06			0.20		0.03			0.03			0.08
Total unit costs	1.74			1.84			7.26		1.76			1.88			7.33
Revenue adjustments, primarily for pricing on prior period open sales	(0.02		)	(0.02		)	0.68		(0.08		)	(0.08		)	(0.25		)
Gross profit per pound	$	0.31		$	0.21		$	1.25	$	0.48		$	0.36		$	1.38

Copper sales (millions of recoverable pounds)	118			118					113			113
Cobalt sales (millions of contained pounds)							9								10




	Nine Months Ended September 30,
	2016								2015
	By-Product Method			Co-Product Method					By-Product Method			Co-Product Method
	By-Product Method			Copper			Cobalt		By-Product Method			Copper			Cobalt
Revenues, excluding adjustments^a	$	2.07		$	2.07		$	7.15	$	2.52		$	2.52		$	9.04

Site production and delivery, before net noncash and other costs shown below	1.61			1.39			5.17		1.58			1.37			5.56
Cobalt credits^b	(0.39		)	—			—		(0.47		)	—			—
Royalty on metals	0.05			0.04			0.12		0.06			0.04			0.15
Unit net cash costs	1.27			1.43			5.29		1.17			1.41			5.71
Depreciation, depletion and amortization	0.50			0.41			1.15		0.56			0.45			1.38
Noncash and other costs, net	0.06			0.05			0.14		0.03			0.03			0.08
Total unit costs	1.83			1.89			6.58		1.76			1.89			7.17
Revenue adjustments, primarily for pricing on prior period open sales	(0.01		)	(0.01		)	0.13		(0.02		)	(0.02		)	(0.02		)
Gross profit per pound	$	0.23		$	0.17		$	0.70	$	0.74		$	0.61		$	1.85

Copper sales (millions of recoverable pounds)	365			365					350			350
Cobalt sales (millions of contained pounds)							29								26


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 Africa mining were $1.16 per pound of copper in third-quarter 2016, $1.15 per pound of copper in third-quarter 2015, $1.27 per pound of copper for the first nine months of 2016 and$1.17 per pound of copper for the first nine months of 2015. The third quarter and first nine-months of 2016, compared with the 2015 periods, reflect lower cobalt credits.

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

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Based on current sales volume and cost estimates and assuming an average cobalt price of $11 per pound for fourth-quarter 2016, unit net cash costs (net of cobalt credits) for Africa mining are expected to approximate $1.26 per pound of copper for 2016.

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. In ~~third-quarter 2015, we announced revised capital and operating plans in~~ response to weak market ~~conditions. The revised plans include~~conditions, we have taken actions to enhance our financial position, including significant reductions in ~~planned~~capital spending, production curtailments at certain North and South America mines and actions to reduce operating, exploration and administrative costs.

In addition to reducing costs and capital expenditures ~~production curtailments~~to maximize cash flows from our global business, we have announced $6.6 billion in asset sale transactions from which we have received aggregate cash consideration of $1.4 billion. The remaining $5.2 billion in gross proceeds associated with the pending sale of our interest in TFHL and ~~cost reductions. We also announced, on October 22, 2015, additional actions~~the sales of our Deepwater GOM and onshore California oil and gas properties is expected to ~~further curtail copper and molybdenum production.~~be received in fourth-quarter 2016. Refer to ~~"Revised Operating Plans and Oil and Gas Review"~~Note 2 for further ~~discussion.~~discussion of these disposal transactions.

~~Table~~In July 2016, we commenced a new registered at-the-market equity offering of ~~Contents~~up to $1.5 billion in common stock. Through November 8, 2016, we have sold 59.8 million shares of our common stock for gross proceeds of $719 million ($12.02 per share average price).

We remain focused on our high-quality portfolio of long-lived copper assets positioned to generate value as market conditions improve. In addition to debt reduction plans, we are pursuing opportunities to create additional value through mine designs that would increase copper reserves, reduce costs and provide opportunities to enhance net present values, and we continue to advance studies for future development of our copper resources, the timing of which will be dependent on market conditions.

Cash

Following is a summary of the U.S. and international components of consolidated cash and cash equivalents ~~including cash~~ available to the parent company (excluding cash and cash equivalents in assets held for sale of $68 million at September 30, 2016, and $29 million at December 31, 2015), net of noncontrolling interests' share, taxes and other costs (in millions):


	September 30, 2015			December 31, 2014			September 30, 2016			December 31, 2015
Cash at domestic companies	$	11		$	78		$	709		$	6
Cash at international operations	327			386			399			189
Total consolidated cash and cash equivalents	338			464			1,108			195
Less: noncontrolling interests’ share	(82		)	(91		)
Noncontrolling interests’ share							(97		)	(36		)
Cash, net of noncontrolling interests’ share	256			373			1,011			159
Less: withholding taxes and other	(13		)	(16		)
Withholding taxes and other							(30		)	(11		)
Net cash available	$	243		$	357		$	981		$	148

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. ~~With~~Management believes that

sufficient liquidity is available in the ~~exception~~U.S. from cash balances and availability from our revolving credit facility and uncommitted lines of ~~TFM, we~~credit. 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

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. We have a broad set of natural resource assets that provide many alternatives for future actions to enhance financial flexibility. Following is a summary of our total debt and the related weighted-average interest rates (in billions, except percentages):

September 30, 2015 December 31, 2014
Weighted- Weighted-
Average Average
Interest Rate Interest Rate
FCX Senior Notes $ 11.9
3.8% $ 11.9
3.8 %
FCX Term Loan 3.0
1.9% 3.0
1.7 %
FM O&G Senior Notes 2.5
6.6% 2.6
6.6 %
Cerro Verde Term Loan 1.5
^a
2.6% 0.4
2.1 %
FCX Revolving Credit Facility 0.5
^b
1.9% —
N/A

Other FCX debt 1.3
^c
3.2% 0.9
3.9 %
Total debt $ 20.7
3.7% $ 18.8
3.8 %


a.	At September 30, 2015, Cerro Verde had no letters of credit issued and availability of $0.3 billion under its $1.8 billion credit facility to fund a portion of its expansion project and for its general corporate purposes (see "Operations - South America Mining").


b.	~~At September 30, 2015, we had $42 million in letters of credit issued and availability of $3.5 billion under our $4.0 billion revolving credit facility.~~


c.	Includes our uncommitted and short-term lines, which had outstanding borrowings totaling $235 million as of September 30, 2015, and Cerro Verde's uncommitted short-term lines of credit, which had outstanding borrowings totaling $381 million as of September 30, 2015.



	September 30, 2016			December 31, 2015
			Weighted-			Weighted-
			Average			Average
			Interest Rate			Interest Rate
FCX Senior Notes	$	11.5	3.8%	$	11.9	3.8	%
FCX Term Loan^a	2.5		3.3%	3.0		2.2	%
FM O&G Senior Notes	2.5		6.6%	2.5		6.6	%
Cerro Verde Credit Facility	1.6		2.7%	1.8		2.8	%
Other	0.9		4.9%	1.2		3.9	%
Total debt	$	19.0	4.0%	$	20.4	3.8	%

~~As further discussed in Note 18 in~~a. In accordance with the mandatory prepayment provision of the amended Term Loan, 50 percent of the proceeds associated with our ~~annual report on Form 10-K for~~pending asset sale transactions must be applied toward repaying the ~~year ended December 31, 2014, in February 2015, our revolving credit facility and term loan were modified to amend the maximum total leverage ratio.~~Term Loan.

~~Our~~At September 30, 2016, we had no borrowings, $43 million in letters of credit issued and availability of $3.5 billion under the FCX revolving credit ~~facility~~facility.

Through August 4, 2016, we exchanged $369 million in senior notes (including $101 million during third-quarter 2016) maturing in 2022, 2023, 2034 and term loan contain financial ratio covenants governing maximum total leverage and minimum interest coverage, which limits our ability to incur 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 development2043 for 28 million shares of our ~~oil and gas and mining properties. We may also be required to seek an amendment to the covenants~~common stock in ~~our revolving credit facility and term loan.~~a series of privately negotiated transactions.

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~~For~~Refer to Note 6 for further discussion of ~~our 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.~~debt.

Operating Activities

~~During the first nine months of 2015, we~~We generated consolidated operating cash flows ~~totaling~~of $2.6 billion (including ~~$342~~$463 million ofin working capital sources and changes in other tax payments)~~, compared with consolidated operating cash flows~~ for the first nine months of ~~2014 of $4.5~~2016 and $2.6 billion ~~(net of $699~~(including $342 million for working capital ~~uses~~sources and changes in other tax payments)~~. Lower consolidated operating cash flows~~ for the first nine months of ~~2015, compared with~~2015. Lower copper price realizations for the first nine months of ~~2014, primarily reflected the impact of lower commodity price realizations and lower oil volumes, partly~~2016 were offset by an increase in working capital sources mostly resulting from lower tax payments from our international mining operations. Additionally, the first nine months of 2015 included tax payments of approximately $0.3 billion associated with ~~accounts receivable and oil and gas derivative contracts.~~our November 2014 sale of Candelaria.

Based on current operating plans, ~~and current~~subject to future commodity prices for copper, gold and molybdenum and ~~crude oil,~~subject to a favorable resolution of Indonesian regulatory matters, we expect estimated consolidated operating cash flows for the ~~next twelve months,~~year 2017, plus available cash and availability under our credit facility and uncommitted lines of credit, to be sufficient to fund our budgeted capital expenditures, ~~dividends,~~scheduled debt maturities, noncontrolling interest distributions and other cash requirements for the ~~next twelve months.~~year. Refer to “Outlook” for further discussion of projected operating cash flows for the ~~years~~year ~~2015~~2016 ~~and 2016.~~.

Investing Activities

Capital Expenditures. Capital expenditures, including capitalized interest, totaled $~~5.1~~2.3 billion for the first nine months of~~2015, including $1.8~~ 2016, consisting of $1.2 billion for mining operations (including $0.9 billion for major ~~projects at mining operations~~projects) and ~~$2.5~~$1.1 billion for oil and gas ~~operations, compared with $5.4~~operations. Capital expenditures, including capitalized interest, totaled $5.06 billion for the first nine months of~~2014, including $2.0~~ 2015, consisting of $2.5 billion for mining operations (including $1.8 billion for major ~~projects at mining operations~~projects) and ~~$2.4~~$2.5 billion for oil and gas operations. Lower capital expenditures for the first nine months of~~2015 were primarily associated~~ 2016, compared 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 the Cerro Verde expansion. Refer to “Operations” for further discussion.

~~Capital expenditures are currently expected to approximate~~ ~~$6.3 billion~~ ~~for the year~~first nine months of 2015, ~~including~~ ~~$2.5 billion~~ ~~for~~primarily reflect a decrease in major mining projects ~~at mining operations (primarily for~~associated with the completion of the Cerro Verde expansion and ~~underground development activities at Grasberg) and~~ ~~$2.8 billion~~ ~~for~~a decrease in oil and gas operations. We plan to fund our capital expenditures with operating cash flows, borrowings under our and Cerro Verde's credit facilities and proceeds from our at-the-market (ATM) equity programs (see "Financing Activities" below). We are also evaluating opportunities for funding our oil and gas business.activities in Deepwater GOM. Refer to ~~"Revised Operating Plans and Oil and Gas Review" and "Outlook" for further discussion.~~

We have made substantial progress toward the completion of our major mining development projects, which are expected to result in increased near-term production, lower unit costs, declining capital expenditures and growth in cash flow from operations after capital expenditures over the next several quarters. In addition, positive oil and gas drilling and development activities are expected to result in a growing oil production profile. Capital expenditures for 2016 are expected to approximate $4.0 billion, including $1.4 billion for major projects at mining operations (primarily for underground development activities at Grasberg and completion of the Cerro Verde expansion) and $2.0 billion for oil and gas operations. We continue to evaluate opportunities for future reductions to our capital expenditure budgets.

~~Acquisitions and Dispositions.~~ In June 2014, we completed the sale of the Eagle Ford shale assets for cash consideration of $3.1 billion. Approximately $1.3 billion of the proceeds was placed in a like-kind exchange escrow to reinvest in additional oil and gas interests and the remaining net proceeds were used to repay debt. In June 2014 and September 2014, we completed acquisitions of Deepwater GOM interests totaling $1.4 billion. Refer to Note 2“Outlook” for further discussion of ~~our acquisition~~projected capital expenditures for the year 2016.

Dispositions. Net proceeds from asset sales totaled $1.4 billion for the first nine months of 2016 primarily associated with the $1.0 billion sale of an additional 13 percent undivided interest in Morenci, the sale of an interest in the Timok exploration project in Serbia and ~~disposal~~from oil and gas asset sales, including the Haynesville shale assets and certain oil and gas royalty interests. Refer to Note 2 for further discussion of these transactions.

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Financing Activities

Debt Transactions. Net repayments of debt for the first nine months of 2016 primarily reflect $0.6 billion of payments on the Term Loan, $0.2 billion of payments on the Cerro Verde credit facility and $0.2 billion of payments on lines of credit. Refer to Note 6 for further discussion of debt.

Net proceeds from debt for the first nine months of 2015 primarily included net borrowings of ~~$0.5 billion under our revolving credit facility, $0.2 billion under our unsecured lines of credit and~~ $1.1 billion under Cerro Verde's senior unsecured credit facility primarily to fund its expansion ~~project.~~

~~In third-quarter 2014, we redeemed $1.7~~project, $0.5 billion under our revolving credit facility and $0.2 billion under our unsecured lines of the aggregate principal amount of outstanding senior notes with an average interest rate of 6.6 percent under the equity clawback provisions of the instruments. Holders received the principal amount together with the redemption premium and accrued and unpaid interest to the redemption date.

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

~~Refer to Note 6 for further discussion of debt transactions.~~credit.

Equity Transactions. Net proceeds from the sale of common stock for the first nine months of 2016 and 2015 reflect sales of our common stock under registered at-the-market equity programs (refer to Note 6).

In January 2016, we sold 4 million shares of our common stock (with a value of $32 million) under our 2015 at-the-market equity programs. In July 2016, we commenced a new registered at-the-market equity offering of up to $1.5 billion of common stock, and through September 30, 2016, we sold 33.5 million shares of our common stock, for gross proceeds of $415 million ($12.39 per share average price). From October 1, 2016, through November 8, 2016, we sold 26.3 million shares of our common stock for gross proceeds of $304 million ($11.54 per share average price).

During third-quarter 2015, we sold 97.5 million shares of common stock under our ~~ATM~~2015 at-the-market equity programs, which generated gross proceeds of ~~$1.0 billion. From October 1, 2015 to November 5, 2015, we sold an additional 34.1 million shares of common stock, generating gross proceeds of $0.4~~$1.0 billion. In total $1.4 billion of gross proceeds have been raised under our $2 billion of ATM equity programs. We intend to use the net proceeds for general corporate purposes, which may include, among other things, the repayment of amounts outstanding under our revolving credit facility and other borrowings, and the financing of working capital and capital expenditures. As of October 30, 2015, we had 1.2 billion common shares outstanding.

Dividends. ~~We paid dividends on~~The Board reduced our annual common stock ~~totaling~~dividend from $1.25 per share to $0.20 per share in March 2015, and subsequently suspended the annual common stock dividend in December 2015. Common stock dividends of $5 million for the first nine months of 2016 relate to accumulated dividends paid for vested stock-based compensation, and common stock dividends of $547 million for the first nine months of 2015 ~~(including~~include $115 million for special dividends ~~of $0.1105 per share~~ paid in accordance with the settlement terms of the shareholder derivative litigation) and $979 million for the first nine months of 2014. In response to the impact of lower commodity prices, in March 2015, the annual dividend rate for our common stock was reduced to an annual rate of $0.20 per share from the previous rate of $1.25 per share. On September 30, 2015, the Board declared a regular quarterly dividend of $0.05 per share, which was paid on November 2, 2015.litigation. The declaration of dividends is at the discretion of ~~the~~our Board and will depend upon our financial results, cash requirements, future prospects and other factors deemed relevant by our Board. Additionally, in connection with the ~~Board.~~February 2016 amendment to the revolving credit facility and Term Loan, we are not permitted to pay dividends on our common stock on or prior to March 31, 2017.

Cash dividends and other distributions paid to noncontrolling interests totaled ~~$89~~$87 million for the first nine months of ~~2015~~2016 and ~~$365~~$89 million for the first nine months of ~~2014~~.2015. These payments will vary based on the cash requirements of the related consolidated subsidiaries.

CONTRACTUAL OBLIGATIONS

As further discussed in Note 9, during second-quarter 2016, we terminated FM O&G's three drilling rig contracts for cash and common stock representing a value of ~~September 30, 2015,~~$755 million (excluding contingent consideration) and settled aggregate commitments totaling $1.1 billion. Additionally, as further discussed in Note 6, during the first nine months of 2016, we have ~~current debt maturities totaling $906 million, primarily reflecting bank lines of credit, which are extended to us on an uncommitted basis. As of September 30,~~reduced our December 31, 2015, debt ~~maturities totaled $259 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~~balance by $1.45 billion. There have been no other material changes in our contractual obligations since December 31, ~~2014.~~2015. Refer to Part II, Items 7. and 7A. in our annual report on Form 10-K for the year ended December 31, ~~2014,~~2015, 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.~~2015. Updated cost assumptions, including increases and decreases to cost estimates, changes in the anticipated scope and timing of remediation activities, and settlement of environmental matters may result in additional revisions to certain of our environmental obligations.

Refer to Note 12 in our annual report on Form 10-K for the year ended December 31, ~~2014~~2015, for further information regarding our environmental and asset retirement obligations.

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Litigation and Other Contingencies

Other than as discussed in Note 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~~2015. 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~~2015, for further information regarding legal proceedings and ~~Notes 8 and 9 included in our quarterly reports on Form 10-Q for the quarters ended March 31, 2015, and June 30, 2015, respectively.~~other matters.

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NEW ACCOUNTING STANDARDS

~~We do not expect the impact~~Refer to Note 12 for discussion of recently issued accounting standards ~~to have a significant~~and their impact on our future financial statements and disclosures. ~~Refer to Note 12 for discussion of recently adopted Accounting Standards Updates.~~

PRODUCT REVENUES AND PRODUCTION COSTS

Mining Product Revenues and Unit Net Cash Cost

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

We present gross profit per pound of copper in the following tables using both a “by-product” method and a “co-product” method. We use the by-product method in our presentation of gross profit per pound of copper because (i) the majority of our revenues are copper revenues, (ii) we mine ore, which contains copper, gold, molybdenum and other metals, (iii) it is not possible to specifically assign all of our costs to revenues from the copper, gold, molybdenum and other metals we produce, (iv) it is the method used to compare mining operations in certain industry publications and (v) it is the method used by our management and ~~the~~our 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, inventory adjustments, long-lived asset retirements/impairments, restructuring and/or unusual charges. They are removed from site production and delivery costs in the calculation of unit net cash costs. As discussed above, gold, molybdenum and other metal revenues at copper mines are reflected as credits against site production and delivery costs in the by-product method. The following schedules for our mining operations are presentations under both the by-product and co-product methods together with reconciliations to amounts reported in our consolidated financial statements.

U.S. Oil 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, accretionAccretion charges for asset retirement obligations and other costs, such as ~~idle/terminated~~drillship settlements/idle rig costs, inventory ~~write-downs~~write downs and/or unusual charges, are removed from production and delivery costs in the calculation of cash production costs per BOE. Additionally, in the 2015 periods, we had crude oil derivative contracts. We show revenue adjustments from these derivative contracts as separate line items. Because these adjustments did not result from oil and gas sales, gains and losses have been reflected separately from revenues on current period sales. The following schedules include calculations of oil and gas product revenues and cash production costs together with a reconciliation to amounts reported in our consolidated financial statements.

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

Three Months Ended September 30, 2015
(In millions) By-Product Co-Product Method
Method Copper
Molybdenum^a

Other^b
Total
Revenues, excluding adjustments $ 1,167
$ 1,167
$ 56
$ 29
$ 1,252
Site production and delivery, before net noncash
    and other costs shown below
810
766
50
21
837
By-product credits (58 ) —
—
—
—
Treatment charges 58
56
—
2
58
Net cash costs 810
822
50
23
895
Depreciation, depletion and amortization 135
128
4
3
135
Noncash and other costs, net 159
^c
155
3
1
159
Total costs 1,104
1,105
57
27
1,189
Revenue adjustments, primarily for pricing
    on prior period open sales
(56 ) (56 ) —
—
(56 )
Gross profit (loss) $ 7
$ 6
$ (1 ) $ 2
$ 7

Copper sales (millions of recoverable pounds) 483
483

Molybdenum sales (millions of recoverable pounds)^a
9

Gross profit (loss) per pound of copper/molybdenum:

Revenues, excluding adjustments $ 2.42
$ 2.42
$ 6.18

Site production and delivery, before net noncash
    and other costs shown below
1.68
1.59
5.51

By-product credits (0.12 ) —
—

Treatment charges 0.12
0.11
—

Unit net cash costs 1.68
1.70
5.51

Depreciation, depletion and amortization 0.28
0.27
0.51

Noncash and other costs, net 0.33
^c
0.32
0.33

Total unit costs 2.29
2.29
6.35

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

Gross profit (loss) per pound $ 0.01
$ 0.01
$ (0.17 )

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 1,252
$ 837
$ 135

Treatment charges —
58
—

Noncash and other costs, net —
159
^c
—

Revenue adjustments, primarily for pricing
    on prior period open sales
(56 ) —
—

Eliminations and other (27 ) (26 ) 1

North America copper mines 1,169
1,028
136

Other mining & eliminations^d
1,986
1,570
298

Total mining 3,155
2,598
434

U.S. oil & gas operations 525
293
3,930
^e

Corporate, other & eliminations 1
2
176
^e

As reported in FCX’s consolidated financial statements $ 3,681
$ 2,893
$ 4,540
^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 $133 million ($0.27 per pound) for inventory adjustments and impairment and restructuring charges.~~


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 totaling $3.7 billion, $3.5 billion for U.S. oil and gas operations and $0.2 billion for Morocco.~~

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


Three Months Ended September 30, 2014
Three Months Ended September 30, 2016
(In millions)	By-Product			Co-Product Method											By-Product			Co-Product Method
	Method			Copper			Molybdenum^a			Other^b		Total			Method			Copper			Molybdenum^a		Other^b		Total
Revenues, excluding adjustments	$	1,374		$	1,374		$	109		$	31	$	1,514		$	1,002		$	1,002		$	65	$	35	$	1,102
Site production and delivery, before net noncash and other costs shown below	791			738			62			20		820			659			610			48		25		683
By-product credits	(111		)	—			—			—		—			(76		)	—			—		—		—
Treatment charges	50			49			—			1		50			45			42			—		3		45
Net cash costs	730			787			62			21		870			628			652			48		28		728
Depreciation, depletion and amortization	131			124			5			2		131
Depreciation, depletion and amortization (DD&A)															127			117			6		4		127
Metals inventory adjustments															6			6			—		—		6
Noncash and other costs, net	46			45			1			—		46			20			19			1		—		20
Total costs	907			956			68			23		1,047			781			794			55		32		881
Revenue adjustments, primarily for pricing on prior period open sales	(8		)	(8		)	—			—		(8		)	(3		)	(3		)	—		—		(3		)
Gross profit	$	459		$	410		$	41		$	8	$	459		$	218		$	205		$	10	$	3	$	218

Copper sales (millions of recoverable pounds)	434			434											457			457
Molybdenum sales (millions of recoverable pounds)^a	Molybdenum sales (millions of recoverable pounds)^a						8														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	$	3.17		$	3.17		$	13.83							$	2.19		$	2.19		$	7.39
Site production and delivery, before net noncash and other costs shown below	1.83			1.70			7.87								1.44			1.34			5.51
By-product credits	(0.26		)	—			—								(0.17		)	—			—
Treatment charges	0.11			0.11			—								0.10			0.09			—
Unit net cash costs	1.68			1.81			7.87								1.37			1.43			5.51
Depreciation, depletion and amortization	0.30			0.29			0.72
DD&A															0.28			0.26			0.70
Metals inventory adjustments															0.01			0.01			—
Noncash and other costs, net	0.11			0.10			0.06								0.05			0.04			0.13
Total unit costs	2.09			2.20			8.65								1.71			1.74			6.34
Revenue adjustments, primarily for pricing
on prior period open sales	(0.02		)	(0.02		)	—
Revenue adjustments, primarily for pricing on prior period open sales															—			—			—
Gross profit per pound	$	1.06		$	0.95		$	5.18							$	0.48		$	0.45		$	1.05

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization								Revenues			Production and Delivery			DD&A		Metals Inventory Adjustments
Totals presented above	$	1,514		$	820		$	131							$	1,102		$	683		$	127	$	6
Treatment charges	—			50			—								—			45			—		—
Noncash and other costs, net	—			46			—								—			20			—		—
Revenue adjustments, primarily for pricing on prior period open sales	(8		)	—			—								(3		)	—			—		—
Eliminations and other	(16		)	(14		)	2								(15		)	(15		)	2		—
North America copper mines	1,490			902			133								1,084			733			129		6
Other mining & eliminations^c	3,216			1,978			305								2,366			1,523			287		14
Total mining	4,706			2,880			438								3,450			2,256			416		20
U.S. oil & gas operations	990			273			812		^d						427			231			223		—
Corporate, other & eliminations	—			(1		)	3								—			22			4		—
As reported in FCX’s consolidated financial statements	$	5,696		$	3,152		$	1,253	^d						$	3,877		$	2,509		$	643	$	20


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


b.	Includes gold and silver product revenues and production costs.


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


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

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



Three Months Ended September 30, 2015
(In millions)	By-Product				Co-Product Method
	Method				Copper			Molybdenum^a			Other^b		Total
Revenues, excluding adjustments	$	1,167			$	1,167		$	56		$	29	$	1,252
Site production and delivery, before net noncash and other costs shown below	810				766			50			21		837
By-product credits	(58		)		—			—			—		—
Treatment charges	58				56			—			2		58
Net cash costs	810				822			50			23		895
DD&A	135				128			4			3		135
Metal inventory adjustments	55				53			1			1		55
Noncash and other costs, net	104			^c	102			2			—		104
Total costs	1,104				1,105			57			27		1,189
Revenue adjustments, primarily for pricing on prior period open sales	(56		)		(56		)	—			—		(56		)
Gross profit (loss)	$	7			$	6		$	(1	)	$	2	$	7

Copper sales (millions of recoverable pounds)	483				483
Molybdenum sales (millions of recoverable pounds)^a								9

Gross profit (loss) per pound of copper/molybdenum:

Revenues, excluding adjustments	$	2.42			$	2.42		$	6.18
Site production and delivery, before net noncash and other costs shown below	1.68				1.59			5.51
By-product credits	(0.12		)		—			—
Treatment charges	0.12				0.11			—
Unit net cash costs	1.68				1.70			5.51
DD&A	0.28				0.27			0.51
Metal inventory adjustments	0.11				0.11			0.14
Noncash and other costs, net	0.22			^c	0.21			0.19
Total unit costs	2.29				2.29			6.35
Revenue adjustments, primarily for pricing on prior period open sales	(0.12		)		(0.12		)	—
Gross profit (loss) per pound	$	0.01			$	0.01		$	(0.17	)

Reconciliation to Amounts Reported
(In millions)	Revenues				Production and Delivery			DD&A			Metals Inventory Adjustments
Totals presented above	$	1,252			$	837		$	135		$	55
Treatment charges	—				58			—			—
Noncash and other costs, net	—				104			—			—
Revenue adjustments, primarily for pricing on prior period open sales	(56		)		—			—			—
Eliminations and other	(27		)		(26		)	1			—
North America copper mines	1,169				973			136			55
Other mining & eliminations^d	1,687				1,327			233			36
Total mining	2,856				2,300			369			91
U.S. oil & gas operations	525				293			450			—
Corporate, other & eliminations	1				2			4			—
As reported in FCX’s consolidated financial statements	$	3,382			$	2,595		$	823		$	91

Nine Months Ended September 30, 2015
(In millions) By-Product Co-Product Method
Method Copper
Molybdenum^a

Other^b
Total
Revenues, excluding adjustments $ 3,723
$ 3,723
$ 218
$ 83
$ 4,024
Site production and delivery, before net noncash
    and other costs shown below
2,525
2,372
172
61
2,605
By-product credits (221 ) —
—
—
—
Treatment charges 179
173
—
6
179
Net cash costs 2,483
2,545
172
67
2,784
Depreciation, depletion and amortization 405
381
16
8
405
Noncash and other costs, net 236
^c
231
4
1
236
Total costs 3,124
3,157
192
76
3,425
Revenue adjustments, primarily for pricing
    on prior period open sales
(28 ) (28 ) —
—
(28 )
Gross profit $ 571
$ 538
$ 26
$ 7
$ 571

Copper sales (millions of recoverable pounds) 1,439
1,439

Molybdenum sales (millions of recoverable pounds)^a
28

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments $ 2.59
$ 2.59
$ 7.62

Site production and delivery, before net noncash
and other costs shown below 1.76
1.65
6.01

By-product credits (0.15 ) —
—

Treatment charges 0.12
0.12
—

Unit net cash costs 1.73
1.77
6.01

Depreciation, depletion and amortization 0.28
0.27
0.56

Noncash and other costs, net 0.16
^c
0.16
0.14

Total unit costs 2.17
2.20
6.71

Revenue adjustments, primarily for pricing
on prior period open sales (0.02 ) (0.02 ) —

Gross profit per pound $ 0.40
$ 0.37
$ 0.91

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 4,024
$ 2,605
$ 405

Treatment charges —
179
—

Noncash and other costs, net —
236
^c
—

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

Eliminations and other (87 ) (87 ) 3

North America copper mines 3,909
2,933
408

Other mining & eliminations^d
6,578
4,856
833

Total mining 10,487
7,789
1,241

U.S. oil & gas operations 1,594
857
10,735
^e

Corporate, other & eliminations 1
7
183
^e

As reported in FCX’s consolidated financial statements $ 12,082
$ 8,653
$ 12,159
^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 ~~$144~~$75 million ($~~0.10~~0.16 per pound) for ~~inventory adjustments and~~ impairment and restructuring charges.


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 totaling $9.4 billion, $9.3 billion for U.S. oil and gas operations and $0.2 billion for Morocco.~~

Table of Contents

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



Nine Months Ended September 30, 2014
Nine Months Ended September 30, 2016
(In millions)	By-Product			Co-Product Method											By-Product			Co-Product Method
	Method			Copper			Molybdenum^a			Other^b		Total			Method			Copper			Molybdenum^a		Other^b		Total
Revenues, excluding adjustments	$	3,901		$	3,901		$	303		$	90	$	4,294		$	3,092		$	3,092		$	155	$	76	$	3,323
Site production and delivery, before net noncash and other costs shown below	2,272			2,126			172			57		2,355			2,008			1,904			121		46		2,071
By-product credits	(310		)	—			—			—		—			(168		)	—			—		—		—
Treatment charges	144			140			—			4		144			148			142			—		6		148
Net cash costs	2,106			2,266			172			61		2,499			1,988			2,046			121		52		2,219
Depreciation, depletion and amortization	360			340			16			4		360
DD&A															405			381			15		9		405
Metals inventory adjustments															6			6			—		—		6
Noncash and other costs, net	105			103			1			1		105			68			66			1		1		68
Total costs	2,571			2,709			189			66		2,964			2,467			2,499			137		62		2,698
Revenue adjustments, primarily for pricing on prior period open sales	(7		)	(7		)	—			—		(7		)	(1		)	(1		)	—		—		(1		)
Gross profit	$	1,323		$	1,185		$	114		$	24	$	1,323		$	624		$	592		$	18	$	14	$	624

Copper sales (millions of recoverable pounds)	1,224			1,224											1,421			1,421
Molybdenum sales (millions of recoverable pounds)^a							25														25

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

Revenues, excluding adjustments	$	3.19		$	3.19		$	12.16							$	2.18		$	2.18		$	6.24
Site production and delivery, before net noncash
and other costs shown below	1.86			1.74			6.90								1.41			1.34			4.86
By-product credits	(0.25		)	—			—								(0.12		)	—			—
Treatment charges	0.11			0.11			—								0.11			0.10			—
Unit net cash costs	1.72			1.85			6.90								1.40			1.44			4.86
Depreciation, depletion and amortization	0.29			0.28			0.62
DD&A															0.29			0.27			0.61
Metals inventory adjustments															—			—			—
Noncash and other costs, net	0.09			0.08			0.05								0.05			0.05			0.06
Total unit costs	2.10			2.21			7.57								1.74			1.76			5.53
Revenue adjustments, primarily for pricing
on prior period open sales	(0.01		)	(0.01		)	—								—			—			—
Gross profit per pound	$	1.08		$	0.97		$	4.59							$	0.44		$	0.42		$	0.71

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization								Revenues			Production and Delivery			DD&A		Metals Inventory Adjustments
Totals presented above	$	4,294		$	2,355		$	360							$	3,323		$	2,071		$	405	$	6
Treatment charges	—			144			—								—			148			—		—
Noncash and other costs, net	—			105			—								—			68			—		—
Revenue adjustments, primarily for pricing on prior period open sales	(7		)	—			—								(1		)	—			—		—
Eliminations and other	(42		)	(46		)	8								(42		)	(40		)	2		—
North America copper mines	4,245			2,558			368								3,280			2,247			407		6
Other mining & eliminations^c	8,471			5,502			810								6,041			4,148			823		21
Total mining	12,716			8,060			1,178								9,321			6,395			1,230		27
U.S. oil & gas operations	3,487			913			2,044		^d						1,132			1,527			696		—
Corporate, other & eliminations	—			(2		)	10								—			35			11		—
As reported in FCX’s consolidated financial statements	$	16,203		$	8,971		$	3,232	^d						$	10,453		$	7,957		$	1,937	$	27


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


b.	Includes gold and silver product revenues and production costs.


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

Table of Contents




Nine Months Ended September 30, 2015
(In millions)	By-Product				Co-Product Method
	Method				Copper			Molybdenum^a		Other^b		Total
Revenues, excluding adjustments	$	3,723			$	3,723		$	218	$	83	$	4,024
Site production and delivery, before net noncash and other costs shown below	2,525				2,372			172		61		2,605
By-product credits	(221		)		—			—		—		—
Treatment charges	179				173			—		6		179
Net cash costs	2,483				2,545			172		67		2,784
DD&A	405				381			16		8		405
Metals inventory adjustments	66				64			1		1		66
Noncash and other costs, net	170			^c	167			3		—		170
Total costs	3,124				3,157			192		76		3,425
Revenue adjustments, primarily for pricing on prior period open sales	(28		)		(28		)	—		—		(28		)
Gross profit	$	571			$	538		$	26	$	7	$	571

Copper sales (millions of recoverable pounds)	1,439				1,439
Molybdenum sales (millions of recoverable pounds)^a								28

Gross profit per pound of copper/molybdenum:

Revenues, excluding adjustments	$	2.59			$	2.59		$	7.62
Site production and delivery, before net noncash
and other costs shown below	1.76				1.65			6.01
By-product credits	(0.15		)		—			—
Treatment charges	0.12				0.12			—
Unit net cash costs	1.73				1.77			6.01
DD&A	0.28				0.27			0.56
Metals inventory adjustments	0.04				0.04			0.04
Noncash and other costs, net	0.12			^c	0.12			0.10
Total unit costs	2.17				2.20			6.71
Revenue adjustments, primarily for pricing
on prior period open sales	(0.02		)		(0.02		)	—
Gross profit per pound	$	0.40			$	0.37		$	0.91

Reconciliation to Amounts Reported
(In millions)	Revenues				Production and Delivery			DD&A		Metals Inventory Adjustments
Totals presented above	$	4,024			$	2,605		$	405	$	66
Treatment charges	—				179			—		—
Noncash and other costs, net	—				170			—		—
Revenue adjustments, primarily for pricing on prior period open sales	(28		)		—			—		—
Eliminations and other	(87		)		(87		)	3		—
North America copper mines	3,909				2,867			408		66
Other mining & eliminations^d	5,587				4,131			638		88
Total mining	9,496				6,998			1,046		154
U.S. oil & gas operations	1,594				857			1,465		—
Corporate, other & eliminations	1				7			11		—
As reported in FCX’s consolidated financial statements	$	11,091			$	7,862		$	2,522	$	154


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 $75 million ($0.05 per pound) for impairment and restructuring charges.


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

Table of Contents

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


Three Months Ended September 30, 2015
Three Months Ended September 30, 2016
(In millions)	By-Product				Co-Product Method											By-Product			Co-Product Method
	Method				Copper				Other^a				Total			Method			Copper			Other^a		Total
Revenues, excluding adjustments	$	491			$	491			$	13			$	504		$	709		$	709		$	50	$	759
Site production and delivery, before net noncash and other costs shown below	320				312				13				325			409			386			35		421
By-product credits	(8		)		—				—				—			(38		)	—			—		—
Treatment charges	36				36				—				36			79			79			—		79
Royalty on metals	1				1				—				1			2			2			—		2
Net cash costs	349				349				13				362			452			467			35		502
Depreciation, depletion and amortization	89				87				2				89
DD&A																134			126			8		134
Noncash and other costs, net	21			^b	20				1				21			4			3			1		4
Total costs	459				456				16				472			590			596			44		640
Revenue adjustments, primarily for pricing on prior period open sales	(29		)		(29		)		—				(29		)	(7		)	(7		)	—		(7		)
Gross profit (loss)	$	3			$	6			$	(3	)		$	3
Gross profit																$	112		$	106		$	6	$	112

Copper sales (millions of recoverable pounds)	207				207											323			323

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

Revenues, excluding adjustments	$	2.37			$	2.37										$	2.19		$	2.19
Site production and delivery, before net noncash and other costs shown below	1.54				1.50											1.27			1.20
By-product credits	(0.04		)		—											(0.12		)	—
Treatment charges	0.18				0.18											0.24			0.24
Royalty on metals	—				—											0.01			—
Unit net cash costs	1.68				1.68											1.40			1.44
Depreciation, depletion and amortization	0.43				0.42
DD&A																0.41			0.39
Noncash and other costs, net	0.10			^b	0.10											0.01			0.01
Total unit costs	2.21				2.20											1.82			1.84
Revenue adjustments, primarily for pricing
on prior period open sales	(0.14		)		(0.14		)
Revenue adjustments, primarily for pricing on prior period open sales																(0.02		)	(0.02		)
Gross profit per pound	$	0.02			$	0.03										$	0.35		$	0.33

Reconciliation to Amounts Reported
(In millions)	Revenues				Production and Delivery				Depreciation, Depletion and Amortization							Revenues			Production and Delivery			DD&A
Totals presented above	$	504			$	325			$	89						$	759		$	421		$	134
Treatment charges	(36		)		—				—							(79		)	—			—
Royalty on metals	(1		)		—				—							(2		)	—			—
Noncash and other costs, net	—				21			^b	—							—			4			—
Revenue adjustments, primarily for pricing on prior period open sales	(29		)		—				—							(7		)	—			—
Eliminations and other	—				(2		)		—							—			(1		)	—
South America mining	438				344				89							671			424			134
Other mining & eliminations^c	2,717				2,254				345
Other mining & eliminations^b																2,779			1,832			282
Total mining	3,155				2,598				434							3,450			2,256			416
U.S. oil & gas operations	525				293				3,930			^d				427			231			223
Corporate, other & eliminations	1				2				176			^d				—			22			4
As reported in FCX’s consolidated financial statements	$	3,681			$	2,893			$	4,540		^d				$	3,877		$	2,509		$	643


a.	Includes silver sales of 952 thousand ounces ($21.72 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.

Table of Contents



Three Months Ended September 30, 2015
(In millions)	By-Product				Co-Product Method
	Method				Copper			Other^a			Total
Revenues, excluding adjustments	$	491			$	491		$	13		$	504
Site production and delivery, before net noncash and other costs shown below	320				312			13			325
By-product credits	(8		)		—			—			—
Treatment charges	36				36			—			36
Royalty on metals	1				1			—			1
Net cash costs	349				349			13			362
DD&A	89				87			2			89
Noncash and other costs, net	21			^b	20			1			21
Total costs	459				456			16			472
Revenue adjustments, primarily for pricing on prior period open sales	(29		)		(29		)	—			(29		)
Gross profit (loss)	$	3			$	6		$	(3	)	$	3

Copper sales (millions of recoverable pounds)	207				207

Gross profit per pound of copper:

Revenues, excluding adjustments	$	2.37			$	2.37
Site production and delivery, before net noncash and other costs shown below	1.54				1.50
By-product credits	(0.04		)		—
Treatment charges	0.18				0.18
Royalty on metals	—				—
Unit net cash costs	1.68				1.68
DD&A	0.43				0.42
Noncash and other costs, net	0.10			^b	0.10
Total unit costs	2.21				2.20
Revenue adjustments, primarily for pricing on prior period open sales	(0.14		)		(0.14		)
Gross profit per pound	$	0.02			$	0.03

Reconciliation to Amounts Reported
(In millions)	Revenues				Production and Delivery			DD&A
Totals presented above	$	504			$	325		$	89
Treatment charges	(36		)		—			—
Royalty on metals	(1		)		—			—
Noncash and other costs, net	—				21			—
Revenue adjustments, primarily for pricing on prior period open sales	(29		)		—			—
Eliminations and other	—				(2		)	—
South America mining	438				344			89
Other mining & eliminations^c	2,418				1,956			280
Total mining	2,856				2,300			369
U.S. oil & gas operations	525				293			450
Corporate, other & eliminations	1				2			4
As reported in FCX’s consolidated financial statements	$	3,382			$	2,595		$	823


a.	Includes silver sales of 438 thousand ounces ($13.90 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.


b.	Includes restructuring charges totaling $11 million ($0.05 per pound).


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 totaling $3.7 billion, $3.5 billion for U.S. oil and gas operations and $0.2 billion for Morocco.~~

Table of Contents

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


Three Months Ended September 30, 2014

Nine Months Ended September 30, 2016
(In millions)	By-Product				Co-Product Method									By-Product			Co-Product Method
	Method				Copper			Other^a			Total			Method			Copper			Other^a		Total
Revenues, excluding adjustments	$	840			$	840		$	69		$	909		$	2,115		$	2,115		$	129	$	2,244
Site production and delivery, before net noncash and other costs shown below	451				416			42			458			1,199			1,140			88		1,228
By-product credits	(62		)		—			—			—			(100		)	—			—		—
Treatment charges	43				43			—			43			230			230			—		230
Royalty on metals	1				1			—			1			5			5			—		5
Net cash costs	433			^b	460			42			502			1,334			1,375			88		1,463
Depreciation, depletion and amortization	102				96			6			102
DD&A														401			379			22		401
Noncash and other costs, net	18				16			2			18			15			14			1		15
Total costs	553				572			50			622			1,750			1,768			111		1,879
Revenue adjustments, primarily for pricing on prior period open sales	(15		)		(15		)	—			(15		)	9			9			—		9
Gross profit	$	272			$	253		$	19		$	272		$	374		$	356		$	18	$	374

Copper sales (millions of recoverable pounds)	271			^b	271									973			973

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

Revenues, excluding adjustments	$	3.10			$	3.10								$	2.17		$	2.17
Site production and delivery, before net noncash and other costs shown below	1.67				1.54
Site production and delivery, before net noncash																						��
and other costs shown below														1.23			1.17
By-product credits	(0.23		)		—									(0.10		)	—
Treatment charges	0.16				0.16									0.24			0.24
Royalty on metals	—				—									—			—
Unit net cash costs	1.60			^b	1.70									1.37			1.41
Depreciation, depletion and amortization	0.37				0.34
DD&A														0.41			0.39
Noncash and other costs, net	0.07				0.06									0.02			0.02
Total unit costs	2.04				2.10									1.80			1.82
Revenue adjustments, primarily for pricing
on prior period open sales	(0.06		)		(0.06		)							0.01			0.01
Gross profit per pound	$	1.00			$	0.94								$	0.38		$	0.36

Reconciliation to Amounts Reported
(In millions)	Revenues				Production and Delivery			Depreciation, Depletion and Amortization						Revenues			Production and Delivery			DD&A
Totals presented above	$	909			$	458		$	102					$	2,244		$	1,228		$	401
Treatment charges	(43		)		—			—						(230		)	—			—
Royalty on metals	(1		)		—			—						(5		)	—			—
Noncash and other costs, net	—				18			—						—			15			—
Revenue adjustments, primarily for pricing on prior period open sales	(15		)		—			—						9			—			—
Eliminations and other	(3		)		(5		)	—						1			(3		)	1
South America mining	847				471			102						2,019			1,240			402
Other mining & eliminations^c	3,859				2,409			336
Other mining & eliminations^b														7,302			5,155			828
Total mining	4,706				2,880			438						9,321			6,395			1,230
U.S. oil & gas operations	990				273			812		^d				1,132			1,527			696
Corporate, other & eliminations	—				(1		)	3						—			35			11
As reported in FCX’s consolidated financial statements	$	5,696			$	3,152		$	1,253	^d				$	10,453		$	7,957		$	1,937


a.	Includes ~~gold sales of 16 thousand ounces ($1,234 per ounce average realized price) and~~ silver sales of ~~684 thousand~~2.8 million ounces ($~~18.57~~17.99 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 third-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)

Presented above $ 433
271
$ 1.60

Less: Candelaria and Ojos del Salado 112
63

$ 321
208
$ 1.54


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


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

Table of Contents

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




Nine Months Ended September 30, 2015
(In millions)	By-Product				Co-Product Method
	Method				Copper			Other^a			Total
Revenues, excluding adjustments	$	1,473			$	1,473		$	48		$	1,521
Site production and delivery, before net noncash and other costs shown below	983				954			46			1,000
By-product credits	(31		)		—			—			—
Treatment charges	100				100			—			100
Royalty on metals	2				2			—			2
Net cash costs	1,054				1,056			46			1,102
DD&A	236				229			7			236
Noncash and other costs, net	21			^b	21			—			21
Total costs	1,311				1,306			53			1,359
Revenue adjustments, primarily for pricing on prior period open sales	(29		)		(29		)	—			(29		)
Gross profit (loss)	$	133			$	138		$	(5	)	$	133

Copper sales (millions of recoverable pounds)	585				585

Gross profit per pound of copper:

Revenues, excluding adjustments	$	2.52			$	2.52
Site production and delivery, before net noncash
and other costs shown below	1.68				1.63
By-product credits	(0.05		)		—
Treatment charges	0.17				0.17
Royalty on metals	—				—
Unit net cash costs	1.80				1.80
DD&A	0.40				0.39
Noncash and other costs, net	0.04			^b	0.04
Total unit costs	2.24				2.23
Revenue adjustments, primarily for pricing
on prior period open sales	(0.05		)		(0.05		)
Gross profit per pound	$	0.23			$	0.24

Reconciliation to Amounts Reported
(In millions)	Revenues				Production and Delivery			DD&A
Totals presented above	$	1,521			$	1,000		$	236
Treatment charges	(100		)		—			—
Royalty on metals	(2		)		—			—
Noncash and other costs, net	—				21			—
Revenue adjustments, primarily for pricing on prior period open sales	(29		)		—			—
Eliminations and other	(13		)		(17		)	—
South America mining	1,377				1,004			236
Other mining & eliminations^c	8,119				5,994			810
Total mining	9,496				6,998			1,046
U.S. oil & gas operations	1,594				857			1,465
Corporate, other & eliminations	1				7			11
As reported in FCX’s consolidated financial statements	$	11,091			$	7,862		$	2,522

Nine Months Ended September 30, 2015
(In millions) By-Product Co-Product Method
Method Copper
Other^a
Total
Revenues, excluding adjustments $ 1,473
$ 1,473
$ 48
$ 1,521
Site production and delivery, before net noncash
    and other costs shown below
983
954
46
1,000
By-product credits (31 ) —
—
—
Treatment charges 100
100
—
100
Royalty on metals 2
2
—
2
Net cash costs 1,054
1,056
46
1,102
Depreciation, depletion and amortization 236
229
7
236
Noncash and other costs, net 21
^b
21
—
21
Total costs 1,311
1,306
53
1,359
Revenue adjustments, primarily for pricing
    on prior period open sales
(29 ) (29 ) —
(29 )
Gross profit (loss) $ 133
$ 138
$ (5 ) $ 133

Copper sales (millions of recoverable pounds) 585
585

Gross profit per pound of copper:

Revenues, excluding adjustments $ 2.52
$ 2.52

Site production and delivery, before net noncash
and other costs shown below 1.68
1.63

By-product credits (0.05 ) —

Treatment charges 0.17
0.17

Royalty on metals —
—

Unit net cash costs 1.80
1.80

Depreciation, depletion and amortization 0.40
0.39

Noncash and other costs, net 0.04
^b
0.04

Total unit costs 2.24
2.23

Revenue adjustments, primarily for pricing
on prior period open sales (0.05 ) (0.05 )
Gross profit per pound $ 0.23
$ 0.24

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 1,521
$ 1,000
$ 236

Treatment charges (100 ) —
—

Royalty on metals (2 ) —
—

Noncash and other costs, net —
21
^b
—

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

Eliminations and other (13 ) (17 ) —

South America mining 1,377
1,004
236

Other mining & eliminations^c
9,110
6,785
1,005

Total mining 10,487
7,789
1,241

U.S. oil & gas operations 1,594
857
10,735
^d

Corporate, other & eliminations 1
7
183
^d

As reported in FCX’s consolidated financial statements $ 12,082
$ 8,653
$ 12,159
^d


a.	Includes silver sales of 1.2 million ounces ($14.58 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.


b.	Includes restructuring charges totaling $11 million ($0.02 per pound).


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 totaling $9.4 billion, $9.3 billion for U.S. oil and gas operations and $0.2 billion for Morocco.~~

Table of Contents

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

Nine Months Ended September 30, 2014
(In millions) By-Product Co-Product Method
Method Copper
Other^a
Total
Revenues, excluding adjustments $ 2,775
$ 2,775
$ 227
$ 3,002
Site production and delivery, before net noncash
    and other costs shown below
1,424
1,317
122
1,439
By-product credits (212 ) —
—
—
Treatment charges 151
151
—
151
Royalty on metals 4
4
—
4
Net cash costs 1,367
^b
1,472
122
1,594
Depreciation, depletion and amortization 284
266
18
284
Noncash and other costs, net 57
53
4
57
Total costs 1,708
1,791
144
1,935
Revenue adjustments, primarily for pricing
    on prior period open sales
(66 ) (66 ) —
(66 )
Gross profit $ 1,001
$ 918
$ 83
$ 1,001

Copper sales (millions of recoverable pounds) 888
^b
888

Gross profit per pound of copper:

Revenues, excluding adjustments $ 3.12
$ 3.12

Site production and delivery, before net noncash
and other costs shown below 1.61
1.49

By-product credits (0.24 ) —

Treatment charges 0.17
0.17

Royalty on metals —
—

Unit net cash costs 1.54
^b
1.66

Depreciation, depletion and amortization 0.32
0.30

Noncash and other costs, net 0.06
0.06

Total unit costs 1.92
2.02

Revenue adjustments, primarily for pricing
on prior period open sales (0.07 ) (0.07 )
Gross profit per pound $ 1.13
$ 1.03

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 3,002
$ 1,439
$ 284

Treatment charges (151 ) —
—

Royalty on metals (4 ) —
—

Noncash and other costs, net —
57
—

Revenue adjustments, primarily for pricing
    on prior period open sales
(66 ) —
—

Eliminations and other (5 ) (19 ) —

South America mining 2,776
1,477
284

Other mining & eliminations^c
9,940
6,583
894

Total mining 12,716
8,060
1,178

U.S. oil & gas operations 3,487
913
2,044
^d

Corporate, other & eliminations —
(2 ) 10

As reported in FCX’s consolidated financial statements $ 16,203
$ 8,971
$ 3,232
^d


a.	Includes gold sales of 59 thousand ounces ($1,280 per ounce average realized price) and silver sales of 2.2 million ounces ($19.10 per ounce average realized price). Also reflects sales of molybdenum produced by Cerro Verde to our molybdenum sales company at market-based pricing.


b.	~~Following is a reconciliation of South America mining's unit net cash costs for the first nine 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 $ 1,367
888
$ 1.54

Less: Candelaria and Ojos del Salado 375
236

$ 992
652
$ 1.52

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

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

~~Table of Contents~~

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


Three Months Ended September 30, 2015
Three Months Ended September 30, 2016
(In millions)	By-Product			Co-Product Method												By-Product				Co-Product Method
	Method			Copper			Gold				Silver^a		Total			Method				Copper			Gold			Silver^a		Total
Revenues, excluding adjustments	$	466		$	466		$	319			$	8	$	793		$	729			$	729		$	408		$	18	$	1,155
Site production and delivery, before net noncash and other costs shown below	429			252			173				4		429			453				286			160			7		453
Gold and silver credits	(316		)	—			—				—		—			(427		)		—			—			—		—
Treatment charges	61			36			25				—		61			90				57			32			1		90
Export duties	35			20			14				1		35			34				21			12			1		34
Royalty on metals	25			15			10				—		25			40				24			15			1		40
Net cash costs	234			323			222				5		550			190				388			219			10		617
Depreciation and amortization	90			53			36				1		90
DD&A																110				69			39			2		110
Noncash and other costs, net	4			2			1				1		4			16			^b	11			5			—		16
Total costs	328			378			259				7		644			316				468			263			12		743
Revenue adjustments, primarily for pricing on prior period open sales	(52		)	(52		)	(11		)		—		(63		)	(6		)		(6		)	—			1		(5		)
PT Smelting intercompany profit	16			9			7				—		16
PT Smelting intercompany loss																(9		)		(6		)	(3		)	—		(9		)
Gross profit	$	102		$	45		$	56			$	1	$	102		$	398			$	249		$	142		$	7	$	398

Copper sales (millions of recoverable pounds)	198			198												332				332
Gold sales (thousands of recoverable ounces)							285																307

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	$	2.35		$	2.35		$	1,117								$	2.20			$	2.20		$	1,327
Site production and delivery, before net noncash and other costs shown below	2.16			1.28			604									1.37				0.86			520
Gold and silver credits	(1.59		)	—			—									(1.29		)		—			—
Treatment charges	0.31			0.18			86									0.27				0.17			104
Export duties	0.17			0.10			49									0.10				0.07			39
Royalty on metals	0.13			0.07			35									0.12				0.07			50
Unit net cash costs	1.18			1.63			774									0.57				1.17			713
Depreciation and amortization	0.45			0.27			127
DD&A																0.33				0.21			125
Noncash and other costs, net	0.02			0.01			5									0.05			^b	0.03			19
Total unit costs	1.65			1.91			906									0.95				1.41			857
Revenue adjustments, primarily for pricing
on prior period open sales	(0.26		)	(0.26		)	(38		)
PT Smelting intercompany profit	0.08			0.05			23
Revenue adjustments, primarily for pricing on prior period open sales																(0.02		)		(0.02		)	1
PT Smelting intercompany loss																(0.03		)		(0.02		)	(10		)
Gross profit per pound/ounce	$	0.52		$	0.23		$	196								$	1.20			$	0.75		$	461

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization									Revenues				Production and Delivery			DD&A
Totals presented above	$	793		$	429		$	90								$	1,155			$	453		$	110
Treatment charges	(61		)	—			—									(90		)		—			—
Export duties	(35		)	—			—									(34		)		—			—
Royalty on metals	(25		)	—			—									(40		)		—			—
Noncash and other costs, net	—			4			—									—				16			—
Revenue adjustments, primarily for pricing on prior period open sales	(63		)	—			—									(5		)		—			—
PT Smelting intercompany profit	—			(16		)	—
PT Smelting intercompany loss																—				9			—
Indonesia mining	609			417			90									986				478			110
Other mining & eliminations^b	2,546			2,181			344
Other mining & eliminations^c																2,464				1,778			306
Total mining	3,155			2,598			434									3,450				2,256			416
U.S. oil & gas operations	525			293			3,930			^c						427				231			223
Corporate, other & eliminations	1			2			176			^c						—				22			4
As reported in FCX’s consolidated financial statements	$	3,681		$	2,893		$	4,540		^c						$	3,877			$	2,509		$	643


a.	Includes silver sales of 928 thousand ounces ($18.97 per ounce average realized price).


b.	Includes asset retirement charges of $17 million ($0.05 per pound).


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

Table of Contents



Three Months Ended September 30, 2015
(In millions)	By-Product			Co-Product Method
	Method			Copper			Gold			Silver^a		Total
Revenues, excluding adjustments	$	466		$	466		$	319		$	8	$	793
Site production and delivery, before net noncash and other costs shown below	429			252			173			4		429
Gold and silver credits	(316		)	—			—			—		—
Treatment charges	61			36			25			—		61
Export duties	35			20			14			1		35
Royalty on metals	25			15			10			—		25
Net cash costs	234			323			222			5		550
DD&A	90			53			36			1		90
Noncash and other costs, net	4			2			1			1		4
Total costs	328			378			259			7		644
Revenue adjustments, primarily for pricing on prior period open sales	(52		)	(52		)	(11		)	—		(63		)
PT Smelting intercompany profit	16			9			7			—		16
Gross profit	$	102		$	45		$	56		$	1	$	102

Copper sales (millions of recoverable pounds)	198			198
Gold sales (thousands of recoverable ounces)							285

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

Revenues, excluding adjustments	$	2.35		$	2.35		$	1,117
Site production and delivery, before net noncash and other costs shown below	2.16			1.28			604
Gold and silver credits	(1.59		)	—			—
Treatment charges	0.31			0.18			86
Export duties	0.17			0.10			49
Royalty on metals	0.13			0.07			35
Unit net cash costs	1.18			1.63			774
DD&A	0.45			0.27			127
Noncash and other costs, net	0.02			0.01			5
Total unit costs	1.65			1.91			906
Revenue adjustments, primarily for pricing on prior period open sales	(0.26		)	(0.26		)	(38		)
PT Smelting intercompany profit	0.08			0.05			23
Gross profit per pound/ounce	$	0.52		$	0.23		$	196

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			DD&A
Totals presented above	$	793		$	429		$	90
Treatment charges	(61		)	—			—
Export duties	(35		)	—			—
Royalty on metals	(25		)	—			—
Noncash and other costs, net	—			4			—
Revenue adjustments, primarily for pricing on prior period open sales	(63		)	—			—
PT Smelting intercompany profit	—			(16		)	—
Indonesia mining	609			417			90
Other mining & eliminations^b	2,247			1,883			279
Total mining	2,856			2,300			369
U.S. oil & gas operations	525			293			450
Corporate, other & eliminations	1			2			4
As reported in FCX’s consolidated financial statements	$	3,382		$	2,595		$	823


a.	Includes silver sales of 574 thousand ounces ($14.37 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 totaling $3.7 billion, $3.5 billion for U.S. oil and gas operations and $0.2 billion for Morocco.~~

Table of Contents

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


Three Months Ended September 30, 2014

Nine Months Ended September 30, 2016
(In millions)	By-Product			Co-Product Method												By-Product				Co-Product Method
	Method			Copper			Gold				Silver^a		Total			Method				Copper			Gold			Silver^a		Total
Revenues, excluding adjustments	$	786		$	786		$	615			$	15	$	1,416		$	1,525			$	1,525		$	844		$	36	$	2,405
Site production and delivery, before net noncash and other costs shown below	624			346			271				7		624			1,190				754			418			18		1,190
Gold and silver credits	(629		)	—			—				—		—			(897		)		—			—			—		—
Treatment charges	65			36			28				1		65			202				128			71			3		202
Export duties	42			23			18				1		42			63				40			22			1		63
Royalty on metals	52			29			23				—		52			84				51			32			1		84
Net cash costs	154			434			340				9		783			642				973			543			23		1,539
Depreciation and amortization	92			51			40				1		92
DD&A																284				180			100			4		284
Noncash and other costs, net	28			16			12				—		28			31			^b	20			10			1		31
Total costs	274			501			392				10		903			957				1,173			653			28		1,854
Revenue adjustments, primarily for pricing on prior period open sales	(3		)	(3		)	(1		)		—		(4		)	—				—			17			—		17
PT Smelting intercompany loss	(48		)	(27		)	(21		)		—		(48		)	(7		)		(5		)	(2		)	—		(7		)
Gross profit	$	461		$	255		$	201			$	5	$	461		$	561			$	347		$	206		$	8	$	561

Copper sales (millions of recoverable pounds)	258			258												702				702
Gold sales (thousands of recoverable ounces)							505																653

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	$	3.05		$	3.05		$	1,219								$	2.17			$	2.17		$	1,292
Site production and delivery, before net noncash and other costs shown below	2.42			1.34			537
Site production and delivery, before net noncash
and other costs shown below																1.70				1.08			639
Gold and silver credits	(2.44		)	—			—									(1.28		)		—			—
Treatment charges	0.25			0.14			56									0.29				0.18			109
Export duties	0.16			0.09			36									0.09				0.06			34
Royalty on metals	0.21			0.12			45									0.12				0.07			48
Unit net cash costs	0.60			1.69			674									0.92				1.39			830
Depreciation and amortization	0.35			0.20			79
DD&A																0.40				0.25			152
Noncash and other costs, net	0.11			0.06			24									0.04			^b	0.03			16
Total unit costs	1.06			1.95			777									1.36				1.67			998
Revenue adjustments, primarily for pricing
on prior period open sales	(0.01		)	(0.01		)	(1		)							—				—			25
PT Smelting intercompany loss	(0.19		)	(0.10		)	(42		)							(0.01		)		(0.01		)	(4		)
Gross profit per pound/ounce	$	1.79		$	0.99		$	399								$	0.80			$	0.49		$	315

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization									Revenues				Production and Delivery			DD&A
Totals presented above	$	1,416		$	624		$	92								$	2,405			$	1,190		$	284
Treatment charges	(65		)	—			—									(202		)		—			—
Export duties	(42		)	—			—									(63		)		—			—
Royalty on metals	(52		)	—			—									(84		)		—			—
Noncash and other costs, net	—			28			—									—				31			—
Revenue adjustments, primarily for pricing on prior period open sales	(4		)	—			—									17				—			—
PT Smelting intercompany loss	—			48			—									—				7			—
Indonesia mining	1,253			700			92									2,073				1,228			284
Other mining & eliminations^b	3,453			2,180			346
Other mining & eliminations^c																7,248				5,167			946
Total mining	4,706			2,880			438									9,321				6,395			1,230
U.S. oil & gas operations	990			273			812			^c						1,132				1,527			696
Corporate, other & eliminations	—			(1		)	3									—				35			11
As reported in FCX’s consolidated financial statements	$	5,696		$	3,152		$	1,253		^c						$	10,453			$	7,957		$	1,937


a.	Includes silver sales of ~~889 thousand~~2.0 million ounces ($~~17.11~~17.95 per ounce average realized price).


b.	Includes asset retirement charges of $17 million ($0.02 per pound).


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


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

Table of Contents

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



Nine Months Ended September 30, 2015
(In millions)	By-Product			Co-Product Method												By-Product			Co-Product Method
	Method			Copper			Gold			Silver^a			Total			Method			Copper			Gold		Silver^a		Total
Revenues, excluding adjustments	$	1,345		$	1,345		$	1,024		$	24	^a	$	2,393		$	1,345		$	1,345		$	1,024	$	24	$	2,393
Site production and delivery, before net noncash and other costs shown below	1,311			736			562			13			1,311			1,311			736			562		13		1,311
Gold and silver credits	(1,057		)	—			—			—			—			(1,057		)	—			—		—		—
Treatment charges	169			95			72			2			169			169			95			72		2		169
Export duties	92			52			39			1			92			92			52			39		1		92
Royalty on metals	85			48			37			—			85			85			48			37		—		85
Net cash costs	600			931			710			16			1,657			600			931			710		16		1,657
Depreciation and amortization	238			134			102			2			238
DD&A																238			134			102		2		238
Noncash and other costs, net	19			11			8			—			19			19			11			8		—		19
Total costs	857			1,076			820			18			1,914			857			1,076			820		18		1,914
Revenue adjustments, primarily for pricing on prior period open sales	(50		)	(50		)	9			—			(41		)	(50		)	(50		)	9		—		(41		)
PT Smelting intercompany profit	19			11			8			—			19			19			11			8		—		19
Gross profit	$	457		$	230		$	221		$	6		$	457		$	457		$	230		$	221	$	6	$	457

Copper sales (millions of recoverable pounds)	549			549												549			549
Gold sales (thousands of recoverable ounces)							891															891

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	$	2.45		$	2.45		$	1,149								$	2.45		$	2.45		$	1,149
Site production and delivery, before net noncash
and other costs shown below	2.39			1.34			630									2.39			1.34			630
Gold and silver credits	(1.93		)	—			—									(1.93		)	—			—
Treatment charges	0.31			0.17			81									0.31			0.17			81
Export duties	0.16			0.10			44									0.16			0.10			44
Royalty on metals	0.16			0.09			41									0.16			0.09			41
Unit net cash costs	1.09			1.70			796									1.09			1.70			796
Depreciation and amortization	0.43			0.24			114
DD&A																0.43			0.24			114
Noncash and other costs, net	0.04			0.02			10									0.04			0.02			10
Total unit costs	1.56			1.96			920									1.56			1.96			920
Revenue adjustments, primarily for pricing
on prior period open sales	(0.09		)	(0.09		)	10									(0.09		)	(0.09		)	10
PT Smelting intercompany profit	0.03			0.02			9									0.03			0.02			9
Gross profit per pound/ounce	$	0.83		$	0.42		$	248								$	0.83		$	0.42		$	248

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			Depreciation, Depletion and Amortization									Revenues			Production and Delivery			DD&A
Totals presented above	$	2,393		$	1,311		$	238								$	2,393		$	1,311		$	238
Treatment charges	(169		)	—			—									(169		)	—			—
Export duties	(92		)	—			—									(92		)	—			—
Royalty on metals	(85		)	—			—									(85		)	—			—
Noncash and other costs, net	—			19			—									—			19			—
Revenue adjustments, primarily for pricing on prior period open sales	(41		)	—			—									(41		)	—			—
PT Smelting intercompany profit	—			(19		)	—									—			(19		)	—
Indonesia mining	2,006			1,311			238									2,006			1,311			238
Other mining & eliminations^b	8,481			6,478			1,003									7,490			5,687			808
Total mining	10,487			7,789			1,241									9,496			6,998			1,046
U.S. oil & gas operations	1,594			857			10,735		^c							1,594			857			1,465
Corporate, other & eliminations	1			7			183		^c							1			7			11
As reported in FCX’s consolidated financial statements	$	12,082		$	8,653		$	12,159	^c							$	11,091		$	7,862		$	2,522


a.	Includes silver sales of 1.6 million ounces ($15.07 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 totaling $9.4 billion, $9.3 billion for U.S. oil and gas operations and $0.2 billion for Morocco.~~

Table of Contents

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

Nine Months Ended September 30, 2014
(In millions) By-Product Co-Product Method
Method Copper Gold
Silver^a
Total
Revenues, excluding adjustments $ 1,495
$ 1,495
$ 1,001
$ 29
$ 2,525
Site production and delivery, before net noncash
    and other costs shown below
1,404
831
557
16
1,404
Gold and silver credits (1,048 ) —
—
—
—
Treatment charges 121
72
48
1
121
Export duties 42
25
16
1
42
Royalty on metals 79
47
31
1
79
Net cash costs 598
975
652
19
1,646
Depreciation and amortization 194
115
77
2
194
Noncash and other costs, net 200
^b
118
80
2
200
Total costs 992
1,208
809
23
2,040
Revenue adjustments, primarily for pricing
    on prior period open sales
(55 ) (55 ) 18
—
(37 )
PT Smelting intercompany profit 10
6
4
—
10
Gross profit $ 458
$ 238
$ 214
$ 6
$ 458

Copper sales (millions of recoverable pounds) 484
484

Gold sales (thousands of recoverable ounces) 802

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

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

Site production and delivery, before net noncash
and other costs shown below 2.90
1.72
694

Gold and silver credits (2.16 ) —
—

Treatment charges 0.25
0.15
60

Export duties 0.09
0.05
21

Royalty on metals 0.16
0.09
39

Unit net cash costs 1.24
2.01
814

Depreciation and amortization 0.40
0.24
96

Noncash and other costs, net 0.41
^b
0.25
98

Total unit costs 2.05
2.50
1,008

Revenue adjustments, primarily for pricing
on prior period open sales (0.11 ) (0.11 ) 22

PT Smelting intercompany profit 0.02
0.01
5

Gross profit per pound/ounce $ 0.95
$ 0.49
$ 267

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 2,525
$ 1,404
$ 194

Treatment charges (121 ) —
—

Export duties (42 ) —
—

Royalty on metals (79 ) —
—

Noncash and other costs, net —
200
^b
—

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

PT Smelting intercompany profit —
(10 ) —

Indonesia mining 2,246
1,594
194

Other mining & eliminations^c
10,470
6,466
984

Total mining 12,716
8,060
1,178

U.S. oil & gas operations 3,487
913
2,044
^d

Corporate, other & eliminations —
(2 ) 10

As reported in FCX’s consolidated financial statements $ 16,203
$ 8,971
$ 3,232
^d


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


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


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


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

~~Table of Contents~~

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

Three Months Ended September 30, 2015
(In millions) By-Product Co-Product Method
Method Copper Cobalt Total
Revenues, excluding adjustments^a
$ 261
$ 261
$ 84
$ 345
Site production and delivery, before net noncash
    and other costs shown below
184
153
53
206
Cobalt credits^b
(60 ) —
—
—
Royalty on metals 6
5
1
6
Net cash costs 130
158
54
212
Depreciation, depletion and amortization 65
50
15
65
Noncash and other costs, net 3
3
—
3
Total costs 198
211
69
280
Revenue adjustments, primarily for pricing
    on prior period open sales
(9 ) (9 ) (2 ) (11 )
Gross profit $ 54
$ 41
$ 13
$ 54

Copper sales (millions of recoverable pounds) 113
113

Cobalt sales (millions of contained pounds) 10

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustments^a
$ 2.32
$ 2.32
$ 8.96

Site production and delivery, before net noncash
     and other costs shown below
1.63
1.36
5.58

Cobalt credits^b
(0.53 ) —
—

Royalty on metals 0.05
0.04
0.15

Unit net cash costs 1.15
1.40
5.73

Depreciation, depletion and amortization 0.58
0.45
1.52

Noncash and other costs, net 0.03
0.03
0.08

Total unit costs 1.76
1.88
7.33

Revenue adjustments, primarily for pricing
on prior period open sales (0.08 ) (0.08 ) (0.25 )
Gross profit per pound $ 0.48
$ 0.36
$ 1.38

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 345
$ 206
$ 65

Royalty on metals (6 ) —
—

Noncash and other costs, net —
3
—

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

Africa mining 328
209
65

Other mining & eliminations^c
2,827
2,389
369

Total mining 3,155
2,598
434

U.S. oil & gas operations 525
293
3,930
^d

Corporate, other & eliminations 1
2
176
^d

As reported in FCX’s consolidated financial statements $ 3,681
$ 2,893
$ 4,540
^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 totaling $3.7 billion, $3.5 billion for U.S. oil and gas operations and $0.2 billion for Morocco.~~

~~Table of Contents~~

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

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

Copper sales (millions of recoverable pounds) 112
112

Cobalt sales (millions of contained pounds) 8

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustments^a
$ 3.11
$ 3.11
$ 9.99

Site production and delivery, before net noncash
     and other costs shown below
1.61
1.40
5.32

Cobalt credits^b
(0.58 ) —
—

Royalty on metals 0.07
0.06
0.18

Unit net cash costs 1.10
1.46
5.50

Depreciation, depletion and amortization 0.51
0.43
1.06

Noncash and other costs, net 0.05
0.04
0.10

Total unit costs 1.66
1.93
6.66

Revenue adjustments, primarily for pricing
on prior period open sales 0.01
0.01
0.39

Gross profit per pound $ 1.46
$ 1.19
$ 3.72

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 432
$ 202
$ 58

Royalty on metals (8 ) —
—

Noncash and other costs, net —
4
—

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

Africa mining 428
206
58

Other mining & eliminations^c
4,278
2,674
380

Total mining 4,706
2,880
438

U.S. oil & gas operations 990
273
812
^d

Corporate, other & eliminations —
(1 ) 3

As reported in FCX’s consolidated financial statements $ 5,696
$ 3,152
$ 1,253
^d


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


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


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


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

~~Table of Contents~~

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

Nine Months Ended September 30, 2015
(In millions) By-Product Co-Product Method
Method Copper Cobalt Total
Revenues, excluding adjustments^a
$ 883
$ 883
$ 234
$ 1,117
Site production and delivery, before net noncash
    and other costs shown below
553
479
144
623
Cobalt credits^b
(164 ) —
—
—
Royalty on metals 21
16
5
21
Net cash costs 410
495
149
644
Depreciation, depletion and amortization 195
160
35
195
Noncash and other costs, net 11
9
2
11
Total costs 616
664
186
850
Revenue adjustments, primarily for pricing
    on prior period open sales
(7 ) (7 ) —
(7 )
Gross profit $ 260
$ 212
$ 48
$ 260

Copper sales (millions of recoverable pounds) 350
350

Cobalt sales (millions of contained pounds) 26

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustments^a
$ 2.52
$ 2.52
$ 9.04

Site production and delivery, before net noncash
and other costs shown below 1.58
1.37
5.56

Cobalt credits^b
(0.47 ) —
—

Royalty on metals 0.06
0.04
0.15

Unit net cash costs 1.17
1.41
5.71

Depreciation, depletion and amortization 0.56
0.45
1.38

Noncash and other costs, net 0.03
0.03
0.08

Total unit costs 1.76
1.89
7.17

Revenue adjustments, primarily for pricing
on prior period open sales (0.02 ) (0.02 ) (0.02 )
Gross profit per pound $ 0.74
$ 0.61
$ 1.85

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 1,117
$ 623
$ 195

Royalty on metals (21 ) —
—

Noncash and other costs, net —
11
—

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

Africa mining 1,089
634
195

Other mining & eliminations^c
9,398
7,155
1,046

Total mining 10,487
7,789
1,241

U.S. oil & gas operations 1,594
857
10,735
^d

Corporate, other & eliminations 1
7
183
^d

As reported in FCX’s consolidated financial statements $ 12,082
$ 8,653
$ 12,159
^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 totaling $9.4 billion, $9.3 billion for U.S. oil and gas operations and $0.2 billion for Morocco.~~

~~Table of Contents~~

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

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

Copper sales (millions of recoverable pounds) 314
314

Cobalt sales (millions of contained pounds) 23

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustments^a
$ 3.09
$ 3.09
$ 9.68

Site production and delivery, before net noncash
and other costs shown below 1.51
1.33
5.24

Cobalt credits^b
(0.51 ) —
—

Royalty on metals 0.07
0.06
0.16

Unit net cash costs 1.07
1.39
5.40

Depreciation, depletion and amortization 0.55
0.47
1.04

Noncash and other costs, net 0.05
0.05
0.10

Total unit costs 1.67
1.91
6.54

Revenue adjustments, primarily for pricing
on prior period open sales —
—
0.09

Gross profit per pound $ 1.42
$ 1.18
$ 3.23

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 1,194
$ 540
$ 172

Royalty on metals (22 ) —
—

Noncash and other costs, net —
16
—

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

Africa mining 1,173
556
172

Other mining & eliminations^c
11,543
7,504
1,006

Total mining 12,716
8,060
1,178

U.S. oil & gas operations 3,487
913
2,044
^d

Corporate, other & eliminations —
(2 ) 10

As reported in FCX’s consolidated financial statements $ 16,203
$ 8,971
$ 3,232
^d


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


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


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


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

~~Table of Contents~~

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

Three Months Ended September 30,
(In millions) 2015 2014
Revenues, excluding adjustments^a
$ 94
$ 184

Site production and delivery, before net noncash and other costs shown below 79
83

Treatment charges and other 11
11

Net cash costs 90
94

Depreciation, depletion and amortization 26
25

Noncash and other costs, net 7
^b
3

Total costs 123
122

Gross (loss) profit $ (29 ) $ 62

Molybdenum sales (millions of recoverable pounds)^a
13
13

Gross profit per pound of molybdenum:

Revenues, excluding adjustments^a
$ 7.23
$ 13.93

Site production and delivery, before net noncash and other costs shown below 6.10
6.29

Treatment charges and other 0.83
0.83

Unit net cash costs 6.93
7.12

Depreciation, depletion and amortization 2.00
1.89

Noncash and other costs, net 0.61
^b
0.21

Total unit costs 9.54
9.22

Gross (loss) profit per pound $ (2.31 ) $ 4.71

Reconciliation to Amounts Reported
(In millions)
Three Months Ended September 30, 2015 Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 94
$ 79
$ 26

Treatment charges and other (11 ) —
—

Noncash and other costs, net —
7
^b
—

Molybdenum mines 83
86
26

Other mining & eliminations^c
3,072
2,512
408

Total mining 3,155
2,598
434

U.S. oil & gas operations 525
293
3,930
^d
Corporate, other & eliminations 1
2
176
^d
As reported in FCX’s consolidated financial statements $ 3,681
$ 2,893
$ 4,540
^d

Three Months Ended September 30, 2014
Totals presented above $ 184
$ 83
$ 25

Treatment charges and other (11 ) —
—

Noncash and other costs, net —
3
—

Molybdenum mines 173
86
25

Other mining & eliminations^c
4,533
2,794
413

Total mining 4,706
2,880
438

U.S. oil & gas operations 990
273
812
^e
Corporate, other & eliminations —
(1 ) 3

As reported in FCX’s consolidated financial statements $ 5,696
$ 3,152
$ 1,253
^e


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 $5 million ($0.42 per pound) for inventory adjustments and restructuring charges.~~


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 totaling $3.7 billion, $3.5 billion for U.S. oil and gas operations and $0.2 billion for Morocco.~~


e.	~~Impairments of oil and gas properties totaling $308 million.~~

~~Table of Contents~~

~~Molybdenum Mines Product Revenues, Production Costs and Unit Net Cash Costs (continued)~~



	Nine Months Ended September 30,
(In millions)	2015				2014							Three Months Ended September 30,
												2016			2015
Revenues, excluding adjustments^a	$	330			$	502						$	51		$	94

Site production and delivery, before net noncash and other costs shown below	240				237							53			79
Treatment charges and other	32				33							5			11
Net cash costs	272				270							58			90
Depreciation, depletion and amortization	77				71
Noncash and other costs, net	13			^b	6
DD&A												15			26
Metals inventory adjustments												6			3
Noncash and other (credits) costs, net												(2		)	4			^b
Total costs	362				347							77			123
Gross (loss) profit	$	(32	)		$	155
Gross loss												$	(26	)	$	(29	)

Molybdenum sales (millions of recoverable pounds)^a	39				40							5			13

Gross profit per pound of molybdenum:
Gross loss per pound of molybdenum:												Gross loss per pound of molybdenum:

Revenues, excluding adjustments^a	$	8.60			$	12.56						$	9.08		$	7.23

Site production and delivery, before net noncash and other costs shown below	6.26				5.92							9.42			6.10
Treatment charges and other	0.84				0.84							0.86			0.83
Unit net cash costs	7.10				6.76							10.28			6.93
Depreciation, depletion and amortization	2.00				1.77
Noncash and other costs, net	0.35			^b	0.14
DD&A												2.63			2.00
Metals inventory adjustments												1.06			0.27
Noncash and other (credits) costs, net												(0.29		)	0.34			^b
Total unit costs	9.45				8.67							13.68			9.54
Gross (loss) profit per pound	$	(0.85	)		$	3.89
Gross loss per pound												$	(4.60	)	$	(2.31	)

Reconciliation to Amounts Reported
(In millions)
Nine Months Ended September 30, 2015	Revenues				Production and Delivery				Depreciation, Depletion and Amortization
Three Months Ended September 30, 2016												Revenues			Production and Delivery				DD&A		Metals Inventory Adjustments
Totals presented above												$	51		$	53			$	15	$	6
Treatment charges and other												(5		)	—				—		—
Noncash and other (credits) costs, net												—			(2		)		—		—
Molybdenum mines												46			51				15		6
Other mining & eliminations^c												3,404			2,205				401		14
Total mining												3,450			2,256				416		20
U.S. oil & gas operations												427			231				223		—
Corporate, other & eliminations												—			22				4		—
As reported in FCX’s consolidated financial statements												$	3,877		$	2,509			$	643	$	20

Three Months Ended September 30, 2015
Totals presented above	$	330			$	240			$	77		$	94		$	79			$	26	$	3
Treatment charges and other	(32		)		—				—			(11		)	—				—		—
Noncash and other costs, net	—				13			^b	—			—			4				—		—
Molybdenum mines	298				253				77			83			83				26		3
Other mining & eliminations^c	10,189				7,536				1,164			2,773			2,217				343		88
Total mining	10,487				7,789				1,241			2,856			2,300				369		91
U.S. oil & gas operations	1,594				857				10,735		^d	525			293				450		—
Corporate, other & eliminations	1				7				183		^d	1			2				4		—
As reported in FCX’s consolidated financial statements	$	12,082			$	8,653			$	12,159	^d	$	3,382		$	2,595			$	823	$	91

Nine Months Ended September 30, 2014
Totals presented above	$	502			$	237			$	71
Treatment charges and other	(33		)		—				—
Noncash and other costs,net	—				6				—
Molybdenum mines	469				243				71
Other mining & eliminations^c	12,247				7,817				1,107
Total mining	12,716				8,060				1,178
U.S. oil & gas operations	3,487				913				2,044		^e
Corporate, other & eliminations	—				(2		)		10
As reported in FCX’s consolidated financial statements	$	16,203			$	8,971			$	3,232	^e


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 $8restructuring charges totaling $2 million ($~~0.21~~0.15 per pound) ~~for inventory adjustments and restructuring charges.~~.


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.

Table of Contents




(In millions)	Nine Months Ended September 30,
	2016			2015
Revenues, excluding adjustments^a	$	153		$	330

Site production and delivery, before net noncash and other costs shown below	146			240
Treatment charges and other	17			32
Net cash costs	163			272
DD&A	51			77
Metals inventory adjustments	12			6
Noncash and other costs, net	1			7			^b
Total costs	227			362
Gross loss	$	(74	)	$	(32	)

Molybdenum sales (millions of recoverable pounds)^a	19			39

Gross loss per pound of molybdenum:

Revenues, excluding adjustments^a	$	7.94		$	8.60

Site production and delivery, before net noncash and other costs shown below	7.53			6.26
Treatment charges and other	0.86			0.84
Unit net cash costs	8.39			7.10
DD&A	2.65			2.00
Metals inventory adjustments	0.63			0.16
Noncash and other costs, net	0.09			0.19			^b
Total unit costs	11.76			9.45
Gross loss per pound	$	(3.82	)	$	(0.85	)

Reconciliation to Amounts Reported
(In millions)
Nine Months Ended September 30, 2016	Revenues			Production and Delivery				DD&A		Metals Inventory Adjustments
Totals presented above	$	153		$	146			$	51	$	12
Treatment charges and other	(17		)	—				—		—
Noncash and other costs, net	—			1				—		—
Molybdenum mines	136			147				51		12
Other mining & eliminations^c	9,185			6,248				1,179		15
Total mining	9,321			6,395				1,230		27
U.S. oil & gas operations	1,132			1,527				696		—
Corporate, other & eliminations	—			35				11		—
As reported in FCX’s consolidated financial statements	$	10,453		$	7,957			$	1,937	$	27

Nine Months Ended September 30, 2015
Totals presented above	$	330		$	240			$	77	$	6
Treatment charges and other	(32		)	—				—		—
Noncash and other costs,net	—			7				—		—
Molybdenum mines	298			247				77		6
Other mining & eliminations^c	9,198			6,751				969		148
Total mining	9,496			6,998				1,046		154
U.S. oil & gas operations	1,594			857				1,465		—
Corporate, other & eliminations	1			7				11		—
As reported in FCX’s consolidated financial statements	$	11,091		$	7,862			$	2,522	$	154

d.a.

~~Includes impairment~~Reflects sales of ~~oil and gas properties totaling $9.4 billion, $9.3 billion~~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 ~~U.S. oil and gas operations and $0.2 billion for Morocco.~~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.


e.b.	~~Impairments of oil and gas properties~~Includes restructuring charges totaling ~~$308 million.~~$2 million ($0.05 per pound).


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.

Table of Contents

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

Three Months Ended September 30, 2015

(In millions) Oil Natural Gas NGLs
Total
U.S. Oil
& Gas

Oil and gas revenues before derivatives $ 416
$ 62
$ 12
$ 490

Cash gains on derivative contracts 103
—
—
103

Realized revenues $ 519
$ 62
$ 12
593

Less: cash production costs 260

Cash operating margin 333

Less: depreciation, depletion and amortization 450

Less: impairment of oil and gas properties 3,480

Less: accretion and other costs 33

Plus: net noncash mark-to-market losses on derivative contracts (74 )
Plus: other net adjustments 6

Gross loss $ (3,698 )

Oil (MMBbls) 9.3

Gas (Bcf) 22.8

NGLs (MMBbls) 0.7

Oil Equivalents (MMBOE) 13.8

Oil
(per barrel) Natural Gas
(per MMBtu) NGLs
(per barrel) Per BOE
Oil and gas revenues before derivatives $ 44.85
$ 2.72
$ 16.68
$ 35.56

Cash gains on derivative contracts 11.03
—
—
7.44

Realized revenues $ 55.88
$ 2.72
$ 16.68
43.00

Less: cash production costs 18.85

Cash operating margin 24.15

Less: depreciation, depletion and amortization 32.71

Less: impairment of oil and gas properties 252.58

Less: accretion and other costs 2.38

Plus: net noncash mark-to-market losses on derivative contracts (5.34 )
Plus: other net adjustments 0.49

Gross loss $ (268.37 )

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 490
$ 260
$ 450

Cash gains on derivative contracts 103
—
—

Net noncash mark-to-market losses on derivative contracts (74 ) —
—

Accretion and other costs —
33
—

Impairment of oil and gas properties —
—
3,480

Other net adjustments 6
—
—

U.S. oil & gas operations 525
293
3,930

Total mining^a
3,155
2,598
434

Corporate, other & eliminations 1
2
176
^b

As reported in FCX's consolidated financial statements $ 3,681
$ 2,893
$ 4,540



Three Months Ended September 30, 2016
(In millions)	Oil		Natural Gas		NGLs		Total
Oil and gas revenues	$	371	$	39	$	11	$	421
Cash production costs							(180		)
Cash operating margin							241
DD&A							(223		)
Impairment of oil and gas properties							(238		)
Accretion and other costs							(51		)	^a
Other revenue							6
Gross loss							$	(265	)

Oil (MMBbls)	9.1
Gas (Bcf)			13.8
NGLs (MMBbls)					0.6
Oil Equivalents (MMBOE)							12.0

	Oil (per barrel)		Natural Gas (per MMBtu)		NGLs (per barrel)		Per BOE
Oil and gas revenues	$	40.63	$	2.84	$	17.65	$	34.99
Cash production costs							(15.00		)
Cash operating margin							19.99
DD&A							(18.54		)
Impairment of oil and gas properties							(19.75		)
Accretion and other costs							(4.24		)	^a
Other revenue							0.46
Gross loss							$	(22.08	)

Reconciliation to Amounts Reported
(In millions)	Revenues		Production and Delivery		DD&A		Impairment of Oil and Gas Properties
Totals presented above	$	421	$	180	$	223	$	238
Accretion and other costs	—		51		—		—
Other revenue	6		—		—		—
U.S. oil & gas operations	427		231		223		238
Total mining^b	3,450		2,256		416		—
Corporate, other & eliminations	—		22		4		1
As reported in FCX's consolidated financial statements	$	3,877	$	2,509	$	643	$	239


a.	~~Represents the combined total~~Includes charges of $33 million ($2.81 per BOE) primarily for ~~mining operations~~idle rig costs, inventory adjustments and ~~the related eliminations, as presented in Note 10.~~asset impairments.


b.	~~Includes $0.2 billion for impairments associated with Morocco.~~

~~Table of Contents~~

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

Three Months Ended September 30, 2014
Total
Natural U.S. Oil
(In millions) Oil Gas NGLs & Gas
Oil and gas revenues before derivatives $ 821
$ 81
$ 23
$ 925

Cash losses on derivative contracts (58 ) —
—
(58 )
Realized revenues $ 763
$ 81
$ 23
867

Less: cash production costs 263

Cash operating margin 604

Less: depreciation, depletion and amortization 504

Less: impairment of oil and gas properties 308

Less: accretion and other costs 10

Plus: net noncash mark-to-market gains on derivative contracts 122

Plus: other net adjustments 1

Gross loss $ (95 )

Oil (MMBbls) 8.6

Gas (Bcf) 20.2

NGLs (MMBbls) 0.6

Oil Equivalents (MMBOE) 12.5

Oil Natural Gas NGLs
(per barrel) (per MMBtu) (per barrel) Per BOE
Oil and gas revenues before derivatives $ 95.35
$ 4.00
$ 39.69
$ 73.70

Cash (losses) gains on derivative contracts (6.77 ) 0.02
—
(4.62 )
Realized revenues $ 88.58
$ 4.02
$ 39.69
69.08

Less: cash production costs 20.93

Cash operating margin 48.15

Less: depreciation, depletion and amortization 40.12

Less: impairment of oil and gas properties 24.59

Less: accretion and other costs 0.85

Plus: net noncash mark-to-market gains on derivative contracts 9.73

Plus: other net adjustments 0.09

Gross loss $ (7.59 )

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 925
$ 263
$ 504

Cash losses on derivative contracts (58 ) —
—

Net noncash mark-to-market gains on derivative contracts 122
—
—

Accretion and other costs —
10
—

Impairment of oil and gas properties —
—
308

Other net adjustments 1
—
—

U.S. oil & gas operations 990
273
812

Total mining^a
4,706
2,880
438

Corporate, other & eliminations —
(1 ) 3

As reported in FCX's consolidated financial statements $ 5,696
$ 3,152
$ 1,253


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

~~Table of Contents~~

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

Nine Months Ended September 30, 2015

(In millions) Oil Natural Gas NGLs
Total
U.S. Oil
& Gas

Oil and gas revenues before derivatives $ 1,269
$ 187
$ 36
$ 1,492

Cash gains on derivative contracts 304
—
—
304

Realized revenues $ 1,573
$ 187
$ 36
1,796

Less: cash production costs 765

Cash operating margin 1,031

Less: depreciation, depletion and amortization 1,465

Less: impairment of oil and gas properties 9,270

Less: accretion and other costs 92

Plus: net noncash mark-to-market losses on derivative
contracts
(217 )
Plus: other net adjustments 15

Gross loss $ (9,998 )

Oil (MMBbls) 26.3

Gas (Bcf) 68.1

NGLs (MMBbls) 1.8

Oil Equivalents (MMBOE) 39.4

Oil
(per barrel) Natural Gas
(per MMBtu) NGLs
(per barrel) Per BOE
Oil and gas revenues before derivatives $ 48.34
$ 2.74
$ 19.78
$ 37.85

Cash gains on derivative contracts 11.58
—
—
7.72

Realized revenues $ 59.92
$ 2.74
$ 19.78
45.57

Less: cash production costs 19.42

Cash operating margin 26.15

Less: depreciation, depletion and amortization 37.18

Less: impairment of oil and gas properties 235.22

Less: accretion and other costs 2.32

Plus: net noncash mark-to-market losses on derivative
contracts
(5.51 )
Plus: other net adjustments 0.39

Gross loss $ (253.69 )

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 1,492
$ 765
$ 1,465

Cash gains on derivative contracts 304
—
—

Net noncash mark-to-market losses on derivative contracts

(217 ) —
—

Accretion and other costs —
92
—

Impairment of oil and gas properties —
—
9,270

Other net adjustments 15
—
—

U.S. oil & gas operations 1,594
857
10,735

Total mining^a
10,487
7,789
1,241

Corporate, other & eliminations 1
7
183
^b

As reported in FCX's consolidated financial statements $ 12,082
$ 8,653
$ 12,159


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


b.	~~Includes $0.2 billion for impairments associated with Morocco.~~

~~Table of Contents~~

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

Nine Months Ended September 30, 2014

(In millions) Oil Natural Gas NGLs
Total
U.S. Oil
& Gas

Oil and gas revenues before derivatives $ 3,155
$ 275
$ 111
$ 3,541
^a
Cash losses on derivative contracts (173 ) (13 ) —
(186 )
Realized revenues $ 2,982
$ 262
$ 111
3,355

Less: cash production costs 875
^a
Cash operating margin 2,480

Less: depreciation, depletion and amortization 1,736

Less: impairment of oil and gas properties 308

Less: accretion and other costs 38

Plus: net noncash mark-to-market gains on derivative contracts 130

Plus: other net adjustments 2

Gross profit $ 530

Oil (MMBbls) 32.1

Gas (Bcf) 59.9

NGLs (MMBbls) 2.7

Oil Equivalents (MMBOE) 44.7

Oil
(per barrel) Natural Gas
(per MMBtu) NGLs
(per barrel) Per BOE
Oil and gas revenues before derivatives $ 98.41
$ 4.58
$ 41.77
$ 79.20
^a
Cash losses on derivative contracts (5.41 ) (0.21 ) —
(4.16 )
Realized revenues $ 93.00
$ 4.37
$ 41.77
75.04

Less: cash production costs 19.57
^a
Cash operating margin 55.47

Less: depreciation, depletion and amortization 38.81

Less: impairment of oil and gas properties 6.90

Less: accretion and other costs 0.86

Plus: net noncash mark-to-market gains on derivative contracts 2.90

Plus: other net adjustments 0.05

Gross profit $ 11.85

Reconciliation to Amounts Reported
(In millions) Revenues Production and Delivery Depreciation, Depletion and Amortization
Totals presented above $ 3,541
$ 875
$ 1,736

Cash losses on derivative contracts (186 ) —
—

Net noncash mark-to-market gains on derivative contracts 130
—
—

Accretion and other costs —
38
—

Impairment of oil and gas properties —
—
308

Other net adjustments 2
—
—

U.S. oil & gas operations 3,487
913
2,044

Total mining^b
12,716
8,060
1,178

Corporate, other & eliminations —
(2 ) 10

As reported in FCX's consolidated financial statements $ 16,203
$ 8,971
$ 3,232

~~a.Following is a reconciliation of FM O&G's cash production costs per BOE for the first nine months of 2014, excluding Eagle Ford:~~

Cash Production Costs
(in millions)
Oil Equivalents (MMBOE) Cash Production Costs Per BOE
Presented above $ 875
44.7
$ 19.57
Less: Eagle Ford 113
8.7
12.97
$ 762
36.0
$ 21.16


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

90Table of Contents




Three Months Ended September 30, 2015
(In millions)	Oil			Natural Gas		NGLs		Total
Oil and gas revenues before derivatives	$	416		$	62	$	12	$	490
Cash gains on derivative contracts	103			—		—		103
Realized revenues	$	519		$	62	$	12	593
Cash production costs								(260		)
Cash operating margin								333
DD&A								(450		)
Impairment of oil and gas properties								(3,480		)
Accretion and other costs								(33		)	^a
Net noncash mark-to-market losses on derivative contracts								(74		)
Other revenue								6
Gross loss								$	(3,698	)

Oil (MMBbls)	9.3
Gas (Bcf)				22.8
NGLs (MMBbls)						0.7
Oil Equivalents (MMBOE)								13.8

	Oil			Natural Gas		NGLs
	(per barrel)			(per MMBtu)		(per barrel)		Per BOE
Oil and gas revenues before derivatives	$	44.85		$	2.72	$	16.68	$	35.56
Cash gains on derivative contracts	11.03			—		—		7.44
Realized revenues	$	55.88		$	2.72	$	16.68	43.00
Cash production costs								(18.85		)
Cash operating margin								24.15
DD&A								(32.71		)
Impairment of oil and gas properties								(252.58		)
Accretion and other costs								(2.38		)	^a
Net noncash mark-to-market losses on derivative contracts								(5.34		)
Other revenue								0.49
Gross loss								$	(268.37	)

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery		DD&A		Impairment of Oil and Gas Properties
Totals presented above	$	490		$	260	$	450	$	3,480
Cash gains on derivative contracts	103			—		—		—
Net noncash mark-to-market losses on derivative contracts	(74		)	—		—		—
Accretion and other costs	—			33		—		—
Other revenue	6			—		—		—
U.S. oil & gas operations	525			293		450		3,480
Total mining^b	2,856			2,300		369		—
Corporate, other & eliminations	1			2		4		172			^c
As reported in FCX's consolidated financial statements	$	3,382		$	2,595	$	823	$	3,652


a.	Includes charges of $21 million ($1.54 per BOE) primarily for inventory adjustments and prior period property tax assessments related to California properties.


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


c.	Reflects impairment of international oil and gas properties, primarily in Morocco.

Table of Contents





Nine Months Ended September 30, 2016
(In millions)	Oil		Natural Gas		NGLs		Total
Oil and gas revenues	$	968	$	117	$	30	$	1,115
Cash production costs							(558		)
Cash operating margin							557
DD&A							(696		)
Impairment of oil and gas properties							(4,299		)
Accretion and other costs							(969		)	^a
Other revenue							17
Gross loss							$	(5,390	)

Oil (MMBbls)	26.1
Gas (Bcf)			52.2
NGLs (MMBbls)					1.8
Oil Equivalents (MMBOE)							36.6

	Oil (per barrel)		Natural Gas (per MMBtu)		NGLs (per barrel)		Per BOE
Oil and gas revenues	$	37.11	$	2.24	$	16.85	$	30.50
Cash production costs							(15.28		)
Cash operating margin							15.22
DD&A							(19.03		)
Impairment of oil and gas properties							(117.56		)
Accretion and other costs							(26.49		)	^a
Other revenue							0.45
Gross loss							$	(147.41	)

Reconciliation to Amounts Reported
(In millions)	Revenues		Production and Delivery		DD&A		Impairment of Oil and Gas Properties
Totals presented above	$	1,115	$	558	$	696	$	4,299
Accretion and other costs	—		969		—		—
Other revenue	17		—		—		—
U.S. oil & gas operations	1,132		1,527		696		4,299
Total mining^b	9,321		6,395		1,230		—
Corporate, other & eliminations	—		35		11		18			^c
As reported in FCX's consolidated financial statements	$	10,453	$	7,957	$	1,937	$	4,317


a.	Includes charges of $925 million ($25.32 per BOE) primarily for the termination and settlement of drillship contracts, inventory adjustments and asset impairments.


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


c.	Reflects impairment of international oil and gas properties primarily in Morocco.

Table of Contents





Nine Months Ended September 30, 2015
(In millions)	Oil			Natural Gas		NGLs		Total
Oil and gas revenues before derivatives	$	1,269		$	187	$	36	$	1,492
Cash gains on derivative contracts	304			—		—		304
Realized revenues	$	1,573		$	187	$	36	1,796
Cash production costs								(765		)
Cash operating margin								1,031
DD&A								(1,465		)
Impairment of oil and gas properties								(9,270		)
Accretion and other costs								(92		)	^a
Net noncash mark-to-market losses on derivative contracts								(217		)
Other revenue								15
Gross loss								$	(9,998	)

Oil (MMBbls)	26.3
Gas (Bcf)				68.1
NGLs (MMBbls)						1.8
Oil Equivalents (MMBOE)								39.4

	Oil (per barrel)			Natural Gas (per MMBtu)		NGLs (per barrel)		Per BOE
Oil and gas revenues before derivatives	$	48.34		$	2.74	$	19.78	$	37.85
Cash gains on derivative contracts	11.58			—		—		7.72
Realized revenues	$	59.92		$	2.74	$	19.78	45.57
Cash production costs								(19.42		)
Cash operating margin								26.15
DD&A								(37.18		)
Impairment of oil and gas properties								(235.22		)
Accretion and other costs								(2.32		)	^a
Net noncash mark-to-market losses on derivative contracts								(5.51		)
Other revenue								0.39
Gross loss								$	(253.69	)

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery		DD&A		Impairment of Oil and Gas Properties
Totals presented above	$	1,492		$	765	$	1,465	$	9,270
Cash gains on derivative contracts	304			—		—		—
Net noncash mark-to-market losses on derivative contracts	(217		)	—		—		—
Accretion and other costs	—			92		—		—
Other revenue	15			—		—		—
U.S. oil & gas operations	1,594			857		1,465		9,270
Total mining^b	9,496			6,998		1,046		—
Corporate, other & eliminations	1			7		11		172			^c
As reported in FCX's consolidated financial statements	$	11,091		$	7,862	$	2,522	$	9,442


a.	Includes charges of $59 million ($1.48 per BOE) primarily for idle rig costs, inventory adjustments and prior period property tax assessments related to California properties.


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


c.	Reflects impairment of international oil and gas properties primarily in Morocco.

Table of Contents

Discontinued Operations (Africa Mining): Product Revenues, Production Costs and Unit Net Cash Costs



Three Months Ended September 30, 2016
(In millions)	By-Product			Co-Product Method
	Method			Copper			Cobalt			Total
Revenues, excluding adjustments^a	$	244		$	244		$	72		$	316
Site production and delivery, before net noncash and other costs shown below	186			159			51			210
Cobalt credits^b	(54		)	—			—			—
Royalty on metals	6			4			2			6
Net cash costs	138			163			53			216
DD&A	59			47			12			59
Noncash and other costs, net	9			7			2			9
Total costs	206			217			67			284
Revenue adjustments, primarily for pricing on prior period open sales	(2		)	(2		)	6			4
Gross profit	$	36		$	25		$	11		$	36

Copper sales (millions of recoverable pounds)	118			118
Cobalt sales (millions of contained pounds)							9

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustments^a	$	2.07		$	2.07		$	7.83
Site production and delivery, before net noncash and other costs shown below	1.57			1.34			5.56
Cobalt credits^b	(0.46		)	—			—
Royalty on metals	0.05			0.04			0.14
Unit net cash costs	1.16			1.38			5.70
DD&A	0.50			0.40			1.36
Noncash and other costs, net	0.08			0.06			0.20
Total unit costs	1.74			1.84			7.26
Revenue adjustments, primarily for pricing on prior period open sales	(0.02		)	(0.02		)	0.68
Gross profit per pound	$	0.31		$	0.21		$	1.25

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			DD&A
Totals presented above	$	316		$	210		$	59
Royalty on metals	(6		)	—			—
Noncash and other costs, net	—			9			—
Revenue adjustments, primarily for pricing on prior period open sales	4			—			—
Eliminations and other adjustments^c	(53		)	29			(59		)
Total^d	$	261		$	248		$	—


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


b.	Net of cobalt downstream processing and freight costs.


c.	Reflects adjustments associated with reporting Tenke as discontinued operations, including the elimination of intercompany sales to our consolidated subsidiaries and the impact of discontinuing DD&A.


d.	Refer to Note 2 for a reconciliation of these amounts to net (loss) income from discontinued operations as reported in FCX's consolidated financial statements.

Table of Contents



Three Months Ended September 30, 2015
(In millions)	By-Product			Co-Product Method
	Method			Copper			Cobalt			Total
Revenues, excluding adjustments^a	$	261		$	261		$	84		$	345
Site production and delivery, before net noncash and other costs shown below	184			153			53			206
Cobalt credits^b	(60		)	—			—			—
Royalty on metals	6			5			1			6
Net cash costs	130			158			54			212
DD&A	65			50			15			65
Noncash and other costs, net	3			3			—			3
Total costs	198			211			69			280
Revenue adjustments, primarily for pricing on prior period open sales	(9		)	(9		)	(2		)	(11		)
Gross profit	$	54		$	41		$	13		$	54

Copper sales (millions of recoverable pounds)	113			113
Cobalt sales (millions of contained pounds)							10

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustments^a	$	2.32		$	2.32		$	8.96
Site production and delivery, before net noncash and other costs shown below	1.63			1.36			5.58
Cobalt credits^b	(0.53		)	—			—
Royalty on metals	0.05			0.04			0.15
Unit net cash costs	1.15			1.40			5.73
DD&A	0.58			0.45			1.52
Noncash and other costs, net	0.03			0.03			0.08
Total unit costs	1.76			1.88			7.33
Revenue adjustments, primarily for pricing on prior period open sales	(0.08		)	(0.08		)	(0.25		)
Gross profit per pound	$	0.48		$	0.36		$	1.38

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			DD&A
Totals presented above	$	345		$	206		$	65
Royalty on metals	(6		)	—			—
Noncash and other costs, net	—			3			—
Revenue adjustments, primarily for pricing on prior period open sales	(11		)	—			—
Eliminations and other adjustments^c	(29		)	(2		)	—
Total^d	$	299		$	207		$	65


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


b.	Net of cobalt downstream processing and freight costs.


c.	Reflects adjustments associated with reporting Tenke as discontinued operations/assets held for sale, including the elimination of intercompany sales to our consolidated subsidiaries.


d.	Refer to Note 2 for a reconciliation of these amounts to net (loss) income from discontinued operations as reported in FCX's consolidated financial statements.

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Nine Months Ended September 30, 2016
(In millions)	By-Product			Co-Product Method
	Method			Copper			Cobalt			Total
Revenues, excluding adjustments^a	$	757		$	757		$	205		$	962
Site production and delivery, before net noncash and other costs shown below	589			509			148			657
Cobalt credits^b	(141		)	—			—			—
Royalty on metals	18			14			4			18
Net cash costs	466			523			152			675
DD&A	181			148			33			181
Noncash and other costs, net	22			18			4			22
Total costs	669			689			189			878
Revenue adjustments, primarily for pricing on prior period open sales	(4		)	(4		)	4			—
Gross profit	$	84		$	64		$	20		$	84

Copper sales (millions of recoverable pounds)	365			365
Cobalt sales (millions of contained pounds)							29

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustments^a	$	2.07		$	2.07		$	7.15
Site production and delivery, before net noncash
and other costs shown below	1.61			1.39			5.17
Cobalt credits^b	(0.39		)	—			—
Royalty on metals	0.05			0.04			0.12
Unit net cash costs	1.27			1.43			5.29
DD&A	0.50			0.41			1.15
Noncash and other costs, net	0.06			0.05			0.14
Total unit costs	1.83			1.89			6.58
Revenue adjustments, primarily for pricing
on prior period open sales	(0.01		)	(0.01		)	0.13
Gross profit per pound	$	0.23		$	0.17		$	0.70

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			DD&A
Totals presented above	$	962		$	657		$	181
Royalty on metals	(18		)	—			—
Noncash and other costs, net	—			22			—
Revenue adjustments, primarily for pricing on prior period open sales	—			—			—
Eliminations and other adjustments^c	(125		)	51			(101		)
Total^d	$	819		$	730		$	80


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


b.	Net of cobalt downstream processing and freight costs.


c.	Reflects adjustments associated with reporting Tenke as discontinued operations, including the elimination of intercompany sales to our consolidated subsidiaries and the impact of discontinuing DD&A.


d.	Refer to Note 2 for a reconciliation of these amounts to net (loss) income from discontinued operations as reported in FCX's consolidated financial statements.

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Nine Months Ended September 30, 2015
(In millions)	By-Product			Co-Product Method
	Method			Copper			Cobalt			Total
Revenues, excluding adjustments^a	$	883		$	883		$	234		$	1,117
Site production and delivery, before net noncash and other costs shown below	553			479			144			623
Cobalt credits^b	(164		)	—			—			—
Royalty on metals	21			16			5			21
Net cash costs	410			495			149			644
DD&A	195			160			35			195
Noncash and other costs, net	11			9			2			11
Total costs	616			664			186			850
Revenue adjustments, primarily for pricing on prior period open sales	(7		)	(7		)	—			(7		)
Gross profit	$	260		$	212		$	48		$	260

Copper sales (millions of recoverable pounds)	350			350
Cobalt sales (millions of contained pounds)							26

Gross profit per pound of copper/cobalt:

Revenues, excluding adjustments^a	$	2.52		$	2.52		$	9.04
Site production and delivery, before net noncash
and other costs shown below	1.58			1.37			5.56
Cobalt credits^b	(0.47		)	—			—
Royalty on metals	0.06			0.04			0.15
Unit net cash costs	1.17			1.41			5.71
DD&A	0.56			0.45			1.38
Noncash and other costs, net	0.03			0.03			0.08
Total unit costs	1.76			1.89			7.17
Revenue adjustments, primarily for pricing
on prior period open sales	(0.02		)	(0.02		)	(0.02		)
Gross profit per pound	$	0.74		$	0.61		$	1.85

Reconciliation to Amounts Reported
(In millions)	Revenues			Production and Delivery			DD&A
Totals presented above	$	1,117		$	623		$	195
Royalty on metals	(21		)	—			—
Noncash and other costs, net	—			11			—
Revenue adjustments, primarily for pricing on prior period open sales	(7		)	—			—
Eliminations and other adjustments^c	(98		)	3			—
Total^d	$	991		$	637		$	195


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


b.	Net of cobalt downstream processing and freight costs.


c.	Reflects adjustments associated with reporting Tenke as discontinued operations/assets held for sale, including the elimination of intercompany sales to our consolidated subsidiaries.


d.	Refer to Note 2 for a reconciliation of these amounts to net (loss) income from discontinued operations as reported in FCX's consolidated financial statements.

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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; debt reduction initiatives, including our ability to complete pending asset sales and the anticipated timing thereof, and to sell additional assets; 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; potential transactions with strategic investors interested in investing capital in the development of our oil and gas and mining properties; statements regarding the review of strategic alternatives for our oil and gas business, including the previously announced potential initial public offering of a minority interest in Freeport-McMoRan Oil & Gas Inc., a potential spinoff of our oil and gas business to our shareholders, potential joint venture arrangements, and potential further spending reductions; the impact of derivative positions; the impact of deferred intercompany profits on earnings; reserve estimates; future dividend ~~payments; debt reduction~~payments, and share purchases and sales. The words “anticipates,” “may,” “can,” “plans,” “believes,” ~~“potential,”~~ “estimates,” “expects,” “projects,” “targets,” “intends,” “likely,” “will,” “should,” “to ~~be”~~be,” “potential,” and any similar expressions are intended to identify those assertions as forward-looking statements. Under our term loan and revolving credit facility, as amended, we are not permitted to pay dividends on common stock on or prior to March 31, 2017. The declaration of dividends is at the discretion of ~~the~~our Board of Directors (Board), subject to restrictions under our credit agreements, and will depend on our financial results, cash requirements, future prospects, and other factors deemed relevant by ~~the~~our Board.

We caution readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, projected or assumed in the forward-looking statements. Important factors that can cause 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, drilling results, potential effects of cost and capital expenditure reductions and production curtailments on financial results and cash flow, the outcome of our ~~strategic review of~~debt reduction initiatives, our ~~oil~~ability to secure regulatory approvals, satisfy closing conditions and ~~gas business,~~consummate pending asset sales, potential additional oil and gas property impairment charges, potential inventory adjustments, potential impairment of long-lived mining assets, the outcome of ongoing discussions with the Indonesian government regarding ~~PT-FI's COW, PT-FI's ability to obtain renewal~~PT Freeport Indonesia's (PT-FI) Contract of ~~its export license after January 28, 2016, PT-FI's ability to renew its biennial labor agreement which expired in September 2015,~~Work (COW), the potential effects of violence in Indonesia generally and in the province of Papua, the resolution of administrative disputes in the ~~DRC,~~Democratic Republic of Congo, industry risks, regulatory changes, political risks, labor relations, 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~~2015, filed with the U.S. Securities and Exchange Commission (SEC) as updated by our subsequent filings with the ~~SEC.~~SEC and Part II, Item 1A. "Risk Factors" in this report. With respect to our operations in Indonesia, such factors include whether PT-FI will be able to continue to export its copper concentrate, or whether PT Smelting (PT-FI's 25 percent-owned Indonesian smelting unit) will be able to export its anode slimes after the January 12, 2017, effective date of regulations prohibiting exports of copper concentrate and anode slimes, including whether and when those regulations may be revised and whether any such revisions would impose conditions or costs on PT-FI not contained in its COW. The inability of PT-FI and PT Smelting to export copper concentrate and anode slimes, respectively, for any extended period of time would lead to the suspension of all of our production in Indonesia.

Investors are cautioned that many of the assumptions upon which our forward-looking statements are based are likely to change after the 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 not be able to control. Further, we may make changes to our business plans that could affect our results. We caution investors that we do not intend to update forward-looking statements more frequently than quarterly notwithstanding any changes in our assumptions, changes in business plans, actual experience or other changes, and we undertake no obligation to update any forward-looking statements.

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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~~nine-month period ended September 30, ~~2015~~2016. For additional information on market risks, refer to “Disclosures About Market Risks” included in Part ~~I, Item 2.~~II, Items 7. and 7A. of our annual report on Form 10-K for the year ended December 31, ~~2014~~2015. 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 September 30, ~~2015~~2016; 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 September 30, ~~2015~~2016.


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 September 30, ~~2015~~2016.


(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 September 30, ~~2015~~2016, 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 129 of this quarterly report on Form 10-Q for the period ended September 30, 2016, and ~~incorporated by reference into~~in Part I, Item 3. “Legal Proceedings” and Note 12 of our annual report on Form 10-K for the year ended December 31, ~~2014~~2015, ~~as updated in Notes 8 and 9 to the financial statements included in our quarterly reports on Form 10-Q for the quarters ended March 31, 2015 and June 30, 2015, respectively,~~ 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~~The risk factor “Because our Grasberg mining operations in Indonesia is a significant operating asset, our business may continue to be adversely affected by political, economic and social uncertainties and security risks in Indonesia”, which was included in our annual report on Form 10-K for the year ended December 31, 2015, is amended to add the following:

PT Freeport Indonesia (PT-FI) produces copper concentrate that contains significant quantities of gold and silver. Substantially all of PT-FI’s copper concentrate is sold under long-term contracts, and during the first nine months of 2016, approximately half of PT-FI’s concentrate production was sold to PT Smelting (PT-FI's 25-percent owned smelter and refinery), which is the only copper smelter in Indonesia.

In August 2016, PT-FI’s export permit was renewed through January 11, 2017. Current regulations published by the Indonesian government prohibit exports of copper concentrate and anode slimes (a by-product of the copper refining process containing metals including gold, produced by PT Smelting) after January 12, 2017. The Indonesian government has indicated it intends to revise these regulations in order to protect employment and government revenues, but we cannot predict whether and when those regulations may be revised or whether any such revisions would impose conditions or costs on PT-FI not contained in its Contract of Work (COW), such as additional royalty payments or export duties, increased smelter development commitments, increased depository

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requirements, or conversion of contracts of work to less favorable licenses under the 2009 mining law framework. PT-FI is actively engaged with Indonesian government officials to resolve this matter.

We also cannot predict whether PT-FI will be able to continue to export its copper concentrate, or whether PT Smelting will be able to export its anode slimes, after January 12, 2017. The inability of PT-FI and PT Smelting to export copper concentrate and anode slimes, respectively, for any extended period of time, would lead to the suspension of all of our production in Indonesia, which would have a material adverse effect on our cash flow, liquidity and profitability, and could result in asset impairments, inventory write downs, difficulty in meeting covenants under our credit facilities, and a significant reduction in our reported mineral reserves.

The initial term of PT-FI’s COW expires in 2021, but the COW explicitly provides that it can be extended for two 10-year periods subject to Indonesian government approval, which cannot be withheld or delayed unreasonably. PT-FI has been engaged in discussions with officials of the Indonesian government since 2012 regarding various provisions of its COW, including extending its term. We cannot predict whether PT-FI will be successful in reaching a satisfactory agreement on the terms of its long-term mining rights. If PT-FI is unable to reach agreement with the Indonesian government on its long-term rights, we may be required to reduce or defer investments in underground development projects, which would have a material adverse effect on our future production, cash flow, liquidity and profitability, and could result in asset impairments, inventory write downs, difficulty in meeting covenants under our credit facilities, and a significant reduction in our reported mineral reserves.

In the event PT-FI is unable to reach a satisfactory resolution of these matters, PT-FI would intend to pursue any and all claims against the Indonesian government for breach of contract through international arbitration.

On October 14, 2016, a new Minister of Energy and Mineral Resources was appointed, the fourth person to hold the office since July 2016. We cannot predict what impact the transition will have on any amendments to existing regulations, or the progress or outcome of PT-FI’s COW negotiations.

The risk factor “Mine closure and reclamation regulations impose substantial costs on our operations, and include requirements that we provide financial assurance supporting those obligations. We also have plugging and abandonment obligations related to our oil and gas properties, and are required to provide bonds or other forms of financial assurance in connection with those operations. Changes in or the failure to comply with these requirements could have a material adverse effect on us”, which was included in our annual report on Form 10-K for the year ended December 31, 2015, is amended to add the following:

With respect to our mining operations, our financial assurance obligations are based principally on state laws that may vary by jurisdiction, depending on how each state regulates land use and groundwater quality. Although Section 108(b) of Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) requires the Environmental Protection Agency (EPA) to identify classes of facilities that must establish evidence of financial responsibility, currently there are no financial assurance requirements for active mining operations under CERCLA. In August 2014, several environmental organizations initiated litigation against the EPA to require it to set a schedule for adopting financial assurance regulations under CERCLA governing the hard rock mining industry. The EPA and the environmental organizations reached a joint agreement and submitted it to the U.S. Court of Appeals for the District of Columbia Circuit for approval. Notwithstanding industry objections, the court approved the agreement on January 29, 2016, thereby requiring the EPA to propose financial assurance regulations for the hard rock mining industry by December 1, 2016, and to provide notice of its final action by December 1, 2017. The EPA recently filed a status update with the court confirming that it intended to proceed with promulgation of the proposed rules by December 1, 2016. Based on limited information contained in recent conceptual presentations made by the EPA, the proposed rules, if promulgated as apparently envisioned by the EPA, would result in onerous financial responsibility obligations for our U.S. hard rock mining operations. For instance, the form, cost and availability of financial mechanisms necessary to meet such obligations is uncertain (if they could be met at all). In addition, complying with these obligations could be very costly, harm the international competitiveness of our U.S. hard rock mining operations and have a material adverse effect on our cash flows, operations and profitability.

Except as described above, there have been no material changes to our risk factors during the ~~three-month~~nine-month period ended September 30, ~~2015 .~~2016. 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~~2015.

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

(a) We entered into privately negotiated share exchange agreements to exchange certain of our outstanding senior notes for shares of our common stock, plus cash representing accrued and unpaid interest on the senior notes. During the quarter ended September 30, 2016, we issued an aggregate of 8 million shares of common stock and approximately $2 million in cash representing accrued and unpaid interest, in exchange for an aggregate of $101 million in senior notes, consisting of: (i) $23 million aggregate principal amount of our 3.550% Senior Notes due 2022; (ii) $25 million aggregate principal amount of our 3.875% Senior Notes due 2023; and (iii) $53 million aggregate principal amount of our 5.450% Senior Notes due 2043.

The issuance of shares of common stock in the exchange transactions was made in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 3(a)(9) thereof, as the exchanges were made with existing security holders exclusively in a series of privately negotiated transactions where no commission or other remuneration was paid or given directly or indirectly for soliciting the exchanges.


(c)	The following table sets forth information with respect to shares of our common stock purchased by us during the three months ended September 30, ~~2015~~2016:



Period	(a) Total Number of Shares Purchased	(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs^a	(d) Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs^a
Period	(a) Total Number of Shares Purchased	(b) Average Price Paid Per Share
July 1-31, ~~2015~~2016	—	$	—	—	23,685,500
August 1-31, ~~2015~~2016	—	$	—	—	23,685,500
September 1-30, ~~2015~~2016	—	$	—	—	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.~~Disclosures.

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~~thereunto 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: November ~~6, 2015~~9, 2016

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FREEPORT-McMoRan INC.
EXHIBIT INDEX
		Filed
Exhibit		with this	Incorporated by Reference
Number	Exhibit Title	Form 10-Q	Form	File No.	Date Filed
~~3.1~~2.1	~~Composite Certificate of Incorporation of FCX~~		~~10-Q~~	~~001-11307-01~~	~~8/8/2014~~
~~3.2~~	~~Composite By-Laws of FCX as of July 14, 2014~~ Purchase Agreement dated February 15, 2016, between Sumitomo Metal Mining America Inc., Sumitomo Metal Mining Co., Ltd., Freeport-McMoRan Morenci Inc., Freeport Minerals Corporation and FCX.		8-K	001-11307-01	7/2/~~2014~~16/2016
2.2	Stock Purchase Agreement dated May 9, 2016, among CMOC Limited, China Molybdenum Co., Ltd., Phelps Dodge Katanga Corporation and FCX.		8-K	001-11307-01	5/9/2016
2.3	Purchase and Sale Agreement dated September 12, 2016, between Freeport-McMoRan Oil & Gas LLC, Freeport-McMoRan Exploration & Production LLC, Plains Offshore Operations Inc. and Anadarko US Offshore LLC.	X
3.1	Amended and Restated Certificate of Incorporation of FCX, effective as of June 8, 2016.		8-K	001-11307-01	6/9/2016
3.2	Amended and Restated By-Laws of FCX, effective as of June 8, 2016.		8-K	001-11307-01	6/9/2016
4.1	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, 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-K	001-11307-01	2/13/2012
4.2	Second Supplemental Indenture dated as of February 13, 2012, between FCX and U.S. Bank National Association, as Trustee (relating to the 2.15% Senior Notes due 2017).		8-K	001-11307-01	2/13/2012
4.3	Third Supplemental Indenture dated as of February 13, 2012, between FCX and U.S. Bank National Association, as Trustee (relating to the 3.55% Senior Notes due 2022).		8-K	001-11307-01	2/13/2012
4.4	Fourth Supplemental Indenture dated as of May 31, 2013, among FCX, Freeport-McMoRan Oil & Gas LLC and U.S. Bank National Association, as Trustee (relating to the 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-K	001-11307-01	6/3/2013
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-K	001-11307-01	11/14/2014
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-K	001-11307-01	11/14/2014
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-K	001-11307-01	11/14/2014
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-K	001-11307-01	11/14/2014
4.9	Indenture dated as of March 7, 2013, between FCX and U.S. Bank National Association, as Trustee (relating to the 2.375% Senior Notes due 2018, the 3.100% Senior Notes due 2020, the 3.875% Senior Notes due 2023, and the 5.450% Senior Notes due 2043).		8-K	001-11307-01	3/7/2013

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FREEPORT-McMoRan INC.
EXHIBIT INDEX
		Filed
Exhibit		with this	Incorporated by Reference
Number	Exhibit Title	Form 10-Q	Form	File No.	Date Filed
4.10	Supplemental Indenture dated as of May 31, 2013, among FCX, Freeport-McMoRan Oil & Gas LLC and U.S. Bank National Association, as Trustee (relating to the 2.375% Senior Notes due 2018, the 3.100% Senior Notes due 2020, the 3.875% Senior Notes due 2023, and the 5.450% Senior Notes due 2043).		8-K	001-11307-01	6/3/2013

~~E-1~~

~~Table of Contents~~



~~FREEPORT-McMoRan INC.~~
~~EXHIBIT INDEX~~
		~~Filed~~
~~Exhibit~~		~~with this~~	~~Incorporated by Reference~~
~~Number~~	~~Exhibit Title~~	~~Form 10-Q~~	~~Form~~	~~File No.~~	~~Date Filed~~
4.11	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, the 6.75% Senior Notes due 2022, the 6.125% Senior Notes due 2019, the 6.5% Senior Notes due 2020, and the 6.875% Senior Notes due 2023).		8-K	001-31470	3/13/2007
4.12	Twelfth Supplemental Indenture dated as of March 29, 2011 to the Indenture dated as of March 13, 2007, among Plains Exploration & Production Company, the Subsidiary Guarantors parties thereto and Wells Fargo Bank, N.A., as Trustee (relating to the 6.625% Senior Notes due 2021).		8-K	001-31470	3/29/2011
4.13	Thirteenth Supplemental Indenture dated as of November 21, 2011 to the Indenture dated as of March 13, 2007, among Plains Exploration & Production Company, the Subsidiary Guarantors parties thereto and Wells Fargo Bank, N.A., as Trustee (relating to the 6.75% Senior Notes due 2022).		8-K	001-31470	11/22/2011
4.14	Fourteenth Supplemental Indenture dated as of April 27, 2012 to the Indenture dated as of March 13, 2007, among Plains Exploration & Production Company, the Subsidiary Guarantors parties thereto and Wells Fargo Bank, N.A., as Trustee (relating to the 6.125% Senior Notes due 2019).		8-K	001-31470	4/27/2012
4.15	Sixteenth Supplemental Indenture dated as of October 26, 2012 to the Indenture dated as of March 13, 2007, among Plains Exploration & Production Company, the Subsidiary Guarantors parties thereto and Wells Fargo Bank, N.A., as Trustee (relating to the 6.5% Senior Notes due 2020).		8-K	001-31470	10/26/2012
4.16	Seventeenth Supplemental Indenture dated as of October 26, 2012 to the Indenture dated as of March 13, 2007, among Plains Exploration & Production Company, the Subsidiary Guarantors parties thereto and Wells Fargo Bank, N.A., as Trustee (relating to the 6.875% Senior Notes due 2023).		8-K	001-31470	10/26/2012
4.17	Eighteenth Supplemental Indenture dated as of May 31, 2013 to the Indenture dated as of March 13, 2007, among Freeport-McMoRan Oil & Gas LLC, as Successor Issuer, FCX Oil & Gas Inc., as Co-Issuer, FCX, as Parent Guarantor, Plains Exploration & Production Company, as Original Issuer, and Wells Fargo Bank, N.A., as Trustee (relating to the 6.625% Senior Notes due 2021, the 6.75% Senior Notes due 2022, the 6.125% Senior Notes due 2019, the 6.5% Senior Notes due 2020, and the 6.875% Senior Notes due 2023).		8-K	001-11307-01	6/3/2013

Table of Contents



FREEPORT-McMoRan INC.
EXHIBIT INDEX
		Filed
Exhibit		with this	Incorporated by Reference
Number	Exhibit Title	Form 10-Q	Form	File No.	Date Filed
4.18	Nineteenth Supplemental Indenture dated as of September 30, 2016 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, FMSTP Inc., as Additional Co-Issuer, FCX, as Parent Guarantor, and Wells Fargo Bank, N.A., as Trustee (relating to the 6.125% Senior Notes due 2019, the 6.50% Senior Notes due 2020, the 6.625% Senior Notes due 2021, the 6.75% Senior Notes due 2022 and the 6.875% Senior Notes due 2023).	X
4.19	Form of Indenture dated as of September 22, 1997, between Phelps Dodge Corporation and The Chase Manhattan Bank, as Trustee (relating to the 7.125% Senior Notes due 2027, the 9.50% Senior Notes due 2031, and the 6.125% Senior Notes due 2034).		S-3	333-36415	9/25/1997

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~~Table of Contents~~



~~FREEPORT-McMoRan INC.~~
~~EXHIBIT INDEX~~
		~~Filed~~
~~Exhibit~~		~~with this~~	~~Incorporated by Reference~~
~~Number~~	~~Exhibit Title~~	~~Form 10-Q~~	~~Form~~	~~File No.~~	~~Date Filed~~
~~4.19~~4.20	Form of 7.125% Debenture due November 1, 2027 of Phelps Dodge Corporation issued on November 5, 1997, pursuant to the Indenture dated as of September 22, 1997, between Phelps Dodge Corporation and The Chase Manhattan Bank, as Trustee (relating to the 7.125% Senior Notes due 2027).		8-K	01-00082	11/3/1997
~~4.20~~4.21	Form of 9.5% Note due June 1, 2031 of Phelps Dodge Corporation issued on May 30, 2001, pursuant to the Indenture dated as of September 22, 1997, between Phelps Dodge Corporation and First Union National Bank, as successor Trustee (relating to the 9.50% Senior Notes due 2031).		8-K	01-00082	5/30/2001
~~4.21~~4.22	Form of 6.125% Note due March 15, 2034 of Phelps Dodge Corporation issued on March 4, 2004, pursuant to the Indenture dated as of September 22, 1997, between Phelps Dodge Corporation and First Union National Bank, as successor Trustee (relating to the 6.125% Senior Notes due 2034).		10-K	01-00082	3/7/2005
4.23	Supplemental Indenture dated as of April 4, 2007 to the Indenture dated as of September 22, 1997, among Phelps Dodge Corporation, as Issuer, Freeport-McMoRan Copper & Gold Inc., as Parent Guarantor, and U.S. Bank National Association, 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).		10-K	001-11307-01	2/26/2016
10.1	Distribution Agreement, dated as of ~~August 10, 2015, by and between FCX and J.P. Morgan Securities LLC.~~		~~8-K~~	~~001-11307-01~~	~~8/10/2015~~
~~10.2~~	~~Distribution Agreement, dated as of September 18, 2015,~~July 27, 2016, by and among FCX, J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BBVA Securities Inc., BMO Capital Markets Corp., BNP Paribas Securities Corp., BTIG, LLC, CIBC World Markets Corp., Citigroup Global Markets Inc., HSBC Securities (USA) Inc., Mizuho Securities USA Inc. ~~and~~, MUFG Securities Americas Inc., RBC Capital Markets, LLC, Santander Investment Securities Inc., Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc., TD Securities (USA) LLC and Wells Fargo Securities, LLC.		8-K	001-11307-01	~~9/18/2015~~
~~10.3~~	Nomination and Standstill Agreement dated October 7, 2015, by and between Freeport-McMoRan Inc., Carl C. Icahn, High River Limited Partnership, Hopper Investments LLC, Barberry Corp., Icahn Partners Master Fund LP, Icahn Offshore LP, Icahn Partners LP, Icahn Onshore LP, Icahn Capital LP, IPH GP LLC, Icahn Enterprises Holdings L.P., Icahn Enterprises G.P. Inc., Beckton Corp., Andrew Langham and Courtney Mather.		~~8-K~~	~~001-11307-01~~	~~10/~~7/~~2015~~
~~10.4~~	Confidentiality Agreement dated October 7, 2015, by and between Freeport-McMoRan Inc., Carl C. Icahn, High River Limited Partnership, Hopper Investments LLC, Barberry Corp., Icahn Partners Master Fund LP, Icahn Offshore LP, Icahn Partners LP, Icahn Onshore LP, Icahn Capital LP, IPH GP LLC, Icahn Enterprises Holdings L.P., Icahn Enterprises G.P. Inc., Beckton Corp., Andrew Langham and Courtney Mather.		~~8-K~~	~~001-11307-01~~	~~10/7/2015~~27/2016
~~10.5~~10.2	~~Sixth~~ Seventh Amendment dated ~~September 17, 2015,~~October 21, 2016, to the Participation Agreement dated as of October 11, 1996, between PT Freeport Indonesia and P.T. Rio Tinto Indonesia.	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

Table of Contents



FREEPORT-McMoRan INC.
EXHIBIT INDEX
		Filed
Exhibit		with this	Incorporated by Reference
Number	Exhibit Title	Form 10-Q	Form	File No.	Date Filed
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
~~99.1~~	~~Letter dated October 7, 2015, from Minister of Energy and Mineral Resources, Republic of Indonesia~~		~~8-K~~	~~001-11307-01~~	~~10/8/2015~~

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~~Table of Contents~~



~~FREEPORT-McMoRan INC.~~
~~EXHIBIT INDEX~~
		~~Filed~~
~~Exhibit~~		~~with this~~	~~Incorporated by Reference~~
~~Number~~	~~Exhibit Title~~	~~Form 10-Q~~	~~Form~~	~~File No.~~	~~Date Filed~~
101.INS	XBRL Instance Document.	X
101.SCH	XBRL Taxonomy Extension Schema.	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase.	X
101.LAB	XBRL Taxonomy Extension Label Linkbase.	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.	X

* Indicates management contract or compensatory plan or arrangement.

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.

E-4



	Stockholders’ 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
	(In millions)
Balance at December 31, 2014	1,167	$	117	$	22,281		$	128		$	(544	)	128	$	(3,695	)	$	18,287		$	4,187		$	22,474
Sale of common stock	98	10		989			—			—			—	—			999			—			999
Exercised and issued stock-based awards	1	—		3			—			—			—	—			3			—			3
Stock-based compensation	—	—		70			—			—			—	—			70			7			77
Reserve of tax benefit for stock-based awards	—	—		(4		)	—			—			—	—			(4		)	—			(4		)
Tender of shares for stock-based awards	—	—		—			—			—			—	(7		)	(7		)	—			(7		)
Dividends on common stock	—	—		—			(278		)	—			—	—			(278		)	—			(278		)
Dividends to noncontrolling interests	—	—		—			—			—			—	—			—			(68		)	(68		)
Noncontrolling interests' share of contributed capital in subsidiary	—	—		(4		)	—			—			—	—			(4		)	3			(1		)
Net loss attributable to common stockholders	—	—		—			(8,155		)	—			—	—			(8,155		)	—			(8,155		)
Net income attributable to noncontrolling interests	—	—		—			—			—			—	—			—			129			129
Other comprehensive income	—	—		—			—			35			—	—			35			1			36
Balance at September 30, 2015	1,266	$	127	$	23,335		$	(8,305	)	$	(509	)	128	$	(3,702	)	$	10,946		$	4,259		$	15,205



	Crude Oil
	Options
Fair value at December 31, 2014	$	316
Net realized gains	50			^a
Net unrealized gains included in earnings related to assets and liabilities still held at the end of the period	36
Net settlement receipts	(301		)	^b
Fair value at September 30, 2015	$	101



	Net Cash Costs (in millions)		Copper Sales (millions of recoverable pounds)	Unit Net Cash Costs (per pound of copper)
Presented above	$	433	271	$	1.60
Less: Candelaria and Ojos del Salado	112		63
	$	321	208	$	1.54



	Cash Production Costs (in millions)		Oil Equivalents (MMBOE)	Cash Production Costs Per BOE
Presented above	$	875	44.7	$	19.57
Less: Eagle Ford	113		8.7	12.97
	$	762	36.0	$	21.16