Freeport McMoRan 1Q15 Earnings Call Notes

2015 is a transition year for investments

“I want to look back on our January call when we discussed this year 2015 as being a bridging year as we complete our major copper expansion projects that we started in 2010 and transition to 2016 when we will realize the ongoing benefits of these investments. These projects will generate volumes that will be accompanied by lower cost, lower capital expenditures. All of this adds up to a significant free cash flow generation which will not be dependent on higher copper prices.”

Optimistic about long term outlook for copper

Now we remain very optimistic about the outlook for the copper markets. We supported by the world’s need for copper and the challenges in developing supplies and maintaining supplies for copper, but we are cognizant of the near term uncertainties and commodity prices so we’re going to continue to be diligence about controlling cost and will remain flexible to respond to market conditions.”

Evaluating a public listing of a minority interest in Freeport Oil and Gas

“We are going to talk today that among these alternatives we are considering a public listing of minority interest in Freeport-McMoRan Oil & Gas. Publicly trated Freeport-McMoRan Oil & Gas would — values of our oil and gas assets through a public market evaluation and enable us to expand the financing alternatives for our oil and gas operations on a standalone basis. Subject to market conditions this alternative essentially would be completed in late 2015 following the completion of an SEC review of the required registration statement”

Copper surplus that people were forecasting has not materialized

“When you step back and look at where we are right now in 2015, the surpluses that had been projected for a number of past years are not developing as they were estimated. Projects have been delayed, production has been interrupted and the market has not moved into a large surplus position. The focus by investors and people involved in the industry has been on China, with China’s lower growth rate and uncertainties about its economy, its base has grown significantly. The government is providing economic stimulus and China’s need for copper is going to continue to be significant and the key factor in terms of near-term.”

The market isn’t recognizing the value of the oil and gas business

“There is a big disconnect between the value of our oil and gas business within Freeport-McMoRan today and the public market perception is stand alone. I guess we have had more success than anybody with the drill bed in the last two years and it’s caused more spending but it is also likely reflected in our equity. So the aspect of being able to get that visibility for the Freeport shareholder we think is an important part of it.”

Reported reserves are a function of prices

“it’s important to note that reserves are function of prices as well. As prices go higher economic limits extend and reserve volumes increasing, lower prices put limits on how much reserves you can add at a particular point in time.”