Item 6. Selected Financial Data.

FREEPORT-McMoRan INC.

SELECTED FINANCIAL AND OPERATING DATA

	Years Ended December 31,
	2014				2013a				2012				2011				2010
CONSOLIDATED FINANCIAL DATA	(In millions, except per share amounts)
Revenues	$	21,438		b	$	20,921		b	$	18,010			$	20,880			$	18,982
Operating income	$	97		b,c	$	5,351		b,d,e	$	5,814			$	9,140		e	$	9,068
Net (loss) income	$	(745	)		$	3,441			$	3,980			$	5,747			$	5,544
Net (loss) income attributable to common stockholders	$	(1,308	)	b,c,f,g	$	2,658		b,d,e,f,g,h	$	3,041		f,g	$	4,560		e,f,g	$	4,273		f
Basic net (loss) income per share attributable to common stockholders	$	(1.26	)		$	2.65			$	3.20			$	4.81			$	4.67
Basic weighted-average common shares outstanding	1,039				1,002				949				947				915
Diluted net (loss) income per share attributable to common stockholders	$	(1.26	)	b,c,f,g	$	2.64		b,d,e,f,g,h	$	3.19		f,g	$	4.78		e,f,g	$	4.57		f
Diluted weighted-average common shares outstanding	1,039				1,006				954				955				949
Dividends declared per share of common stock	$	1.25			$	2.25			$	1.25			$	1.50			$	1.125
Operating cash flows	$	5,631			$	6,139			$	3,774			$	6,620			$	6,273
Capital expenditures	$	7,215			$	5,286			$	3,494			$	2,534			$	1,412
At December 31:
Cash and cash equivalents	$	464			$	1,985			$	3,705			$	4,822			$	3,738
Property, plant, equipment and mining development costs, net	$	26,220			$	24,042			$	20,999			$	18,449			$	16,785
Oil and gas properties, net	$	19,274			$	23,359			$	—			$	—			$	—
Goodwill	$	—			$	1,916			$	—			$	—			$	—
Total assets	$	58,795			$	63,473			$	35,440			$	32,070			$	29,386
Total debt, including current portion	$	18,970			$	20,706			$	3,527			$	3,537			$	4,755
Redeemable noncontrolling interest	$	751			$	716			$	—			$	—			$	—
Total stockholders’ equity	$	18,287			$	20,934			$	17,543			$	15,642			$	12,504

The selected consolidated financial data shown above is derived from our audited consolidated financial statements. These historical results are not necessarily indicative of results that you can expect for any future period. You should read this data in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and our Consolidated Financial Statements and Notes thereto contained in this annual report.

a.	Includes the results of FCX Oil & Gas Inc. (FM O&G) beginning June 1, 2013.

b.

Includes net noncash mark-to-market realized gains (losses) associated with crude oil and natural gas derivative contracts totaling $627 million ($389 million to net loss attributable to common stockholders or $0.37 per share) for 2014 and $(312) million ($(194) million to net income attributable to common stockholders or $(0.19) per share) for the seven-month period from June 1, 2013, to December 31, 2013.

c.

Includes (i) impairment charges of $5.5 billion ($4.0 billion to net loss attributable to common stockholders or $3.89 per share) to reduce the carrying value of oil and gas properties pursuant to full cost accounting rules and to fully impair goodwill and (ii) gains of $717 million ($481 million to net loss attributable to common stockholders or $0.46 per share) primarily from the sale of our 80 percent interests in the Candelaria and Ojos del Salado mining operations.

d.	Includes transaction and related costs principally associated with our oil and gas acquisitions totaling $80 million ($50 million to net income attributable to common stockholders or $0.05 per share).

e.	Includes charges associated with labor agreements totaling $36 million ($13 million to net income attributable to common stockholders or $0.01 per share) at Cerro Verde in 2013 and $116 million ($50 million to net income attributable to common stockholders or $0.05 per share) at PT-FI, Cerro Verde and El Abra in 2011.

f.	Includes after-tax net gains (losses) on early extinguishment of debt totaling $3 million (less than $0.01 per share) in 2014, $(28) million ($(0.03) per share) in 2013, $(149) million ($(0.16) per share) in 2012, $(60) million ($(0.06) per share) in 2011 and $(71) million ($(0.07) per share) in 2010.

g.

As further discussed in "Consolidated Results - Provision for Income Taxes" contained in Part 7. and 7a. Management's Discussion and Analysis of Financial Condition and Results of Operations, net (loss) income attributable to common stockholders includes a net tax charge of $121 million ($103 million net of noncontrolling interests or $0.10 per share) in 2014, a net tax benefit of $199 million ($0.20 per share) in 2013 and a net tax benefit of $205 million ($98 million net of noncontrolling interests or $0.11 per share) in 2012. The year 2011 includes a tax charge of $53 million ($49 million net of noncontrolling interests or $0.05 per share) for additional taxes associated with Cerro Verde's election to pay a special mining burden during the remaining term of its 1998 stability agreement.

h.	Includes a gain of $128 million to net income attributable to common stockholders ($0.13 per share) related to our preferred stock investments in and the subsequent acquisition of McMoRan Exploration Co.

FREEPORT-McMoRan INC.

SELECTED FINANCIAL AND OPERATING DATA (Continued)

	Years Ended December 31,
	2014				2013				2012				2011				2010
CONSOLIDATED MINING OPERATING DATA
Copper (recoverable)
Production (millions of pounds)	3,904				4,131				3,663				3,691				3,908
Production (thousands of metric tons)	1,771				1,874				1,662				1,674				1,773
Sales, excluding purchases (millions of pounds)	3,888				4,086				3,648				3,698				3,896
Sales, excluding purchases (thousands of metric tons)	1,764				1,853				1,655				1,678				1,767
Average realized price per pound	$	3.09			$	3.30			$	3.60			$	3.86			$	3.59
Gold (thousands of recoverable ounces)
Production	1,214				1,250				958				1,383				1,886
Sales, excluding purchases	1,248				1,204				1,010				1,378				1,863
Average realized price per ounce	$	1,231			$	1,315			$	1,665			$	1,583			$	1,271
Molybdenum (millions of recoverable pounds)
Production	95				94				85				83				72
Sales, excluding purchases	95				93				83				79				67
Average realized price per pound	$	12.74			$	11.85			$	14.26			$	16.98			$	16.47
NORTH AMERICA COPPER MINES
Operating Data, Net of Joint Venture Interest
Copper (recoverable)
Production (millions of pounds)	1,670				1,431				1,363				1,258				1,067
Production (thousands of metric tons)	757				649				618				571				484
Sales, excluding purchases (millions of pounds)	1,664				1,422				1,351				1,247				1,085
Sales, excluding purchases (thousands of metric tons)	755				645				613				566				492
Average realized price per pound	$	3.13			$	3.36			$	3.64			$	3.99			$	3.42
Molybdenum (millions of recoverable pounds)
Production	33				32				36				35				25
100% Operating Data
Solution extraction/electrowinning (SX/EW) operations
Leach ore placed in stockpiles (metric tons per day)	1,005,300				1,003,500				998,600				888,300				648,800
Average copper ore grade (percent)	0.25				0.22				0.22				0.24				0.24
Copper production (millions of recoverable pounds)	963				889				866				801				746
Mill operations
Ore milled (metric tons per day)	273,800				246,500				239,600				222,800				189,200
Average ore grade (percent):
Copper	0.45				0.39				0.37				0.38				0.32
Molybdenum	0.03				0.03				0.03				0.03				0.03
Copper recovery rate (percent)	85.8				85.3				83.9				83.1				83.0
Copper production (millions of recoverable pounds)	828				642				592				549				398
SOUTH AMERICA MINING
Copper (recoverable)
Production (millions of pounds)	1,151				1,323				1,257				1,306				1,354
Production (thousands of metric tons)	522				600				570				592				614
Sales (millions of pounds)	1,135				1,325				1,245				1,322				1,335
Sales (thousands of metric tons)	515				601				565				600				606
Average realized price per pound	$	3.08			$	3.30			$	3.58			$	3.77			$	3.68
Gold (thousands of recoverable ounces)
Production	72				101				83				101				93
Sales	67				102				82				101				93
Average realized price per ounce	$	1,271			$	1,350			$	1,673			$	1,580			$	1,263
Molybdenum (millions of recoverable pounds)
Production	11				13				8				10				7
SX/EW operations
Leach ore placed in stockpiles (metric tons per day)	275,200				274,600				229,300				245,200				268,800
Average copper ore grade (percent)	0.48				0.50				0.55				0.50				0.41
Copper production (millions of recoverable pounds)	491				448				457				439				504
Mill operations
Ore milled (metric tons per day)	180,500				192,600				191,400				189,200				188,800
Average ore grade:
Copper (percent)	0.54				0.65				0.60				0.66				0.65
Gold (grams per metric ton)	0.10				0.12				0.10				0.12				0.10
Molybdenum (percent)	0.02				0.02				0.02				0.02				0.02
Copper recovery rate (percent)	88.1				90.9				90.1				89.6				90.0
Copper production (millions of recoverable pounds)	660				875				800				867				850

FREEPORT-McMoRan INC.

SELECTED FINANCIAL AND OPERATING DATA (Continued)

	Years Ended December 31,
	2014				2013				2012				2011				2010
INDONESIA MINING
Operating Data, Net of Joint Venture Interest
Copper (recoverable)
Production (millions of pounds)	636				915				695				846				1,222
Production (thousands of metric tons)	288				415				315				384				554
Sales (millions of pounds)	664				885				716				846				1,214
Sales (thousands of metric tons)	301				401				325				384				551
Average realized price per pound	$	3.01			$	3.28			$	3.58			$	3.85			$	3.69
Gold (thousands of recoverable ounces)
Production	1,130				1,142				862				1,272				1,786
Sales	1,168				1,096				915				1,270				1,765
Average realized price per ounce	$	1,229			$	1,312			$	1,664			$	1,583			$	1,271
100% Operating Data
Ore milled (metric tons per day):a
Grasberg open pit	69,100				127,700				118,800				112,900				149,800
Deep Ore Zone underground mine	50,500				49,400				44,600				51,700				79,600
Big Gossan underground mine	900				2,100				1,600				1,500				800
Total	120,500				179,200				165,000				166,100				230,200
Average ore grade:
Copper (percent)	0.79				0.76				0.62				0.79				0.85
Gold (grams per metric ton)	0.99				0.69				0.59				0.93				0.90
Recovery rates (percent):
Copper	90.3				90.0				88.7				88.3				88.9
Gold	83.2				80.0				75.7				81.2				81.7
Production (recoverable):
Copper (millions of pounds)	651				928				695				882				1,330
Gold (thousands of ounces)	1,132				1,142				862				1,444				1,964
AFRICA MINING
Copper (recoverable)
Production (millions of pounds)	447				462				348				281				265
Production (thousands of metric tons)	203				210				158				127				120
Sales (millions of pounds)	425				454				336				283				262
Sales (thousands of metric tons)	193				206				152				128				119
Average realized price per pound	$	3.06			$	3.21			$	3.51			$	3.74			$	3.45
Cobalt (millions of contained pounds)
Production	29				28				26				25				20
Sales	30				25				25				25				20
Average realized price per pound	$	9.66			$	8.02			$	7.83			$	9.99			10.95
Ore milled (metric tons per day)	14,700				14,900				13,000				11,100				10,300
Average ore grade (percent):
Copper	4.06				4.22				3.62				3.41				3.51
Cobalt	0.34				0.37				0.37				0.40				0.40
Copper recovery rate (percent)	92.6				91.4				92.4				92.5				91.4
MOLYBDENUM MINES
Molybdenum production (millions of recoverable pounds)	51				49				41			b	38				40
Ore milled (metric tons per day)c	39,400				35,700				20,800				22,300				22,900
Average molybdenum ore grade (percent)c	0.19				0.19				0.23				0.24				0.25
OIL AND GAS OPERATIONSd
Sales Volumes:
Oil (million barrels)	40.1				26.6
Natural gas (billion cubic feet)	80.8				54.2				—				—				—
Natural gas liquids (NGLs) (million barrels)	3.2				2.4				—				—				—
Million barrels of oil equivalents (MMBOE)	56.8				38.1				—				—				—
Average Realizations:
Oil (per barrel)	$	90.00			$	98.32			—				—				—
Natural gas (per million British thermal units)	$	4.23			$	3.99			—				—				—
NGLs (per barrel)	$	39.73			$	38.20			—				—				—

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

b.	Includes production from the Climax molybdenum mine, which began commercial operations in May 2012.

c.	The 2014 and 2013 periods reflect operating data for the Henderson and Climax mines; the prior periods reflect operating data of only the Henderson mine.

d.	Represents the results of FM O&G beginning June 1, 2013.

Ratio of Earnings to Fixed Charges

For the ratio of earnings to fixed charges calculation, earnings consist of income (loss) from continuing operations before income taxes, noncontrolling interests in consolidated subsidiaries, equity in affiliated companies’ net earnings, cumulative effect of accounting changes and fixed charges. Fixed charges include interest and that portion of rent deemed representative of interest. For the ratio of earnings to fixed charges and preferred stock dividends calculation, we assumed that our preferred stock dividend requirements were equal to the pre-tax earnings that would be required to cover those dividend requirements. We computed those pre-tax earnings using the effective tax rate for each year. Our ratio of earnings to fixed charges was as follows for the years presented:

	Years Ended December 31,
	2014		2013		2012		2011		2010
Ratio of earnings to fixed charges	—	a	7.4x		19.8x		20.7x		16.3x
Ratio of earnings to fixed charges
and preferred stock dividends	—	a	7.4x		19.8x		20.7x		13.9x

a.	As a result of the loss recorded in 2014, the ratio coverage was less than 1:1. FCX would have needed to generate additional earnings of $657 million to achieve coverage of 1:1 in 2014.

Items 7. and 7A. Management's Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk.

In Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk, “we,” “us” and “our” refer to Freeport-McMoRan Inc. (FCX) and its consolidated subsidiaries. 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 and Quantitative and Qualitative Disclosures About Market Risk, all references to income or losses per share are on a diluted basis, unless otherwise noted.

OVERVIEW

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

We have significant mineral reserves, resources and future development opportunities within our portfolio of mining assets. At December 31, 2014, our estimated consolidated recoverable proven and probable mineral reserves totaled 103.5 billion pounds of copper, 28.5 million ounces of gold and 3.11 billion pounds of molybdenum, which were determined using long-term average prices of $2.00 per pound for copper, $1,000 per ounce for gold and $10 per pound for molybdenum. Refer to “Critical Accounting Estimates – Mineral Reserves” for further discussion.

A summary of the sources of our consolidated copper, gold and molybdenum production for the year 2014 by geographic location follows:

	Copper		Gold		Molybdenum
North America	43%		1%		88%	a
South America	30%		6%		12%
Indonesia	16%		93%		—
Africa	11%		—		—
	100%		100%		100%

a.	For 2014, 61 percent of our consolidated molybdenum production in North America was from the Henderson and Climax primary molybdenum mines.

Copper production from the Grasberg mine in Indonesia, Morenci mine in North America and Cerro Verde mine in South America together totaled 47 percent of our consolidated copper production in 2014. During 2014, we commenced operations at the Morenci mill expansion and continued construction on the Cerro Verde mill expansion, with completion expected in late 2015. These projects are expected to significantly increase our copper production in future periods. Refer to “Operations” for further discussion of our mining operations.

Our oil and gas business has significant proved, probable and possible reserves with financially attractive organic growth opportunities. Our estimated proved oil and natural gas reserves at December 31, 2014, totaled 390 million barrels of oil equivalents (MMBOE), with 74 percent comprised of oil (including natural gas liquids, or NGLs). Our portfolio includes a broad range of development opportunities and high-potential exploration prospects. For 2014, our oil and gas sales volumes totaled 56.8 MMBOE, including 40.1 million barrels (MMBbls) of crude oil, 80.8 billion cubic feet (Bcf) of natural gas and 3.2 MMBbls of NGLs. Refer to “Operations” for further discussion of our oil and gas operations and to “Critical Accounting Estimates – Oil and Natural Gas Reserves” for further discussion of our reserves.

During 2014, we completed approximately $5 billion in asset sales, including the June 2014 sale of our Eagle Ford shale assets for $3.1 billion and the November 2014 sale of our 80 percent ownership interests in the Candelaria and Ojos del Salado copper mining operations (Candelaria/Ojos) for $1.8 billion. Refer to Note 2 for further discussion of dispositions and acquisitions.

Our results for 2014, compared with 2013, reflect lower copper volumes and lower price realizations for copper and gold, offset by higher gold sales volumes and a full year of results from FCX Oil & Gas Inc. (FM O&G). Results for 2014 were also significantly impacted by impairment charges totaling $5.5 billion ($4.0 billion to net loss attributable to common stockholders) related to ceiling test impairment charges for our oil and gas properties pursuant to full cost accounting rules and a goodwill impairment charge (refer to Notes 1 and 2). These charges were partly offset by a gain on the sale of Candelaria/Ojos and net noncash mark-to-market gains on oil and gas derivative contracts. Refer to “Consolidated Results” for discussion of items impacting our consolidated results for the three years ended December 31, 2014.

At December 31, 2014, we had $19.0 billion in total debt and $464 million in consolidated cash and cash equivalents. During 2014, we continued our efforts to manage debt by completing several transactions that will reduce future interest costs and defer debt maturities. We remain committed to a strong balance sheet and are taking aggressive actions to reduce or defer capital expenditures and other costs and have initiated efforts to obtain third-party funding for a significant portion of our oil and gas capital expenditures to maintain financial strength and flexibility in response to recent sharp declines in oil prices. In addition, we are monitoring copper markets and will be responsive to market conditions. As a first step, we have reduced budgeted 2015 capital expenditures, exploration and other costs by a total of $2 billion. We have a broad set of natural resource assets that provide many alternatives for future actions to enhance our financial flexibility. Additional capital cost reductions, potential additional divestitures or monetizations and other actions will be pursued as required to maintain a strong balance sheet while preserving a strong resource position and portfolio of assets with attractive long-term growth prospects.

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 BOE for our oil and gas operations and consolidated operating cash flow. The outlook for each of these measures follows.

Sales Volumes. Following are our projected consolidated sales volumes for 2015 and actual consolidated sales volumes for 2014:

	2015			2014
	(Projected)			(Actual)
Copper (millions of recoverable pounds):
North America copper mines	1,930			1,664
South America mining	935			1,135
Indonesia mining	960			664
Africa mining	445			425
	4,270			3,888
Gold (thousands of recoverable ounces):
Indonesia mining	1,285			1,168
North and South America mining	—			80
	1,285			1,248
Molybdenum (millions of recoverable pounds)	95		a	95
Oil Equivalents (MMBOE)	55.5			56.8

a.	Projected molybdenum sales include 47 million pounds produced at our molybdenum mines and 48 million pounds produced at our North and South America copper mines.

Projected sales volumes are dependent on a number of factors, including operational performance and other factors. For other important factors that could cause results to differ materially from projections, refer to "Cautionary Statement."

Mining Unit Net Cash Costs. Assuming average prices of $1,300 per ounce of gold and $9 per pound of molybdenum, and achievement of current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for our copper mining operations are expected to average $1.53 per pound in 2015, compared with $1.51 per pound in 2014. 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 in 2015 on consolidated unit net cash costs would approximate $0.015 per pound for each $50 per ounce change in the average price of gold and $0.02 per pound for each $2 per pound change in the average price of molybdenum. Refer to “Consolidated Results – Production and Delivery Costs” for further discussion of consolidated production costs for our mining operations.

Oil and Gas Cash Production Costs per BOE. Based on current sales volume and cost estimates, cash production costs are expected to approximate $18 per BOE for 2015, compared with $20.08 per BOE in 2014. Refer to “Operations – Oil and Gas Operations” for further discussion of oil and gas production costs.

Consolidated Operating Cash Flow. Our consolidated operating cash flows vary with prices realized from copper, gold, molybdenum and oil sales, our sales volumes, production costs, income taxes and other working capital changes and other factors. Based on current sales volume and cost estimates and assuming average prices of $2.60 per pound of copper, $1,300 per ounce of gold, $9 per pound of molybdenum and $50 per barrel of Brent crude oil in 2015, consolidated operating cash flows are estimated to approximate $4 billion (including $0.2 billion of net working capital sources and changes in other tax payments) in 2015. First-quarter 2015 operating cash flows are expected to include net working capital uses and changes in other tax payments of approximately $0.6 billion. Projected consolidated operating cash flows for the year 2015 also reflect no tax provision (refer to “Consolidated Results – Provision for Income Taxes” for discussion of our projected annual consolidated effective tax rate for 2015). The impact of price changes in 2015 on consolidated operating cash flows would approximate $315 million for each $0.10 per pound change in the average price of copper, $40 million for each $50 per ounce change in the average price of gold, $135 million for each $2 per pound change in the average price of molybdenum and $115 million for each $5 per barrel change in the average Brent crude oil price.

MARKETS

Metals. World prices for copper, gold and molybdenum can fluctuate significantly. During the period from January 2005 through January 2015, the London Metal Exchange (LME) spot copper price varied from a low of $1.26 per pound in 2008 to a record high of $4.60 per pound in 2011; the London Bullion Market Association (London) PM gold price fluctuated from a low of $411 per ounce in 2005 to a record high of $1,895 per ounce in 2011, and the Metals Week Molybdenum Dealer Oxide weekly average price ranged from a low of $7.83 per pound in 2009 to a high of $39.25 per pound in 2005. Copper, gold and molybdenum prices are affected by numerous factors beyond our control as described further in our “Risk Factors” contained in Part I, Item 1A of our Form 10-K for the year ended December 31, 2014.

This graph presents LME spot copper prices and 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 through January 2015. From 2006 through most of 2008, limited supplies, combined with growing demand from China and other emerging economies, resulted in high copper prices and low levels of inventories. We believe current copper prices are supported by a combination of demand from developing economies and pro-growth monetary fiscal policy decisions in Europe, China and the U.S. Since mid-2014, copper prices have declined because of concerns about slowing growth rates in China, a stronger U.S. dollar and a broad-based decline in commodity prices, led by a sharp decline in oil prices. Copper prices have also come under pressure as financial investors take positions in the metal consistent with a view on declining global growth and the resulting general weak commodity prices. During 2014, LME spot copper prices ranged from a low of $2.86 per pound to a high of $3.38 per pound, averaged $3.11 per pound and closed at $2.88 per pound on December 31, 2014. The LME spot copper price closed at $2.59 per pound on February 20, 2015.

We believe the underlying long-term fundamentals of the copper business remain positive, supported by the significant role of copper in the global economy and a challenging long-term supply environment attributable to difficulty in replacing existing large mines' output with new production sources. Future copper prices are expected to be volatile and are likely to be influenced by demand from China and emerging markets, as well as economic activity in the U.S. and other industrialized countries, the timing of the development of new supplies of copper and production levels of mines and copper smelters.

This graph presents London PM gold prices from January 2005 through January 2015. An improving economic outlook and positive global equity performance contributed to lower demand for gold in 2013 and 2014, resulting in generally lower prices. During 2014, gold prices ranged from a low of $1,142 per ounce to a high of $1,385 per ounce, averaged $1,266 per ounce and closed at $1,199 per ounce on December 31, 2014. Gold prices closed at $1,208 per ounce on February 20, 2015.

This graph presents the Metals Week Molybdenum Dealer Oxide weekly average price from January 2005 through January 2015. Molybdenum prices improved during most of 2014, resulting from improved demand in the metallurgical sector, but declined in fourth-quarter 2014 because of weaker demand from European steel and stainless steel producers. During 2014, the weekly average price for molybdenum ranged from a low of $8.82 per pound to a high of $15.00 per pound, averaged $11.41 per pound and was $9.00 per pound on December 31, 2014. The Metals Week Molybdenum Dealer Oxide weekly average price was $7.62 per pound on February 20, 2015.

Oil and Gas. Market prices for crude oil and natural gas can fluctuate significantly. During the period from January 2005 through January 2015, the Brent crude oil price ranged from a low of $36.61 per barrel to a high of $146.08 per barrel in 2008 and the NYMEX natural gas price fluctuated from a low of $2.04 per million British thermal units (MMBtu) in 2012 to a high of $13.91 per MMBtu in 2005. Crude oil and natural gas prices are affected by numerous factors beyond our control as described further in our “Risk Factors” contained in Part I, Item 1A of our Form 10-K for the year ended December 31, 2014.

This graph presents Brent crude oil prices and NYMEX natural gas contract prices from January 2005 through January 2015. Crude oil prices reached a record high in July 2008 as economic growth in emerging economies and the U.S. created high global demand for oil and lower inventories. By the end of 2008, financial turmoil in the U.S. contributed to a global economic slowdown and a decline in many commodity prices. Crude oil prices rebounded after 2008, supported by a gradually improving global economy and demand outlook. Since mid-2014, oil prices have significantly declined associated with global oversupply primarily attributable to U.S. shale production and increased Brazilian and Libyan output, coupled with weak economic data in Europe and slowing Chinese demand. During 2014, the Brent crude oil price ranged from a low of $57.33 per barrel to a high of $115.06 per barrel, averaged $99.45 per barrel and was $57.33 per barrel on December 31, 2014. The Brent crude oil price was $60.22 per barrel on February 20, 2015.

CRITICAL ACCOUNTING ESTIMATES

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements, which have been prepared in conformity with generally accepted accounting principles (GAAP) in the U.S. The preparation of these statements requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We base these estimates on historical experience and on assumptions that we consider reasonable under the circumstances; however, reported results could differ from those based on the current estimates under different assumptions or conditions. The areas requiring the use of management’s estimates are also discussed in Note 1 under the subheading “Use of Estimates.” Management has reviewed the following discussion of its development and selection of critical accounting estimates with the Audit Committee of our Board of Directors (the Board).

Mineral Reserves

Recoverable proven and probable reserves are the part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination. The determination of reserves involves numerous uncertainties with respect to the ultimate geology of the ore bodies, including quantities, grades and recovery rates. Estimating the quantity and grade of mineral reserves requires us to determine the size, shape and depth of our ore bodies by analyzing geological data, such as samplings of drill holes, tunnels and other underground workings. In addition to the geology of our mines, assumptions are required to determine the economic feasibility of mining these reserves, including estimates of future commodity prices and demand, the mining methods we use and the related costs incurred to develop and mine our reserves. Our estimates of recoverable proven and probable mineral reserves are prepared by and are the responsibility of our employees. A majority of these estimates are reviewed annually and verified by independent experts in mining, geology and reserve determination.

At December 31, 2014, our consolidated estimated recoverable proven and probable reserves were determined using long-term average prices of $2.00 per pound for copper (consistent with the long-term average copper price used since December 31, 2010), $1,000 per ounce for gold and $10 per pound for molybdenum. The following table summarizes changes in our estimated consolidated recoverable proven and probable copper, gold and molybdenum reserves during 2014 and 2013:

		Coppera (billion pounds)			Gold (million ounces)		Molybdenum (billion pounds)
Consolidated reserves at December 31, 2012		116.5			32.5		3.42
Net additions/revisions		(1.2	)		—		(0.07)
Production		(4.1	)		(1.2)		(0.09)
Consolidated reserves at December 31, 2013		111.2			31.3		3.26
Net additions/revisions		(0.1	)		(0.6)		(0.05)
Production		(3.9	)		(1.2)		(0.10)
Sale of Candelaria/Ojos		(3.7	)		(1.0)		—
Consolidated reserves at December 31, 2014		103.5			28.5		3.11

a.	Includes estimated recoverable metals contained in stockpiles. See below for additional discussion of recoverable copper in stockpiles.

Refer to Note 20 for further information regarding estimated recoverable proven and probable mineral reserves.

As discussed in Note 1, we depreciate our life-of-mine mining and milling assets and values assigned to proven and probable mineral reserves using the unit-of-production (UOP) method based on our estimated recoverable proven and probable mineral reserves. Because the economic assumptions used to estimate mineral reserves may change from period to period and additional geological data is generated during the course of operations, estimates of reserves may change, which could have a significant impact on our results of operations, including changes to prospective depreciation rates and impairments of asset carrying values. Excluding impacts associated with changes in the levels of finished goods inventories and based on projected copper sales volumes for 2015, if estimated copper reserves at our mines were 10 percent higher at December 31, 2014, we estimate that our annual depreciation, depletion and amortization expense for 2015 would decrease by $59 million ($30 million to net income attributable to common stockholders), and a 10 percent decrease in copper reserves would increase depreciation, depletion and amortization expense by $77 million ($40 million to net income attributable to common stockholders). We perform annual assessments of our existing assets in connection with the review of mine operating and development plans. If it is determined that assigned asset lives do not reflect the expected remaining period of benefit, any change could affect prospective depreciation rates.

As discussed below and in Note 1, we review and evaluate our long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amount of such assets may not be recoverable, and changes to our estimates of recoverable proven and probable mineral reserves could have an impact on our assessment of asset recoverability.

Recoverable Copper in Stockpiles

We record, as inventory, applicable costs for copper contained in mill and leach stockpiles that are expected to be processed in the future based on proven processing technologies. Accounting for recoverable copper from mill and leach stockpiles represents a critical accounting estimate because (i) it is generally impracticable to determine

copper contained in mill and leach stockpiles by physical count, thus requiring management to employ reasonable estimation methods and (ii) recovery rates from leach stockpiles can vary significantly. Refer to Note 1 for further discussion of our accounting policy for recoverable copper in stockpiles.

At December 31, 2014, estimated consolidated recoverable copper was 3.6 billion pounds in leach stockpiles (with a carrying value of $3.6 billion) and 0.9 billion pounds in mill stockpiles (with a carrying value of $446 million), compared with 3.3 billion pounds in leach stockpiles (with a carrying value of $3.3 billion) and 1.4 billion pounds in mill stockpiles (with a carrying value of $789 million) at December 31, 2013.

Oil and Natural Gas Reserves

Proved reserves are those quantities of oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations. The term “reasonable certainty” implies a high degree of confidence that the quantities of oil and natural gas actually recovered will equal or exceed the estimate. Engineering estimates of proved oil and natural gas reserves directly impact financial accounting estimates, including depreciation, depletion and amortization and the ceiling limitation under the full cost method. Estimates of total proved reserves are determined using methods prescribed by the U.S. Securities and Exchange Commission (SEC), which require the use of an average reference price calculated as the twelve-month average of the first-day-of-the-month historical market prices for crude oil and natural gas. At December 31, 2014, our estimates were based on reference prices of $94.99 per barrel (West Texas Intermediate) and $4.35 per MMBtu (Henry Hub spot natural gas) as adjusted for location and quality differentials, which are held constant throughout the lives of the oil and gas properties, except where such guidelines permit alternate treatment, including the use of fixed and determinable contractual price escalations, but excluding derivatives. Actual future prices and costs may be materially higher or lower than the average prices and costs as of the date of the estimate.

There are numerous uncertainties inherent in estimating quantities and values of proved oil and natural gas reserves and in projecting future rates of production and the amount and timing of development expenditures, including many factors beyond our control. Future development and abandonment costs are determined annually for each of our properties based upon its geographic location, type of production structure, water depth, reservoir depth and characteristics, currently available procedures and consultations with engineering consultants. Because these costs typically extend many years into the future, estimating these future costs is difficult and requires management to make judgments that are subject to future revisions based upon numerous factors, including changing technology and the political and regulatory environment. Reserve engineering is a subjective process of estimating the recovery from underground accumulations of oil and natural gas that cannot be measured in an exact manner and the accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Because all reserve estimates are subjective, the quantities of oil and natural gas that are ultimately recovered, production and operating costs, the amount and timing of future development expenditures and future oil and natural gas sales prices may all differ from those assumed in our estimates.

Refer to Note 21 for further information regarding estimated proved oil and natural gas reserves.

The average amortization rate per BOE was $39.74 in 2014 and $35.54 for the period from June 1, 2013, to December 31, 2013. Our oil and gas depreciation, depletion and amortization rate for 2015, after the effect of the ceiling test impairments recorded in 2014, is expected to be $36.39 per BOE. Changes to estimates of proved reserves could result in changes to the prospective UOP amortization rate for our oil and gas properties, which could have a significant impact on our results of operations. Based on our estimated proved reserves and our net oil and gas properties subject to amortization at December 31, 2014, a 10 percent increase in our costs subject to amortization would increase our amortization rate by approximately $3.63 per BOE and a 10 percent reduction to proved reserves would increase our amortization rate by approximately $4.04 per BOE. Changes in estimates of proved oil and natural gas reserves may also affect our ceiling test calculation. Refer to Note 1 and "Impairment of Oil and Gas Properties" below for further discussion.

Impairment of Long-Lived Mining Assets

As discussed in Note 1, we evaluate our long-lived mining assets for impairment 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 commodity-based and other input costs; proven and probable reserves, including the timing and cost to develop and produce the reserves; and the use of appropriate escalation and discount rates. We believe our estimates and models used to determine fair value are similar to what a market participant would use.

Because the cash flows used to assess recoverability of our long-lived assets and measure fair value of our mining operations require us to make several estimates and assumptions that are subject to risk and uncertainty, changes in these estimates and assumptions could result in the impairment of our long-lived asset values. Events that could result in impairment of our long-lived assets include, but are not limited to, decreases in future metal prices, 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.

Impairment of Oil and Gas Properties

As discussed in Note 1, we follow the full cost method of accounting for our oil and gas operations, whereby all costs associated with oil and gas property acquisition, exploration and development activities are capitalized and amortized to expense under the UOP method on a country-by-country basis using estimates of proved oil and natural gas reserves relating to each country where such activities are conducted.

In evaluating our oil and gas properties for impairment, estimates of future cash flows are used (refer to Note 1 for further discussion of the ceiling test calculation). Additionally, SEC rules require that we price our future oil and gas production at the twelve-month average of the first-day-of-the-month historical reference prices adjusted for location and quality differentials. Such prices are utilized except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts excluding derivatives. The pricing in ceiling test impairment calculations required by full cost accounting 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.

At September 30, 2014, and December 31, 2014, net capitalized costs with respect to FM O&G's proved U.S. oil and gas properties exceeded the ceiling amount specified by SEC full cost accounting rules, which resulted in the recognition of impairment charges totaling $3.7 billion ($2.3 billion to net loss attributable to common stockholders) in 2014. The twelve-month average of the first-day-of-the-month historical reference oil price required to be used under SEC full cost accounting rules in determining the December 31, 2014, ceiling amount was $94.99 per barrel. Because the ceiling test limitation uses a twelve-month historical average price, if oil prices remain below the twelve-month 2014 average of $94.99 per barrel the ceiling limitation will decrease in 2015. In particular, the effect of weaker oil prices than the 2014 average is expected to result in significant additional ceiling test impairments of our oil and gas properties during 2015. Brent crude oil prices averaged $77.08 per barrel during fourth-quarter 2014 and were $57.33 per barrel at December 31, 2014, and $60.22 per barrel at February 20, 2015.

At December 31, 2014, we also had $10.1 billion of costs for unproved oil and gas properties, which are excluded from amortization. These costs will be transferred into the amortization base (i.e., full cost pool) as the properties are evaluated and proved reserves are established or if impairment is determined. We assess our unproved properties at least annually, and if impairment is indicated, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and subject to amortization. Accordingly, an impairment of unproved properties does not immediately result in the recognition of a charge to the consolidated statements of income, but rather increases the costs subject to amortization and the costs subject to the ceiling limitation under the full cost accounting method. The transfer of costs into the amortization base involves a significant amount of judgment and may be subject to changes over time based on our drilling plans and results, geological and geophysical evaluations, the assignment of proved reserves, availability of capital and other factors.

Because the transfer of unevaluated property to the full cost pool requires significant judgment and the ceiling test used to evaluate impairment of our proved oil and gas properties requires us to make several estimates and assumptions that are subject to risk and uncertainty, changes in these estimates and assumptions could result in the impairment of our oil and gas properties. Events that could result in impairment of our oil and gas properties include, but are not limited to, decreases in future crude oil and natural gas prices, decreases in estimated proved

oil and natural gas reserves, increases in production, development or abandonment costs and any event that might otherwise have a material adverse effect on our oil and gas production levels or costs.

Impairment of Goodwill

We account for business combinations using the acquisition method of accounting, which requires us to allocate the purchase price to the assets acquired and liabilities assumed based on their estimated fair values on the acquisition date. Determining the fair values of assets acquired and liabilities assumed requires management's judgment, the utilization of independent valuation experts, and often involves the use of significant estimates and assumptions, including future cash flows, discount rates and forward prices. The excess of acquisition consideration over the fair values of assets acquired and liabilities assumed is recorded as goodwill. In connection with our oil and gas acquisitions in 2013, we recorded goodwill, all of which was assigned to our U.S. oil and gas reporting unit.

Goodwill is required to be evaluated for impairment on at least an annual basis, or at any other time if events or circumstances indicate that its carrying amount may no longer be recoverable. During the fourth quarter of each year, we conduct a qualitative goodwill impairment assessment, which involves examining relevant events and circumstances which could have a negative impact on our goodwill such as macroeconomic conditions, industry and market conditions, cost factors that have a negative effect on earnings and cash flows, overall financial performance, dispositions and acquisitions, and any other relevant events or circumstances. After assessing the relevant events and circumstances for the qualitative impairment assessment during fourth-quarter 2014, including the significant decline in oil prices, we determined that performing a quantitative goodwill impairment test was necessary. These evaluations resulted in impairment charges totaling $1.7 billion ($1.7 billion to net loss attributable to common stockholders) for the full carrying value of goodwill. Crude oil prices and our estimates of oil reserves at December 31, 2014, represent the most significant assumptions used in our evaluation of goodwill. Forward strip Brent oil prices used in our estimates as of December 31, 2014, ranged from approximately $62 per barrel to $80 per barrel for the years 2015 through 2021. Refer to Notes 1 and 2 for further discussion.

Environmental Obligations

Our current and historical operating activities are subject to various national, state and local environmental laws and regulations that govern the protection of the environment, and compliance with those laws requires significant expenditures. Environmental expenditures are expensed or capitalized, depending upon their future economic benefits. The guidance provided by U.S. GAAP requires that liabilities for contingencies be recorded when it is probable that obligations have been incurred and the cost can be reasonably estimated. At December 31, 2014, environmental obligations recorded in our consolidated balance sheet totaled $1.2 billion, which reflect obligations for environmental liabilities attributed to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) or analogous state programs and for estimated future costs associated with environmental matters. Refer to Notes 1 and 12 for further discussion of environmental obligations, including a summary of changes in our estimated environmental obligations for the three years ending December 31, 2014.

Accounting for environmental obligations represents a critical accounting estimate because changes to environmental laws and regulations and/or circumstances affecting our operations could result in significant changes to our estimates, which could have a significant impact on our results of operations. We perform a comprehensive annual review of our environmental obligations and also review changes in facts and circumstances associated with these obligations at least quarterly. Judgments and estimates are based upon available facts, existing technology, presently enacted laws and regulations, remediation experience, whether or not we are a potentially responsible party (PRP), the ability of other PRPs to pay their allocated portions and take into consideration reasonably possible outcomes. Our cost estimates can change substantially as additional information becomes available regarding the nature or extent of site contamination, updated cost assumptions (including increases and decreases to cost estimates), changes in the anticipated scope and timing of remediation activities, the settlement of environmental matters, required remediation methods and actions by or against governmental agencies or private parties.

Asset Retirement Obligations

We record the fair value of our estimated asset retirement obligations (AROs) associated with tangible long-lived assets in the period incurred. Fair value is measured as the present value of cash flow estimates after considering inflation and a market risk premium. Our cost estimates are reflected on a third-party cost basis and comply with our legal obligation to retire tangible long-lived assets in the period incurred. These cost estimates may differ from financial assurance cost estimates for reclamation activities because of a variety of factors, including obtaining updated cost estimates for reclamation activities, the timing of reclamation activities, changes in scope and the exclusion of certain costs not considered reclamation and closure costs. At December 31, 2014, AROs recorded in

our consolidated balance sheet totaled $2.8 billion, including $1.1 billion associated with our oil and gas operations. Refer to Notes 1 and 12 for further discussion of reclamation and closure costs, including a summary of changes in our AROs for the three years ended December 31, 2014.

Generally, ARO activities are specified by regulations or in permits issued by the relevant governing authority, and management judgment is required to estimate the extent and timing of expenditures. Accounting for AROs represents a critical accounting estimate because (i) we will not incur most of these costs for a number of years, requiring us to make estimates over a long period, (ii) reclamation and closure laws and regulations could change in the future and/or circumstances affecting our operations could change, either of which could result in significant changes to our current plans, (iii) the methods used or required to plug and abandon non-producing oil and gas wellbores, remove platforms, tanks, production equipment and flow lines, and restore the wellsite could change, (iv) calculating the fair value of our AROs requires management to estimate projected cash flows, make long-term assumptions about inflation rates, determine our credit-adjusted, risk-free interest rates and determine market risk premiums that are appropriate for our operations and (v) given the magnitude of our estimated reclamation, mine closure and wellsite abandonment and restoration costs, changes in any or all of these estimates could have a significant impact on our results of operations.

Taxes

In preparing our annual consolidated financial statements, we estimate the actual amount of income taxes currently payable or receivable as well as deferred income tax assets and liabilities attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates or laws is recognized in income in the period in which such changes are enacted.

Our operations are in multiple jurisdictions where uncertainties arise in the application of complex tax regulations. Some of these tax regimes are defined by contractual agreements with the local government, while others are defined by general tax laws and regulations. We and our subsidiaries are subject to reviews of our income tax filings and other tax payments, and disputes can arise with the taxing authorities over the interpretation of our contracts or laws. The final taxes paid may be dependent upon many factors, including negotiations with taxing authorities. In certain jurisdictions, we must pay a portion of the disputed amount to the local government in order to formally appeal the assessment. Such payment is recorded as a receivable if we believe the amount is collectible.

A valuation allowance is provided for those deferred income tax assets for which it is more likely than not that the related benefits will not be realized. In determining the amount of the valuation allowance, we consider estimated future taxable income as well as feasible tax planning strategies in each jurisdiction. If we determine that we will not realize all or a portion of our deferred income tax assets, we will increase our valuation allowance. Conversely, if we determine that we will ultimately be able to realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related valuation allowance will be reduced.

Our valuation allowances totaled $2.4 billion at December 31, 2014, and covered a portion of our U.S. foreign tax credit carryforwards, foreign net operating loss carryforwards, U.S. state net operating loss carryforwards and U.S. state deferred tax assets. Valuation allowances totaled $2.5 billion at December 31, 2013, and covered all of our U.S. foreign tax credit carryforwards, and a portion of our foreign net operating loss carryforwards, U.S. state net operating loss carryforwards, U.S. state deferred tax assets and U.S. capital loss carryforwards. Refer to Note 11 for further discussion.

CONSOLIDATED RESULTS

	Years Ended December 31,
	2014				2013a				2012
SUMMARY FINANCIAL DATA	(in millions, except per share amounts)
Revenuesb	$	21,438		c,d	$	20,921		c,d	$	18,010		c
Operating incomeb	$	97		c,d,e,f,g,h	$	5,351		c,d,g,h,i,j	$	5,814		c,g,h,i,j
Net (loss) income attributable to common stockholdersk	$	(1,308	)	c,d,e,f,g,h,l,m	$	2,658		c,d,g,h,i,j,l,n	$	3,041		c,g,h,i,j,l,m
Diluted net (loss) income per share attributable to common stockholders	$	(1.26	)	c,d,e,f,g,h,l,m	$	2.64		c,d,g,h,i,j,l,n	$	3.19		c,g,h,i,j,l,m
Diluted weighted-average common shares outstanding	1,039				1,006				954
Operating cash flowso	$	5,631			$	6,139			$	3,774
Capital expenditures	$	7,215			$	5,286			$	3,494
At December 31:
Cash and cash equivalents	$	464			$	1,985			$	3,705
Total debt, including current portion	$	18,970			$	20,706			$	3,527

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

b.As further detailed in Note 16, following is a summary of revenues and operating income (loss) by operating division (in millions):

	Years Ended December 31,
Revenues	2014				2013				2012
North America copper mines	$	5,616			$	5,183			$	5,486
South America mining	3,532				4,485				4,728
Indonesia mining	3,071				4,087				3,921
Africa mining	1,558				1,637				1,359
Molybdenum mines	587				522				529
Rod & Refining	4,655				5,022				5,016
Atlantic Copper Smelting & Refining	2,412				2,041				2,709
U.S. oil & gas operations	4,710				2,616				—
Other mining, corporate, other & eliminations	(4,703		)		(4,672		)		(5,738		)
Total revenues	$	21,438			$	20,921			$	18,010
Operating income (loss)
North America copper mines	$	1,698			$	1,506			$	2,204
South America mining	1,220				2,063				2,321
Indonesia mining	719				1,420				1,298
Africa mining	548				625				562
Molybdenum mines	167				123				150
Rod & Refining	12				23				14
Atlantic Copper Smelting & Refining	(2		)		(75		)		8
U.S. oil & gas operations	(4,479		)		450				—
Other mining, corporate, other & eliminations	214				(784		)		(743		)
Total operating income	$	97			$	5,351			$	5,814

c.

Includes (unfavorable) favorable adjustments to provisionally priced concentrate and cathode sales recognized in prior periods totaling $(118) million ($(65) million to net loss attributable to common stockholders or $(0.06) per share) in 2014, $(26) million ($(12) million to net income attributable to common stockholders or $(0.01) per share) in 2013 and $101 million ($43 million to net income attributable to common stockholders or $0.05 per share) in 2012. Refer to “Revenues” for further discussion.

d.

Includes net noncash mark-to-market gains (losses) associated with crude oil and natural gas derivative contracts totaling $627 million ($389 million to net loss attributable to common stockholders or $0.37 per share) in 2014 and $(312) million ($(194) million to net income attributable to common stockholders or $(0.19) per share) for the seven-month period from June 1, 2013, to December 31, 2013. Refer to "Revenues" for further discussion.

e.	Includes charges of $3.7 billion ($2.3 billion to net loss attributable to common stockholders or $2.24 per share) to reduce the carrying value of oil and gas properties pursuant to full cost accounting rules and a goodwill impairment charge of $1.7 billion ($1.7 billion to net loss attributable to common stockholders or $1.65 per share) for the full carrying value of goodwill.

f.	Includes gains of $717 million ($481 million to net loss attributable to common stockholders or $0.46 per share) primarily from the sale of Candelaria/Ojos.

g.

Includes net (charges) credits for adjustments to environmental obligations and related litigation reserves totaling $(76) million ($(50) million to net loss attributable to common stockholders or $(0.05) per share) in 2014, $(19) million ($(17) million to net income attributable to common stockholders or $(0.02) per share) in 2013 and $62 million ($40 million to net income attributable to common stockholders or $0.04 per share) in 2012.

h.

The year 2014 includes charges totaling $37 million ($23 million to net loss attributable to common stock or $0.02 per share) associated with early rig termination and inventory write offs at FCX's oil and gas operations. The year 2013 includes charges of (i) $76 million ($49 million to net income attributable to common stockholders or $0.05 per share) associated with updated mine plans at Morenci that resulted in a loss in recoverable copper in leach stockpiles and (ii) $37 million ($23 million to net income attributable to common stockholders or $0.02 per share) for restructuring an executive employment arrangement. The year 2012 includes a gain of $59 million ($31 million to net income attributable to common stockholders or $0.03 per share) for the settlement of the insurance claim for business interruption and property damage relating to the 2011 incidents affecting PT-FI's concentrate pipelines.

i.	Includes transaction and related costs totaling $80 million ($50 million to net income attributable to common stockholders or $0.05 per share) in 2013 and $9 million ($7 million to net income attributable to common stockholders or $0.01 per share) in 2012 principally associated with the oil and gas acquisitions.

j.	Includes charges associated with new labor agreements totaling $36 million ($13 million to net income attributable to common stockholders or $0.01 per share) at Cerro Verde in 2013 and $16 million ($8 million to net income attributable to common stockholders or $0.01 per share) at Candelaria in 2012.

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

l.

Includes net gains (losses) on early extinguishment of debt totaling $73 million ($3 million to net loss attributable to common stockholders or less than $0.01 per share) in 2014, $(35) million ($(28) million to net income attributable to common stockholders or $(0.03) per share) in 2013 and $(168) million ($(149) million to net income attributable to common stockholders or $(0.16) per share) in 2012. Refer to Note 8 for further discussion.

m.	The year 2014 includes a net tax charge of $103 million ($0.10 per share) and the year 2012 includes a net tax credit of $98 million, net of noncontrolling interests ($0.11 per share). Refer to Note 11 and "Provision for Income Taxes" below for further discussion of the net tax benefits (charges) impacting 2014 and 2012.

n.

Includes gains associated with the oil and gas acquisitions, including (i) $199 million to net income attributable to common stockholders ($0.20 per share) associated with net reductions in our deferred tax liabilities and deferred tax asset valuation allowances, and (ii) $128 million to net income attributable to common stockholders ($0.13 per share) related to our preferred stock investment in and the subsequent acquisition of McMoRan Exploration Co. Refer to Note 11 and "Provision for Income Taxes" below for further discussion.

o.	Includes net working capital uses and changes in other tax payments of $632 million in 2014, $377 million in 2013 and $1.4 billion in 2012.

	Years Ended December 31,
	2014				2013a				2012
SUMMARY OPERATING DATA
Copper (recoverable)
Production (millions of pounds)	3,904				4,131				3,663
Sales, excluding purchases (millions of pounds)	3,888				4,086				3,648
Average realized price per pound	$	3.09			$	3.30			$	3.60
Site production and delivery costs per poundb	$	1.90		c	$	1.88			$	2.00
Unit net cash costs per poundb	$	1.51		c,d	$	1.49			$	1.48
Gold (recoverable)
Production (thousands of ounces)	1,214				1,250				958
Sales, excluding purchases (thousands of ounces)	1,248				1,204				1,010
Average realized price per ounce	$	1,231			$	1,315			$	1,665
Molybdenum (recoverable)
Production (millions of pounds)	95				94				85
Sales, excluding purchases (millions of pounds)	95				93				83
Average realized price per pound	$	12.74			$	11.85			$	14.26
Oil Equivalents
Sales volumes:
MMBOE	56.8				38.1
Thousand BOE (MBOE) per day	156				178
Cash operating margin per BOE:e
Realized revenues	$	71.83			$	76.87
Cash production costs	20.08				17.14
Cash operating margin	$	51.75			$	59.73

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

b.

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

c.	Excludes $0.04 per pound of copper for fixed costs charged directly to cost of sales as a result of the impact of export restrictions on PT Freeport Indonesia's (PT-FI) operating rates.

d.	Includes $0.03 per pound of copper for export duties and increased royalty rates at PT-FI.

e.

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

Revenues

Consolidated revenues totaled $21.4 billion in 2014, $20.9 billion in 2013 and $18.0 billion in 2012. Revenues included the sale of copper concentrates, copper cathodes, copper rod, gold, molybdenum, silver, cobalt and beginning June 1, 2013, the sale of oil, natural gas and NGLs by our oil and gas operations. Our consolidated revenues for 2014 included sales of copper (60 percent), oil (20 percent), gold (7 percent) and molybdenum (6 percent). Following is a summary of changes in our consolidated revenues between periods (in millions):

	2014				2013
Consolidated revenues - prior year	$	20,921			$	18,010
Mining operations:
(Lower) higher sales volumes from mining operations:
Copper	(650		)		1,576
Gold	58				323
Molybdenum	17				151
(Lower) higher price realizations from mining operations:
Copper	(817		)		(1,226		)
Gold	(105		)		(421		)
Molybdenum	84				(225		)
Unfavorable impact of net adjustments for prior year provisionally priced copper sales	(92		)		(127		)
(Lower) higher revenues from purchased copper	(361		)		313
Higher (lower) Atlantic Copper revenues	371				(668		)
Oil and gas operations:a
Higher oil and gas revenues, including realized cash losses on derivative contracts	1,155				2,928
Favorable (unfavorable) impact of net noncash mark-to-market adjustments on derivative contracts	939				(312		)
Other, including intercompany eliminations	(82		)		599
Consolidated revenues - current year	$	21,438			$	20,921

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

Mining Sales Volumes

Consolidated sales volumes totaled 3.9 billion pounds of copper, 1.25 million ounces of gold and 95 million pounds of molybdenum in 2014, 4.1 billion pounds of copper, 1.2 million ounces of gold and 93 million pounds of molybdenum in 2013, and 3.65 billion pounds of copper, 1.0 million ounces of gold and 83 million pounds of molybdenum in 2012. Lower consolidated copper sales volumes in 2014, compared with 2013, primarily reflected decreased volumes in Indonesia and South America, partly offset by higher volumes from our North America copper mines. Higher consolidated copper and gold sales volumes in 2013, compared with 2012, primarily reflected improved volumes throughout our global mining operations. Refer to “Operations” for further discussion of sales volumes at our operating divisions.

Metal Price Realizations

Our consolidated mining revenues can vary significantly as a result of fluctuations in the market prices of copper, gold, molybdenum, silver and cobalt. As presented above on the summary operating data table, we recognized lower copper and gold price realizations from our mining operations in 2014, compared with 2013, and also in 2013, compared with 2012. Refer to "Markets" for further discussion.

Provisionally Priced Sales

Impacts of net adjustments for prior year 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 (refer to "Disclosures About Market Risks-Commodity Price Risk" for further discussion). Revenues included (unfavorable) favorable net adjustments to prior years' provisionally prized copper sales totaling $(118) million in 2014, $(26) million in 2013 and $101 million in 2012.

Purchased Copper

We purchased copper cathode for processing by our Rod & Refining segment totaling 125 million pounds in 2014, 223 million pounds in 2013 and 125 million pounds in 2012.

Atlantic Copper Revenues

Lower Atlantic Copper revenues in 2013, compared with 2014 and 2012, primarily reflected the impact of a major maintenance turnaround in 2013.

Oil & Gas Revenues and Derivative Contracts

Oil and gas sales volumes totaled 56.8 MMBOE in 2014, and 38.1 MMBOE for the seven-month period from June 1, 2013, to December 31, 2013. Oil and gas realizations of $71.83 per BOE in 2014 were lower compared with $76.87 per BOE for the seven-month period from June 1, 2013, to December 31, 2013, primarily reflecting lower oil prices and higher realized cash losses on derivative contracts (realized cash losses totaled $122 million, or $2.15 per BOE in 2014, compared with $22 million, or $0.58 per BOE for the seven-month period from June 1, 2013, to December 31, 2013). Refer to “Operations” for further discussion of average realizations and sales volumes at our oil and gas operations.

In connection with the acquisition of Plains Exploration & Production Company (PXP), FCX has derivative contracts for 2015 consisting of crude oil options, and for 2013 and 2014, had derivative contracts that consisted of crude oil options and swaps and natural gas swaps. These crude oil and natural gas derivative contracts are not designated as hedging instruments; accordingly, they are recorded at fair value with the mark-to-market gains and losses recorded in revenues each period. Net credits (charges) to revenues for net noncash mark-to-market gains (losses) on crude oil and natural gas derivative contracts totaled $627 million in 2014 and $(312) million for the seven-month period from June 1, 2013, to December 31, 2013. Refer to Note 14 and "Disclosure About Market Risks - Commodity Price Risk" for further discussion of crude oil and natural gas derivative contracts.

Production and Delivery Costs

Consolidated production and delivery costs totaled $11.9 billion in 2014, $11.8 billion in 2013 and $10.4 billion in 2012. Higher production and delivery costs for 2014, compared with 2013, were primarily associated with our oil and gas operations, which included a full year of results for 2014, partly offset by lower costs for our mining operations mostly associated with lower volumes in South America and Indonesia. Higher consolidated production and delivery costs in 2013, compared with 2012, primarily reflected the addition of costs from our oil and gas operations and higher copper purchases.

Mining Unit Site Production and Delivery Costs

Site production and delivery costs for our copper mining operations primarily include labor, energy and commodity-based inputs, such as sulphuric acid, reagents, liners, tires and explosives. Consolidated unit site production and delivery costs (before net noncash and other costs) for our copper mining operations averaged $1.90 per pound of copper in 2014, $1.88 per pound in 2013 and $2.00 per pound in 2012. Higher consolidated unit site production and delivery costs in 2014, compared with 2013, primarily reflect the impact of lower copper sales volumes in South America and Indonesia, partly offset by higher volumes in North America. Consolidated production and delivery costs for 2014 also exclude fixed costs charged directly to cost of sales as a result of the impact of export restrictions on PT-FI's operating rates totaling $0.04 per pound of copper. Lower consolidated unit site production and delivery costs in 2013, compared with 2012, primarily reflects higher copper sales volumes in Indonesia and South America.

Assuming achievement of current 2015 volume and cost estimates, consolidated site production and delivery costs are expected to average $1.81 per pound of copper for 2015. Refer to “Operations – Unit Net Cash Costs” for further discussion of unit net cash costs associated with our operating divisions, and to “Product Revenues and Production Costs” for reconciliations of per pound costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements.

Our copper mining operations require significant energy, principally diesel, electricity, coal and natural gas, most of which is obtained from third parties under long-term contracts. Energy costs approximated 20 percent of our consolidated copper production costs in 2014, including purchases of approximately 250 million gallons of diesel fuel; 7,600 gigawatt hours of electricity at our North America, South America and Africa copper mining operations (we generate all of our power at our Indonesia mining operation); 600 thousand metric tons of coal for our coal power plant in Indonesia; and 1 MMBtu of natural gas at certain of our North America mines. Based on current cost estimates, we estimate energy will approximate 16 percent of our consolidated copper production costs for 2015.

Oil and Gas Production Costs per BOE

Production costs for our oil and gas operations primarily include costs incurred to operate and maintain wells and related equipment and facilities, such as lease operating expenses, steam gas costs, electricity, production and ad valorem taxes, and gathering and transportation expenses. Cash production costs for our oil and gas operations of $20.08 per BOE were higher than $17.14 per BOE for the seven-month period from June 1, 2013, to December 31, 2013, primarily reflecting the sale of lower cost Eagle Ford properties in June 2014 and higher operating costs in California and the GOM.

Assuming achievement of current volume and cost estimates for 2015, cash production costs are expected to approximate $18 per BOE for the year 2015. Refer to "Operations" for further discussion of cash production costs at our oil and gas operations.

Depreciation, Depletion and Amortization

Depreciation will vary under the UOP method as a result of changes in sales volumes and the related UOP rates at our mining and oil and gas operations. Consolidated depreciation, depletion and amortization (DD&A) totaled $3.9 billion in 2014, $2.8 billion in 2013 and $1.2 billion in 2012. Higher DD&A in 2014 was primarily associated with a full year of expense for oil and gas operations ($2.3 billion in 2014, compared with $1.4 billion for the seven-month period from June 1, 2013, to December 31, 2013). Higher DD&A in 2013, compared with 2012, primarily reflected the seven months of expense from our acquired oil and gas operations, and asset additions and higher production at our mining operations.

Impairment of Oil and Gas Properties

Under the full cost accounting rules, a "ceiling test" is conducted each quarter to review the carrying value of the oil and gas properties for impairment. At September 30, 2014, and December 31, 2014, net capitalized costs with respect to FM O&G's proved U.S. oil and gas properties exceeded the related ceiling limitation, which resulted in the recognition of impairment charges totaling $3.7 billion in 2014. Refer to Note 1 and "Critical Accounting Estimates - Impairment of Oil and Gas Properties" for further discussion.

Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses totaled $592 million in 2014, $657 million in 2013 and $431 million in 2012. Excluding amounts for our oil and gas operations, which totaled $207 million in 2014 and $120 million for the seven-month period from June 1, 2013, to December 31, 2013, selling, general and administrative expenses were lower in 2014, compared with 2013, primarily because of transaction and related costs totaling $80 million incurred during 2013 associated with the oil and gas acquisitions. Higher selling, general and administrative expenses in 2013, compared with 2012, primarily reflected the addition of costs associated with oil and gas operations, and transaction and related costs associated with the oil and gas acquisitions.

Consolidated selling, general and administrative expenses exclude capitalized general and administrative expenses at our oil and gas operations totaling $143 million in 2014 and $67 million for the seven-month period from June 1, 2013, to December 31, 2013.

Mining Exploration and Research Expenses

Consolidated exploration and research expenses for our mining operations totaled $126 million in 2014, $210 million in 2013 and $285 million in 2012. Our exploration activities are generally near our existing mines with a focus on opportunities to expand reserves and resources to support development of additional future production capacity in the large mineral districts where we currently operate. Exploration results continue to indicate opportunities for what we believe could be significant future potential reserve additions in North and South America, and in the Tenke minerals district. The drilling data in North America also continue to indicate the potential for significantly expanded sulfide production. Drilling results and exploration modeling in North America have identified large-scale potential sulfide resources in the Morenci and Safford/Lone Star districts, providing a long-term pipeline for future growth in reserves and production capacity in an established minerals district.

For the year 2015, mining exploration and research expenditures are expected to total approximately $140 million, including approximately $100 million for exploration. As further discussed in Note 1, under the full cost method of accounting, exploration costs for our oil and gas operations are capitalized to oil and gas properties.

Environmental Obligations and Shutdown Costs

Environmental obligation costs (credits) reflect net revisions to our long-term environmental obligations, which will vary from period to period because of changes to environmental laws and regulations, the settlement of environmental matters and/or circumstances affecting our operations that could result in significant changes in our estimates (refer to "Critical Accounting Estimates - Environmental Obligations" for further discussion). Shutdown costs include care and maintenance costs and any litigation, remediation or related expenditures associated with closed facilities or operations. Net charges (credits) for environmental obligations and shutdown costs totaled $119 million in 2014, compared with $66 million in 2013 and $(22) million in 2012. Refer to Note 12 for further discussion of environmental obligations and litigation matters.

Goodwill Impairment

We performed a goodwill assessment in fourth-quarter 2014, which resulted in an impairment charge of $1.7 billion for the full carrying value. Refer to Notes 1 and 2, and "Critical Accounting Estimates - Impairment of Goodwill" for further discussion.

Net Gain on Sales of Assets

Net gain on sales of assets totaled $717 million for the year 2014, primarily related to the sale of Candelaria/Ojos. Refer to Note 2 for further discussion.

Interest Expense, Net

Consolidated interest expense (excluding capitalized interest) totaled $866 million in 2014, $692 million in 2013 and $267 million in 2012. Increased interest expense in 2014 and 2013 was primarily associated with acquisition-related debt and assumed debt of PXP. Refer to Note 8 for further discussion.

Capitalized interest is related to the level of expenditures for our development projects and average interest rates on our borrowings, and totaled $236 million in 2014, compared with $174 million in 2013 and $81 million in 2012.

Net Gain (Loss) on Early Extinguishment of Debt

During 2014, we recorded net gains on early extinguishment of debt totaling $73 million primarily related to the senior note redemptions and tender offers. During 2013, we recorded net losses on early extinguishment of debt totaling $35 million associated with the termination of the bridge loan facilities for the oil and gas acquisitions, partly offset by a gain on the redemption of McMoRan Exploration Co.'s (MMR) remaining outstanding 11.875% Senior Notes. During 2012, we recorded losses on early extinguishment of debt totaling $168 million associated with the redemption of our remaining 8.375% Senior Notes. Refer to Note 8 for further discussion of these transactions.

Gain on Investment in MMR

During 2013, we recorded a gain totaling $128 million related to the carrying value of our preferred stock investment in and the subsequent acquisition of MMR. Refer to Note 2 for further discussion.

Provision for Income Taxes

Following is a summary of the approximate amounts used in the calculation of our consolidated provision for income taxes for the years ended December 31 (in millions, except percentages):

	2014										2013
	Income (Loss)a				Effective Tax Rate		Income Tax (Provision) Benefit				Incomea				Effective Tax Rate		Income Tax (Provision) Benefit
U.S.	$	1,857			30%		$	(550	)	b,c	$	1,080			23%		$	(243	)
South America	1,221				43%		(531		)	d	2,021				36%		(720		)
Indonesia	709				41%		(293		)		1,370				44%		(603		)
Africa	379				31%		(116		)		425				31%		(131		)
Impairment of oil and gas properties	(3,737		)		38%		1,413				—				N/A		—
Gain on sale of Candelaria/Ojos	671				33%		(221		)		—				N/A		—
Eliminations and other	193				N/A		(26		)		17				N/A		23
	1,293				25%	g	(324		)		4,913				34%		(1,674		)
Adjustments	(1,717		)	e	N/A		—				—				N/A		199			f
Consolidated FCX	$	(424	)		(76)%		$	(324	)		$	4,913			30%		$	(1,475	)

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

b.	Includes an $84 million charge for deferred taxes recorded in connection with the allocation of goodwill to the sale of Eagle Ford properties.

c.	Includes a net benefit of $41 million, comprised of $57 million related to changes in U.S. state income tax filing positions, partly offset by a charge of $16 million for a change in U.S. federal income tax law.

d.	Includes charges related to changes in Chilean and Peruvian tax rules totaling $78 million ($60 million net of noncontrolling interests).

e.	Reflects goodwill impairment charges, which were non-deductible for tax purposes.

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

g.

Our consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which we conduct operations. Accordingly, variations in the relative proportions of jurisdictional income result in fluctuations to our consolidated effective income tax rate. Assuming average prices of $2.60 per pound for copper, $1,300 per ounce for gold, $9 per pound for molybdenum and Brent crude oil of $50 per barrel for the year ended 2015 and achievement of current sales volume and cost estimates, we estimate no tax provision for 2015. The effective tax rate at $3.00 per pound of copper and $65 per barrel of Brent crude oil for 2015, would approximate 30 percent.

Following is a summary of the approximate amounts used in the calculation of our consolidated provision for income taxes for the year ended December 31 (in millions, except percentages):

	2012
	Incomea				Effective Tax Rate		Income Tax (Provision) Benefit
U.S.	$	1,571			23%		$	(357	)
South America	2,211				36%		(791		)	b
Indonesia	1,287				39%		(497		)
Africa	357				31%		(112		)
Eliminations and other	61				N/A		13
	5,487				32%		(1,744		)
Adjustments	—				N/A		234			c
Consolidated FCX	$	5,487			28%		$	(1,510	)

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

b.	Cerro Verde signed a new 15-year mining stability agreement with the Peruvian government, which became effective January 1, 2014. In connection with the new mining stability agreement, Cerro Verde's income tax rate increased from 30 percent to 32 percent, and we recognized additional deferred tax expense of $29 million ($25 million net of noncontrolling interests) in 2012.

c.	Reflects the reversal of a net deferred tax liability totaling $234 million ($123 million of noncontrolling interest) related to reinvested profits at Cerro Verde that were not distributed prior to expiration of its 1998 stability agreement on December 31, 2013.

Refer to Note 11 for further discussion of income taxes.

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 interest in the Morenci unincorporated joint venture using the proportionate consolidation method.

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

Operating and Development Activities. We have increased production from our North America copper mines by approximately 50 percent over the past five years and continue to evaluate a number of opportunities to add production capacity following positive exploration results. Future investments will be undertaken based on the results of economic and technical feasibility studies and market conditions.

Morenci Mill Expansion. At Morenci, the mill expansion project commenced operations in May 2014 and is expected to achieve full rates in first-quarter 2015. The project targets average incremental annual production of approximately 225 million pounds of copper through an increase in milling rates from 50,000 metric tons of ore per day to approximately 115,000 metric tons of ore per day. Morenci's mill rates averaged 100,900 metric tons per day in fourth-quarter 2014. Morenci's copper production is expected to average over 900 million pounds per year over the next five years, compared with 691 million pounds in 2014.

Construction of the expanded Morenci milling facility is substantially complete. Remaining items include completion of the molybdenum circuit, which adds capacity of approximately 9 million pounds of molybdenum per year, and the construction of an expanded tailings storage facility. Both are expected to be completed in 2015. At December 31, 2014, approximately $1.6 billion had been incurred for the Morenci mill expansion project ($0.6 billion during 2014), with approximately $55 million remaining to be incurred.

Operating Data. Following is summary operating data for the North America copper mines for the years ended December 31:

	2014				2013				2012
Operating Data, Net of Joint Venture Interest
Copper (recoverable)
Production (millions of pounds)	1,670				1,431				1,363
Sales, excluding purchases (millions of pounds)	1,664				1,422				1,351
Average realized price per pound	$	3.13			$	3.36			$	3.64
Molybdenum (millions of recoverable pounds)
Productiona	33				32				36
100% Operating Data
SX/EW operations
Leach ore placed in stockpiles (metric tons per day)	1,005,300				1,003,500				998,600
Average copper ore grade (percent)	0.25				0.22				0.22
Copper production (millions of recoverable pounds)	963				889				866
Mill operations
Ore milled (metric tons per day)	273,800				246,500				239,600
Average ore grade (percent):
Copper	0.45				0.39				0.37
Molybdenum	0.03				0.03				0.03
Copper recovery rate (percent)	85.8				85.3				83.9
Copper production (millions of recoverable pounds)	828				642				592

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

2014 Compared with 2013

Copper sales volumes from our North America copper mines increased to 1.66 billion pounds in 2014, compared with 1.42 billion pounds in 2013, primarily reflecting higher mining and milling rates at Morenci and higher ore grades at Chino.

Copper sales from North America are expected to approximate 1.9 billion pounds in 2015 as a result of higher mill rates from the Morenci expansion. Refer to "Outlook" for projected molybdenum sales volumes.

2013 Compared with 2012

Copper sales volumes from our North America copper mines increased to 1.42 billion pounds in 2013, compared with 1.35 billion pounds in 2012, primarily because of higher mining and milling rates, higher copper ore grades and higher recovery rates.

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

Gross Profit 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 years ended December 31. 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.

	2014												2013
	By-				Co-Product Method								By-				Co-Product Method
	Product Method				Copper				Molyb- denuma				Product Method				Copper				Molyb- denuma
Revenues, excluding adjustments	$	3.13			$	3.13			$	11.52			$	3.36			$	3.36			$	10.79
Site production and delivery, before net noncash
and other costs shown below	1.85				1.81				2.74				2.00				1.94				3.79
By-product credits	(0.24		)		—				—				(0.24		)		—				—
Treatment charges	0.12				0.12				—				0.11				0.11				—
Unit net cash costs	1.73				1.93				2.74				1.87				2.05				3.79
Depreciation, depletion and amortization	0.29				0.28				0.14				0.28				0.27				0.22
Noncash and other costs, net	0.09				0.09				0.03				0.14			b	0.14				0.04
Total unit costs	2.11				2.30				2.91				2.29				2.46				4.05
Revenue adjustments, primarily for pricing on prior period open sales	—				—				—				—				—				—
Gross profit per pound	$	1.02			$	0.83			$	8.61			$	1.07			$	0.90			$	6.74
Copper sales (millions of recoverable pounds)	1,657				1,657								1,416				1,416
Molybdenum sales (millions of recoverable pounds)a									33												32

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 $76 million ($0.05 per pound) associated with updated mine plans at Morenci that resulted in a loss in recoverable copper in leach stockpiles.

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. During 2014, average unit net cash costs (net of by-product credits) for the North America copper mines ranged from $1.24 per pound to $2.32 per pound at the individual mines and averaged $1.73 per pound. Lower average unit net cash costs (net of by-product credits) in 2014, compared with $1.87 per pound in 2013, primarily reflected higher copper sales volumes.

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

Assuming achievement of current sales volume and cost estimates and an average price of $9 per pound of molybdenum for 2015, average unit net cash costs (net of by-product credits) for our North America copper mines are expected to approximate $1.67 per pound of copper in 2015. North America's average unit net cash costs for 2015 would change by approximately $0.04 per pound for each $2 per pound change in the average price of molybdenum during 2015.

	2013												2012
	By-				Co-Product Method								By-				Co-Product Method
	Product Method				Copper				Molyb- denuma				Product Method				Copper				Molyb- denuma
Revenues, excluding adjustments	$	3.36			$	3.36			$	10.79			$	3.64			$	3.64			$	13.00
Site production and delivery, before net noncash
and other costs shown below	2.00				1.94				3.79				1.91				1.75				6.32
By-product credits	(0.24		)		—				—				(0.36		)		—				—
Treatment charges	0.11				0.11				—				0.12				0.11				—
Unit net cash costs	1.87				2.05				3.79				1.67				1.86				6.32
Depreciation, depletion and amortization	0.28				0.27				0.22				0.26				0.24				0.48
Noncash and other costs, net	0.14			b	0.14				0.04				0.10				0.10				0.09
Total unit costs	2.29				2.46				4.05				2.03				2.20				6.89
Revenue adjustments, primarily for pricing on prior period open sales	—				—				—				0.01				0.01				—
Gross profit per pound	$	1.07			$	0.90			$	6.74			$	1.62			$	1.45			$	6.11
Copper sales (millions of recoverable pounds)	1,416				1,416								1,347				1,347
Molybdenum sales (millions of recoverable pounds)a									32												36

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 $76 million ($0.05 per pound) associated with updated mine plans at Morenci that resulted in a loss in recoverable copper in leach stockpiles.

Unit net cash costs (net of by-product credits) for our North America copper mines increased to $1.87 per pound of copper in 2013, compared with $1.67 per pound in 2012, primarily reflecting lower molybdenum credits and increased mining and milling activities, partly offset by higher copper sales volumes.

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). All operations in South America are consolidated in our financial statements.

On November 3, 2014, we completed the sale of our 80 percent ownership interests in Candelaria/Ojos for $1.8 billion in cash. Refer to Note 2 for further discussion.

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

Operating and Development Activities.

Cerro Verde Expansion. Construction activities associated with a large-scale expansion at Cerro Verde are advancing toward completion in late 2015. Detailed engineering and major procurement activities are complete and construction progress is more than 50 percent complete. The project will expand the concentrator facilities from 120,000 metric tons of ore per day to 360,000 metric tons of ore per day and provide incremental annual production of approximately 600 million pounds of copper and 15 million pounds of molybdenum beginning in 2016. As of December 31, 2014, $3.1 billion had been incurred for this project ($1.6 billion during 2014), with approximately $1.5 billion remaining to be incurred.

El Abra Sulfide. We continue to evaluate a potential large-scale milling operation at El Abra to process additional sulfide material and to achieve higher recoveries. Exploration results in recent years at El Abra indicate a significant sulfide resource, which could potentially support a major mill project. Future investments will be dependent on technical studies, economic factors and global copper market conditions.

Operating Data. Following is summary operating data for our South America mining operations for the years ended December 31.

	2014a				2013				2012
Copper (recoverable)
Production (millions of pounds)	1,151				1,323				1,257
Sales (millions of pounds)	1,135				1,325				1,245
Average realized price per pound	$	3.08			$	3.30			$	3.58
Gold (recoverable)
Production (thousands of ounces)	72				101				83
Sales (thousands of ounces)	67				102				82
Average realized price per ounce	$	1,271			$	1,350			$	1,673
Molybdenum (millions of recoverable pounds)
Productionb	11				13				8
SX/EW operations
Leach ore placed in stockpiles (metric tons per day)	275,200				274,600				229,300
Average copper ore grade (percent)	0.48				0.50				0.55
Copper production (millions of recoverable pounds)	491				448				457
Mill operations
Ore milled (metric tons per day)	180,500				192,600				191,400
Average ore grade:
Copper (percent)	0.54				0.65				0.60
Gold (grams per metric ton)	0.10				0.12				0.10
Molybdenum (percent)	0.02				0.02				0.02
Copper recovery rate (percent)	88.1				90.9				90.1
Copper production (millions of recoverable pounds)	660				875				800

a.	Includes the results of Candelaria/Ojos through November 3, 2014.

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

2014 Compared with 2013

Consolidated copper sales volumes from South America totaled 1.14 billion pounds in 2014, compared with 1.33 billion in 2013, primarily reflecting anticipated lower ore grades at Candelaria and Cerro Verde, and the sale of Candelaria/Ojos in November 2014.

For the year 2015, consolidated sales volumes from South America mines are expected to approximate 0.9 billion pounds of copper. Refer to "Outlook" for projected gold and molybdenum sales volumes.

2013 Compared with 2012

Copper sales volumes from our South America mining operations totaled 1.33 billion pounds in 2013, compared with 1.25 billion pounds in 2012, primarily reflecting higher ore grades at Candelaria, partly offset by lower ore grades at Cerro Verde.

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

Gross Profit per Pound of Copper

The following tables summarize unit net cash costs and gross profit per pound at our South America mining operations for the years ended December 31. 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.

	2014a								2013
	By-Product Method				Co-Product Method				By-Product Method				Co-Product Method
Revenues, excluding adjustments	$	3.08			$	3.08			$	3.30			$	3.30
Site production and delivery, before net noncash
and other costs shown below	1.62				1.50				1.53			b	1.42
By-product credits	(0.22		)		—				(0.27		)		—
Treatment charges	0.17				0.17				0.17				0.17
Royalty on metals	0.01				0.01				—				—
Unit net cash costs	1.58				1.68				1.43				1.59
Depreciation, depletion and amortization	0.32				0.30				0.26				0.24
Noncash and other costs, net	0.06				0.07				0.04				0.03
Total unit costs	1.96				2.05				1.73				1.86
Revenue adjustments, primarily for pricing on
prior period open sales	(0.05		)		(0.05		)		(0.03		)		(0.03		)
Gross profit per pound	$	1.07			$	0.98			$	1.54			$	1.41
Copper sales (millions of recoverable pounds)	1,135				1,135				1,325				1,325

a.	Includes the results of Candelaria/Ojos through November 3, 2014.

b.	Includes labor agreement costs totaling $36 million ($0.03 per pound) at Cerro Verde.

Our South America mines have varying cost structures because of differences in ore grades and characteristics, processing costs, by-products and other factors. During 2014, unit net cash costs (net of by-product credits) for the South America mines ranged from $1.47 per pound to $1.96 per pound at the individual mines and averaged $1.58 per pound. Average unit net cash costs (net of by-product credits) for our South America mining operations increased to $1.58 per pound of copper in 2014, compared with $1.43 per pound in 2013, primarily reflecting lower sales volumes and by-product credits.

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. The increase in unit depreciation in 2014, compared with 2013, primarily relates to asset additions at Cerro Verde.

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 $9 per pound of molybdenum in 2015, we estimate that average unit net cash costs (net of by-product credits) for our South America mining operations would approximate $1.70 per pound of copper in 2015.

	2013								2012
	By-Product Method				Co-Product Method				By-Product Method				Co-Product Method
Revenues, excluding adjustments	$	3.30			$	3.30			$	3.58			$	3.58
Site production and delivery, before net noncash
and other costs shown below	1.53			a	1.42				1.60			a	1.49
By-product credits	(0.27		)		—				(0.26		)		—
Treatment charges	0.17				0.17				0.16				0.16
Unit net cash costs	1.43				1.59				1.50				1.65
Depreciation, depletion and amortization	0.26				0.24				0.23				0.22
Noncash and other costs, net	0.04				0.03				0.09				0.06
Total unit costs	1.73				1.86				1.82				1.93
Revenue adjustments, primarily for pricing on
prior period open sales	(0.03		)		(0.03		)		0.09				0.09
Gross profit per pound	$	1.54			$	1.41			$	1.85			$	1.74
Copper sales (millions of recoverable pounds)	1,325				1,325				1,245				1,245

a.	Includes labor agreement costs totaling $36 million ($0.03 per pound) at Cerro Verde in 2013 and $16 million ($0.01 per pound) at Candelaria in 2012.

Unit net cash costs (net of by-product credits) for our South America mining operations decreased to $1.43 per pound of copper in 2013, compared with $1.50 per pound in 2012, primarily reflecting higher volumes.

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 (refer to Notes 3 and 13).

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

PT-FI proportionately consolidates an unincorporated joint venture with Rio Tinto plc (Rio Tinto) established in 1996, 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. As of December 31, 2014, the amounts allocated 100 percent to PT-FI remaining to be produced totaled 7.5 billion pounds of copper, 10.9 million ounces of gold and 20.8 million ounces of silver. Based on the current mine plans, PT-FI anticipates that it will be allocated most of the production and related revenues and costs through 2021. Under the joint venture arrangements, PT-FI's share of copper production and sales totaled 98 percent in 2014, 99 percent in 2013 and 100 percent in 2012, and of gold production and sales totaled nearly 100 percent for the last three years. Refer to Note 3 for further discussion of our joint venture with Rio Tinto. Refer to "Regulatory Matters" below and Note 13 for further discussion of PT-FI's Contract of Work (COW) with the Indonesian government.

Refer to "Risk Factors" contained in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2014, for discussion of risks associated with operations in Indonesia.

Regulatory Matters. On July 25, 2014, PT-FI entered into a Memorandum of Understanding (MOU) with the Indonesian government under which PT-FI and the government agreed to negotiate an amended COW to address provisions related to the size of PT-FI’s concession area, royalties and taxes, domestic processing and refining, divestment, local content, and continuation of operations post-2021. Execution of the MOU enabled the resumption of concentrate exports in August 2014, which had been suspended since January 2014. The MOU has been extended to July 25, 2015. PT-FI is engaged in active discussions with the Indonesian government regarding an amended COW.

Provisions being addressed include the development of new copper smelting and refining capacity in Indonesia, provisions for divestment to the Indonesian government and/or Indonesian nationals of up to a 30 percent interest (an additional 20.64 percent interest) in PT-FI at fair value, and timely granting rights for the continuation of

operations from 2022 through 2041. Negotiations are taking into consideration PT-FI’s need for assurance of legal and fiscal terms post-2021 for PT-FI to continue with its large-scale investment program for the development of its underground reserves.

Effective with the signing of the MOU, PT-FI provided a $115 million assurance bond to support its commitment for smelter development, agreed to increase royalties to 4.0 percent for copper and 3.75 percent for gold from the previous rates of 3.5 percent for copper and 1.0 percent for gold, and to pay export duties as set forth in a new regulation. PT-FI's royalties totaled $115 million in 2014, $109 million in 2013 and $93 million in 2012. The Indonesian government revised its January 2014 regulations regarding export duties, which are now set at 7.5 percent, declining to 5.0 percent when smelter development progress exceeds 7.5 percent and are eliminated when development progress exceeds 30 percent. PT-FI's export duties totaled $77 million in 2014.

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

PT-FI is advancing plans for the construction of new smelter capacity in parallel with completing negotiations of its long-term operating rights and will also discuss the possibility of expanding industrial activities in Papua in connection with its long-term development plans. PT-FI has identified a site adjacent to the existing PT Smelting site in Gresik, Indonesia, for the construction of additional smelter capacity.

PT-FI is required to apply for renewal of export permits at six-month intervals. In January 2015, PT-FI obtained a renewal of its export license through July 25, 2015.

Operating and Development Activities. We have several projects in progress in the Grasberg minerals district related to the development of large-scale, long-lived, high-grade underground ore bodies. In aggregate, these underground ore bodies are expected to ramp up over several years to process approximately 240,000 metric tons of ore per day following the transition from the Grasberg open pit, currently anticipated to occur in late 2017. Development of the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) underground mines is advancing to enable DMLZ to commence production in late 2015 and the Grasberg Block Cave mine to commence production in early 2018. Over the next five years, estimated aggregate capital spending on these projects is currently expected to average $0.9 billion per year ($0.7 billion per year net to PT-FI). Considering the long-term nature and size of these projects, actual costs could vary from these estimates. Additionally, PT-FI may reduce or defer these activities pending resolution of negotiations for an amended COW.

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

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

The Grasberg Block Cave underground mine accounts for more than 40 percent of our recoverable proven and probable reserves in Indonesia. Production at the Grasberg Block Cave mine is expected to commence in early 2018, at the end of mining the Grasberg open pit. Targeted production rates once the Grasberg Block Cave mining operation reaches full capacity are expected to approximate 160,000 metric tons of ore per day.

Aggregate mine development capital for the Grasberg Block Cave mine and associated Common Infrastructure is expected to approximate $5.7 billion (incurred between 2008 to 2021), with PT-FI’s share totaling approximately $5.1 billion. Aggregate project costs totaling $1.8 billion have been incurred through December 31, 2014 ($0.5 billion during 2014).

DMLZ. The DMLZ ore body lies below the DOZ mine at the 2,590-meter elevation and represents the downward continuation of mineralization in the Ertsberg East Skarn system and neighboring Ertsberg porphyry. We plan to

mine the ore body using a block-cave method with production beginning in late 2015. Targeted production rates once the DMLZ mining operation reaches full capacity are expected to approximate 80,000 metric tons of ore per day. Drilling efforts continue to determine the extent of this ore body. Aggregate mine development capital costs for the DMLZ mine are expected to approximate $2.7 billion (incurred between 2009 to 2020), with PT-FI’s share totaling approximately $1.6 billion. Aggregate project costs totaling $1.2 billion have been incurred through December 31, 2014 ($0.3 billion during 2014).

Operating Data. Following is summary operating data for our Indonesia mining operations for the years ended December 31.

	2014				2013				2012
Operating Data, Net of Joint Venture Interest
Copper (recoverable)
Production (millions of pounds)	636				915				695
Sales (millions of pounds)	664				885				716
Average realized price per pound	$	3.01			$	3.28			$	3.58
Gold (recoverable)
Production (thousands of ounces)	1,130				1,142				862
Sales (thousands of ounces)	1,168				1,096				915
Average realized price per ounce	$	1,229			$	1,312			$	1,664
100% Operating Data
Ore milled (metric tons per day):a
Grasberg open pit	69,100				127,700				118,800
DOZ underground mineb	50,500				49,400				44,600
Big Gossan underground minec	900				2,100				1,600
Total	120,500				179,200				165,000
Average ore grade:
Copper (percent)	0.79				0.76				0.62
Gold (grams per metric ton)	0.99				0.69				0.59
Recovery rates (percent):
Copper	90.3				90.0				88.7
Gold	83.2				80.0				75.7
Production (recoverable):
Copper (millions of pounds)	651				928				695
Gold (thousands of ounces)	1,132				1,142				862

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

b.	Ore milled from the DOZ underground mine is expected to ramp up to 70,000 metric tons of ore per day in the second half of 2015.

c.	Ore milled from the Big Gossan underground mine is expected to ramp up to 7,000 metric tons of ore per day in 2018.

2014 Compared with 2013

Indonesia's sales volumes totaled 664 million pounds of copper and 1.2 million ounces of gold in 2014, compared with 885 million pounds of copper and 1.1 million ounces of gold in 2013, reflecting lower mill throughput resulting from the export restrictions and labor-related work stoppages, partly offset by higher gold ore grades. During fourth-quarter 2014, reduced workforce attendance levels in certain operating areas (primarily in the Grasberg open pit) unfavorably impacted productivity. Following discussions with union leadership and other stakeholders, attendance levels improved significantly by year-end 2014 and in January 2015.

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 1.0 billion pounds of copper and 1.3 million ounces of gold for 2015. PT-FI has updated its mine plans to incorporate lower than planned mining rates associated with work stoppages in late 2014 and the impact of export restrictions in the first half of 2014, resulting in a deferral of completion of mining the open pit from mid-2017 to late 2017.

2013 Compared with 2012

Sales volumes from our Indonesia mining operations increased to 885 million pounds of copper and 1.1 million ounces of gold in 2013, compared with 716 million pounds of copper and 915 thousand ounces of gold in 2012, primarily reflecting higher ore grades and increased mill rates.

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 metal mining companies, although our measure may not be comparable to similarly titled measures reported by other companies.

Gross Profit per Pound of Copper/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 years ended December 31. Refer to “Production Revenues and Production Costs” for an explanation of “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

	2014												2013
	By- Product				Co-Product Method								By- Product				Co-Product Method
	Method				Copper				Gold				Method				Copper				Gold
Revenues, excluding adjustments	$	3.01			$	3.01			$	1,229			$	3.28			$	3.28			$	1,312
Site production and delivery, before net noncash
and other costs shown below	2.76			a	1.59				648				2.46				1.62				648
Gold and silver credits	(2.25		)		—				—				(1.69		)		—				—
Treatment charges	0.26				0.15				61				0.23				0.15				61
Export duties	0.12				0.06				27				—				—				—
Royalty on metals	0.17			b	0.10				41				0.12				0.08				33
Unit net cash costs	1.06				1.90				777				1.12				1.85				742
Depreciation and amortization	0.40				0.23				94				0.28				0.19				73
Noncash and other costs, net	0.29				0.17				68				0.13				0.09				35
Total unit costs	1.75				2.30				939				1.53				2.13				850
Revenue adjustments, primarily for pricing on
prior period open sales	(0.08		)		(0.08		)		15				—				—				(1		)
PT Smelting intercompany profit (loss)	0.05				0.03				12				(0.02		)		(0.01		)		(6		)
Gross profit per pound/ounce	$	1.23			$	0.66			$	317			$	1.73			$	1.14			$	455
Copper sales (millions of recoverable pounds)	664				664								885				885
Gold sales (thousands of recoverable ounces)									1,168												1,096

a.	Excludes fixed costs totaling $0.22 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.

b.	Includes $0.05 per pound of copper associated with increased royalty rates.

A significant portion of PT-FI's costs are fixed and unit costs vary depending on sales volumes. Indonesia's unit net cash costs (including gold and silver credits) averaged $1.06 per pound of copper in 2014, compared with $1.12 per pound in 2013, primarily reflecting lower copper sales volumes, the impact of export duties and increased royalty rates, which were more than offset by higher gold and silver credits as a result of lower copper sales volumes.

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

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

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

PT Smelting intercompany profit (loss) 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.

Assuming achievement of current sales volume and cost estimates, and an average gold price of $1,300 per ounce for 2015, we estimate that Indonesia's unit net cash costs (net of gold and silver credits) are expected to approximate $1.19 per pound of copper for the year 2015. Indonesia's projected unit net cash costs would change by approximately $0.06 per pound for each $50 per ounce change in the average price of gold during 2015. Because of the fixed nature of a large portion of Indonesia's costs, unit costs vary from quarter to quarter depending on copper and gold volumes.

	2013												2012
	By- Product				Co-Product Method								By- Product				Co-Product Method
	Method				Copper				Gold				Method				Copper				Gold
Revenues, excluding adjustments	$	3.28			$	3.28			$	1,312			$	3.58			$	3.58			$	1,664
Site production and delivery, before net noncash
and other costs shown below	2.46				1.62				648				3.12				1.93				894
Gold and silver credits	(1.69		)		—				—				(2.22		)		—				—
Treatment charges	0.23				0.15				61				0.21				0.13				61
Royalty on metals	0.12				0.08				33				0.13				0.08				38
Unit net cash costs	1.12				1.85				742				1.24				2.14				993
Depreciation and amortization	0.28				0.19				73				0.30				0.18				85
Noncash and other costs, net	0.13				0.09				35				0.11				0.07				33
Total unit costs	1.53				2.13				850				1.65				2.39				1,111
Revenue adjustments, primarily for pricing on
prior period open sales	—				—				(1		)		0.02				0.02				3
PT Smelting intercompany loss	(0.02		)		(0.01		)		(6		)		(0.05		)		(0.03		)		(15		)
Gross profit per pound/ounce	$	1.73			$	1.14			$	455			$	1.90			$	1.18			$	541
Copper sales (millions of recoverable pounds)	885				885								716				716
Gold sales (thousands of recoverable ounces)									1,096												915

Unit net cash costs (net of gold and silver credits) for our Indonesia mining operations averaged $1.12 per pound of copper in 2013, compared with $1.24 per pound in 2012, primarily reflecting higher volumes.

Africa Mining

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

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

Operating and Development Activities. TFM completed its second phase expansion project in early 2013, which included increasing mine, mill and processing capacity. Construction of a second sulphuric acid plant is under way, with completion expected in 2016. We continue to engage in exploration activities and metallurgical testing to evaluate the potential of the highly prospective minerals district at Tenke. These analyses are being incorporated in future plans for potential expansions of production capacity. Future expansions are subject to a number of factors, including power availability, economic and market conditions, and the business and investment climate in the DRC.

Operating Data. Following is summary operating data for our Africa mining operations for the years ended December 31.

	2014				2013				2012
Copper (recoverable)
Production (millions of pounds)	447				462				348
Sales (millions of pounds)	425				454				336
Average realized price per pounda	$	3.06			$	3.21			$	3.51
Cobalt (contained)
Production (millions of pounds)	29				28				26
Sales (millions of pounds)	30				25				25
Average realized price per pound	$	9.66			$	8.02			$	7.83
Ore milled (metric tons per day)	14,700				14,900				13,000
Average ore grade (percent):
Copper	4.06				4.22				3.62
Cobalt	0.34				0.37				0.37
Copper recovery rate (percent)	92.6				91.4				92.4

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

2014 Compared with 2013

Copper sales volumes from TFM decreased to 425 million pounds in 2014, compared with 454 million pounds in 2013, primarily because of lower ore grades.

Consolidated sales volumes from our Africa mining operations are expected to approximate 445 million pounds of copper and 32 million pounds of cobalt in 2015.

2013 Compared with 2012

Copper sales volumes from our Africa mining operations increased to 454 million pounds of copper in 2013, compared with 336 million pounds of copper in 2012, primarily reflecting increased mining and milling rates resulting from the expansion project completed in early 2013 and higher ore grades.

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

Gross Profit 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 years ended December 31. Refer to “Production Revenues and Production Costs” for an explanation of “by-product” and “co-product” methods and a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

	2014												2013
	By-Product				Co-Product Method								By-Product				Co-Product Method
	Method				Copper				Cobalt				Method				Copper				Cobalt
Revenues, excluding adjustmentsa	$	3.06			$	3.06			$	9.66			$	3.21			$	3.21			$	8.02
Site production and delivery, before net noncash
and other costs shown below	1.56				1.39				5.30				1.43				1.35				4.35
Cobalt creditsb	(0.48		)		—				—				(0.29		)		—				—
Royalty on metals	0.07				0.06				0.16				0.07				0.06				0.14
Unit net cash costs	1.15				1.45				5.46				1.21				1.41				4.49
Depreciation, depletion and amortization	0.54				0.46				1.13				0.54				0.48				1.00
Noncash and other costs, net	0.05				0.04				0.11				0.06				0.06				0.11
Total unit costs	1.74				1.95				6.70				1.81				1.95				5.60
Revenue adjustments, primarily for pricing on
prior period open sales	—				—				0.07				—				—				0.09
Gross profit per pound	$	1.32			$	1.11			$	3.03			$	1.40			$	1.26			$	2.51
Copper sales (millions of recoverable pounds)	425				425								454				454
Cobalt sales (millions of contained pounds)									30												25

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

b.	Net of cobalt downstream processing and freight costs.

Lower unit net cash costs (net of cobalt credits) for our Africa mining operations of $1.15 per pound of copper in 2014, compared with $1.21 per pound of copper in 2013, primarily reflecting higher cobalt credits, partly offset by higher site production and delivery costs associated with input and mine logistics support costs.

Assuming achievement of current sales volume and cost estimates, and an average cobalt market price of $13 per pound for 2015, average unit net cash costs (net of cobalt credits) are expected to approximate $1.31 per pound of copper in 2015. Africa's projected unit net cash costs for 2015 would change by $0.09 per pound for each $2 per pound change in the average price of cobalt during 2015.

	2013												2012
	By-Product				Co-Product Method								By-Product				Co-Product Method
	Method				Copper				Cobalt				Method				Copper				Cobalt
Revenues, excluding adjustmentsa	$	3.21			$	3.21			$	8.02			$	3.51			$	3.51			$	7.83
Site production and delivery, before net noncash
and other costs shown below	1.43				1.35				4.35				1.49				1.39				4.86
Cobalt creditsb	(0.29		)		—				—				(0.33		)		—				—
Royalty on metals	0.07				0.06				0.14				0.07				0.06				0.12
Unit net cash costs	1.21				1.41				4.49				1.23				1.45				4.98
Depreciation, depletion and amortization	0.54				0.48				1.00				0.52				0.47				0.67
Noncash and other costs, net	0.06				0.06				0.11				0.09				0.08				0.11
Total unit costs	1.81				1.95				5.60				1.84				2.00				5.76
Revenue adjustments, primarily for pricing on
prior period open sales	—				—				0.09				0.02				0.02				0.09
Gross profit per pound	$	1.40			$	1.26			$	2.51			$	1.69			$	1.53			$	2.16
Copper sales (millions of recoverable pounds)	454				454								336				336
Cobalt sales (millions of contained pounds)									25												25

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

b.	Net of cobalt downstream processing and freight costs.

Unit net cash costs (net of cobalt credits) for our Africa mining operations of $1.21 per pound of copper in 2013 were lower than unit net cash costs of $1.23 per pound of copper in 2012, primarily reflecting higher copper sales volumes, partly offset by lower cobalt credits.

Molybdenum Mines

We have two wholly owned molybdenum mines in North America – the Henderson underground mine and the Climax open-pit mine, both in Colorado. The Henderson and Climax mines produce high-purity, chemical-grade molybdenum concentrates, which are typically further processed into value-added molybdenum chemical products. The majority of molybdenum concentrates produced at the Henderson and Climax mines, as well as from North and South America copper mines, are processed at our own conversion facilities.

Production from our molybdenum mines totaled 51 million pounds of molybdenum in 2014, 49 million pounds in 2013 and 41 million pounds in 2012 . Refer to "Consolidated Results" for our consolidated molybdenum operating data, which includes sales of molybdenum produced at our molybdenum mines and at our North and South America copper mines, and refer to "Outlook" for projected consolidated molybdenum sales volumes.

Unit Net Cash Costs 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 totaled $7.08 per pound of molybdenum in 2014, compared with $7.15 per pound in 2013 and with Henderson's unit net cash costs of $7.07 per pound in 2012. Assuming achievement of current sales volume and cost estimates, we estimate unit net cash costs for the molybdenum mines to average $7.60 per pound of molybdenum in 2015. Refer to "Product Revenues and Production Costs" for a reconciliation of unit net cash costs per pound to production and delivery costs applicable to sales reported in our consolidated financial statements.

Smelting & Refining

We wholly own and operate a smelter in Miami, Arizona and Atlantic Copper, a smelter and refinery in Spain. Additionally, PT-FI owns 25 percent of PT Smelting, a smelter and refinery in Gresik, Indonesia. Treatment charges for smelting and refining copper concentrates consist of a base rate and, in certain contracts, price participation based on copper prices. Treatment charges represent a cost to our mining operations and income to Atlantic Copper and PT Smelting. Thus, higher treatment charges benefit our smelter operations and adversely affect our mining operations. Our North America copper mines are less significantly affected by changes 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. During 2014, approximately half of our consolidated concentrate production was processed through the Miami smelter, Atlantic Copper and PT Smelting's facilities.

Atlantic Copper smelts and refines copper concentrates and markets refined copper and precious metals in slimes. Following is a summary of Atlantic Copper's concentrate purchases from our copper mining operations and third parties for the three years ended December 31:

	2014		2013		2012
North America copper mines	21%		13%		16%
South America mining	21%		32%		31%
Indonesia mining	8%		16%		10%
Third parties	50%		39%		43%
	100%		100%		100%

PT-FI's contract with PT Smelting provides for PT-FI to supply 100 percent of the copper concentrate requirements (subject to a minimum or maximum rate) necessary for PT Smelting to produce 205,000 metric tons of copper

annually on a priority basis. PT-FI also sells copper concentrate to PT Smelting at market rates for quantities in excess of 205,000 metric tons of copper annually. PT-FI supplied 81 percent in 2014, 83 percent in 2013 and 99 percent in 2012 of PT Smelting's concentrate requirements, and PT Smelting processed 58 percent in 2014, 41 percent in 2013 and 52 percent in 2012 of PT-FI's concentrate production.

We defer recognizing profits on sales from our mining operations to Atlantic Copper and on 25 percent of Indonesia mining's sales to PT Smelting until final sales to third parties occur. Changes in these deferrals attributable to variability in intercompany volumes resulted in net reductions to net loss attributable to common stockholders totaling $43 million ($0.04 per share) in 2014, compared with net reductions to net income attributable to common stockholders of $17 million ($0.02 per share) in 2013 and $80 million ($0.08 per share) in 2012. Our net deferred profits on inventories at Atlantic Copper and PT Smelting to be recognized in future periods' net income attributable to common stockholders totaled $73 million at December 31, 2014. 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. Refer to Note 6 for further discussion.

Oil and Gas Operations

Our portfolio of oil and gas assets includes significant oil production facilities and growth potential in the Deepwater GOM, established oil production facilities onshore and offshore California, large onshore natural gas resources in the Haynesville shale play in Louisiana, natural gas production from the Madden area in central Wyoming, and an industry-leading position in the emerging Inboard Lower Tertiary/Cretaceous natural gas trend located in the shallow waters of the GOM and onshore in South Louisiana. Approximately 90 percent of our oil and gas revenues are from oil and NGLs.

Exploration, Operating and Development Activities. Our oil and gas business has significant proved, probable and possible reserves, a broad range of development opportunities and high-potential exploration prospects. The business is managed to reinvest its cash flows in projects with attractive rates of returns and risk profiles. Following the recent sharp decline in oil prices, we have taken steps to significantly reduce capital spending plans and near-term oil and gas growth initiatives in order to preserve cash flows and resources for anticipated improved market conditions in the future. We are also evaluating third-party participation in our oil and gas projects to provide additional funding.

FM O&G has a large, strategic position in the Deepwater GOM with significant current oil production, strong cash margins and existing infrastructure and facilities with excess capacity. These assets, combined with FM O&G’s large leasehold interests in an established geologic basin, provide financially attractive investment opportunities for high-impact growth in oil production and cash margins. FM O&G’s capital allocation strategy is principally focused on drilling and development opportunities that can be tied back to existing facilities.

Capital expenditures for our oil and gas operations totaled $3.2 billion for the year ended December 31, 2014, including $2.1 billion incurred for the Deepwater GOM and $0.7 billion for the Inboard Lower Tertiary/Cretaceous natural gas trend. Capital expenditures for oil and gas operations for the year 2015 are currently estimated to total $2.3 billion. Approximately 80 percent of the 2015 capital budget is expected to be directed to the highest return focus areas in the GOM. We are committed to achieving our objective of funding oil and gas capital expenditures with oil and gas cash flows, third-party joint venture transactions or asset sales. FM O&G is engaged in discussions to obtain funding from industry partners and other oil and gas market participants for a substantial portion of its 2015 capital expenditures to achieve this objective. Third-party funding could also enable FM O&G to complete additional development wells for production.

Sale and Purchase Transactions. In June 2014, FM O&G completed the sale of its Eagle Ford shale assets for cash consideration of $3.1 billion and the acquisition of Deepwater GOM interests for $0.9 billion, including interests in the Lucius and Heidelberg oil fields and several exploration leases. In September 2014, FM O&G acquired additional Deepwater GOM interests for $0.5 billion, including an 18.67 percent interest in the Vito oil discovery in the Mississippi Canyon area (Blocks 940, 941, 984 and 985) and a significant lease position in the Vito area. Refer to Note 2 for further discussion of this disposition and these acquisitions.

International Oil and Gas Operations.

International Exploration (Morocco). FM O&G has a farm-in arrangement to earn interests in exploration blocks located in the Mazagan permit area offshore Morocco. The exploration area covers 2.2 million gross acres in water depths of 4,500 to 9,900 feet. FM O&G expects to commence drilling the first prospect in the first half of 2015. FM O&G currently has no proved reserves or production in Morocco.

U.S. Oil and Gas Operations. Following is summary operating results for the U.S. oil and gas operations for the years 2014 and 2013.

		2014a				2013b
Sales Volumes
Oil (MMBbls)		40.1				26.6
Natural gas (Bcf)		80.8				54.2
NGLs (MMBbls)		3.2				2.4
MMBOE		56.8				38.1
Average Realizationsc
Oil (per barrel)		$	90.00			$	98.32
Natural gas (per MMBtu)		$	4.23			$	3.99
NGLs (per barrel)		$	39.73			$	38.20
Gross (Loss) Profit per BOE
Realized revenuesc		$	71.83			$	76.87
Less: cash production costsc		20.08				17.14
Cash operating marginc		51.75				59.73
Less: depreciation, depletion and amortization		40.34				35.81
Less: impairment of oil and gas properties		65.80				—
Less: accretion and other costs		1.69				0.79
Plus: net noncash mark-to-market gains (losses) on derivative contracts		11.03				(8.20		)
Plus: other net adjustments		0.06				0.04
Gross (loss) profit		$	(44.99	)		$	14.97

a.	Includes results from Eagle Ford through June 19, 2014.

b.	Include the results of FM O&G beginning June 1, 2013.

c.

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

FM O&G's average realized price for crude oil was $90.00 per barrel, including $2.76 per barrel of realized cash losses on derivative contracts, for the year 2014. Excluding the impact of derivative contracts, the 2014 average realized price for crude oil was $92.76 per barrel (93 percent of the average Brent crude oil price of $99.45 per barrel).

FM O&G has derivative contracts that provide price protection between $70 and $90 per barrel of Brent crude oil for more than 80 percent of estimated 2015 oil production. At current Brent crude oil prices approximating $50 per barrel, we would receive a benefit of $20 per barrel on 2015 volumes of 30.7 million barrels, before taking into account premiums of $6.89 per barrel. Refer to Note 14 for further discussion.

FM O&G's average realized price for natural gas was $4.23 per MMBtu for the year 2014. Excluding the impact of derivative contracts, the average realized price for natural gas was $4.37 per MMBtu, compared to the NYMEX natural gas price average of $4.41 per MMBtu for the January through December 2014 contracts. As of December 31, 2014, FM O&G has no remaining derivative contracts for natural gas.

Realized revenues for oil and gas operations of $71.83 per BOE for the year 2014 were lower than realized revenues of $76.87 per BOE for the seven-month period from June 1, 2013, to December 31, 2013, primarily reflecting lower oil prices and higher realized cash losses on derivative contracts (realized losses were $122 million or $2.15 per BOE for the year 2014, compared with $22 million or $0.58 per BOE for the seven-month period from June 1, 2013, to December 31, 2013).

Cash production costs of $20.08 per BOE for the year 2014 were higher than cash production costs of $17.14 per BOE for the seven-month period from June 1, 2013, to December 31, 2013, primarily reflecting the sale of lower cost Eagle Ford properties in June 2014 and higher operating costs in California and the GOM.

Based on current sales volume and cost estimates, cash production costs are expected to approximate $18 per BOE for the year 2015.

Following is a summary of average sales volumes per day by region for oil and gas operations for the years ended 2014 and 2013:

		2014			2013a
Sales Volumes (MBOE per day):
GOMb		73			72
California		39			39
Haynesville/Madden/Other		20		c	21
Eagle Ford		24		d	46
Total oil and gas operations		156			178

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

b.	Includes sales from properties on the GOM Shelf and in the Deepwater GOM. Production from the GOM Shelf totaled 13 MBOE per day for 2014 (17 percent of the GOM total) and 13 MBOE per day (18 percent of the GOM total) for the seven-month period from June 1, 2013, to December 31, 2013.

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

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

Daily sales volumes averaged 156 MBOE for the year 2014, including 110 MBbls of crude oil, 221 MMcf of natural gas and 9 MBbls of NGLs, compared to 178 MBOE for the seven-month period from June 1, 2013, to December 31, 2013, including 124 MBbls of crude oil, 254 MMcf of natural gas and 11 MBbls of NGLs. Oil and gas sales volumes are expected to average 152 MBOE per day for the year 2015, comprised of 67 percent oil, 28 percent natural gas and 5 percent NGLs.

Deepwater Gulf of Mexico. Multiple development and exploration opportunities have been identified in the Deepwater GOM that are expected to benefit from tieback opportunities to available production capacity at the FM O&G operated large-scale Holstein, Marlin and Horn Mountain deepwater production platforms. In addition, FM O&G has interests in the Lucius and Heidelberg oil fields and in the Vito basin area.

In January 2015, first oil production commenced from the Lucius oil field in Keathley Canyon and the operator is continuing to ramp up production. Lucius is a subsea development consisting of six subsea wells tied back to a truss spar hull located in 7,200 feet of water. The spar has a design capacity of 80 MBbls of oil per day and 450 MMcf of natural gas per day. The Lucius field was discovered in November 2009 and the subsequent development project was sanctioned in late 2011. FM O&G has a 25.1 percent working interest in Lucius.

During fourth-quarter 2014, installation operations for flow lines, export lines and suction piles for Heidelberg’s mooring system commenced. Fabrication of the main topsides module is more than 70 percent complete. The Heidelberg truss spar was designed as a Lucius-look-alike facility with capacity of 80 MBbls of oil per day. Development drilling is in progress and the project remains on track for first production in 2016. Heidelberg is a large, high-quality oil development project located in 5,300 feet of water in the Green Canyon area. FM O&G has a 12.5 percent working interest in Heidelberg.

In December 2014, FM O&G announced successful results from the 100-percent-owned Holstein Deep delineation well in the Green Canyon area. The well, which is approximately one mile south of the discovery well, was drilled to a total depth of 31,100 feet and wireline logs and core data confirmed 234 net feet of Miocene oil pay with excellent reservoir characteristics and good correlation to the discovery well and previous confirmation sidetrack penetration.

In December 2014, FM O&G commenced drilling the second delineation well at Holstein Deep. The well, which is updip to the discovery well, is currently drilling below 24,800 feet towards a proposed total depth of 31,500 feet. Production from the planned three-well development program is expected to reach approximately 15 MBOE per day. The timing of tying in this production will be subject to partner arrangements and general market conditions.

Recent data supports the potential for additional development opportunities at Holstein Deep to achieve production of up to 75 MBOE per day by 2020. The Holstein Deep development is located in Green Canyon Block 643, west of

the Holstein platform in 3,890 feet of water. FM O&G has identified multiple additional development opportunities in the Green Canyon area that could be tied back to the Holstein facility.

Marlin, in which FM O&G has a 100 percent working interest, is located in Viosca Knoll and has production facilities capable of producing in excess of 90 MBOE per day. Several tieback opportunities in the area have been identified including the Dorado and King development projects.

In December 2014, FM O&G announced positive drilling results from the 100-percent-owned Dorado development project. This well is the first of three planned subsea tieback wells to the Marlin facility targeting undrained fault blocks and updip resource potential south of the Marlin facility. The well is expected to commence production in second-quarter 2015. Drilling operations for the second and third wells are expected to begin in the second half of 2015. The Dorado development is located on Viosca Knoll Block 915 in 3,860 feet of water.

FM O&G commenced drilling at the 100-percent-owned King prospect in late 2014 and the well was drilled to a true vertical depth of 12,250 feet in January 2015. Log results indicated 71 net feet of gas pay and FM O&G is preparing a downdip sidetrack to pursue an optimum oil take point below the gas-oil contact in the reservoir. King is located in Mississippi Canyon south of the Marlin facility in 5,200 feet of water.

Horn Mountain, in which FM O&G has a 100 percent working interest, is located in Mississippi Canyon and has production facilities capable of producing in excess of 80 MBOE per day. Several tieback opportunities in the area have been identified including Kilo/Oscar/Quebec/Victory (KOQV), which are expected to commence in mid-2015. This infill drilling program will target undrained fault blocks and updip resource potential just east of the Horn Mountain facility. KOQV is located in approximately 5,500 feet of water.

In December 2014, the Power Nap exploration well in the Vito area encountered positive drilling results. The well was drilled to a total depth of 30,970 feet and wireline logs and core data indicated that the well encountered hydrocarbons in multiple subsalt Miocene sand packages. The operator is preparing to drill a sidetrack well to delineate the reservoir and test the downdip limit of the oil accumulation. Power Nap, in which FM O&G has a 50 percent working interest, is located in 4,200 feet of water and is operated by Shell Offshore Inc., which has a 50 percent working interest.

FM O&G has an 18.67 percent interest in the Vito oil discovery in the Mississippi Canyon area and a significant lease position in the Vito basin in the Mississippi Canyon and Atwater Valley areas. Vito, a large, deep subsalt Miocene oil discovery made in 2009, is located in approximately 4,000 feet of water and is operated by Shell Offshore Inc. Exploration and appraisal drilling in recent years confirmed a significant resource in high-quality, subsalt Miocene sands. Development options are under evaluation.

Inboard Lower Tertiary/Cretaceous. FM O&G has an industry-leading position in the emerging Inboard Lower Tertiary/Cretaceous natural gas trend, located on the Shelf of the GOM and onshore in South Louisiana. FM O&G believes that data from eight wells drilled to date indicate the presence of geologic formations that are analogous to productive formations in the Deepwater GOM and onshore in the Gulf Coast region.

In February 2015, we announced the results of additional production testing on FM O&G's Highlander discovery, located onshore in South Louisiana in the Inboard Lower Tertiary/Cretaceous trend. The production test, which was performed in the Cretaceous/Tuscaloosa section, utilized expanded testing equipment and indicated a flow rate of approximately 75 million MMcf/d, approximately 37 MMcf/d net to FM O&G, on a 42/64th choke with flowing tubing pressure of 10,300 pounds per square inch. Highlander began production on February 25, 2015, using FM O&G facilities in the immediate area. FM O&G plans to install additional amine processing facilities to accommodate the higher rates. A second well location has been identified and future plans will be determined pending review of well performance from the first well. FM O&G is the operator and has a 72 percent working interest and an approximate 49 percent net revenue interest in Highlander. FM O&G has identified multiple prospects in the Highlander area where it controls rights to more than 50,000 gross acres.

The Farthest Gate West onshore exploration prospect commenced drilling in October 2014 and is currently drilling below 18,500 feet towards a proposed total depth of 24,000 feet. Farthest Gate West is located onshore in Cameron Parish, Louisiana, and is a Lineham Creek analog prospect with Paleogene objectives.

In response to current oil and gas market conditions, future activities at other Inboard Lower Tertiary/Cretaceous prospects have been deferred.

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

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

CAPITAL RESOURCES AND LIQUIDITY

Our consolidated operating cash flows vary with prices realized from copper, gold, molybdenum and oil, our sales volumes, production costs, income taxes, other working capital changes and other factors. We remain committed to a strong balance sheet and will take prudent actions in response to market conditions. We have taken steps to sell assets, defer capital spending and will continue to evaluate opportunities to strengthen our financial position.

Cash

Following is a summary of the U.S. and international components of consolidated cash and cash equivalents, including cash available to the parent company, net of noncontrolling interests' share, taxes and other costs at December 31 (in millions):

	2014				2013
Cash at domestic companies	$	78			$	410
Cash at international operations	386				1,575
Total consolidated cash and cash equivalents	464				1,985
Less: Noncontrolling interests’ share	(91		)		(602		)
Cash, net of noncontrolling interests’ share	373				1,383
Less: Withholding taxes and other	(16		)		(75		)
Net cash available	$	357			$	1,308

Cash held at our international operations is generally used to support our foreign operations' capital expenditures, operating expenses, working capital and other tax payments or other cash needs. Management believes that sufficient liquidity is available in the U.S. from cash balances and availability from our revolving credit facility and uncommitted lines of credit (refer to Note 8). With the exception of TFM, we have not elected to permanently reinvest earnings from our foreign subsidiaries, and we have recorded deferred tax liabilities for foreign earnings that are available to be repatriated to the U.S. From time to time, our foreign subsidiaries distribute earnings to the U.S. through dividends that are subject to applicable withholding taxes and noncontrolling interests' share.

Debt

Following is a summary of our total debt and related weighted-average interest rates at December 31 (in billions, except percentages):

	2014						2013
					Weighted-						Weighted-
					Average						Average
					Interest Rate						Interest Rate
FCX Senior Notes	$	12.0			3.8%		$	9.5			3.6%
FM O&G Senior Notes	2.6				6.6%		6.7				6.8%
FCX Term Loan	3.1				1.7%		4.0				1.7%
Other FCX debt	1.3				3.3%		0.5				6.4%
Total debt	$	19.0			3.8%		$	20.7			4.2%

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

We have uncommitted and short-term lines of credit with certain financial institutions that are unsecured, which have terms and pricing that are generally more favorable than our revolving credit facility. As of December 31, 2014, there were $474 million of borrowings drawn on these lines of credit.

In March 2014, Cerro Verde entered into a five-year, $1.8 billion senior unsecured credit facility. Amounts may be drawn or letters of credit issued over a two-year period to fund a portion of the expansion project (see "Operations - South America Mining") and for Cerro Verde's general corporate purposes. At December 31, 2014, there were $425 million of borrowings and no letters of credit issued under Cerro Verde’s credit facility.

Refer to Note 8 and "Financing Activities" below for further discussion of our debt and Note 18 and Item 9B for discussion of February 2015 modifications to our revolving credit facility and unsecured bank term loan (Term Loan).

Operating Activities

We generated consolidated operating cash flows totaling $5.6 billion in 2014 (net of $0.6 billion for working capital uses and changes in other tax payments), $6.1 billion in 2013 (net of $0.4 billion for working capital uses and changes in other tax payments) and $3.8 billion in 2012 (net of $1.4 billion for working capital uses and changes in other tax payments).

Lower consolidated operating cash flows for 2014, compared with 2013, reflect the impact of lower copper and gold price realizations and lower copper sales volumes, partly offset by a full year of our oil and gas operations.

Higher consolidated operating cash flows for 2013, compared with 2012, resulted from our oil and gas operations, higher copper and gold sales volumes and a decrease in working capital uses and changes in other tax payments, primarily associated with changes in accrued income taxes, inventories and accounts receivable. Partly offsetting these increases was the impact of lower metals price realizations.

Based on current operating plans and subject to future copper, gold, molybdenum and crude oil prices, we expect estimated consolidated operating cash flows for the year 2015, plus available cash and availability under our credit facilities, to be sufficient to fund our budgeted capital expenditures, dividends, noncontrolling interest distributions and other cash requirements for the year. Refer to “Outlook” for further discussion of projected operating cash flows for the year 2015.

Investing Activities

Capital Expenditures. Capital expenditures, including capitalized interest, totaled $7.2 billion in 2014 (including $2.9 billion for major projects at mining operations and $3.2 billion for oil and gas operations), $5.3 billion in 2013 (including $2.3 billion for major projects at mining operations and $1.45 billion for oil and gas operations) and $3.5 billion in 2012 (including $2.2 billion for major projects at mining operations).

Increased capital expenditures at mining operations in 2014, compared with 2013, were primarily associated with the expansion project at Cerro Verde. Increased capital expenditures at mining operations in 2013, compared with 2012, were primarily associated with the expansion projects at Morenci and Cerro Verde and our underground development activities at Grasberg, partly offset by decreased spending for the expansion at Tenke, which was completed in early 2013, and at the Climax mine, which began commercial operations in May 2012.

Capital expenditures are expected to approximate $6.0 billion for the year 2015, including $2.5 billion for major projects at our mining operations (primarily for the Cerro Verde expansion and underground development at Grasberg) and $2.3 billion for our oil and gas operations. We are engaged in discussions to obtain funding from oil and gas market participants for a substantial portion of our planned capital expenditures for our oil and gas operations.

We are taking aggressive actions to reduce or defer capital expenditures and other costs and have initiated efforts to obtain third-party funding for a significant portion of our oil and gas capital expenditures to maintain financial strength and flexibility in response to recent sharp declines in oil prices. In addition, we are monitoring copper markets and will be responsive to the market conditions. As a first step, we have reduced budgeted 2015 capital expenditures, exploration and other costs by a total of $2 billion. We have a broad set of natural resource assets that provide many alternatives for future actions to enhance our financial flexibility. Additional capital cost reductions, potential additional divestitures or monetizations, potential reduction or suspension in common dividend

payments and other actions will be pursued as required to maintain a strong balance sheet while preserving a strong resource position and portfolio of assets with attractive long-term growth prospects. Refer to "Operations" for further discussion.

Dispositions and Acquisitions. In November 2014, we completed the sale of our 80 percent ownership interests in the Candelaria/Ojos to Lundin Mining Corporation (Lundin) for $1.8 billion in cash and contingent consideration of up to $200 million. Excluding contingent consideration, after-tax net proceeds from the transaction approximated $1.5 billion.

In June 2014, we completed the sale of the Eagle Ford shale assets for cash consideration of $3.1 billion. A portion of the proceeds was reinvested 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.

In June 2013, we paid $3.5 billion in cash (net of cash acquired) for the acquisition of PXP and $1.6 billion in cash (net of cash acquired) for the acquisition of MMR.

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

Refer to Note 2 for further discussion of these dispositions and acquisitions.

Financing Activities

Debt Transactions. In November 2014, we completed the sale of $3.0 billion of senior notes, which were comprised of four tranches with a weighted-average interest rate of 4.1 percent. The proceeds from these senior notes were used to fund our December 2014 tender offers for $1.14 billion aggregate principal of senior notes (with a weighted-average interest rate of 6.5 percent), essentially all of our 2015 scheduled maturities (including scheduled term loan amortization and $500 million of 1.40% Senior Notes due 2015), $300 million in 7.625% Senior Notes, and to repay borrowings under our revolving credit facility. Other senior note redemptions during 2014 included $400 million of our 8.625% Senior Notes, $1.7 billion of the aggregate principal amount of certain senior notes (with a weighted-average interest rate of 6.6 percent) and $210 million of the aggregate principal amount of our 6.625% Senior Notes.

During 2013, we sold $6.5 billion of senior notes in four tranches with a weighted-average interest rate of 3.9 percent, and borrowed $4.0 billion under an unsecured bank term loan with an interest rate of London Interbank Offered Rate (LIBOR) plus 1.75 percent. Net proceeds from these borrowings were used to fund the acquisitions of PXP and MMR, repay certain debt of PXP and for general corporate purposes. Also in 2013, we redeemed the $299 million of MMR's outstanding 11.875% Senior Notes due 2014 and $400 million of PXP's 75/8% Senior Notes due 2018, which were assumed in the acquisitions.

During 2012, we sold $3.0 billion of senior notes in three tranches with a weighted-average interest rate of 3.0 percent. Net proceeds from this offering, plus cash on hand, were used to redeem the remaining $3.0 billion of our 8.375% Senior Notes.

Refer to Note 8 for further discussion of these transactions.

Dividends and Other Equity Transactions. We paid dividends on our common stock totaling $1.3 billion in 2014, $2.3 billion in 2013 (including $1.0 billion for a supplemental dividend of $1.00 per share paid in July 2013) and $1.1 billion in 2012. The current annual dividend rate for our common stock is $1.25 per share ($0.3125 per share quarterly). Based on outstanding common shares of 1.0 billion at December 31, 2014, and the current dividend rate, our estimated regular common stock dividend for 2015 approximates $1.3 billion. As a result of the recent sharp decline in copper and oil prices, our Board is reviewing the effect of market conditions on our financial position. We have reduced capital spending and other costs and are seeking third-party funding for a significant portion of our oil and gas expenditures. In addition, the Board is reviewing our financial policy and may take further steps to enhance the Company’s liquidity and financial position, including a potential reduction or suspension in common dividend payments. For information about a special dividend expected to paid in 2015 associated with the proposed settlement of the stockholder derivative litigation, refer to Note 12. The declaration of dividends is at the discretion

of the Board and will depend upon our financial results, cash requirements, future prospects and other factors deemed relevant by the Board. The Board will continue to review our financial policy on an ongoing basis.

Cash dividends and other distributions paid to noncontrolling interests totaled $424 million in 2014, $256 million in 2013 and $113 million in 2012. Higher noncontrolling interest payments in 2014, compared with 2013, primarily reflected higher dividends to the noncontrolling interest holders of El Abra and Tenke. Higher noncontrolling interest payments in 2013, compared with 2012, primarily reflected higher dividends to the noncontrolling interest holders of El Abra and Candelaria. These payments will vary based on the operating results and cash requirements of our consolidated subsidiaries.

Conversion of MMR's 8% Convertible Perpetual Preferred Stock and 5.75% Convertible Perpetual Preferred Stock, Series 1 required cash payments of $228 million during 2013. Refer to Note 2 for further discussion.

CONTRACTUAL OBLIGATIONS

We have contractual and other long-term obligations, including debt maturities based on the principal amounts, which we expect to fund with available cash, projected operating cash flows, availability under our revolving credit facility or future financing transactions, if necessary. A summary of these various obligations at December 31, 2014, follows (in millions):

	Total				2015				2016 to 2017				2018 to 2019				Thereafter
Debt maturities	$	18,752			$	478			$	2,102			$	4,363			$	11,809
Scheduled interest payment obligationsa	7,720				704				1,382				1,186				4,448
ARO and environmental obligationsb	8,062				319				728				428				6,587
Take-or-pay contractsc	4,273				2,128				1,711				230				204
Operating lease obligations	354				44				86				59				165
Totald	$	39,161			$	3,673			$	6,009			$	6,266			$	23,213

a.	Scheduled interest payment obligations were calculated using stated coupon rates for fixed-rate debt and interest rates applicable at December 31, 2014, for variable-rate debt.

b.

Represents estimated cash payments, on an undiscounted and unescalated basis, associated with ARO and environmental activities (including $1.9 billion for our oil and gas operations). The timing and the amount of these payments could change as a result of changes in regulatory requirements, changes in scope and timing of ARO activities, the settlement of environmental matters and as actual spending occurs. Refer to Note 12 for additional discussion of environmental and ARO matters.

c.

Represents contractual obligations for purchases of goods or service agreements enforceable and legally binding and that specify all significant terms, including minimum commitments for deepwater drillships to be utilized in the GOM drilling campaign ($1.8 billion), transportation services ($732 million), the procurement of copper concentrates ($572 million), electricity ($316 million) and deferred premium costs and future interest on the crude oil derivative contracts ($231 million). Some of our take-or-pay contracts are settled based on the prevailing market rate for the service or commodity purchased, and in some cases, the amount of the actual obligation may change over time because of market conditions. Drillship obligations provide for an operating rate over the contractual term upon delivery of the drillship. Transportation obligations are primarily for South America contracted ocean freight and FM O&G contracted gathering. Obligations for copper concentrates provide for deliveries of specified volumes to Atlantic Copper at market-based prices. Electricity obligations are primarily for contractual minimum demand at the South America and Tenke mines.

d.

This table excludes certain other obligations in our consolidated balance sheets, such as estimated funding for pension obligations as the funding may vary from year to year based on changes in the fair value of plan assets and actuarial assumptions, commitments and contingencies totaling $191 million and unrecognized tax benefits totaling $68 million where the timing of settlement is not determinable, and other less significant amounts.This table also excludes purchase orders for the purchase of inventory and other goods and services, as purchase orders typically represent authorizations to purchase rather than binding agreements.

Refer to Note 18 and Item 9B for discussion of February 2015 modifications to our revolving credit facility and Term Loan.

In addition to our debt maturities and other contractual obligations discussed above, we have other commitments, which we expect to fund with available cash, projected operating cash flows, available credit facilities or future financing transactions, if necessary. These include (i) PT-FI's commitment to provide one percent of its annual revenue for the development of the local people in its area of operations through the Freeport Partnership Fund for

Community Development, (ii) TFM's commitment to provide 0.3 percent of its annual revenue for the development of the local people in its area of operations and (iii) other commercial commitments, including standby letters of credit, surety bonds and guarantees. Refer to Notes 12 and 13 for further discussion.

CONTINGENCIES

Environmental

The cost of complying with environmental laws is a fundamental and substantial cost of our business. At December 31, 2014, we had $1.2 billion recorded in our consolidated balance sheet for environmental obligations attributed to CERCLA or analogous state programs and for estimated future costs associated with environmental obligations that are considered probable based on specific facts and circumstances.

During 2014, we incurred environmental capital expenditures and other environmental costs (including our joint venture partners’ shares) of $405 million for programs to comply with applicable environmental laws and regulations that affect our operations, compared with $595 million in 2013 and $612 million in 2012. Lower spending in 2014 primarily reflects the completion of a water treatment facility in 2013 and extended project timelines. For 2015, we expect to incur approximately $500 million of aggregate environmental capital expenditures and other environmental costs, which are part of our overall 2015 operating budget, and are higher than 2014 because of timing of expenditures. The timing and amount of estimated payments could change as a result of changes in regulatory requirements, changes in scope and timing of reclamation activities, the settlement of environmental matters and as actual spending occurs.

Refer to Note 12 for further information about environmental regulation, including significant environmental matters.

Asset Retirement Obligations

We recognize AROs as liabilities when incurred, with the initial measurement at fair value. These obligations, which are initially estimated based on discounted cash flow estimates, are accreted to full value over time through charges to income. Mine reclamation costs for disturbances are recorded as an ARO and as a related asset retirement cost (ARC) (included in property, plant, equipment and development costs) in the period of disturbance. Oil and gas plugging and abandonment costs are recognized as an ARO and as a related ARC (included in oil and gas properties) in the period in which the well is drilled or acquired. Our cost estimates are reflected on a third-party cost basis and comply with our legal obligation to retire tangible, long-lived assets. At December 31, 2014, we had $2.8 billion recorded in our consolidated balance sheet for AROs, including $1.1 billion related to our oil and gas properties. Spending on AROs totaled $99 million in 2014, $107 million in 2013 and $47 million in 2012, including $74 million in 2014 and $64 million in 2013 for our oil and gas operations. For 2015, we expect to incur approximately $191 million for aggregate ARO payments. Refer to Note 12 for further discussion.

Litigation and Other Contingencies

Refer to Notes 2 and 12 and "Legal Proceedings" contained in Part I, Item 3 of our annual report on Form 10-K for the year ended December 31, 2014, for further discussion of contingencies associated with legal proceedings and other matters.

DISCLOSURES ABOUT MARKET RISKS

Commodity Price Risk

Metals. Our consolidated revenues from our mining operations include the sale of copper concentrates, copper cathodes, copper rod, gold, molybdenum and other metals by our North and South America mines, the sale of copper concentrates (which also contain significant quantities of gold and silver) by our Indonesia mining operations, the sale of copper cathodes and cobalt hydroxide by our Africa mining operations, the sale of molybdenum in various forms by our molybdenum operations, and the sale of copper cathodes, copper anodes and gold in anodes and slimes by Atlantic Copper. Our financial results can vary significantly as a result of fluctuations in the market prices of copper, gold, molybdenum, silver and cobalt. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control.

For 2014, 44 percent of our mined copper was sold in concentrate, 31 percent as cathode and 25 percent as rod. Substantially all of our copper concentrate and cathode sales contracts provide final copper pricing in a specified future month (generally one to four months from the shipment date) based primarily on quoted LME monthly average spot copper prices. We receive market prices based on prices in the specified future period, which results in price fluctuations recorded through revenues until the date of settlement. We record revenues and invoice

customers at the time of shipment based on then-current LME prices, which results in an embedded derivative on our provisionally priced concentrate and cathode sales that is adjusted to fair value through earnings each period, using the period-end forward prices, until the date of final pricing. To the extent final prices are higher or lower than what was recorded on a provisional basis, an increase or decrease to revenues is recorded each reporting period until the date of final pricing. Accordingly, in times of rising copper prices, our revenues benefit from adjustments to the final pricing of provisionally priced sales pursuant to contracts entered into in prior periods; in times of falling copper prices, the opposite occurs.

Following are the (unfavorable) favorable impacts of net adjustments to the prior years' provisionally priced copper sales for the years ended December 31 (in millions, except per share amounts):

	2014				2013				2012
Revenues	$	(118	)		$	(26	)		$	101
Net income attributable to common stockholders	$	(65	)		$	(12	)		$	43
Net income per share of common stockholders	$	(0.06	)		$	(0.01	)		$	0.05

At December 31, 2014, we had provisionally priced copper sales at our copper mining operations, primarily South America and Indonesia, totaling 405 million pounds of copper (net of intercompany sales and noncontrolling interests) recorded at an average price of $2.86 per pound, subject to final pricing over the next several months. We estimate that each $0.05 change in the price realized from the December 31, 2014, provisional price recorded would have a net impact on our 2015 consolidated revenues of approximately $26 million ($13 million to net income attributable to common stockholders). The LME spot copper price closed at $2.59 per pound on February 20, 2015.

Oil & Gas. Our financial results from oil and gas operations may vary with fluctuations in crude oil prices and, to a lesser extent natural gas prices. Market prices for crude oil and natural gas have fluctuated historically and are affected by numerous factors beyond our control.

Our oil and gas operations have used various derivative contracts to manage exposure to oil and gas price risk. Realized cash losses on crude oil and natural gas derivative contracts totaled $122 million for the year 2014 and $22 million for the seven-month period from June 1, 2013, to December 31, 2013. Additionally, following is a summary of the net noncash mark-to-market gains (losses) on crude oil and natural gas derivative contracts for the years ended December 31 (in millions, except per share amounts):

	2014				2013a
Revenues	$	627			$	(312	)
Net income to common stockholders	$	389			$	(194	)
Net income per share attributable to common stockholders	$	0.37			$	(0.19	)

a.	Reflects the seven-month period from June 1, 2013, to December 31, 2013.

At December 31, 2014, the fair value of the crude oil derivative contracts totaled a $526 million asset; partly offsetting the fair value is $210 million in deferred premiums and interest to be settled in future periods. The estimated increase in the net asset on our balance sheet of a 10 percent decrease in Brent crude oil prices on the fair values of outstanding crude oil derivative contracts, compared with forward prices used to determine the December 31, 2014, fair values approximates $38 million. The estimated decrease in the net asset on our balance sheet of a 10 percent increase in Brent crude oil prices on the fair values of outstanding crude oil derivative contracts, compared with the forward prices used to determine the December 31, 2014, fair values approximates $51 million. Refer to Note 14 for further discussion of our crude oil and natural gas derivative contracts.

Foreign Currency Exchange Risk

The functional currency for most of our operations is the U.S. dollar. All of our revenues and a significant portion of our costs are denominated in U.S. dollars; however, some costs and certain asset and liability accounts are denominated in local currencies, including the Indonesian rupiah, Australian dollar, Chilean peso, Peruvian nuevo sol and euro. Generally, our results are positively affected when the U.S. dollar strengthens in relation to those foreign currencies and adversely affected when the U.S. dollar weakens in relation to those foreign currencies.

Following is a summary of estimated annual payments and the impact of changes in foreign currency rates on our annual operating costs:

	Exchange Rate per $1 at December 31,									Estimated Annual Payments						10% Change in Exchange Rate (in millions)a
	2014			2013			2012			(in local currency)		(in millions)b				Increase				Decrease
Indonesia
Rupiah	12,378			12,128			9,622			7.6 trillion		$	614			$	(56	)		$	68
Australian dollar	1.22			1.12			0.93			225 million		$	185			$	(17	)		$	21
South America
Chilean peso	607			525			480			170 billion		$	280			$	(25	)		$	31
Peruvian nuevo sol	2.99			2.80			2.55			600 million		$	201			$	(18	)		$	22
Atlantic Copper
Euro	0.82			0.73			0.76			135 million		$	164			$	(15	)		$	18

a.	Reflects the estimated impact on annual operating costs assuming a 10 percent increase or decrease in the exchange rate reported at December 31, 2014.

b.	Based on December 31, 2014, exchange rates.

Interest Rate Risk

At December 31, 2014, we had total debt maturities based on the principal amounts of $18.8 billion, of which approximately 22 percent was variable-rate debt with interest rates based on the LIBOR or the Euro Interbank Offered Rate. The table below presents average interest rates for our scheduled maturities of principal for our outstanding debt (excluding fair value adjustments) and the related fair values at December 31, 2014 (in millions, except percentages):

	2015				2016				2017				2018				2019				Thereafter				Fair Value
Fixed-rate debt	$	4			$	1			$	1,251			$	1,501			$	237			$	11,702			$	14,679
Average interest rate	1.1		%		3.9		%		2.2		%		2.4		%		6.1		%		4.8		%		4.4		%
Variable-rate debt	$	474			$	650			$	200			$	2,200			$	425			$	107			$	4,056
Average interest rate	1.3		%		1.7		%		1.7		%		1.7		%		2.1		%		3.9		%		1.7		%

NEW ACCOUNTING STANDARDS

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

OFF-BALANCE SHEET ARRANGEMENTS

Refer to Note 13 for discussion of off-balance sheet arrangements.

PRODUCT REVENUES AND PRODUCTION COSTS

Mining Product Revenues and Unit Net Cash Costs

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

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

We show revenue adjustments for prior period open sales as separate line items. Because these adjustments do not result from current period sales, we have reflected these separately from revenues on current period sales. Noncash and other costs consist of items such as stock-based compensation costs, start-up costs, write-offs of equipment and/or unusual charges. They are removed from site production and delivery costs in the calculation of unit net cash costs. As discussed above, gold, molybdenum and other metal revenues at copper mines are reflected as credits against site production and delivery costs in the by-product method. The following schedules for our mining operations are presentations under both the by-product and co-product methods together with reconciliations to amounts reported in our consolidated financial statements.

Oil & Gas Product Revenues and Cash Production Costs per Unit

Realized revenues and cash production costs per unit are measures intended to provide investors with information about the cash operating margin of our oil and gas operations expressed on a basis relating to each product sold. We use this measure for the same purpose and for monitoring operating performance by our oil and gas operations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. Our measures may not be comparable to similarly titled measures reported by other companies.

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

North America Copper Mines Product Revenues and Production Costs

Year Ended December 31, 2014
(In millions)	By-Product				Co-Product Method
	Method				Copper				Molybdenuma				Otherb				Total
Revenues, excluding adjustments	$	5,186			$	5,186			$	379			$	127			$	5,692
Site production and delivery, before net noncash
and other costs shown below	3,057				2,999				90				75				3,164
By-product credits	(399		)		—				—				—				—
Treatment charges	203				198				—				5				203
Net cash costs	2,861				3,197				90				80				3,367
Depreciation, depletion and amortization	473				462				4				7				473
Noncash and other costs, net	149				147				1				1				149
Total costs	3,483				3,806				95				88				3,989
Revenue adjustments, primarily for pricing on prior period open sales	(7		)		(7		)		—				—				(7		)
Gross profit	$	1,696			$	1,373			$	284			$	39			$	1,696
Copper sales (millions of recoverable pounds)	1,657				1,657
Molybdenum sales (millions of recoverable pounds)a									33
Gross profit per pound of copper/molybdenum:
Revenues, excluding adjustments	$	3.13			$	3.13			$	11.52
Site production and delivery, before net noncash
and other costs shown below	1.85				1.81				2.74
By-product credits	(0.24		)		—				—
Treatment charges	0.12				0.12				—
Unit net cash costs	1.73				1.93				2.74
Depreciation, depletion and amortization	0.29				0.28				0.14
Noncash and other costs, net	0.09				0.09				0.03
Total unit costs	2.11				2.30				2.91
Revenue adjustments, primarily for pricing
on prior period open sales	—				—				—
Gross profit per pound	$	1.02			$	0.83			$	8.61
Reconciliation to Amounts Reported
									Depreciation,
					Production				Depletion and
(In millions)	Revenues				and Delivery				Amortization
Totals presented above	$	5,692			$	3,164			$	473
Treatment charges	—				203				—
Noncash and other costs, net	—				149				—
Revenue adjustments, primarily for pricing on prior period open sales	(7		)		—				—
Eliminations and other	(69		)		(76		)		11
North America copper mines	5,616				3,440				484
Other mining & eliminationsc	11,112				7,225				1,074
Total mining	16,728				10,665				1,558
U.S. oil & gas operations	4,710				1,237				6,028			d
Corporate, other & eliminations	—				2				14
As reported in FCX’s consolidated financial statements	$	21,438			$	11,904			$	7,600		d

a.	Reflects sales of molybdenum 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 16.

d.	Includes impairment of oil and gas properties of $3.7 billion.

North America Copper Mines Product Revenues and Production Costs (continued)

Year Ended December 31, 2013
(In millions)	By-Product				Co-Product Method
	Method				Copper				Molybdenuma				Otherb				Total
Revenues, excluding adjustments	$	4,752			$	4,752			$	349			$	106			$	5,207
Site production and delivery, before net noncash
and other costs shown below	2,828				2,744				123				74				2,941
By-product credits	(342		)		—				—				—				—
Treatment charges	155				151				—				4				155
Net cash costs	2,641				2,895				123				78				3,096
Depreciation, depletion and amortization	391				378				7				6				391
Noncash and other costs, net	202			c	200				1				1				202
Total costs	3,234				3,473				131				85				3,689
Revenue adjustments, primarily for pricing on prior period open sales	(4		)		(4		)		—				—				(4		)
Gross profit	$	1,514			$	1,275			$	218			$	21			$	1,514
Copper sales (millions of recoverable pounds)	1,416				1,416
Molybdenum sales (millions of recoverable pounds)a									32
Gross profit per pound of copper/molybdenum:
Revenues, excluding adjustments	$	3.36			$	3.36			$	10.79
Site production and delivery, before net noncash
and other costs shown below	2.00				1.94				3.79
By-product credits	(0.24		)		—				—
Treatment charges	0.11				0.11				—
Unit net cash costs	1.87				2.05				3.79
Depreciation, depletion and amortization	0.28				0.27				0.22
Noncash and other costs, net	0.14			c	0.14				0.04
Total unit costs	2.29				2.46				4.05
Revenue adjustments, primarily for pricing
on prior period open sales	—				—				—
Gross profit per pound	$	1.07			$	0.90			$	6.74
Reconciliation to Amounts Reported
									Depreciation,
					Production				Depletion and
(In millions)	Revenues				and Delivery				Amortization
Totals presented above	$	5,207			$	2,941			$	391
Treatment charges	—				155				—
Noncash and other costs, net	—				202			c	—
Revenue adjustments, primarily for pricing on prior period open sales	(4		)		—				—
Eliminations and other	(20		)		(32		)		11
North America copper mines	5,183				3,266				402
Other mining & eliminationsd	13,118				7,885				1,020
Total mining	18,301				11,151				1,422
U.S. oil & gas operations	2,616				682				1,364
Corporate, other & eliminations	4				7				11
As reported in FCX’s consolidated financial statements	$	20,921			$	11,840			$	2,797

a.	Reflects sales of molybdenum 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 $76 million ($0.05 per pound) associated with updated mine plans at Morenci that resulted in a loss in recoverable copper in leach stockpiles.

d.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

North America Copper Mines Product Revenues and Production Costs (continued)

Year Ended December 31, 2012
(In millions)	By-Product				Co-Product Method
	Method				Copper				Molybdenuma				Otherb				Total
Revenues, excluding adjustments	$	4,908			$	4,908			$	468			$	91			$	5,467
Site production and delivery, before net noncash
and other costs shown below	2,572				2,357				227				60				2,644
By-product credits	(487		)		—				—				—				—
Treatment charges	161				147				—				14				161
Net cash costs	2,246				2,504				227				74				2,805
Depreciation, depletion and amortization	346				323				18				5				346
Noncash and other costs, net	138				134				3				1				138
Total costs	2,730				2,961				248				80				3,289
Revenue adjustments, primarily for pricing on prior period open sales	4				4				—				—				4
Gross profit	$	2,182			$	1,951			$	220			$	11			$	2,182
Copper sales (millions of recoverable pounds)	1,347				1,347
Molybdenum sales (millions of recoverable pounds)a									36
Gross profit per pound of copper/molybdenum:
Revenues, excluding adjustments	$	3.64			$	3.64			$	13.00
Site production and delivery, before net noncash
and other costs shown below	1.91				1.75				6.32
By-product credits	(0.36		)		—				—
Treatment charges	0.12				0.11				—
Unit net cash costs	1.67				1.86				6.32
Depreciation, depletion and amortization	0.26				0.24				0.48
Noncash and other costs, net	0.10				0.10				0.09
Total unit costs	2.03				2.20				6.89
Revenue adjustments, primarily for pricing
on prior period open sales	0.01				0.01				—
Gross profit per pound	$	1.62			$	1.45			$	6.11
Reconciliation to Amounts Reported
									Depreciation,
					Production				Depletion and
(In millions)	Revenues				and Delivery				Amortization
Totals presented above	$	5,467			$	2,644			$	346
Treatment charges	—				161				—
Noncash and other costs, net	—				138				—
Revenue adjustments, primarily for pricing on prior period open sales	4				—				—
Eliminations and other	15				(10		)		14
North America copper mines	5,486				2,933				360
Other mining & eliminationsc	12,517				7,446				812
Total mining	18,003				10,379				1,172
U.S. oil & gas operations	—				—				—
Corporate, other & eliminations	7				3				7
As reported in FCX’s consolidated financial statements	$	18,010			$	10,382			$	1,179

a.	Reflects sales of molybdenum 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 16.

South America Mining Product Revenues and Production Costs

Year Ended December 31, 2014
(In millions)	By-Product				Co-Product Method
	Method				Copper				Other				Total
Revenues, excluding adjustments	$	3,498			$	3,498			$	269		a	$	3,767
Site production and delivery, before net noncash
and other costs shown below	1,839				1,708				153				1,861
By-product credits	(247		)		—				—				—
Treatment charges	191				191				—				191
Royalty on metals	6				5				1				6
Net cash costs	1,789				1,904				154				2,058
Depreciation, depletion and amortization	367				345				22				367
Noncash and other costs, net	67				78				(11		)		67
Total costs	2,223				2,327				165				2,492
Revenue adjustments, primarily for pricing on prior period open sales	(65		)		(65		)		—				(65		)
Gross profit	$	1,210			$	1,106			$	104			$	1,210
Copper sales (millions of recoverable pounds)	1,135				1,135
Gross profit per pound of copper:
Revenues, excluding adjustments	$	3.08			$	3.08
Site production and delivery, before net noncash
and other costs shown below	1.62				1.50
By-product credits	(0.22		)		—
Treatment charges	0.17				0.17
Royalty on metals	0.01				0.01
Unit net cash costs	1.58				1.68
Depreciation, depletion and amortization	0.32				0.30
Noncash and other costs, net	0.06				0.07
Total unit costs	1.96				2.05
Revenue adjustments, primarily for pricing
on prior period open sales	(0.05		)		(0.05		)
Gross profit per pound	$	1.07			$	0.98
Reconciliation to Amounts Reported
									Depreciation,
					Production				Depletion and
(In millions)	Revenues				and Delivery				Amortization
Totals presented above	$	3,767			$	1,861			$	367
Treatment charges	(191		)		—				—
Royalty on metals	(6		)		—				—
Noncash and other costs, net	—				67				—
Revenue adjustments, primarily for pricing on prior period open sales	(65		)		—				—
Eliminations and other	27				11				—
South America mining	3,532				1,939				367
Other mining & eliminationsb	13,196				8,726				1,191
Total mining	16,728				10,665				1,558
U.S. oil & gas operations	4,710				1,237				6,028			c
Corporate, other & eliminations	—				2				14
As reported in FCX’s consolidated financial statements	$	21,438			$	11,904			$	7,600		c

a.	Includes gold sales of 67 thousand ounces ($1,271 per ounce average realized price) and silver sales of 2.9 million ounces ($18.54 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 16.

c.	Includes impairment of oil and gas properties of $3.7 billion.

South America Mining Product Revenues and Production Costs (continued)

Year Ended December 31, 2013
(In millions)	By-Product				Co-Product Method
	Method				Copper				Other				Total
Revenues, excluding adjustments	$	4,366			$	4,366			$	374		a	$	4,740
Site production and delivery, before net noncash
and other costs shown below	2,023			b	1,875				170				2,045
By-product credits	(352		)		—				—				—
Treatment charges	226				226				—				226
Net cash costs	1,897				2,101				170				2,271
Depreciation, depletion and amortization	346				323				23				346
Noncash and other costs, net	49				44				5				49
Total costs	2,292				2,468				198				2,666
Revenue adjustments, primarily for pricing on prior period open sales	(28		)		(28		)		—				(28		)
Gross profit	$	2,046			$	1,870			$	176			$	2,046
Copper sales (millions of recoverable pounds)	1,325				1,325
Gross profit per pound of copper:
Revenues, excluding adjustments	$	3.30			$	3.30
Site production and delivery, before net noncash
and other costs shown below	1.53			b	1.42
By-product credits	(0.27		)		—
Treatment charges	0.17				0.17
Unit net cash costs	1.43				1.59
Depreciation, depletion and amortization	0.26				0.24
Noncash and other costs, net	0.04				0.03
Total unit costs	1.73				1.86
Revenue adjustments, primarily for pricing
on prior period open sales	(0.03		)		(0.03		)
Gross profit per pound	$	1.54			$	1.41
Reconciliation to Amounts Reported
									Depreciation,
					Production				Depletion and
(In millions)	Revenues				and Delivery				Amortization
Totals presented above	$	4,740			$	2,045			$	346
Treatment charges	(226		)		—				—
Noncash and other costs, net	—				49				—
Revenue adjustments, primarily for pricing on prior period open sales	(28		)		—				—
Eliminations and other	(1		)		(25		)		—
South America mining	4,485				2,069				346
Other mining & eliminationsc	13,816				9,082				1,076
Total mining	18,301				11,151				1,422
U.S. oil & gas operations	2,616				682				1,364
Corporate, other & eliminations	4				7				11
As reported in FCX’s consolidated financial statements	$	20,921			$	11,840			$	2,797

a.	Includes gold sales of 102 thousand ounces ($1,350 per ounce average realized price) and silver sales of 4.1 million ounces ($21.88 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 $36 million ($0.03 per pound) associated with labor agreement costs at Cerro Verde.

c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

South America Mining Product Revenues and Production Costs (continued)

Year Ended December 31, 2012
(In millions)	By-Product				Co-Product Method
	Method				Copper				Other				Total
Revenues, excluding adjustments	$	4,462			$	4,462			$	355		a	$	4,817
Site production and delivery, before net noncash
and other costs shown below	1,995			b	1,846				173				2,019
By-product credits	(331		)		—				—				—
Treatment charges	202				202				—				202
Net cash costs	1,866				2,048				173				2,221
Depreciation, depletion and amortization	287				272				15				287
Noncash and other costs, net	110				75				35				110
Total costs	2,263				2,395				223				2,618
Revenue adjustments, primarily for pricing on prior period open sales	106				106				—				106
Gross profit	$	2,305			$	2,173			$	132			$	2,305
Copper sales (millions of recoverable pounds)	1,245				1,245
Gross profit per pound of copper:
Revenues, excluding adjustments	$	3.58			$	3.58
Site production and delivery, before net noncash
and other costs shown below	1.60			b	1.49
By-product credits	(0.26		)		—
Treatment charges	0.16				0.16
Unit net cash costs	1.50				1.65
Depreciation, depletion and amortization	0.23				0.22
Noncash and other costs, net	0.09				0.06
Total unit costs	1.82				1.93
Revenue adjustments, primarily for pricing
on prior period open sales	0.09				0.09
Gross profit per pound	$	1.85			$	1.74
Reconciliation to Amounts Reported
									Depreciation,
					Production				Depletion and
(In millions)	Revenues				and Delivery				Amortization
Totals presented above	$	4,817			$	2,019			$	287
Treatment charges	(202		)		—				—
Noncash and other costs, net	—				110				—
Revenue adjustments, primarily for pricing on prior period open sales	106				—				—
Eliminations and other	7				(15		)		—
South America mining	4,728				2,114				287
Other mining & eliminationsc	13,275				8,265				885
Total mining	18,003				10,379				1,172
U.S. oil & gas operations	—				—				—
Corporate, other & eliminations	7				3				7
As reported in FCX’s consolidated financial statements	$	18,010			$	10,382			$	1,179

a.	Includes gold sales of 82 thousand ounces ($1,673 per ounce average realized price) and silver sales of 3.2 million ounces ($30.33 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 $16 million ($0.01 per pound) associated with labor agreement costs at Candelaria.

c.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

Indonesia Mining Product Revenues and Production Costs

Year Ended December 31, 2014
(In millions)	By-Product				Co-Product Method
	Method				Copper				Gold				Silver				Total
Revenues, excluding adjustments	$	1,998			$	1,998			$	1,434			$	39		a	$	3,471
Site production and delivery, before net noncash
and other costs shown below	1,831				1,054				757				20				1,831
Gold and silver credits	(1,491		)		—				—				—				—
Treatment charges	171				99				70				2				171
Export duties	77				44				32				1				77
Royalty on metals	115				66				48				1				115
Net cash costs	703				1,263				907				24				2,194
Depreciation and amortization	266				153				110				3				266
Noncash and other costs, net	191			b	110				79				2				191
Total costs	1,160				1,526				1,096				29				2,651
Revenue adjustments, primarily for pricing on prior period open sales	(55		)		(55		)		18				—				(37		)
PT Smelting intercompany profit	34				20				14				—				34
Gross profit	$	817			$	437			$	370			$	10			$	817
Copper sales (millions of recoverable pounds)	664				664
Gold sales (thousands of recoverable ounces)									1,168
Gross profit per pound of copper/per ounce of gold:
Revenues, excluding adjustments	$	3.01			$	3.01			$	1,229
Site production and delivery, before net noncash
and other costs shown below	2.76				1.59				648
Gold and silver credits	(2.25		)		—				—
Treatment charges	0.26				0.15				61
Export duties	0.12				0.06				27
Royalty on metals	0.17				0.10				41
Unit net cash costs	1.06				1.90				777
Depreciation and amortization	0.40				0.23				94
Noncash and other costs, net	0.29			b	0.17				68
Total unit costs	1.75				2.30				939
Revenue adjustments, primarily for pricing on
prior period open sales	(0.08		)		(0.08		)		15
PT Smelting intercompany profit	0.05				0.03				12
Gross profit per pound/ounce	$	1.23			$	0.66			$	317
Reconciliation to Amounts Reported
									Depreciation,
					Production				Depletion and
(In millions)	Revenues				and Delivery				Amortization
Totals presented above	$	3,471			$	1,831			$	266
Treatment charges	(171		)		—				—
Export duties	(77		)		—				—
Royalty on metals	(115		)		—				—
Noncash and other costs, net	—				191			b	—
Revenue adjustments, primarily for pricing on prior period open sales	(37		)		—				—
PT Smelting intercompany profit	—				(34		)		—
Indonesia mining	3,071				1,988				266
Other mining & eliminationsc	13,657				8,677				1,292
Total mining	16,728				10,665				1,558
U.S. oil & gas operations	4,710				1,237				6,028			d
Corporate, other & eliminations	—				2				14
As reported in FCX’s consolidated financial statements	$	21,438			$	11,904			$	7,600		d

a.Includes silver sales of 2.2 million ounces ($17.42 per ounce average realized price).

b.	Includes $143 million ($0.22 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 16.

d.Includes impairment of oil and gas properties of $3.7 billion.

Indonesia Mining Product Revenues and Production Costs (continued)

Year Ended December 31, 2013
(In millions)	By-Product				Co-Product Method
	Method				Copper				Gold				Silver				Total
Revenues, excluding adjustments	$	2,903			$	2,903			$	1,438			$	61		a	$	4,402
Site production and delivery, before net noncash
and other costs shown below	2,174				1,434				710				30				2,174
Gold and silver credits	(1,497		)		—				—				—				—
Treatment charges	205				135				67				3				205
Royalty on metals	109				72				36				1				109
Net cash costs	991				1,641				813				34				2,488
Depreciation and amortization	247				163				80				4				247
Noncash and other costs, net	116				77				38				1				116
Total costs	1,354				1,881				931				39				2,851
Revenue adjustments, primarily for pricing on prior period open sales	1				1				(2		)		—				(1		)
PT Smelting intercompany loss	(19		)		(12		)		(6		)		(1		)		(19		)
Gross profit	$	1,531			$	1,011			$	499			$	21			$	1,531
Copper sales (millions of recoverable pounds)	885				885
Gold sales (thousands of recoverable ounces)									1,096
Gross profit per pound of copper/per ounce of gold:
Revenues, excluding adjustments	$	3.28			$	3.28			$	1,312
Site production and delivery, before net noncash
and other costs shown below	2.46				1.62				648
Gold and silver credits	(1.69		)		—				—
Treatment charges	0.23				0.15				61
Royalty on metals	0.12				0.08				33
Unit net cash costs	1.12				1.85				742
Depreciation and amortization	0.28				0.19				73
Noncash and other costs, net	0.13				0.09				35
Total unit costs	1.53				2.13				850
Revenue adjustments, primarily for pricing on
prior period open sales	—				—				(1		)
PT Smelting intercompany loss	(0.02		)		(0.01		)		(6		)
Gross profit per pound/ounce	$	1.73			$	1.14			$	455
Reconciliation to Amounts Reported
									Depreciation,
					Production				Depletion and
(In millions)	Revenues				and Delivery				Amortization
Totals presented above	$	4,402			$	2,174			$	247
Treatment charges	(205		)		—				—
Royalty on metals	(109		)		—				—
Noncash and other costs, net	—				116				—
Revenue adjustments, primarily for pricing on prior period open sales	(1		)		—				—
PT Smelting intercompany loss	—				19				—
Indonesia mining	4,087				2,309				247
Other mining & eliminationsb	14,214				8,842				1,175
Total mining	18,301				11,151				1,422
U.S. oil & gas operations	2,616				682				1,364
Corporate, other & eliminations	4				7				11
As reported in FCX’s consolidated financial statements	$	20,921			$	11,840			$	2,797

a.	Includes silver sales of 2.9 million ounces ($21.32 per ounce average realized price).

b.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

Indonesia Mining Product Revenues and Production Costs (continued)

Year Ended December 31, 2012
(In millions)	By-Product				Co-Product Method
	Method				Copper				Gold				Silver				Total
Revenues, excluding adjustments	$	2,564			$	2,564			$	1,522			$	64		a	$	4,150
Site production and delivery, before net noncash
and other costs shown below	2,230				1,378				818				34				2,230
Gold and silver credits	(1,589		)		—				—				—				—
Treatment charges	152				94				56				2				152
Royalty on metals	93				58				34				1				93
Net cash costs	886				1,530				908				37				2,475
Depreciation and amortization	212				131				78				3				212
Noncash and other costs, net	82				50				30				2				82
Total costs	1,180				1,711				1,016				42				2,769
Revenue adjustments, primarily for pricing on prior period open sales	13				13				3				—				16
PT Smelting intercompany loss	(37		)		(23		)		(13		)		(1		)		(37		)
Gross profit	$	1,360			$	843			$	496			$	21			$	1,360
Copper sales (millions of recoverable pounds)	716				716
Gold sales (thousands of recoverable ounces)									915
Gross profit per pound of copper/per ounce of gold:
Revenues, excluding adjustments	$	3.58			$	3.58			$	1,664
Site production and delivery, before net noncash
and other costs shown below	3.12				1.93				894
Gold and silver credits	(2.22		)		—				—
Treatment charges	0.21				0.13				61
Royalty on metals	0.13				0.08				38
Unit net cash costs	1.24				2.14				993
Depreciation and amortization	0.30				0.18				85
Noncash and other costs, net	0.11				0.07				33
Total unit costs	1.65				2.39				1,111
Revenue adjustments, primarily for pricing on
prior period open sales	0.02				0.02				3
PT Smelting intercompany loss	(0.05		)		(0.03		)		(15		)
Gross profit per pound/ounce	$	1.90			$	1.18			$	541
Reconciliation to Amounts Reported
									Depreciation,
					Production				Depletion and
(In millions)	Revenues				and Delivery				Amortization
Totals presented above	$	4,150			$	2,230			$	212
Treatment charges	(152		)		—				—
Royalty on metals	(93		)		—				—
Noncash and other costs, net	—				82				—
Revenue adjustments, primarily for pricing on prior period open sales	16				—				—
PT Smelting intercompany loss	—				37				—
Indonesia mining	3,921				2,349				212
Other mining & eliminationsb	14,082				8,030				960
Total mining	18,003				10,379				1,172
U.S. oil & gas operations	—				—				—
Corporate, other & eliminations	7				3				7
As reported in FCX’s consolidated financial statements	$	18,010			$	10,382			$	1,179

a.	Includes silver sales of 2.1 million ounces ($30.70 per ounce average realized price).

b.	Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16.

Africa Mining Product Revenues and Production Costs

Year Ended December 31, 2014
(In millions)	By-Product				Co-Product Method
	Method				Copper				Cobalt				Total
Revenues, excluding adjustmentsa	$	1,301			$	1,301			$	285			$	1,586
Site production and delivery, before net noncash
and other costs shown below	665				591				157				748
Cobalt creditsb	(204		)		—				—				—
Royalty on metals	29				24				5				29
Net cash costs	490				615				162				777
Depreciation, depletion and amortization	228				195				33				228
Noncash and other costs, net	22				19				3				22
Total costs	740				829				198				1,027
Revenue adjustments, primarily for pricing on prior period open sales	(1		)		(1		)		2				1
Gross profit	$	560			$	471			$	89			$	560
Copper sales (millions of recoverable pounds)	425				425
Cobalt sales (millions of contained pounds)									30
Gross profit per pound of copper and cobalt:
Revenues, excluding adjustmentsa	$	3.06			$	3.06			$	9.66
Site production and delivery, before net noncash
and other costs shown below	1.56				1.39				5.30
Cobalt creditsb	(0.48		)		—				—
Royalty on metals	0.07				0.06				0.16
Unit net cash costs	1.15				1.45				5.46
Depreciation, depletion and amortization	0.54				0.46				1.13
Noncash and other costs, net	0.05				0.04				0.11
Total unit costs	1.74				1.95				6.70
Revenue adjustments, primarily for pricing on
prior period open sales	—				—				0.07
Gross profit per pound	$	1.32			$	1.11			$	3.03
Reconciliation to Amounts Reported
									Depreciation,
					Production				Depletion and
(In millions)	Revenues				and Delivery				Amortization
Totals presented above	$	1,586			$	748			$	228
Royalty on metals	(29		)		—				—
Noncash and other costs, net	—				22				—
Revenue adjustments, primarily for pricing on prior period open sales	1				—				—
Africa mining	1,558				770				228
Other mining & eliminationsc	15,170				9,895				1,330
Total mining	16,728				10,665				1,558
U.S. oil & gas operations	4,710				1,237				6,028			d
Corporate, other & eliminations	—				2				14
As reported in FCX’s consolidated financial statements	$	21,438			$	11,904			$	7,600		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 16.

d.	Includes impairment of oil and gas properties of $3.7 billion.

Africa Mining Product Revenues and Production Costs (continued)

Year Ended December 31, 2013
(In millions)	By-Product				Co-Product Method
	Method				Copper				Cobalt				Total
Revenues, excluding adjustmentsa	$	1,457			$	1,457			$	205			$	1,662
Site production and delivery, before net noncash
and other costs shown below	649				614				111				725
Cobalt creditsb	(131		)		—				—				—
Royalty on metals	29				26				3				29
Net cash costs	547				640				114				754
Depreciation, depletion and amortization	246				220				26				246
Noncash and other costs, net	29				26				3				29
Total costs	822				886				143				1,029
Revenue adjustments, primarily for pricing on prior period open sales	2				2				2				4
Gross profit	$	637			$	573			$	64			$	637
Copper sales (millions of recoverable pounds)	454				454
Cobalt sales (millions of contained pounds)									25
Gross profit per pound of copper and cobalt:
Revenues, excluding adjustmentsa	$	3.21			$	3.21			$	8.02
Site production and delivery, before net noncash
and other costs shown below	1.43				1.35				4.35
Cobalt creditsb	(0.29		)		—				—
Royalty on metals	0.07				0.06				0.14
Unit net cash costs	1.21				1.41				4.49
Depreciation, depletion and amortization	0.54				0.48				1.00
Noncash and other costs, net	0.06				0.06				0.11
Total unit costs	1.81				1.95				5.60
Revenue adjustments, primarily for pricing on
prior period open sales	—				—				0.09
Gross profit per pound	$	1.40			$	1.26			$	2.51
Reconciliation to Amounts Reported
									Depreciation,
					Production				Depletion and
(In millions)	Revenues				and Delivery				Amortization
Totals presented above	$	1,662			$	725			$	246
Royalty on metals	(29		)		—				—
Noncash and other costs, net	—				29				—
Revenue adjustments, primarily for pricing on prior period open sales	4				—				—
Africa mining	1,637				754				246
Other mining & eliminationsc	16,664				10,397				1,176
Total mining	18,301				11,151				1,422
U.S. oil & gas operations	2,616				682				1,364
Corporate, other & eliminations	4				7				11
As reported in FCX’s consolidated financial statements	$	20,921			$	11,840			$	2,797

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 16.

Africa Mining Product Revenues and Production Costs (continued)

Year Ended December 31, 2012
(In millions)	By-Product				Co-Product Method
	Method				Copper				Cobalt				Total
Revenues, excluding adjustmentsa	$	1,179			$	1,179			$	194			$	1,373
Site production and delivery, before net noncash
and other costs shown below	501				465				121				586
Cobalt creditsb	(112		)		—				—				—
Royalty on metals	25				22				3				25
Net cash costs	414				487				124				611
Depreciation, depletion and amortization	176				160				16				176
Noncash and other costs, net	29				26				3				29
Total costs	619				673				143				816
Revenue adjustments, primarily for pricing on prior period open sales	8				8				3				11
Gross profit	$	568			$	514			$	54			$	568
Copper sales (millions of recoverable pounds)	336				336
Cobalt sales (millions of contained pounds)									25
Gross profit per pound of copper and cobalt:
Revenues, excluding adjustmentsa	$	3.51			$	3.51			$	7.83
Site production and delivery, before net noncash
and other costs shown below	1.49				1.39				4.86
Cobalt creditsb	(0.33		)		—				—
Royalty on metals	0.07				0.06				0.12
Unit net cash costs	1.23				1.45				4.98
Depreciation, depletion and amortization	0.52				0.47				0.67
Noncash and other costs, net	0.09				0.08				0.11
Total unit costs	1.84				2.00				5.76
Revenue adjustments, primarily for pricing on
prior period open sales	0.02				0.02				0.09
Gross profit per pound	$	1.69			$	1.53			$	2.16
Reconciliation to Amounts Reported
									Depreciation,
					Production				Depletion and
(In millions)	Revenues				and Delivery				Amortization
Totals presented above	$	1,373			$	586			$	176
Royalty on metals	(25		)		—				—
Noncash and other costs, net	—				29				—
Revenue adjustments, primarily for pricing on prior period open sales	11				—				—
Africa mining	1,359				615				176
Other mining & eliminationsc	16,644				9,764				996
Total mining	18,003				10,379				1,172
U.S. oil & gas operations	—				—				—
Corporate, other & eliminations	7				3				7
As reported in FCX’s consolidated financial statements	$	18,010			$	10,382			$	1,179

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 16.

Molybdenum Mines Product Revenues and Production Costs

	Years Ended December 31,
(In millions)	2014a				2013a				2012a
Revenues, excluding adjustmentsb	$	630			$	566			$	484
Site production and delivery, before net noncash
and other costs shown below	321				303				210
Treatment charges and other	43				44				30
Net cash costs	364				347				240
Depreciation, depletion and amortization	92				82				33
Noncash and other costs, net	7				14				8
Total costs	463				443				281
Gross profit	$	167			$	123			$	203
Molybdenum sales (millions of recoverable pounds)b	51				49				34
Gross profit per pound of molybdenum:
Revenues, excluding adjustmentsb	$	12.28			$	11.65			$	14.27
Site production and delivery, before net noncash
and other costs shown below	6.24				6.24				6.19
Treatment charges and other	0.84				0.91				0.88
Unit net cash costs	7.08				7.15				7.07
Depreciation, depletion and amortization	1.80				1.68				0.97
Noncash and other costs, net	0.15				0.29				0.24
Total unit costs	9.03				9.12				8.28
Gross profit per pound	$	3.25			$	2.53			$	5.99
Reconciliation to Amounts Reported									Depreciation,
					Production				Depletion and
Year Ended December 31, 2014	Revenues				and Delivery				Amortization
Totals presented above	$	630			$	321			$	92
Treatment charges and other	(43		)		—				—
Noncash and other costs, net	—				7				—
Molybdenum mines	587				328				92
Other mining & eliminationsc	16,141				10,337				1,466
Total mining	16,728				10,665				1,558
U.S. oil & gas operations	4,710				1,237				6,028			d
Corporate, other & eliminations	—				2				14
As reported in FCX’s consolidated financial statements	$	21,438			$	11,904			$	7,600		d
Year Ended December 31, 2013
Totals presented above	$	566			$	303			$	82
Treatment charges and other	(44		)		—				—
Noncash and other costs, net	—				14				—
Molybdenum mines	522				317				82
Other mining & eliminationsc	17,779				10,834				1,340
Total mining	18,301				11,151				1,422
U.S. oil & gas operations	2,616				682				1,364
Corporate, other & eliminations	4				7				11
As reported in FCX’s consolidated financial statements	$	20,921			$	11,840			$	2,797
Year Ended December 31, 2012
Totals presented above	$	484			$	210			$	33
Treatment charges and other	(30		)		—				—
Noncash and other costs, net	—				8				—
Henderson mine	454				218				33
Climax mine	75				102				26
Molybdenum mines	529				320				59
Other mining & eliminationsc	17,474				10,059				1,113
Total mining	18,003				10,379				1,172
U.S. oil & gas operations	—				—				—
Corporate, other & eliminations	7				3				7
As reported in FCX’s consolidated financial statements	$	18,010			$	10,382			$	1,179
a. The years 2014 and 2013 include the combined results of the Henderson and Climax mines; the year 2012 reflects the results of only the Henderson mine as start-up activities were still underway at the Climax mine.
b. Reflects sales of the molybdenum mines' production to FCX's 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, FCX's consolidated average realized price per pound of molybdenum will differ from the amounts reported in this table.
c. Represents the combined total for all other mining operations and the related eliminations, as presented in Note 16. Also includes amounts associated with 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.
d. Includes impairment of oil and gas properties of $3.7 billion.

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

Year Ended December 31, 2014
													Total
					Natural								U.S. Oil
(In millions)	Oil				Gas				NGLs				& Gas
Oil and gas revenues before derivatives	$	3,721			$	353			$	128			$	4,202
Realized cash losses on derivative contracts	(111		)		(11		)		—				(122		)
Realized revenues	$	3,610			$	342			$	128			4,080
Less: cash production costs													1,140
Cash operating margin													2,940
Less: depreciation, depletion and amortization													2,291
Less: impairment of oil and gas properties													3,737
Less: accretion and other costs													97
Plus: net noncash mark-to-market gains on derivative contracts													627
Plus: other net adjustments													3
Gross loss													$	(2,555	)
Oil (MMBbls)	40.1
Gas (Bcf)					80.8
NGLs (MMBbls)									3.2
Oil Equivalents (MMBOE)													56.8
	Oil				Natural Gas				NGLs
	(per barrel)				(per MMBtu)				(per barrel)				Per BOE
Oil and gas revenues before derivatives	$	92.76			$	4.37			$	39.73			$	73.98
Realized cash losses on derivative contracts	(2.76		)		(0.14		)		—				(2.15		)
Realized revenues	$	90.00			$	4.23			$	39.73			71.83
Less: cash production costs													20.08
Cash operating margin													51.75
Less: depreciation, depletion and amortization													40.34
Less: impairment of oil and gas properties													65.80
Less: accretion and other costs													1.69
Plus: net noncash mark-to-market gains on derivative contracts													11.03
Plus: other net adjustments													0.06
Gross loss													$	(44.99	)
Reconciliation to Amounts Reported
(In millions)	Revenues				Production and Delivery				Depreciation, Depletion and Amortization
Totals presented above	$	4,202			$	1,140			$	2,291
Realized cash losses on derivative contracts	(122		)		—				—
Net noncash mark-to-market gains on derivative contracts	627				—				—
Accretion and other costs	—				97				—
Impairment of oil and gas properties	—				—				3,737
Other net adjustments	3				—				—
U.S. oil & gas operations	4,710				1,237				6,028
Total mininga	16,728				10,665				1,558
Corporate, other & eliminations	—				2				14
As reported in FCX's consolidated financial statements	$	21,438			$	11,904			$	7,600

a. Represents the combined total for mining operations and the related eliminations, as presented in Note 16.

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

Seven months from June 1, 2013, to December 31, 2013
													Total
(In millions)	Oil				Natural Gas				NGLs				U.S.Oil & Gas
Oil and gas revenues before derivatives	$	2,655			$	202			$	92			$	2,949
Realized cash (losses) gains on derivative contracts	(36		)		14				—				(22		)
Realized revenues	$	2,619			$	216			$	92			2,927
Less: cash production costs													653
Cash operating margin													2,274
Less: depreciation, depletion and amortization													1,364
Less: accretion and other costs													29
Plus: net noncash mark-to-market losses on derivative contracts													(312		)
Plus: other net adjustments													1
Gross profit													$	570
Oil (MMBbls)	26.6
Gas (Bcf)					54.2
NGLs (MMBbls)									2.4
Oil Equivalents (MMBOE)													38.1
	Oil				Natural Gas				NGLs
	(per barrel)				(per MMbtu)				(per barrel)				Per BOE
Oil and gas revenues before derivatives	$	99.67			$	3.73			$	38.20			$	77.45
Realized cash (losses) gains on derivative contracts	(1.35		)		0.26				—				(0.58		)
Realized revenues	$	98.32			$	3.99			$	38.20			76.87
Less: cash production costs													17.14
Cash operating margin													59.73
Less: depreciation, depletion and amortization													35.81
Less: accretion and other costs													0.79
Plus: net noncash mark-to-market losses on derivative contracts													(8.20		)
Plus: other net adjustments													0.04
Gross profit													$	14.97
Reconciliation to Amounts Reported
(In millions)	Revenues				Production and Delivery				Depreciation, Depletion and Amortization
Totals presented above	$	2,949			$	653			$	1,364
Realized cash losses on derivative contracts	(22		)		—				—
Net noncash mark-to-market losses on derivative contracts	(312		)		—				—
Accretion and other costs	—				29				—
Other net adjustments	1				—				—
U.S. oil & gas operations	2,616				682				1,364
Total mininga	18,301				11,151				1,422
Corporate, other & eliminations	4				7				11
As reported in FCX's consolidated financial statements	$	20,921			$	11,840			$	2,797

a.	Represents the combined total for all mining operations and the related eliminations, as presented in Note 16.

CAUTIONARY STATEMENT

Our discussion and analysis contains forward-looking statements in which we discuss factors we believe may affect our future performance. Forward-looking statements are all statements other than statements of historical facts, such as projections or expectations relating to ore grades and milling rates; production and sales volumes; unit net cash costs; cash production costs per BOE; operating cash flows; capital expenditures; exploration efforts and results; development and production activities and costs; liquidity; tax rates; the impact of copper, gold, molybdenum, cobalt, crude oil and natural gas price changes; the impact of derivative positions; the impact of deferred intercompany profits on earnings; reserve estimates; future dividend payments; debt reduction; and share purchases. The words “anticipates,” “may,” “can,” “plans,” “believes,” “potential,” “estimates,” “expects,” “projects,” “targets,” “intends,” “likely,” “will,” “should,” “to be” and any similar expressions are intended to identify those assertions as forward-looking statements. The declaration of dividends is at the discretion of the Board and will depend on our financial results, cash requirements, future prospects, and other factors deemed relevant by the Board.

We caution readers that forward-looking statements are not guarantees of future performance and that our actual results may differ materially from those anticipated, projected or assumed in the forward-looking statements. Important factors that can cause our actual results to differ materially from those anticipated in the forward-looking statements include supply of and demand for, and prices of copper, gold, molybdenum, cobalt, oil and gas, mine sequencing, production rates, industry risks, regulatory changes, political risks, drilling results, the outcome of negotiations with the Indonesian government regarding an amendment to PT-FI's COW, PT-FI's ability to obtain renewal of its export license after July 25, 2015, the potential effects of violence in Indonesia, the resolution of administrative disputes in the Democratic Republic of Congo, weather- and climate-related risks, labor relations, environmental risks, litigation results and other factors described in more detail under the heading “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2014, filed with the SEC as updated by our subsequent filings with the SEC.

Investors are cautioned that many of the assumptions on which our forward-looking statements are based are likely to change after our forward-looking statements are made, including for example commodity prices, which we cannot control, and production volumes and costs, some aspects of which we may or may not be able to control. Further, we may make changes to our business plans that could or will affect our results. We caution investors that we do not intend to update forward-looking statements more frequently than quarterly notwithstanding any changes in our assumptions, changes in business plans, actual experience or other changes, and we undertake no obligation to update any forward-looking statements.