費利浦·麥克莫蘭銅金 (FCX) 2014 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to the Freeport-McMoRan third quarter earnings conference call.

At this time all participants are in a listen only mode.

(Operator Instructions)

I would now like to turn the conference over to Ms. Kathleen Quirk, Executive Vice President and Chief Financial Officer.

Please go ahead, ma'am.

Thank you and good morning.

Welcome to the Freeport-McMoRan third-quarter 2014 earnings conference call.

Our results were released earlier this morning and a copy of the press release and slides for today's call are available on our website at fcx.com.

Our conference call today is being broadcast live on the internet and anyone may listen to the call by accessing our website homepage and clicking on the webcast link for the conference call.

In addition to analysts and investors, the financial press has been invited to listen to today's call.

A replay of the webcast will be available on our website later today.

Before we begin our comments, we'd like to remind everyone that today's press release and certain of our comments on the call include forward-looking statements; and actual results may differ materially.

We'd like to refer everyone to the cautionary language included in our press release and the presentation materials and to the risk factors described in our 2013 form 10-K and subsequent SEC filings.

On the call today are Jim Bob Moffett, our Chairman of the Board, Richard Adkerson, our President and Chief Executive Officer and Jim Flores, the President and Chief Executive Officer of Freeport-McMoRan Oil and Gas.

We have got several others from our senior management team here in the room.

We will start by briefly summarizing the financial results and then I'll turn the call over to Richard, who will be reviewing our recent performance and outlook.

As usual, we will open the call after our remarks for questions.

Today, FCX reported net income attributable to common stock of $552 million, $0.53 per share for third quarter 2014 compared with $821 million or $0.79 per share for the third quarter of 2013.

There are several special items, as you will note, in the press release included in this quarter's result which reduced net income by $115 million or $0.11 per share.

These items included a ceiling test write-down on our oil and gas properties which impacted net income by $192 million, a charge of $47 million for an increase in deferred tax accruals associated with recent tax law changes in Chile.

These were offset partially by mark to market gains on oil and gas derivatives totaling $76 million and $48 million in gains on asset sales and red debt redemption transactions.

The operating results, as you will see, reflect strong operating performance throughout the organization.

Copper sales totaled 1.08 billion pounds and gold sales totalled 525,000 ounces.

Those exceeded the year ago quarter.

Our oil and gas sales of 12.5 million barrels of oil equivalent exceeded the recent forecast, but were below the year ago quarter reflecting the sale of the Eagle Ford Shale properties in June 2014.

Our results also benefited from the resumption of Grasberg concentrate exports in August following regulatory approval's from the Indonesian government in late July.

Our third quarter average realized copper price was $3.12 per pound.

That was below the year ago quarter of $3.28 per pound.

Gold prices were also below the year ago at $1,220 per ounce versus $1,329 per ounce in the third quarter of 2013.

Brent crude prices averaged $103.50 per barrel compared with $110 per barrel in the year ago quarter.

Our operating cash flows generated during the quarter totaled $1.9 billion and our capital expenditures approximated $1.9 billion as well.

As we previously announced and we've got additional information in the press release, we entered into an agreement in October to sell our 80% interest in the Candelaria and Ojos copper mining operations and supporting infrastructures to Lundin Mining Corporation for $1.8 billion in cash and contingent consideration of up to $200 million.

We expect this transaction to close in the fourth quarter.

During the quarter we redeemed $1.7 billion of senior notes with an average interest rate of 6.6% and additionally on October 15, we redeemed $400 million of aggregate principal amount of our 8 5.8% senior notes.

We ended the quarter with $19.7 billion of total debt and the consolidated cash was $658 million.

I'll now turn the call over to Richard who will be referring to the slide presentation materials on our website.

Good morning everyone.

We've got a lot to talk about today and I know in this complicated geopolitical world we live in, with the market conditions we face, we've got some issues to talk about in Indonesia.

We're going to talk about the things that affect our business in those areas and answer your questions.

I also want to put the situation in context for our Company.

Kathleen just talked about a quarter, despite all these things, where we had solid performance from our global operations both in mining and oil and gas.

In Indonesia we resumed concentrated exports in August following the export band that came into play in January and we are working to work with the government on our long-term contract situation.

Then, when we look at our strategy of growing the volumes of our business and to do that we obviously have to focus on making long-term decisions and making long-term investments and being consistent about it, you are seeing progress made of efforts that began back at the time of the Phelps Dodge, Freeport merger in 2007.

The Morenci expansion is expected to reach full rates by the end of this year.

The project is essentially complete and it's a major step for us.

The Cerro Verde expansion, which is a tripling of our output there, a project that's cost is estimated to be in excess of $4.5 billion, is on progress.

Construction is underway heading for a startup in 2016.

In our oil and gas business, Jim will be talking about the commissioning of Lucius this year and the Highlander project where we are completing the well for testing and production as part of our inboard lower Tertiary program, important project in that area.

Beyond that, our exploration activities and our planning activities for future expansions in our mining business, our oil and gas business continue to look at our large resource base and position ourselves for future growth over long periods of time.

Kathleen talked about the sale of Candelaria.

That was a good asset.

We found a buyer willing to pay a reasonable price and we executed it.

It should be a good deal for both companies.

For us, it's a step towards meeting our objective of generating cash to reduce our debt.

All of that has gone smoothly and we are working with Lundin on all the efforts to close the transactions and have an effective transition.

Speaking about copper markets, global microeconomic situations have been overhanging the market, raising questions about demand.

Europe has become a recent matter of global concern about its financial and geopolitical situation.

People are concerned about growth rate slowing in China.

But when we look at our business and the outlook and in talking with our customers, in our copper business we sell directly to users of copper.

We are not traders.

We have a limited amount of activity with trading companies.

So we have direct ties to copper consumers globally.

Here in the US we're almost just a little less than 50% of the total marketplace for copper and we sell around the world.

Copper consumption continues to remain strong.

Copper is affected by the economic situations in any particular country, but as we talked with our customers and we were with many of them during LME week, the outlook, the current uncertainty is bolstered by a more positive outlook going forward.

The US continues to grow at a moderate rate.

Then, when you back from the demand side, which is going to be affected by what goes on in China and the global economy, the supply-side challenges, which is the underpinning for the current copper price and for our optimistic view about copper going forward, is really driven by the supply-side issues.

A number of projects restarted, some of them delayed.

The surpluses that were projected are not yet being realized and appear to perhaps be overstated.

Inventories at customers and on the exchanges remain low.

We see examples of new projects being delayed or deferred and so the supply-side picture remains the same and the positive long-term fundamentals for the copper markets, which drives our business, are intact.

On slide 7 you can see that we managed our business in an efficient way during the quarter and achieved good unit cost results.

You can see that for the quarter, our consolidated unit costs were $1.34 and the improvement in Indonesia with the resumption of exports during the quarter.

We have a set of assets that allows us to be responsive to market changes.

We showed that clearly in 2008 and 2009.

And then with assets that can generate profits at today's copper price levels with the outlook being positive for the longer term of improved profits as we go forward.

Production volumes in North America reflect the Morenci ramp-up and improvements at our mines.

South America, we were in lower grade sections of our mines and you can see that Africa performed well as did Indonesia during the quarter.

The strength of our Company in the minerals businesses is our resource base.

At $2 copper plans, we have over 100 billion pounds of crude and probable reserves reported under SEC standards.

Beyond that, we have identified mineral resources associated with our existing properties and incremental contained over 100 billion pounds.

We are working to take this mineral resource base to develop long-term investments.

Finding projects to invest in requires time and after we complete the current round of investments, there is going to be an active period of doing all the work that's necessary before we begin making significant capital commitments to new projects.

But we have to be focused on doing that with a sense of urgency and in order to be able to take advantage of these opportunities.

Then beyond this big resource base, there is significant additional potential that's not included in our mineral resources and much of this has to do with sulfide deposits lying in North America associated with the oxide production that we have, but Morenci and Safford with the Lone Star deposit and other properties in North America.

At Tenke we still are doing drilling activities, metallurgical analysis to identify the mixed ore sulfide base beyond our existing production that we have there.

El Abra has continued opportunities for resource additions and we're working with partners in the area to determine the best way to deal with that and we have attractive greenfield project in Serbia.

So that is a real strength of our Company.

Now, where do we stand in this process?

This first round of projects that we are now completing -- the Morenci project, the Cerro Verde project, we've previously completed the Tenke project -- were designed to add about 20% to our production volumes.

We started on these projects in 2010.

By 2016 we will be moving from an annual sales level of roughly 4 billion pounds to 5 billion pounds.

You may recall before that we completed the initial development of Tenke.

We completed the start up of the Climax mine.

We had enhanced production from our existing operations.

Now we're seeing where we go from there.

Grasberg, through all the issues related to the export ban, the other issues we've face in recent times, we have progressed the development of the underground resource.

This is a big project, very attractive long-term economics because of the high grades of both copper and gold that are available to us.

We are working to establish Grasberg as a long-term asset with high production volumes, low-cost.

You can see that the schedule we are on will provide for the commencement of mining from the extension of our existing DOZ mine, the deep MLZ mine with its high grades that will begin by the end of 2015.

Then, once we complete mining in the Grasberg pit, which will be 2016, 2017 timeframe, we will commence mining from the Grasberg blockade underlying the pit and that is what we've been working on for several years and continuing to invest in.

All of that is part of our long-term plan.

Now, here's where we stand in Indonesia.

We entered into this memorandum of understanding in July to allow us to resume exports.

Export sales had been prohibited since mid-January as a result of a government policy, government laws and regulations designed to encourage in-country investment in downstream processing.

We executed the MOU, we agreed to pay higher royalties, pay an export duty.

We posted a bond to support a commitment for our smelter development.

And then, we are continuing to operate under our existing COW.

Our agreement with the government is that we will work to amend the contract award, provided we are provided assurances for our ability to operate beyond 2021 through the extension provisions of the COW to 2041 with assurances about our physical terms, operating rights and legal rights.

We've done work with the government on that.

Work remains to be done.

Last week there was an inauguration of the new government, or the new president came into office.

He has now announced his cabinet and we will begin working in a transition mode from the prior government officials with these new government officials.

Our goal is to maintain a positive, long-term partnership with the government of Indonesia.

We're confident we can achieve that because it's one of these things where it's in everyone's best interest to do it.

It's been a complicated political environment with the elections and we've had to work in that environment.

But we are confident we are going to be able to achieve this because we have done such good things for the country, our employees and the region.

And it's important to the country, it's the right thing to do and we are going to work through it.

Labor, we have had issues with labor that started two years ago when we had a strike.

We worked through a CLA agreement following the strike, three years ago with the strike.

Last year we signed a new CLA agreement.

We've had safety issues that have been reported.

We had a collapse of the underground classroom area last year and recently we've had two accidents.

The union has been -- we are approaching these with a great deal of focus to ensure that our procedures are right and we are handling safety right.

Our safety programs are strong by international standards.

Operations in Indonesia have had very low accident incident rates.

Our standards are very high, but because of the terrain, the weather and the workforce, when someone makes a mistake unfortunately the consequences can be tough.

So we are dealing with all of that.

It's been, let me just say, an emotional time in Indonesia with the elections, not only nationally, but in the region.

As a result of that, that has led to a current issue with parts of our workforce.

75% or 80% of our workforce is in place, but some workers are engaging in protests and demands relating to these recent safety issues.

We are attempting to work with them.

Some workers are currently not reporting to work and that's having some constraints on our mining activities in the pit.

We've been continuing to operate our mill, our underground operations and our concentrated delivery systems, but it's having a current impact and those discussions are going on right now.

We're getting support from the local government, the local community and the central government and we are in the process of working to resolve this.

We're reaching out with the union leadership to have discussions with them as well.

Again, this is sorts of things that we've worked through in the past and we'll work to these issues, but that is the situation we are dealing with currently.

Now, stepping back, after we complete these projects where do we go next?

We've been engaged in ground field development studies.

We have significant long-term opportunities for growth projects in Chile at our El Abra mine where we have a partnership with Codelco.

We are talking with our partners about how to proceed with a major development project there.

That requires development of water sources, desalinization, pipeline project, power and so forth, but the great thing is we have got a huge resource.

So those are issues we are working on.

At our Bagdad mine in Prescott, here in Arizona, we have a very significant, large sulfide resource that has a capacity to more than double our mill rates.

We are working on developing the necessary steps with water, land to develop for tailing series and so forth before we move forward with that.

In Tenke we have the resource that allows for growth.

To take the next step will require development of power resources for the area and we are working with the government and other companies in Katanga to deal with that.

That's a necessary step to allow us for the long-term development of Tenke.

At the saffron mine in eastern Arizona with the adjacent Lone Star resource, we have about five years left on our current oxide production.

We're looking at a stepped opportunity there to supplement that oxide ore with ore from the Lone Star deposit and then at Lone Star and at Safford we have a significant sulfide resource that would allow for us to deal with that.

So that is kind of the lineup of where we are going and we will continue to report for it.

We have on slides 13 and 14, these 3-D models, we'll call them Vulcan models, that allow us to take drill hole results and project the geometry of resources and we thought we would share a couple of those with you.

At Morenci where we just completed an expansion of our mill, but the opportunity there because of this huge potential resource that is shown on this slide for a very large-scale milling expansion in the future, is something that is becoming increasingly more attractive.

At Lone Star, adjacent to Safford, a deposit that's been known about for decades now, because of the ability to take advantage of resources and the drilling and exploration analysis we've done, is showing a huge resource potential.

These are in the US.

Today in the US because of the improved energy situation coming from the shale oil and gas development with attractive energy costs, because of the flexibility of US labor, the support we have here in Arizona from the local government for ground fill development expansions makes these things very attractive.

Jim Bob, would you want to say a couple of words about these potential projects?

The only thing I would say is that this is two good examples.

Morenci and Lone Star have been [chosen, that there's brownfields] underneath the property that we acquired from Phelps Dodge.

The easy way to explain it is these things are all icebergs sitting here and the oxide ore is the tip of the iceberg with the big body of the iceberg down below the surface.

Remember, the only difference between oxide ore and sulfide ore is that the oxide ore has been exposed to weather.

So if you look at this and see all the (inaudible) in here, you see that underneath this Lone Star oxide, you have a mine potential that would be bigger than most of these big mine in the US and the rest of the world.

So if you realize that most people are trying to go out and find greenfield projects, we're sitting here with infrastructure on US soil, so the potential of these mines, (indiscernible) in Africa we had (indiscernible).

We have a 60 km oil (indiscernible) its exposure to surface and below that is another one of these icebergs.

(indiscernible) we usually (indiscernible) new resource base and when we've done enough drilling we (indiscernible).

Great.

Thanks, Jim Bob.

Now.

Closing, we're really excited about this mining business.

It's a tough business.

There are challenges we have to face and we've chased over the years.

We are confident about our ability to do that and we have got a track record of doing it, great set of assets, great people, great technology.

On page 15 you can see where we have right now, within sight, five mines to be world-class mines and those are very, very difficult to find, with 400,000 to 500,000 tons of annual production that span the world and then all these resources that, while we won't be spending capital on in the near-term, we would be very disciplined about that and we're going to be focused on shareholder returns.

It gives us a great deal excitement about this part of our business.

I know Jim shares that excitement about our oil and gas business and I'll let him take over.

Thank you, Richard and good morning, everyone.

As Kathleen articulated in her opening comments, the oil and gas business is doing well.

Our sales of 12.5 million barrels of oil equivalent in the third quarter were slightly above the July estimate, but it was impacted by our earlier $3.1 billion rationalization of the Eagle Ford shale assets in the second quarter.

We continue to have good steady production with [Florida] and California and our Deepwater Gulf of Mexico where our high-margin barrels all come from.

The cash operating margin was $600 million for the quarter with a $48 a barrel margin.

That was impacted by the recent price activity in the Brent pricing.

68% of Gulf of Mexico with a $65 margin and we did a good job over the summer to position the Company for future growth out of our key area, which is the Deepwater Gulf of Mexico.

Also, our oil hedges that were carried over from the plains days come in handy with this current oil price where we have puts or [struck] at $90.

They cost us $3 or $4 a barrel and so forth.

When you start talking about $80, $85 oil in this type of market, volatility and violence, they're the fire protection you need to make sure you continue to protect your capital budget and your shareholder returns that we are all pledged to protect.

On page 17, the reserves and resource potential.

We're trying to articulate here what the rotation of our business has been from purely production assets that are flat to declining to something that's going to be impactful for the Company at large with large growth.

As you can see, California and Deepwater Gulf of Mexico's a great comparison: two excellent oil assets, the cash margin obviously in the Gulf of Mexico much higher because of the efficiency of production versus California with $79 versus $53.

The reserve bases are basically about the same, 200 million barrels each.

But the growth potential and the reserve potential in both areas is dramatically different from 400 million barrels in California to 4.4 billion in the Gulf of Mexico.

Still with the same operating leverage, still with the same brownfield complexion of reserve ads and also the facility and technical leverage that preserves your individual project economics, just like in the mining business, that's where our strong suit is.

We're putting a tremendous amount of effort, as everyone knows, in the Deepwater Gulf of Mexico positioning our business.

We'll talk about the portfolio rotation here in a second.

In the meantime, we do have on the right-hand side of the page, a very large opportunity in Morocco to drill some Jurassic fan plays and some deep structures there offshore that we're excited about.

We will start drilling those, the first one next year, the second one in 2016.

I have passed over, but not left out our gas business.

Our gas business, highlighted by the Haynesville and the inboard lower Tertiary.

We have 23 TCF of gas potential there versus our eight billion barrels of oil upside.

With gas prices where they are, we continue to put the harness on this.

We're drilling a few exploratory wells and inboard lower Tertiary on the backs of the Highlander, apparent success even though we haven't put it on production yet.

As far as trying to delineate where the play goes to and try to make sure that we protect our resources there without going into full development just because of the gas price margin.

Obviously at $2.85, an MCI for $18 a barrel doesn't compete as well for capital as the Deepwater Gulf of Mexico or California international does.

So that gives a look at the eight billion barrels of resource potential we have in the Company versus our 430 million barrel reserve base and the additional 23 TCF.

We have a very deep portfolio of opportunities that we plan on taking advantage of for many years and decades to come.

Specifically to the third quarter business on page 18, the portfolio optimization comes on the back of the Eagle Ford Shale interests sale for $3.1 billion in June 2014.

We reinvested $1.4 billion of Deepwater Gulf of Mexico interest on a tax free exchange for interest and picked up another 5% plus of our Lucius oil development.

And then the Heidelberg oil development we've been watching is just to the west of our Holstein facility in Green Canyon.

We picked up 12.5%.

Both of those are operated by Anadarko.

And then a new one, our Vito oil discovery that Shell and Anadarko Statoil had drilled a few years ago.

It's a delineated structure that has a lot of development leases and exploitations and leases around the mini basin that we have a significant interest in.

This will give us an infrastructure hub coming in the basin that will make our offset drilling exploratory and exploitation leases have the brownfield economics that we enjoy in the rest of our portfolio, super high quality projects and high-quality operators that we'll be doing business with either as a [non-operating] partner or operating for them as well.

So this rotation into the Gulf of Mexico projects replaces the Eagle Ford production with an extended growth profile starting at 2017.

It's very value accretive.

It was an important ongoing step in our debt reduction plan with $1.2 billion of debt reduction and net after-tax proceeds.

The graphs of the Deepwater production reflected on 18 incorporate these assets as well as the net resource potential comparison.

You can see how more important these assets were than compared to our upside in the Eagle Ford, so about 10 times more potential than 1.3 billion barrels of oil.

Just to remind everybody what our strategic position in the Gulf of Mexico, the size of our assets, the assets are coming.

This is our Holstein facility here with Marlin and Horn Mountain.

As far as these big production facilities are running at about 25% of capacity and we plan on getting them to 100% capacity by the end of this decade.

The major development projects that are coming on is Lucius, Heidelberg and Vito.

Lucius is scheduled to come on in the fourth quarter of 2014.

Probably the first production that will impact us at the line field will be early 2015 and our new guidance reflects those small delays at Lucius.

Heidelberg is scheduled to come on third quarter of 2016 and Vito is scheduled to come on sometime between 2019 right now, even though it's unsanctioned.

Then of course, our exploration and exploitation opportunities; we are focused primarily with 85% of our dollars on exploitation the next several years and staying with our disciplined operating strategy of filling those existing facilities with high revenue barrels out of the Gulf of Mexico.

Kind of a global picture of our Gulf of Mexico here and starting from right to left because I'm left-handed.

I like going backwards.

We have our Marlin area and Horn Mountain area and this will be Canyon area.

You see how Vito fits in very well between Mississippi Canyon and our Holstein Green Canyon area,.

The Vito and the lower Mississippi Canyon and Atwater Valley area and then we get over to Keathley Canyon and Lucius.

It also reflects by asset areas where the 4.4 billion barrels of resource potential lie.

It's a well-balanced area, about 0.5 billion to 1 billion barrels per area.

We continue to explore it as we get all of our seismic data in and our geo-scientists and we think we have a long, long way to go of developing brownfield and tieback opportunities in these areas.

One we really want to highlight this morning is our Holstein Deep play that were drilling on right now, which is on page 21.

This is a discovery that we drilled a few years ago and after the Holstein purchase we were able to pick the leases back up and develop it.

This is the log from our initial well in Green Canyon 643, a discovery well.

We're currently drilling a well about a mile -- mile and a half southeast of it and we are in the M13 sand right now.

Coring we've found great M13 A and B sands as well as D sands and we are looking at the M13 E sand and coring it and then we're going to drill on down to the M18.

We think this is a significant discovery at this point in time with the confirmation well and we're learning a lot about our seismic as we drill more wells here and how much confidence we have going all the way around the salt feature.

It's a very large resource potential, multi-pay in the Miocene and we haven't gotten into the lower Tertiary or the Cretaceous at this point in time.

So this is going to be a dominant production event for us in 2016.

At Holstein, where we have about 100,000 barrels of capacity there that we'll be able to bring on a significant portion of that 50,000 or 60,000 barrels a day in 2016 out of this Holstein deep drilling as we continue to drill around it.

That will complement with our Heidelberg and also Lucius ramp-ups this year and in 2016 with Heidelberg.

So we've got a lot of production events coming forward.

They are already in the pipeline.

It's a matter of getting the work done.

We're going to continue drilling well we'll pouring M18 sands and further the coring activity at our next call.

Lucius Heidelberg development projects, I gave you the update on those.

Just to refresh everybody's memory, we have a 25% work interest there so it's very significant when you're talking about 80,000 barrels a day and 450 million cubic feet of gas, even though most of that is third-party.

We have a 12.5% interest right now in Heidelberg going forward and that, as you can see, the spar's already had the [sail way] and is progressing on structure.

Page 23, our inboard lower Tertiary Cretaceous activities, we've been very active here.

The Highlander project, which is our top project at this point in time, we've had ongoing completion operations there.

We've had some equipment failures that we've had to replace equipment that's put us about 30 to 45 days behind so we expect a flow test here in the fourth quarter.

More oil field stuff that we've managed through and so we are on track and we are just delayed.

The Davy Jones 2, we are conducting flow tests, the Wilcox sands at this point in time, most of the testing at this point has not yielded commercial results of hydrocarbons, but it's given us confidence in our flow rates from the deeper sands that we are flowing a lot of water and not much gas so at least the permeability and porosity's there, if not the productivity.

The same thing on Blackbeard West number 2 and then on Blackbeard East, but we're going to be moving a rig later this year to do a Miocene completion and there's some nice sands there.

We're drilling our Farthest Gate West exploratory well, it'll spud here in October and it's drilling toward 29,000 feet in southwest Louisiana.

We also have our Lineham Creek project that we're reviewing completion operations with the operator, Chevron.

So that ties it together on oil and gas side, been active.

We are rotating toward a very busy Gulf of Mexico season for the next several years with our drill shift lead and driving production volumes and moving the cash flow production higher.

Richard?

Thanks, Jim.

Let's look at the outlook or rather our update to our outlook for the year 2014.

Current copper is projected to be 3.9 billion pounds.

That reflects the sale of Candelaria and some timing issues at Grasberg.

Gold, molybdenum and oil, this also reflects the most recent information we have from the operator of Lucius about the start up from it.

It's going fine, but it's starting up just a bit later in the fourth quarter and some maintenance that we are having at our Marlin platform, some unscheduled maintenance, but that gives our current outlook for oil production.

You can see our unit cost outlook is consistent in the $1.50 range.

Operating cash flows at $3 copper would be $5.8 billion for the year and our capital expenditures are consistent with our previous estimates.

On a quarter by quarter basis, we have the projected sales volumes on page --, for the annual.

This is the annual.

I'm sorry.

I'm a slide ahead of myself.

This is the annual sales volumes going from 2013 to 2016.

Again, in copper reflects the adjustments for Candelaria and our most recent outlook for plans at Grasberg.

You can see 2016, as we approach the completion of mining from the pit, continues to be a big year.

Some of that may go over into 2017 based on the work that's been done there and you can see the ramp-up in our growth in oil and gas business as well.

Now we get to the quarterly slide that I was talking about earlier.

It shows, again, the adjustments for the year and gives our quarter by quarter projection of our volumes.

The site operating cost, unit operating cost that we have by region is shown on page 27 and shows good performance at each one of our operating sites as well as our sales by region.

That's information for your reference and doing your models.

On page 28 we have this depiction that we traditionally show, showing the cash earning capability of our business at varying copper prices.

We now go from $3 to $4 and show operating cash flows ranging from $9 billion a year to $12.5 billion a year.

Based on previous estimates, we've lowered the byproduct prices to $1,200 for gold, $10 for moly and $100 for oil and also reflects the sale of Candelaria and the adjustments of Grasberg's volumes.

Capital expenditures and how they break out between oil and gas, major mining projects and sustaining capital for mining shows the completion of the Cerro Verde project in 2015 and the drop off in capital spending as a result of that.

We remain committed to balance sheet management.

We recognize that our long-term plans for developing our resource base can best be accomplished if we have a strong balance sheet.

We are currently financially strong with an investment grade rating and our recent meetings with the credit rating agencies have been positive.

We have acted in response to lower commodity prices to sell assets.

We had a positive transaction with our Eagle Ford sale and now we've sold Candelaria.

We are continuing to look at other types of transactions to generate cash for balance sheet management.

The lower commodity prices and with the situation in the non-investment grade credit markets, these kinds of transactions are currently more challenging, but we are going to be creative.

We're going to find ways of looking at the timing of our spending.

We are looking at partnership arrangements that may give us a chance to share cost with others on attractive basis.

And we're looking at the potential for selling assets in a creative way.

We've had a long history of adjusting our business to varied markets and we are prepared to do this now.

We're looking at our balance sheet and how best to structure it for the long term, so this is still a work in progress.

What we want to communicate today to our shareholders is that as a management team and as a Board we remain committed to this process of reaching a strong balance sheet to support the long-term development of our resource base in the type of businesses that we are in.

So that is our update of where we stand right now.

We know you have a lot of questions and Jim Bob, Jim and I and Kathleen and our team are here prepared to respond.

Operator, we will take questions now.

(Operator Instructions)

Our first question will come from Curt Woodworth with Nomura.

Hi, good morning.

Hey, Curt.

I just wanted to drill down more into the capital allocations for the company going forward.

Obviously, this year there's been pretty significant shifts both in terms of monetizing some of the copper and oil assets and then reinvesting in the Deepwater.

So could you just comment on, do you continue to expect to pursue more both on acquisitions in the Deepwater and does the recent decline in the oil price change any thinking regarding exploration spending and/or potentially what you would want to do with California?

Curt, this is Jim.

I will let Richard clean it up from there.

The aspect of our spending, we're spending a minimal amount of exploration spending in the Gulf of Mexico.

Most of it's development and exploitation spending around our facilities.

So as far as exploration, there won't be really any change because there's not much of it being done.

We're obligated to drill one well in Morocco on the exploration front, that's on the international side, if you want to call that the Deepwater aspect.

The bolt-on acquisitions and so forth, that market I think it's going to continue to be there from a sellers perspective.

Our needs, when you look at our portfolio on page 20, we have a tremendous portfolio.

I'm sure we'll buy a few leases on the month lease sale coming up.

I don't forecast as active a year as we had this year.

Even though there will be opportunities, we don't have the need.

As far as California and thinking about that as a monetization asset because of the flat production curve in growth, I think it falls in the area where Richard talked about with the creativity and so forth.

We still have the partnership concepts and ways to do that.

It's a tremendous asset to finance and we are working on a project like that with partners to see.

Obviously the market volatility, we are not rushing out to price something in this type of market.

We want to see where things stabilize and we have probably a little more constructive outlook on commodity prices than the banks at this point in time.

They've been calling for $80 oil for three years and so they finally got it and now they're calling for $70 oil.

We see demand around the world.

We have a pretty good look at it as continuing to be healthy.

There's a lot of financial noise in the markets right now and all this will calm down and we will get back to business as usual; the earliest first half of next year and maybe take a little longer, but we don't think so.

So, we continue to have that arrow in the quiver and we're talking about we want to do something that works, that's very smart and value accretive for the FCX stakeholders.

That's more of our dry powder, but as far as rotating the Deepwater Gulf of Mexico assets, we're probably developing those with the drill bit on our own properties versus third parties at this point in time.

Okay.

That's great.

A follow-up on the sulfide projects, Richard, can you give us a sense for how the capital costs per se, pound of capacity would look compared to some of the recent brownfield expansions that you've been doing.

You know, Curt, I'm always reluctant to use averages.

Because we are assessing these projects based on the individual economics of each property.

The nature of the properties are similar though, in that the available sulfide projects that we have to work with are these large, low-grade deposits.

We are looking at the individual aspects of what it takes to develop them.

In other words, if we compare an El Abra with our Bagdad mine and when we look longer-range at Morenci and Lone Star, all of those things have attributes for development, permitting, water access, power, that vary significantly.

So, we match those up.

We eliminate projects that don't fit in the portfolio, don't have good rates of return or ones that are not impactful or ones that we couldn't fit in the way we manage variations in prices over time.

So it's a real detailed dynamic study of what to do.

Then we look at execution risk.

Which ones can be approached and achieved with the least amount of risk in terms of engineering design, tailings management.

It's a very dynamic kind of project.

So, we can give you averages, but that's not really the way we look at it.

You look at the Morenci project that we just completed, that we're ramping up now.

Here we added a modern, high-pressure grinding roll mill, [both] along a 1940s area mill.

We're taking material that we were wasting and now we're finding a way to economically process it.

It's a lot different situation then Cerra Verde, where we are basically tripling what we had.

We had an existing site.

We developed an innovative approach with the wastewater system for the city of Arequipa to give us water.

We had about as straightforward a building site as you can have in this industry.

And we had technology that we had just put in place when we started the project and so we're tripling that.

That gave us the opportunity to go for that.

As I said, what I'm looking forward to is having a day where we can bring a group of investors here in and go into some detail as to the process we go through in analyzing these things.

The issue is, and this is the reason that the outlook for copper price is so good, in situations that we have where we have the resource, we have the ability to do it and we want to do it as fast as we can; we're talking 10 years plus or minus.

That is what is so supportive of prices.

Now if you are talking about a greenfield project, that you can just see, just watch those that are going on around the world.

That's why I say, when we're looking at markets, that is really supportive of copper price.

Grades are falling, mines are having to go underground.

Codelco is having to deal with the social issues.

That's why we think it's a great business.

No question.

Thank you.

Your next question will come from Oscar Cabrera with BofA Merrill Lynch.

Thank you, operator.

Good morning, everyone.

I'd like to get started with the $12 billion in net debt target that you had set for 2016 with the presumption that the California sale trend oil prices doesn't make sense.

Would you be willing to be flexible with that because 2016 appears to be a pretty good year for production from your projects?

In addition to that, notice that you have been continuing to buy back high-cost debt, which makes absolute sense to me.

So could you provide more color on that?

When we set the $12 billion target it was just following the announcement of the acquisition of the oil and gas business.

We have faced some headwinds since that initial analysis with lower commodity prices, with the interruption of production in Indonesia and that has led us to find ways of selling assets and establishing our business.

We're going to continue to do that.

We are looking at capital spending.

One of the attractive things in the oil and gas business is it is a business that has more financial flexibility than the mining business.

Once we start spending on a mine like Cerra Verde, it's very difficult to pull the plug.

So it gives the opportunity for partner arrangements that could help us for timing of spending, for selling partial interests.

So we are going through all of our business looking at all of our capital spending, seeing what we can defer, how we can deal with it, how we can generate cash.

We are going to be committed to reaching this strong balance sheet target.

All of you run your models and many of you have said, Richard, my model shows it's going to be tough for you to get to $12 billion by 2016.

You are right, by the way.

Does that mean we are going to change our focus on getting to a strong balance sheet?

None of us know what commodity prices are going to be in 2015, 2016.

We have a great set of flexible assets.

We are all very confident we're going reach the goal of having the kind of balance sheet that most of you, as investors, are encouraging us to get to.

We're going to work diligently to try to get there while we work to keep our production volumes up, execute, deal with our issues in Indonesia, deal with our long-term growth plans, be disciplined about how we spent capital over the long range.

So we're going to deal with it.

Richard, to add one thing.

Oscar, this is Jim.

You mentioned on the California sale, remember we have a very strong hedge book on the wall, from the standpoint of looking from where commodity prices are now, and what the current financial community's outlook for it is through 2015.

That gives us a bridge to still be strongly considering a transaction involving California that is, like I said, accretive to the stakeholder report.

We're in a unique position there to carry over some of those hedges and floors, so I would not take that off the table at this point in time as part of our flexibility in bullets towards getting to the goals that Richard outlined, because we're all committed across the board to making sure of that.

We're talking about a business that lasts, as Richard said, for decades and hundred years type reserves.

So the quicker we get to a balance sheet that we are proud of and that we feel like is going to give us the flexibility to accelerate the growth, the faster we will all be happier around here.

If that helps you.

Yes, that's great.

From my perspective you already have a strong balance sheet.

If I may, a second question with regard to Grasberg.

I can't help but notice the agreement that Vale reached in their Indonesian nickel operations ahead of the president taking office.

I understand it's a difficult situation, but I was wondering if you could compare and contrast your situation with that of Vale, because it seems that they got an extension to the contract of work that they didn't have before.

And in addition to that, it changes based on what the press released that they can go directly to the Indonesian stock exchange to dispose of 20% of the stake they need to do.

All right.

Well, Oscar, let me say first of all, it's going to be a limited amount that I want to say about another company.

Vale will explain their situation.

A key thing to remember for all of you who are looking at our situation in Indonesia is that all of these contracts are different.

They were signed at different times.

Vale's operations, like Freeport's, go back -- ours go back to the 1970s.

Theirs go back at least to the 1980s.

So where they ended up, where we ended up was contracts that had historical legacies and that have significantly different terms going into this process.

For whatever reason, for some reason the Indonesian government has elected to treat nickel and copper differently.

Vale produces an intermediate product called nickel matte which represents 80% of the value of refined nickel.

That product is allowed to be exported under Indonesian regulations without any restrictions, without any duties.

We produce a product called copper concentrate that is worth 90% plus, 90% to 95% of the value of refined copper and yet it's treated essentially as an ore and we are subject to these restrictions.

I don't have an answer for that.

But Vale's contract, according to their press reports, did not have legally the same degree of assurance in the contract about the rights to extend.

Legally, our contract of work has very strong provisions that gives us the right for extensions from 2021 to 2041.

Vale's contract extended to 2025 and did not have those same kinds of legal provisions.

They reached some agreement with the Indonesian government, we're not sure of the details, that allows them to continue to operate under a business license approach.

Typically, under a business license you have the right to operate, but you are subject to prevailing laws and regulations that can be changed.

We're working with the government, and it was acknowledged in our MOU, with a need for us to have assurance about the terms of our operations beyond 2021, about our rights to operate, fiscal terms, legal enforceability; because we're spending so much capital now between now and 2021 that won't be produced until after 2021.

75% of our reserves are produced after 2021.

So we have to be in a position of saying, we will spend this money, we've agreed to work with them on a smelter, but provided we have assurance of terms beyond 2021.

Vale's situation is different and I don't know enough about it really to give you a detailed comparison and in any event I don't want to talk about another company.

Our situation is just what I described.

That was great, Richard.

That is exactly what I was looking for.

Thank you very much.

Thank you Oscar.

Your next question comes from Ash Lazenby with HSBC.

Good morning, all.

Just a couple of questions.

If you could possibly expand a bit more, you commented about the hedge book into next year.

If you could give us an idea of how significant the volumes are and the prices, to the extent that you can disclose that.

Secondly, a point of clarification in terms of the CapEx on oil, the $3.5 billion to $4 billion.

How can we think about that in terms of flexibility, for example if the oil price wasn't to recover from these levels, how much flexibility do you have within those CapEx figures where you could potentially rein in some of them, free up some more and then reduce free cash flow generation.

What would that be in terms of, to the detriment of any of the production that you've currently got in the profile?

Thank you.

Ash, on page 35 in our presentation and Kathleen can take you through it later, but 35 has got a detail on all our volumes.

We have 83 million barrels a day with the hedge profile talked about in 2014 and 107 in 2015.

Significant portion, all of our California volumes that decided to do a transaction.

Page 35 will help you there.

As far as flexibility in CapEx, there is a couple of different ways to do it.

You can just reduce activity, but in spite of the flexibility that the oil and gas business has, we do have significant relationships and contracts with drill ships in the Gulf of Mexico.

You have to plan your business much further ahead due to the regulations today and go through all that regulatory process of permitting that causes a little lengthier situation.

I think the easiest or the best way to do it, is start looking at the longer dated projects and develop joint venture relationships and basically bring in partners to share the spending.

That is something we've been active in doing for the past several months and going to continue to have those discussions, mainly out of solicitations from investors to us versus us really reaching out to other investors.

We are ramping up those activities to make sure that we continue to maintain a front-end loaded development activity versus doing too much drilling for the future, even though it's development, during any period of constrained commodity prices.

So we are looking at building that flexibility in.

I think you'll see the realization of it in the second half of 2015 if we're able to be successful there.

I think in the first half of 2015 you would look at rationalization of assets like California and the second half you look at the realization of joint ventures reducing CapEx.

We're going to proceed to have that flexibility in our program irrespective of where prices are if it makes sense.

Great.

Thanks.

You next question will come from John Tumazos with John Tumazos Very Independent Research.

Good morning.

Thank you for taking my call.

I was taking a look at the commodity prices on December 5, 2012 when you announced the oil and gas acquisitions versus yesterday.

It implies about $2.8 billion a year less after-tax cash flow.

It would seem as though some of the CapEx is more things like, smelter in Indonesia came up, but that's small.

Some of the CapEx that's a large project in midstream is hard to change like the Cerra Verde mill, once you've started.

Given the decline in cash flow, what are the levers of spending that you can turn off and would it be less damaging to just omit the dividend as opposed to cutting off these oil and gas projects when they're permitted, or Peruvian CapEx in midstream, and you've got probably some regulatory CapEx for pollution control.

I know it's very complicated, terrible question to ask, but the reality is that markets are the markets.

Right.

John, you are exactly right and that's what we've been dealing with.

As this situation has unfolded with the lowering of commodity prices, with the interruption we had in Indonesia, we've been taking steps all along.

In our mining business we scrutinized spending to defer, delay, spending all along.

And we've done that in oil and gas and we're going to continue to do it.

We're not in a 2008 crisis mode.

Oscar made the point, and thank you, Oscar for saying that, after we answered his questions, we've got a strong balance sheet.

We are an investment-grade rated company right now.

We've had very positive discussions with the agencies.

So, the issue of having to take the draconian steps that we took in the fall of 2008, where I came back from LME week, called our team together and said, we are stopping spending right then.

I mean we stopped Climax, we stopped the spending on Cerra Verde, which was in an earlier stage on Morenci.

We just stopped all the projects, we cut the dividend, we even raised a little capital.

We're not like that now.

We don't have to go through that kind of analysis.

But what we want our shareholders to understand is, we've got this commitment to work to strengthen our balance sheet in a rational way.

We're not going to fire sell assets.

We don't have to.

We are going to find ways, we're going to look at all of our capital spending, see if things can be deferred, with that of where we are honoring our contracts to spend; where we're doing what we need to do.

This is not something that we're wringing our hands about here.

We can manage our way through this and preserve our long-term growth.

We are not having any discussions about cutting the dividend.

We're just talking about managing our business and we've got the assets, the balance sheet, and the way to do it.

We're going to do it in a way that, John, you're going to be happy with and we're going to be happy with.

John, this is Jim.

There's no well that is important enough to drill before paying the dividend on the oil and gas side, that can't be drilled later or that type of thing, just because the structure of our business, as Richard talked about, for the mining aspect.

They're very correlative on both sides.

I think what we're trying to impress on everybody about this company is that we're not only trying to put our business in great shape for the future, to put it in great shape for the present, and at the same point in time increase our flexibility by paying on debt all at the same time.

Is that hard to do?

Yes.

We have all acknowledged that, but that's the kind of goals and realizations that our board expects and we're proud of the flexibility of our business to be able to even discuss and propose it.

We made some progress this year with Candelaria and Eagle Ford sale and we've got more progress to do.

So, we're all on the same board and I think it would be beneficial to the shareholders, irrespective of where commodity prices go, and that's what our job is.

Thank you.

I'm a shareholder.

Thanks, John.

So are we, John.

Your next question will come from the line of Leigh Goehring with Chilton.

Yes, Richard, two questions.

A lot of the chatter regarding the copper tied up in financing deals in China has died down and I was wondering if you had any comment on that.

Second, this is the first time I've heard you talk of Serbia.

I'm very curious about where that project lies, as far as in your priority of your capital investments and new products going forward, between now and 2020.

I've been to that property, so it's very interesting.

I knew you had been there, Leigh.

Great hearing from you.

It's been a long time since we've seen each other.

This financing deal in China has always been murky as to what it meant.

They had this fraudulent situation develop at the port for a brief period of time, really raised everybody's concern.

We've talked about over the years at any point in time in China there's always some story about things that could be happening.

I've got to tell you, I don't know all the details of the financing scheme.

When I look at the size of the Chinese economy and the amount of money that's being spent on development, even in this lower growth situation, and thinking about all they have to do to meet their development goals for the interior and what state grid is facing, not this year or next year, but over a 20 year period in terms of development and how much copper that involves.

I have to tell you, I think a lot of these stories about inventories at any point in time, financing deals, or sideshows that are probably really meaningful for companies that are traders; companies that have to make short-term decisions about what to do with copper stocks and buying and selling.

For companies like ours we are again focused on the longer term situation.

Just like you, as investors, often have to be more concerned about short-term movements as to how you realign your portfolios.

We understand that.

But if we ever were to let short-term deals affect the way we run this business, then we're going to miss out on some huge opportunities because of the time it takes to get projects ready to go.

Now, Serbia.

There's nothing in the natural resource business like greenfield exploration.

I mean nothing.

The idea of making some investments in exploration and finding a new asset and creating huge value, that is the happiest day you can have in a company like ours.

In the oil and gas business it happens a lot more frequently than it does the mining business and that's, again, what's so supportive about prices.

You go back to you think, what are the big success stories during my long career in the mining business from greenfield exploration.

They are few and far between.

Few and far between.

We have an active program, Rich Lavelle and Jim Bob, worked with and we fund junior mining companies around the world on exploration concepts that have the potential to be big.

We don't look at anything unless it has the potential to be big.

So that is why you haven't heard much from us about this program.

This does.

This has that potential.

You've been there.

There have been some real exciting core holes that have been drilled.

A lot of work needs to be done.

It's in an area that's a traditional mining area.

The government of Serbia is very anxious to see us come in and invest.

The current status is we're not actively drilling now.

We are working on partnership arrangements with our partner there.

I saw them briefly in London when I was there last week.

We're excited about it.

But it's longer-term, a lot of work to be done.

But it is a greenfield project that if it's successful, could add a lot of value to our company.

Thank you, Richard very much.

Okay.

Your next question will come from Joan Lappin with Gramercy Capital.

Good morning.

I have a question about the water rates flowing through on this recent test.

I would presume that what you haven't said straight out is you have solved the problem of how to perforate these wells now.

Whether we're getting out hydrocarbons in commercial quantities is less significant, in a way, than all the problems that we had at Davy 1.

So my question is, am I correct in surmising that, that the guns are now working and the ability to perforate at these steps is now perfected?

Would that mean that, would you ever go back to Davy 1?

What does this imply for Davy 2?

Can you elaborate a little on whatever the problems were you had at Highlander.

Joan, this is Jim.

That's a possibility.

The other possibility is the reservoirs are different and the porosities and permeabilities were better at Davy Jones 2 versus Davy Jones 1. When we're in the business of producing saltwater versus oil and gas, it's scientific.

But as far as economic and financial, all eyes are on Highlander.

That's where we have even better porosity and permeability and core evidence and log evidence of hydrocarbon accumulation, so that is our focus.

The delays at Highlander were strictly oil-field related.

Equipment that failed that we had to retrieve out of the hole just put us behind schedule.

But we think we're getting closer and closer to developing a test there.

We have a little more work to do out there and feel like here in the fourth quarter we'll be able to get a test of Highlander and put it into sales very quickly once it happens.

So, that's what we're focused on.

We're really just updating everybody over the operational results of those existing well bores from McMoRan.

I know you're not in the business of producing water.

But, I'm asking more specific question, which is --

Joan, I said that is a possibility.

But there's also another possibility.

What possibility?

The possibility is that it's purely mechanical with the perforating guns.

But the other possibility, more likely possibility, is just different reservoir characteristics.

So, I may answer your question with two answers and either one of them are a possibility.

It could be the reservoir characteristics have changed or the mechanical aspects of the guns.

I happen to think and our guys tend to think it has to be reservoir characteristics, but that the guns are an issue.

At the end of the day, we are focused on Highlander and perfecting the flow rates of gas and oil there and that's where we're concentrating.

Okay.

So you will not say that the guns are now working?

They've always worked.

Well, there's some question about that.

But, okay.

Thank you.

There you go.

The next question will come from the line of Steve Bristow with RBC Capital Markets.

Yes, thanks.

I had a question on your hedging portfolio in oil and gas.

I know you commented on that being an asset possibly in the divestiture of California.

Is there any plans to add to that portfolio?

Because I know it was acquired with the plan's expiration and since I don't think you guys have added to it at all.

Steve, this is Kathleen.

No, we have not added to the positions.

PXP had positions going into the deal which will benefit us during this period of time.

We continue to monitor markets and look at how a hedging program might fit in with our overall plans and capital spending.

But at this point in time, with these markets, we're not looking to add to positions.

But it's something that we'll continue to evaluate over time in the future.

Okay, thanks.

Steve, I might note too, company situation is different than Plains and FCX.

We have a broader set of assets, a stronger balance sheet.

We're also short oil in a lot of our businesses.

It's kind of different match it all up piece by piece, but we're a big energy user, energy is 20% to 25% of our cost.

It's from a variety of sources in our mining business: natural gas, hydro, but oil is a component of it.

When we step back and look at the overall business in terms of what our financial strategy should be, it's a different circumstance from having independent oil and gas (background noise).

Steve, this is Jim.

I would just highlight that it gives us a lot of flexibility during the period of time that other people do not have when it comes to valuations and financial flexibility of financing deals with California.

So, that's unique to us and unique to our situation.

Okay, thanks.

On the debt target, it came up earlier about the $12 billion net debt target by 2016, but it sounds like you are shying away from that and your target is just a strong balance sheet without a certain number around that.

Is that correct in assuming that's what you're leading into?

Look, all I'm acknowledging, let me just say, I'm acknowledging, is we have a target and we're working to get there.

Never anything magic about that target.

We wanted to be as clear as we could to the marketplace at the time about trying to make it.

It would be unrealistic of me to sit here and look at these circumstances and what we're dealing with and say, $12 billion is $12 billion.

We're going to continue to work towards it.

We're going to work to have a strong balance sheet.

We're going to look at the time of when we can get there and I'm just being realistic, more than not being realistic.

Steve, the key about it is the discipline it brings into all the spending, all our business.

It sure keeps everybody focused on creating value.

It's been a beacon that's been endorsed by the board.

So, we're continuing to focus on it.

Perfect.

That's it for me.

Thanks a lot.

Our last question comes from Wilfredo Ortiz with Deutsche Bank.

Yes, good morning, everyone.

Just a quick question on your volume guidance for copper for the fourth quarter.

Does this include any type of impact if a strike at Grasberg were to take place?

If it does take place, would it impact the whole operation or just partially a portion of the operation?

Just wanted to get a sense as to what we're seeing as far as the guidance versus what could potentially happen if a strike does ensue post November 6.

The answer is it does not include any impacts of any kind of potential work disruption, strikes or otherwise.

There's no real clear answer to your question.

As I said, as we speak now, there is a group of workers primarily in the Grasberg open pit who are not reporting to work.

That's in violation of our elective labor agreement.

The work continues at our DOZ mine and our underground development and mill operations and so forth.

So we're just going to have to work through this.

It's unclear even if the union were to declare a strike, to what extent would the workforce respond to that.

It's a dynamic situation with a lot of interests represented, even within the union, and so we're going to deal with it.

Could have an impact, that impact is not reflected in any of our numbers.

The one thing you can be sure of in Indonesia, you've got a real-time news flow coming your way because whatever the union does is in the paper every day.

We're going to be active in our communications efforts to make sure the market's aware of what the circumstance is.

Understood.

Thank you.

Okay.

Thank you, Wilfred.

Now we will turn the call over to management for any closing remarks.

We appreciate everybody's interest and your good questions.

We're going to work hard to achieve all these goals that we have and we're very confident we're going to be successful.

So, thanks for your interest and for following our company.

Ladies and gentlemen, that concludes our call for today.

Thank you for your participation.

You may now disconnect.