Freeport McMoran 2Q16 Earnings Call Notes

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Freeport-McMoRan (FCX) Richard C. Adkerson on Q2 2016 Results

Oil production costs cut to $15 from $19 per barrel

“Oil and gas business, we cut our production cost from $19 a barrel to $15 a barrel.”

We have turned the corner for Freeport

“we have truly turned the corner for Freeport. And our ability to do that wasn’t just clear cut as we started the year. We proved that our assets are attractive. And our strategy and we’ll talk about how our financial strategy fits with our longer term business strategy is focused on leaving us with a core set of assets to build long-term value for shareholders.”

We have to live through the short term to experience the benefits of a positive long term market

“I’m going to talk about the longer term view, but we have to live through the short term to experience the benefits of a positive long-term market. So we sit here with a balancing act. The balancing act was to look at these debt levels, understand what it’s going to take operationally to get to those, then think about what next steps should we take to address the uncertainties of the short-term market. And we are still open and on the table for all strategic moves, whether that means selling assets, selling the company, we’re focused really on creating value for our shareholders, and to create that long-term value.”

There is ample copper supply but price is not high enough to incentivize investment

” rather than the market being overwhelmed with supply, there is ample copper around the world today. So, the market is fully supplied. But it’s not being overwhelmed with new supplies and continued production even with very modest demand growth. And as you go forward, existing mines will produce less. People aren’t investing in new projects. There is barriers to project development that relate to environmental, community, country issues. And as we’ve shown in this process that we’ve had about selling property, there is a significantly higher than current price required to develop new production.”

We’re still telling bankers that we’re open to ideas

“I mean, we started off the year saying that every asset we had was up for consideration for sale. And we made progress. We continue to have discussions. But we’re still telling the market and tell bankers if you got ideas for our business, come share them with us. And we’ve had a lot of interest and a lot of discussions.”

Tone from Indonesian government has been good for some time

“I would tell you the tone we’ve had with the senior government officials has been good for some time now. I’ve had the chance of watching President, Joko Widodo closely, as he’s been in United States and as he talked internationally about foreign investment and so forth. And there is not an issue of tone there. Within the country politically there is a feeling of resource nationalism, which is true of lots of places around the world today. And with us what’s going on here in United States, but I’m convinced the President and senior advisors understand the issues from an Indonesia standpoint.”

I tell buyers that I wish I were on their side of the table

“I keep telling all these people who are sitting on the other table about negotiating right now, I wish I were in your shoes, I wish we had a company where we could be buying assets now rather than selling, but we’re not, we can’t wish that away, we are what we are.’