費利浦·麥克莫蘭銅金 (FCX) 2015 Q1 法說會逐字稿

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

(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 first-quarter 2015 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.

Anyone may listen to the call by accessing our website home page 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.

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

Before we begin our comments, we would 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.

I would like to refer everyone to the cautionary language included in our press release and presentation materials, and to the risk factors described in our form 10-K and subsequent SEC filings.

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

We have several other senior members of our team in the room today.

I'll start by briefly summarizing our financial results and then we will turn the call over to Richard who will begin reviewing our recent performance and outlook in the slide presentation.

After our formal remarks, we will turn the call over to questions.

Today FCX reported a net loss attributable to common stock of $2.5 billion, or $2.38 per share for the first quarter of 2015.

The loss attributable to common stock included net charges of $2.4 billion, or $2.32 per share in the first quarter, primarily for the reduction of the carrying value of oil and gas properties pursuant to SEC full cost accounting rules and a related tax charge to establish a deferred tax valuation allowance.

Our adjusted net loss attributable to common stock totaled $60 million, or $0.06 per share during the quarter.

Our copper sales during the quarter totaled 960 million pounds.

That was above the first quarter of last year of 871 million pounds.

Gold sales totaled 263,000 ounces.

That was also above last year first quarter of 187,000 ounces.

Oil and gas sales totaled 12.5 million barrels of oil equivalents in the first quarter.

Our realized copper price of $2.72 per pound in the first quarter was below the year-ago quarter of $3.14 per pound.

Gold prices of $1,186 per ounce were below the year ago quarter roughly $1,300 per ounce.

FM O&G's average realized price for crude oil was $56.51 per barrel in the quarter, and that included about $12 per barrel of realized cash gains on derivative contracts.

Operating cash flows during the quarter totaled $717 million.

Capital expenditures as we advance our projects totaled $1.9 billion in the quarter.

We ended the quarter with total debt of $20.3 billion and consolidated cash of $549 million.

As previously reported, we completed amendments to our bank loans during the quarter to provide more flexible financial covenants and to extend maturities under our term loan.

At the end of the quarter, availability under the revolver approximated $3 billion of undrawn availability, and undrawn availability under the Cerro Verde credit facility approximated $1 billion.

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

Good morning, everyone.

Before we turn to the slides, I want to look back on our January call when we discussed this year, 2015, as being a bridging year as we complete our major copper expansion projects that we started in 2010 and transition to 2016 when we will realize the ongoing benefits of these investments.

These projects will generate volumes that will be accompanied by lower costs, lower capital expenditures.

All of this adds up to a significant free cash flow generation which will not be dependent on higher copper prices.

Now, we remain very optimistic about the outlook for the copper markets.

We -- supported by the world's need for copper and the challenges in developing supplies and maintaining supplies for copper, but we are cognizant of the near-term uncertainties in commodity prices.

So we are going to continue to be diligent about controlling costs and will remain flexible to respond to market conditions.

We've already taken a series of actions to respond to these market conditions and to maintain our financial strength as we work through 2015 to future years when our financial metrics are expected to improve dramatically.

We have made significant progress and are nearing completion of our Brownfield copper development projects.

These are among the most attractive in the world.

As we complete these projects, we are positioned to achieve our deleveraging objectives over time, increase cash returns to shareholders, and provide exposure to our shareholders to a strengthening commodity markets in the future.

Jim is going to be talking with you about several important milestones completed in our oil and gas business since our acquisitions by FCX in 2013.

The combination of our large-scale infrastructure in the Gulf, with significant available capacity to expand, and our strategic lease position in exploration and development inventory, together with the experience of our team and our Gulf of Mexico focus area positioned us to grow our business, generate attractive investment returns and increase asset values.

When we completed the oil and gas acquisitions we established an objective for the business to be self-funding.

To date, that has been accomplished through cash flows and asset sales.

We are now evaluating a range of alternatives to provide supplemental external funding for our oil and gas investments, and will continue to do so.

We are going to talk today that among these alternatives, we are considering a public listing of a minority interest in Freeport-McMoRan Oil & Gas.

Publicly traded Freeport McMoRan Oil & Gas would highlight the values of our oil and gas assets through a public market valuation and enable us to expand the financing alternatives for our oil and gas operations on a standalone basis.

Subject to market conditions, this alternative could potentially be completed in late 2015 following completion of an SEC review of the required registration statement.

The following review of our business and its outlook will evidence that we have a strong portfolio of assets with attractive nearer-term and longer-term organic growth options, a dedicated and highly motivated management team and organization to execute these plans and a roadmap for managing our assets and finances as we deliver on our strategy of providing long-term values for our shareholders.

Now, turning to our slides.

On Slide 3 we have a picture of our new annual report for 2014.

This report titled Core -- Value At Our Core talks about the substantial value in our assets to growing production and cash flow profile, our exposure to markets with favorable fundamentals, our financial strength, the way we manage our business in a responsible manner for environment, community and social aspects, and the experienced management team that we have.

In the first quarter, turning to Slide 4, the highlights are we substantially ramped up our Morenci expansion.

We had record quarterly sales at our Tenke Fungurume project following the completion of our Phase II expansion in 2013.

The Cerro Verde construction project is on track to become the world's largest copper concentrator facility.

We are entering into the phases of the higher ore grades at Grasberg as we approach completion of our mine plan to complete mining in the Open Pit.

And we set the stage for growth, as I mentioned, in production with declining future capital expenditures.

In the oil and gas business, we had positive drilling results.

At our Holstein Deep facility, Power Nap in the Vito basin and at the King project -- [King] well tie-in to the Marlin facility.

This significantly expanded our resource base.

We established new production as the Lucius project came onstream.

Dorado, Highlander, in our onshore deep gas project combine these added -- we are producing at 25 barrels of equivalence a day by the end of the quarter.

We have an enhanced inventory of financially attractive development projects.

And as I mentioned, we are advancing plans for external funding for executing this plan to develop these assets.

Kathleen reviewed the financial highlights for the quarter in comparison to the first quarter of 2014.

Of course we are dealing with lower commodity prices, with copper prices being roughly 12% lower and oil prices 0.5 of what they were in the year-ago quarter.

Other than that, our business from a fundamental standpoint operated in an efficient and effective way.

Just returned from the annual CESCO week in Santiago, Chile -- that was last week.

A lot of commentary there about copper markets.

When you step back and look at where we are right now in 2015, the surpluses that had been projected for a number of past years are not developing as they were estimated.

Projects have been delayed.

Production has been interrupted.

And the market has not moved into a large surplus position.

The focus by investors and people who follow the industry has been on China with China's lower growth rate and uncertainties about its economy.

Its base has grown significantly, government is providing economic stimulus, and China's need for copper is going to continue to be significant and the key factor in terms of near-term price movements.

The US, as we evidence, we provide over 40% of the downstream copper for the US markets, growing at a moderate rate.

Economic stimulus is being applied in Europe and Japan, and we are seeing the beginnings of growth in Europe in our business there.

The industry continue to face these supply-side challenges.

We are cognizant, as I mentioned, of the near-term price uncertainty but we remain very optimistic about the midterm and long-term fundamentals of this business.

And our Company is really positioned to take advantage of that in a very significant way.

You can see on Slide 7 our operating results for our mining business in the first quarter.

We continue to be focused on cost management.

Our team, and the leaders of that team are here in the room with me today, have done a great job in leading our whole organization to focus on cost.

We had good cost performance in the quarter.

We came in significantly lower than our own internal plans for cost control, and our consolidated unit cost guidance of $1.64 a pound was lower than the guidance we had last quarter.

And you can see how that operates -- how that was reflected in our regional operation.

Our growth in production in North America came from Morenci.

Was also a good performance at Chino.

In South America the decline reflects the sale of the Candelaria project which produced just under 100 million pounds in the first quarter of 2014.

Indonesia is a stronger quarter than the first quarter of 2014 when we were dealing with the export ban.

And as I mentioned, Africa operated well and achieved record production for the quarter.

Looking forward through 2015, we have been working to get to the point now that we are approaching for several years to be well-positioned to take advantage of what we will achieve through the completion of our expansion project, what we will achieve in Indonesia at Grasberg as we enter into the final period of mining from the Open Pit.

You can see growing production volumes during the quarter, lowering unit cash costs as we move forward in 2015, and lower capital cost as we go beyond 2015 into 2016.

This has been our long-term plan and now we are achieving it.

At Cerra Verde we are just terrifically excited about what the progress is being made there.

Engineering and major procurement are complete.

As I mentioned, when we complete this we'll be processing through our concentrate 360,000 tons a day.

And that will be the world's largest.

The construction is on schedule at this point.

It's 70% complete.

We are targeting getting it finished in late 2015.

And as I've said, the entire organization, as we review this internally, is very excited about what we are doing there.

This way I have 600 million pounds of copper per annum.

$4.6 million was our original estimate, and that's where we are today in terms of looking at it.

So it's good to see that we are progressing on a time schedule we set within the capital budget that we set.

In Indonesia we continue to be engaged in active discussions with the government to amend our COW.

The government has expressed -- government officials have expressed a recognition of our need for certainty in terms of our fiscal terms and our operating rights.

And we are working cooperatively with the government on how to accomplish this within the government's regulatory framework.

A lot of mutual benefits for us, our Company and for the country of Indonesia with the operations in Papua.

We have had a very long-term positive partnership.

We are working hard to sustain that in an environment of changes in government and expectations and aspirations in Indonesia.

But this operation is the economic engine for the development in Papua, and that is something that we share in common with the government of Indonesia and with our own Company.

It provides significant benefits to the Indonesian economy.

As we stand right now, all of our rights under our COW continue to be applied until we reach a mutually agreeable approach to amending that.

And these negotiations are taking place.

We do have a Memorandum of Understanding that was extended earlier this year to July 2015.

And as part of that Memorandum of Understanding we're working with partners to advance plans for the expansion of our smelter operations.

We're focused in the Gresik area of east Java where we have the existing smelter that was developed in the mid-1990s, which is Indonesia's only smelter.

At the operations itself, we have now completed the access to our massive underground ore bodies.

We expect that DMLZ extension of the existing DOZ mine to start up late this year.

And we are working to develop the underground reserves that lie below the Grasberg Open Pit, the Grasberg Block Cave Mine, which is scheduled to begin ramping up in 2018.

Development capital of over $3 billion has been spent, $2.5 billion net to PT Freeport Indonesia.

And we expect that that PTFI's share of these costs will average $600 million a year over the next five years.

And throughout this period we have been able to successfully continue with this underground development.

Beyond our existing producing asset, our expansion projects, the transition of Grasberg to being a fully underground operation, we look to the future for projects where we are not currently committing capital to at this point, but they will provide the opportunity for long-term growth for our Company.

They include a very large sulfide resource at our El Abra mine in northern Chile.

This mine would -- this resource would support a major concentrator development project.

Currently our operations at El Abra have been SXEW operations with significant incremental production that would be achieved with that.

At this point we are studying options for getting water, power, dealing with tailings and working with our partners to do this in an effective way.

In the United States where with the lower energy cost here and the productivity of American workers, we have great opportunities for our future expansions at our mines in Arizona.

At Baghdad there is a large sulfide resource that would allow us to more than double mill capacity, add significant amounts of copper, and we are doing the initial steps to look at that project, including the acquisition of water rights, which is the key for that, and tailings deposition areas.

At our Safford mine, which is in eastern Arizona near Morenci, we have additional oxide resources that would extend the existing productive facilities.

That's at an adjoining ore body called Lone Star which is near there and has oxides that could expand that, extend our infrastructure beyond the life of the oxides at Safford.

And then at both Safford and Lone Star there's a significant sulfide resource for the future.

At Tenke Fungurume, besides the oxide ore we have the opportunity for further expansion to produce incremental volumes from oxide.

That is dependent on getting power.

But there is a massive high-grade mixed ore and sulfide resource that we are conducting exploration drilling and doing metallurgical studies that would look for how we -- and looking at how we would process that over time.

With that report on our mining operations, Jim, I am going to turn the presentation over to you to talk about oil and gas business.

Right.

Thank you, Richard.

Good morning, everyone.

On Page 13 we talk about the oil market commentary.

You can see the WTI and Brent curves and HLS curves here on the graph.

The market obviously continues to be volatile as it goes through its price and market discovery of where all the oil needs to go and at what price.

We see it as continuing to be volatile.

It was down 50% in the beginning of the first quarter.

It was up 20% at the end of the first quarter.

So as we bear through that and assets are repriced, both in accounting but also in the marketplace, we continue to focus on our operations and continue to do good things with the drillbit and follow through with our operating plan.

We continue to see the oil market cleaning up, if you will.

The Contango curve is always a positive event for future oil prices on the Brent side.

And we continue to see the oil market under strain going forward, as demand has really been the big story here in the first quarter, as we have seen a lot of gasoline demand here in the US and other parts of the world on the finished product side that we think is going to continue to increase as these current oil prices take hold in the marketplace.

On Page 14, I put together just a chronological series of highlights from 2013 to 2014, obviously for Freeport McMoRan Oil & Gas.

When it was formed as the combination between PXP and MMR and acquired by Freeport in 2013, their big adjustment period, and the total oil and gas division is about 174,000 BOE per day.

It was a big increase from 2012.

Get our hands around all the assets and also the corporate structure of Freeport.

It was a big achievement for us in 2013, and put us on a growth path to say how we are going to develop all these assets and have the right personnel, right equipment, right operating plan going forward was a key part of it.

When we look at our asset review in 2014, we saw what assets might not fit in the next five years as far as building value over time.

They were valuable at the time but they were not going to build value over time and be meaningful to Freeport.

And the Eagle Ford shale fell into that category.

We ended up selling it for $3.1 million -- $3.1 billion, excuse me.

And we were able to rotate that about $1.5 billion of that money into some significant assets that will grow over time like Heidelberg, Lucius and our Vito project, we will talk about.

Then we continued to acquire leases and seismic to put our projects in the best possible position of bringing forward the exemplary results without failure.

And being able to use the new seismic and the additional acreage to add the resources to our existing infrastructure.

In 2015 we started seeing results bear fruit with our first production at Lucius development.

That was the discovery that we discovered in 2009 with Anadarko and it came on netting us between 20,000 and 25,000 barrels a day.

We've successfully drilled wells at Holstein Deep and also at King/Marlin areas around our existing infrastructure that have validated our seismic and brought big resources to bear.

We will show you the Holstein Deep progression of resources that we have identified there with additional drilling.

Then also on our Vito areas, there are several joint prospects.

We drilled the first one that Richard talked about, Power Nap, that was successful.

So we're off to a great start there.

And you go through, on top of that, the Highlander discovery that we announced in 2014.

We put it on production here in 2015 and it's producing quite well down in lower St.

Mary Parish -- or St.

Martin Parish, excuse me, Louisiana.

And we look forward to talking about developing that further going forward as gas prices rebound.

All in all, we're on the edge of a big growth spurt in the oil and gas business.

And with the 145 projects outlined on Page 15 that all have IRRs greater than 20% at strip, the deepwater Gulf of Mexico, this is all because it's attached to existing infrastructure or has infrastructure plan that has -- is very cost-efficient in the Vito area.

But the (Cubic) Canyon, Green Canyon and Mississippi Canyon is tied back to existing infrastructure that we own or we have an interest in.

In the Vito area, the reserves are so large that the returns are going to be excellent from the standpoint of sizing the facility that we're going to build with the operator, Shell, and be in a situation to maximize their economics in that area.

With this deep inventory and so forth, what we need to focus is to manage our cash flow, manage our capital, whether inside or outside going forward to make sure that we achieve the corporate [deck] is FCX.

In the first quarter of 2015, Freeport McMoRan highlights on Page 16, we've had continued steady production performance from California.

We've massed our Gulf of Mexico growth strategy, as I described.

The inboard lower territory, beside the Highlander there's significant flow test and production at Highlander.

We've had our farthest gate west well as a potential discovery.

We have completion underway that we hope to have that completed this summer, and they will talk further about that.

We had about $100 million in net, a little hedging realizations, that help buffer the volatile prices in the first quarter.

In our Deepwater Gulf of Mexico progress report specifically area by area, Green Canyon, Mississippi Canyon and Vito area on Page 17, you can see there's a lot of busy work going on.

As we go through this process, one thing I want everybody to understand is that our operations plan and our budget are risked.

And that is simple and everybody does that.

But as our operation plan outperforms our risk, basically we've had an incredible 2.5 quarters of excellent drilling results and so forth.

It also de-risks some of the capital.

And that is some of the upside movement in our capital budget, is strictly because wells were at risk that at 80% success are now 100% success and so forth.

And it may sound small, but the numbers are big.

That puts upside pressure due to the success all these projects (inaudible) at all in the last two quarters.

You can go through the detail here.

The big key here (inaudible) besides the Holstein Deep, Green Canyon area where the gross resources were initially 75 million barrels, now up to 280 million barrels because of the additional drilling.

And then the big cash flow we're going to get out of the Dorado, King and KOQV area because of our seismic tie-in and the success we have had there, is our Vito area.

Our Power Nap discovery, which is the offset discovery to our Vito area is a very significant discovery for several reasons.

Number one, obviously it's a large column of oil that overextends -- sends a nice reservoir size.

But on top of that, it has really helped us gain confidence in all the additional projects.

And the next one we have to drill is Deep Sleep that we're going to immediately move to after we finish our present logging operations at Power Nap.

And the next page, on Page 18 you can see the overall picture of our assets.

We want to focus on Holstein Deep right there in the Green Canyon area and Power Nap as far as two highlighted assets that we have.

On Page 19 in the Holstein facility, our Holstein Deep development, you can see we're drilling on the southwest side.

You can see Phase 1, it's called the Subsea 1, 2 and 3. And then you can see the Phase 2 development wells in the lighter blue, and even a lighter blue in the Phase 3 development.

And if as we go around from the initial three well development that we had planned that were going to add 15,000 barrels a day in 2016, that is on track.

And expanding the drilling results could add up to 75,000 barrels a day to Freeport-McMoRan by 2020.

This project continues to drill out.

It's above expectations, and therefore its budget has been expanded.

The Holstein Deep production profile on Page 20 can give representative to talk about cash flows and timing for your modeling purposes.

But it's a very significant project for the Company going forward.

On Page 21 is our Vito area, the Power Nap discovery, the Regional Miocene picture.

You can see up on the top left corner our Vito development discovery that Shell operates.

Power Nap just to the east of that, the two red dots, that's another discovery.

These are net DOE exposure to Freeport McMoRan Oil & Gas.

And you can see just to the south of Power Nap is our Deep Sleep (inaudible) very thick part of the basin which is incline separated from the Power Nap discovery.

And then we have our Sun project down to the southeast, which is the 240 million barrel net project and the Spitfire 384 million barrel.

All in all, I skipped Ravioli and Vito North.

They're smaller, but it's about 1 billion barrels of oil net to the Company.

And this is the most significant long-term play that the Company has on its books today.

You can see the extremely thick column of the L&4 sands, upper and lower fans, in our Vito discovery well.

It's a great seismic signature.

It takes all over the mini basin.

So when you flip to Page 22, when you look at our plan going forward for the next 10 years, you can see production growing from where it is today, 130,000, 140,000 barrels a day to over 600,000 barrels a day.

The key about this slide that we wanted to put in here is the estimated reserve replace ratio for the next five years, 137%, finding cost going forward, $26 a barrel and $21 a barrel in the 10-year model, is that all these assets are in hand, most of these have all been discovered or have validation within the basin, all of our gas assets in Haynesville, Madden and Cretaceous that's gas recovered later in this decade.

Our California asset, Mississippi Canyon, Green Canyon and Keathley Canyon and Vito area, there is no additional exploration, there's no additional outside business acquisitions in this model.

This is all within hand.

Just following our playbook, we can increase production at least three times to our Company on the oil side.

All we are arguing about right now internally and externally is timing, because the assets are there, the equipment's there and so forth.

And the cost structure is there.

When you look at our five-year finding cost structure at $26 a barrel and you take our average LOE forecast, which is about $15 a barrel, it's $18 right now, it's $15 going forward because our fixed assets have fixed costs.

And when you add more volumes to it you dilute the per barrel cost.

So if you take $26 and $15, it's about $41 a barrel, and you add $5 corporate cost, you are at about $46 a barrel all-in costs for oil and gas business.

In a $65 to $70 oil market, we make a lot of money in this business.

It's very low risk because of the risk we've taken and the way we've de-risk it with the drillbit.

It's very low risk from the execution standpoint because of the equipment and platforms are in place.

So we are very excited about that.

And we have been working all internally with everyone here at Freeport to figure out the best way to fund these assets going forward.

On Page 23, just wanted to highlight two different ways to think about our business.

Number one, the current plan which is in our corporate projections of 2015, 2016 and 2017 production volumes and EBITDA that's on the top right.

And then if we are able to bring in additional funding that would accelerate that business and get us up to a production level that would allow us to be self-funding in a much faster level, the model is in the lower right-hand corner, which is the growth plan assuming additional funding.

And what happens here is because of all the wells we have drilled and so forth, we are really talking about how fast we hook them up, how fast we put the equipment in to bring that production on, and so forth.

So for us, we are going to be very stingy about it from the standpoint of funding.

We looked for funding sources in the first quarter.

We found some that were interested in participating, they were very expensive.

And we looked around think we found some others that make a lot more sense.

Right now, the public sale of public equities for a minority interest at FMOG is something that we are working on.

And we are going to probably have a decision on that here this quarter to where maybe we can file the document and get the registration, as Richard said, for the summer, and look at raising some money in the fall, or a JV carried interest, other monetizations, and/or divestitures.

And divestitures are just -- they help patch the hole, but they don't solve the problem.

The IP alternative for Freeport McMoRan Oil & Gas on Page 24 provides that, an alternative way to fund the business.

But the key thing we think it does is highlights the standalone value for oil and gas business.

There is a big disconnect between the value of our oil and gas business within Freeport-McMoRan today and the public market perception of standalone oil and gas businesses.

We have had more success than anybody with the drillbit in the last two years.

And it has caused more spending but it is not getting reflected in our equity.

So the aspect of being able to get that visibility for the Freeport shareholder, we think it is important part of it.

FCX certainly plans to maintain control of the majority ownership of the business, and the case studies obviously Freeport has done this before.

The FCX IPO we did it in Plains with Plains Exploration, we spun it out of PXT -- PLX.

And then the Vastar IPO from Arco in 1994 that really funded their deepwater discovery developments in 1994 when deepwater was first showing up and which really is a big part of BPs portfolio today.

The timing might -- as early as late 2015, or as market conditions favor.

We're going to be patient from that standpoint.

And we will continue to assess other alternatives and have other discussion in other areas and then certainty from that standpoint.

Richard, back to you to talk about the 2015 outlook.

Okay.

Thanks, Jim.

We wanted to give you this overview of our assets and make sure that you could sense what our degree of excitement is about the scope of our assets over both our mining business and our oil and gas business.

I want to talk about how all this comes together financially for us as we move forward with our plans for developing them.

First of all, looking at the near term for 2015, we are looking at sales of 4.2 billion pounds of copper, 1.3 million ounces of gold, 95 million pounds of the molybdenum, and 52.3 million barrels equivalent of oil, 67% of that is oil.

The operating cash flows that would be generated at $2.75 copper would be $4.4 billion.

We're highly leveraged to copper for the rest of the year, $0.10 changes in copper is $250 million.

The unit cost is an attractive $1.53 for copper.

And as Jim said, $19 a barrel for oil for this year.

Our capital expenditures reflect a $500 million adjustment for oil and gas business at $6.5 billion as we move forward.

And you can see as we look beyond 2015, this is Slide 26, the volumes increase significantly, as we talked about earlier, both for copper, gold, with support for molybdenum and our oil project where we will be preparing for longer-term growth through our investment activities there.

Our copper sales for the quarter will be growing, as I mentioned earlier, throughout the year.

And that information is presented on Slide 27.

Our 2015 operating estimates for our unit cost for copper shows the effects of the higher volumes with continued cost controls.

We are now looking at projections of $1.53 a pound consolidated for copper.

And you can see how our sales are divided by region.

The EBITDA models and cash flow models that we present each quarter are presented on Slide 29.

It is an average for the next -- for 2016 and 2017.

Average EBITDA at various copper prices with gold at $1,200 and oil at $70.

This approximates the current strip for 2016 and 2017.

You can see EBITDA ranging from $2.50 copper at $8.6 billion to $13.7 billion at $3.50.

And operating cash flows range from $6.6 billion at $2.50 up to $10.3 billion at $3.50.

The sensitivities for our different commodities and currencies are presented on Slide 30 for your use.

Our capital expenditure plans as they current stand are shown on Slide 31.

You can see declining from $7.4 billion (sic - see Slide 31 "$7.2 billion") last year to the new estimate of $6.5 billion this year, $5.6 billion and $5.1 billion.

And we're going to be evaluating these as we go forward, but this is what our current plan is as we stand now.

We are committed to maintaining financial strength, and we have a strong track record for doing that.

Our large resource base gives us strong cash flows and we will exercise capital discipline on how we invest for the future.

We have taken significant steps to reduce cost and capital expenditures, increasing volumes, declining CapEx, that's going to help our existing credit metrics.

And we are advancing plans for external funds, as Jim just talked about.

We have available liquidity under our FCX revolver.

And we have a facility at Cerro Verde that together provide us $4 billion of availability at the end of March.

Our key priorities as we go forward is to maintain our financial strength, manage our operations and our CapEx to maximize near-term cash flows in an uncertain commodity market.

But to look forward to this great set of assets that we have for future growth, future value creation.

We are really going to be focused on executing our plans for our near-term mining projects and our oil and gas investments, and to generate values for our large resource base.

Before we turn the call over for questions, Jim Bob is here.

And he has some comments to be made about our Company's culture and how we are approaching the current environment based on the successes we have had over many years in the past.

Jim Bob?

Thank you, Richard.

If you look at Slide 34, 1981 was the merger with Freeport Minerals and McMoRan Oil &Gas.

That started us in the path unequaled in our industry.

1988 we had (technical difficulties) the Grasberg and (inaudible) through 299 oil and sulfur.

In 1988, if you remember, we did an IPO of FCX.

At the time we had discovered Grasberg.

We knew we had a deposit that was significant, but we had to rely on our geologic instincts to know that this was a major find.

And as you know, actual drilling that we did, we ended up with the largest oil body in the world.

Copper, gold and silver.

In 1990 we developed the Grasberg.

We proved that we had to manage that business because we had a discovery in the business as many as 13,000 feet, and we had already $6 billion.

We took it on ourselves to do that, used every resource in the public markets.

There's gold bonds, silver bonds, and every measured transaction in order to do that.

I remind everybody that we have had challenges (inaudible) going to market, and we have been very resourceful in order to do that deal.

The deal that really set the tone for deals in the (inaudible) was an effort to bring production on for our shareholders (inaudible) 100% of what they own, and we only gave up reserves in the future.

When FCX was spun off of the parent, we had $6 billion in equity value.

Then we come upon the Phelps Dodge acquisition.

Not only did we create the largest publicly traded [tropic] producer, but remember we had the instincts, the (inaudible), and realized that the (inaudible) was the tip of the iceberg.

And with our geologic instincts we were able to drill the lower sulfide whereby we doubled, imagine doubling the reserves of the great Phelps Dodge assets that we acquire.

So my observations is that I think everybody needs to reflect on it because from my tenure as CEO in the first part of this history, and then Richard's CEO and then Jim started in 2013.

If you look back and you remember (inaudible) the Grasberg, we didn't have the benefit of seismic (inaudible), the way we can profile oil and gas prospects.

Didn't have the benefit of seismic.

And we projected the sulfide below the (inaudible) ore bodies.

In the case of the oil and gas business, the technology being what it is with 3D and 40 seismic.

You've got these oil bodies that are outlined.

Never had that kind of information.

But when you look at the discoveries that Jim has referred to for instance, the Power Nap (inaudible).

Just offset the (inaudible) discovery that was made at Thunderhorse, one basin over.

So we took it on ourselves from the time we acquired the (inaudible) we sold off both major oil and gas properties in the Eagle Ford and we sold off the Candelaria.

Raised over $4 billion.

So we have done what we said we intended to do.

Now we have to do is to take advantage of the fact that we have this growth profile, which has been the history of our Company.

And we have proven that geologically and engineering-wise we've been able to complete major projects.

The Deepwater is a challenge.

But remember we acquired in the PXP acquisition the platforms out there, the deepwater three platforms.

Now with the price drop from $150 a barrel, you can just imagine that when you have a monopoly on the deep water in those areas around the BP platforms.

BP owned those assets for several years, and they had -- they didn't just take -- throw darts at the map and decide where they're going to put these big facilities.

Had their geologic and engineering teams looking at the best place to put these platforms.

So it was instinctly for PXP to acquire these in 2013.

But today when you look at the price drop from the $100 a barrel to $50 a barrel, there won't be a lot of these kind of platforms that can be justified.

All the production is found around our platforms, maybe by people with McMoRan Oil & Gas or by third parties who come to our facilities.

So we get the equity in the wells that we are drilling.

Petroleum fees off our platform.

We have about 250,000 barrels capacity.

When you compare that under our facility, which was of course the first one built in the deepwater, had a lot of lead time because it had to have some engineering.

It took about 10 years, cost about $10 billion to put that facility out there.

We have about the same capacity on the three platforms that we have.

So this, as usual, we have the history of (inaudible) geologic and engineering big projects.

So although we have a challenge, just imagine the resources that we have (inaudible).

We just spent $20 billion upgrading our minerals facility, and that is starting to turn around the (inaudible), as Richard pointed out, that we're going to invest in these big bucks.

We have had some hiccups in Indonesia.

And put a [S-fork] (inaudible) and then it was not just copper but all the minerals as far as a complete restructuring of the margins in the minerals business.

But we have been able to sustain that.

We've had labor union situations there.

Nobody was -- had much interest when copper Was $1, but when copper went up (inaudible) it went on up to $3 or $4 the unions have gotten interested in the minerals business.

So that is just part of a worldwide phenomenon.

But as we said, we found Grasberg when copper was less than $1 and gold was at $400 an ounce.

When you look at where we are today, it's really, as I say, when you (inaudible) $20 billion in mineral expansion and (inaudible) started to benefit that.

We are just starting to see the benefit this major investment we have made with the PXP MMR acquisition.

I think our Company culture shows that we have successfully manage some of the biggest projects in the world, both in the mineral and oil and gas business.

Not only to manage them from a technical standpoint, but manage them from a financial standpoint.

So given the chance to do what we've done with the assets, we've always proven that we know how to manage risk, know how to manage the (technical difficulties) projects, no matter how remote they are, being a leader in the industry.

And with what we have put together, with our asset base we are in a position now to really show [investors] of what the mineral and oil and gas treasure trove of assets represent.

Richard, Jim, and our staff and our whole team here, mineral and oil and gas experts, just button up the chin strap because it's going to be quite a ride.

Thank you.

Thanks, Jim Bob.

And we are ready to open up the lines for questions.

(Operator Instructions)

Tony Rizzuto with Cowen and Company.

Thanks very much.

Hi, everyone.

Hey, Richard.

I've got a couple questions here.

First of all, I think many people on this line today are surprised to see the increase in CapEx, especially after the nearly 85% dividend cut and obviously at a time when you are burning a lot of cash.

Have you exhausted all opportunities to cut costs and CapEx elsewhere?

And if 2015 is the bridge year, why not take on some additional debt here instead of diluting shareholder interest further?

That's a very complex question.

And I will tell you, we have gone through an exercise of looking at our capital cost across our business and coming up with a plan that we believe reflects the objective of limiting cost in the current environment while protecting our assets and positioning us to take advantage of them over the long term.

So we have clearly done this.

And we can respond to more details about that, Tony.

The issue of funding more debt is we started with a strong objective, which we communicated with the market following both the announcement of the oil and gas deal in December 2012 and the closing of the transaction in mid-2013, was that we were going to be focused on reducing our debt because of our belief that the nature of our assets can best be managed and positioned for growth with the balance sheet that's strong.

We have a strong balance sheet.

We are an investment-grade rated Company, and we want to take actions to protect that investment-grade rating.

We believe that's important for the credit markets, for the equity markets, but also how we manage some of our reclamation obligations where we are able to use corporate guarantees as an investment-grade rated Company.

So you mix this all together.

And our view has been that we should take steps not to grow debt, but to position ourselves to reduce debt over time.

And then our Board made the decision to reduce our dividend for now.

We have reduced it in 2008, as you recall.

And as markets recovered, we aggressively increased it as the markets changed.

My view is, that is what is going to happen in the future.

But we needed to take into account the uncertainties of the near-term market conditions, position our Company for future growth and for delevering our balance sheet in years beyond 2016.

We do not have current plans to issue equity for the parent company.

We, as Jim talked about, this issue of getting highlights on the value of our oil and gas business, the idea of potentially issuing equity at that level, we could see has benefits both in terms of highlighting those values but also giving us the opportunity to look at a broader range of funding within that entity as a public entity.

So we can see some benefits for it.

By the nature of doing that, it takes time.

You have to file a registration statement with the SEC, go through a review process.

And for us to have that alternative, that filing would be required.

That doesn't mean that we would be fully committed to doing it.

That will be based on our view of all the alternatives we have and how the markets develop as we go forward.

We're going to have our fingers in the markets in all place, and we are going to evaluate all alternatives, and take the actions that best serve our shareholders.

Okay.

Again, just if I switch gears for a moment.

Just production at a couple places.

First, at Grasberg the production was 20% below your January guide or estimate, primarily due to lower money rates.

I'm wondering -- and you kind of indicated that it improved through the quarter.

Could you bring us up-to-date where you were at quarter's end in relation to capacity there?

Yes.

One of the things to keep in mind is that we are ramping down the mining of waste there.

In fact, by the end of this year we will essentially have mined all of the waste in the Grasberg pit.

That is the material that allows us to get to the bottom of the pit.

And as we go forward, we will be mining ore and some low-grade material that we are stockpiling to provide throughput for our mill as we ramp up the Grasberg Block Cave.

For you, Tony, and those of us have who have been following this for a long time, we need to adjust our view of what mining rates are there because that is not part of the Indonesian government issues or the labor union.

This is just the normal mine plan.

Now, we did have a work stoppage that was not a union action during the first quarter.

Some of the labor issues within our workforce continue to be complicated, but that did not last long.

And by the end of the quarter we are essentially operating on a normal fashion.

And so that had an impact, not only for a very short period time when we had a work stoppage, but it's affected the -- some absenteeism issues.

It's affected some productivity issues.

We've been dealing with these labor issues now since 2011.

But we now are back to a normal fashion.

We have negotiations with our unions coming up this year.

We have confidence going into that.

We have our union contract completed two years ago in a relatively straightforward fashion.

And we are building positive -- more positive relationships with the union, but there are other issues within our workforce that we will have to continue to deal with.

One, is look at where we are with our long-term mine plan in the pit with mining rates going down.

And then we are working with some ongoing labor issues that had an impact in the first quarter and we're going to work hard to minimize that impact and we think we can going forward into 2015 in the last three quarters.

All right, Richard.

So strip ratios improve as you go through the year should allow more normal -- lesser rate of absenteeism and so lower unit cost there.

The other question I had was on Cerro Verde.

And in the text, talked about higher repair and maintenance expense and higher mining costs.

Is that all in preparation for the expansion you are doing there, or what is that related to?

Red is here.

Let me let him respond to that.

Sure, sure.

Thanks.

But just another comment.

It is not improving strip rates.

It's the fact that we are not mining the waste anymore.

I mean, we are just following our plan.

Okay.

We mined the waste and now we're down to where we are going to be mining -- essentially after this year, or for the mill currently, and some low-grade material that we are stockpiling to provide mill throughput when we complete mining in the pit and ramping up the underground Block Cave.

All of that -- and that, as I said, that's what we would be doing under any set of circumstances.

And before I turn it over to Red, I want to -- Kathleen's giving me a good note to follow up on the earlier conversation about dilution.

We have the ability to fund the plan that you see under our current revolver, which we have $4 billion of availability at the end of the quarter.

And under the current plan, now we've got to deal with commodity prices, whatever they will be.

Higher prices helps us, lower prices causes us to respond to those.

But we have the ability to borrow temporarily under our credit facility.

And then as we get into 2016 and generate cash flows, even at today's prices, we see that facility becoming back available to us in full force.

So we don't have the need to do -- we don't have an absolute requirement do external financing to execute the plan that you see today.

Understood.

We are focused on how to take advantage of these oil and gas assets to provide funding for its opportunities that's separate and apart from our overall corporate financial plan.

Okay.

Thanks for that.

Red?

Tony, just quickly, at Cerro Verde we have brought additional trucks down from our other operations, 10 trucks, this year.

That again is one of the strengths of our Company where we can do that with support from the other mining operations and our good equipment availability.

So we are advancing the mining there, making sure that that pit is in great shape and able to feed this new big concentrator that is being built on schedule, as Richard pointed out.

So we have taken some of the mining equipment to help with the construction of the starter dam temporarily, and again, (technical difficulties) to do all of that, and achieve our (inaudible).

It did cause a variance in the first quarter.

Thanks for the color, Red.

I appreciate it.

Richard, thank you.

Let me reiterate something.

This is Jim Bob again.

Hi.

Jim Bob.

If you look at where we are today after having spent $20 billion on expanding our minerals, made a major acquisition in oil and gas, during the year we have sold $4.5 billion worth of assets (technical difficulties) we did.

But what we have to do, this year we are pushing the right buttons.

And I think (inaudible) stop looking (inaudible) to make sure that we are using debt equity as we have in the past.

But most importantly, the ability for any company, imagine a company of our size taking on $20 billion of mineral expansion in a major acquisition.

This is quite a treasure trove of assets in our shareholders' hands.

And what we do now is be sure we look forward, and use the equity and the debt as you suggested.

That's what we're in the process of doing.

Thank you.

Thank you, Jim Bob.

Thanks, Tony.

Jorge Beristain with Deutsche Bank.

Good morning.

Maybe this question is best for Kathleen.

But where are we right now with the carrying value or the book value of your oil and gas assets as of this latest write-down?

And if you could give me both the 100% book value and then the net to Freeport?

Jorge, if you look you can find that on our balance sheet.

We've got that detailed so you can see what the balances were at the end of the quarter compared to where was at year end.

The full cost accounting rules which we have talked about in the past require that we assess the ceiling each quarter.

And it's important to keep in mind that that is only using proved reserves.

As Jim talked about during the comments, we have really expanded our resources.

Those haven't been converted yet into proved reserves.

And SEC requirements under full cost accounting requires us to use a 12-month trailing average for oil and gas prices.

So that's why you saw the charge in the fourth quarter and a subsequent charge in the first quarter.

The trailing number for oil is roughly $83.

So we could have, if oil prices stay below that, we could have additional charges in the second and third quarter until the 12-month trailing average is trued up.

But you can see here, we've got on the balance sheet we've got $6.7 billion in the oil and gas properties.

And that is the, essentially the proved reserves.

And then additional $9.7 billion that's not in the full cost ceiling.

That is net of depreciation.

Jorge, this is Jim.

Just on an operational basis, oil and gas areas like Holstein Deep, our Vito basin, our Highlander, all those are not in our proved category yet.

And that's how we can manage our finding cost and our proved reserves growth going forward.

We have a huge pipeline of projects that will become proved this year and next year and the following year already established.

Right.

I'm just trying to sort of get out ahead of what a book value could look like for this unit at time of IPO.

And we have just run a quick sensitivity.

If we just hold Brent crude constant over the next four quarters and just see what the trailing four-quarter historical looks like, it looks like you could still be in for about another $3 billion of write-downs in 2Q, maybe $1.5 billion in 3Q, and that's not including the stuff you are proving up, as you are mentioning it is not in your book value yet.

But I am just tried to get an idea of if those kind of order of magnitudes seem correct to you and what kind of book value do you actually see having by 4Q including the puts and takes?

Jorge, that looks high to us.

If we were to have calculated our full cost ceiling test at the end of March using the current strip prices, there would have been approximately a $2 billion incremental higher write-down at the end of March.

The SEC rules wouldn't allow us to do that because we have to use this 12-month average.

But if you were to go forward and say the strip prices will be realized over the forward, the numbers would be closer to $2 billion than your $3 billion, $3.5 billion number.

Sure.

That's because I was using spot held constant not the forward strip.

That is helpful.

And then to Jim's comment earlier, could you give us an order of magnitude of what you think the offsets that could be coming against those future write-downs would be by the proving up or the conversion of resources to reserves?

The aspect that is going to be fully engineered, and it's strictly a feel at this point, Jorge.

The differences is of having so much of it discovered in the last two years and not -- and hit the proved category, the price function, the actual operating function, and we push out capital like we've been pushing out capital, that slows down the proved booking process.

So there's -- if I could figure out exactly what capital we have external going forward, what the acceleration of those developments were and what prices were, I could answer your questions a lot closer than just saying it's a positive trend, I think is the best way to talk about it, because the inventory is full.

It's just a matter of all those factors coming together and what actually gets booked and what doesn't.

But the resources are there.

Yes.

Jorge, I'm sure you understand this.

But just to be clear, once you write something down, even though prices may come back or you have future reserve additions, you don't write it back up under our accounting system.

The book value stays there.

What higher prices or higher reserves would do, and it's important to note that reserves are a function of prices as well.

As prices go higher, economic limits extend and reserve volumes increase.

Lower prices put limits on how much reserves you can add at a particular point in time.

But that could tend to offset this $2 billion number we are talking about.

It would not result in a write-up of past write-downs.

And you are going to see our DD&A rate on the oil and gas unit because of the write-downs be more correlative to our finding cost going forward.

And we will be able to add reserves at that finding cost, which will be beneficial or par with our DD&A rate versus what it's been at the end of last year, was $40-plus and it's going to be in the $20s because of the write-down, I guess, going forward.

This is Jim Bob.

You should make sure we qualify something.

When we talk resources, if you look at the map of Vito, if you look back (inaudible) for instance, the resources as you see there, both drilled and undrilled, the important part of that would be the numbers we have before us now is, for instance, in the case of [deep hosting] all those wells have been drilled.

So that number you see going from 75 million barrels to 270 million barrels have logged (inaudible) in the face of (inaudible).

So have two kind of resources on these maps.

Resources that have been drilled and logged and put in the bank, so to speak, but we haven't been able to because of the so-called rules.

Haven't been able to get it separated.

In other words, we have a (inaudible) green color of all the resources and a red set of all reserves.

We have a lot of them in this category right now.

Fully understood, and I appreciate the extra color.

And just lastly, Jim, on Page 22 of the PowerPoint are those the projections for the potential tripling of your production based on the assumption that you are self-funded, or is that assuming extra capital comes into the Company?

That is the latter, assuming extra capital comes into the Company.

What it does, if it doesn't, if we just self-fund it ourselves at a slower pace, that just means it's a slower slope and it would extend the peak out beyond 2025.

Everything just shifts forward or into the future years at a slower pace.

We could accelerate it with the additional funding it comes in.

Got it, thank you.

Listen, let me just say to everyone, these full cost accounting rules are complicated.

And they're illogical in certain respects in today's world.

If you have questions, call David Joint and he will answer them or he will arrange for our people to walk you through them.

We want to make sure everybody understands what this is and what it isn't.

Brian Yu with Citi.

Great, thanks.

First question is on the oil and gas.

On Page 23 of the presentation we can see the improvement EBITDA between additional funding versus without additional funding.

But if I increase -- if I incorporate the increased CapEx footnotes, under both scenarios the net number is about a negative $3.9 billion unlevered free cash flow for 2015 and 2017.

In the context of the impressive IRRs that were laid out on Page 15 of the handout, when should the energy business start generating positive free cash flow on a standalone basis under those assumptions?

It would be at 2017 at a $74 Brent oil price is the assumption.

If it's not -- if oil's not $74 in 2017, it would be 2018 and $74.

It is a function of price and also the production scheduling, Brian.

Okay.

In 2017 there is still about a $400 million shortfall.

Right, at these prices you have to --

Okay.

Well, I can ask, just because the IRRs do look so impressive.

They're a lot higher than what we would typically see for the mining business.

And I'm just trying to figure out where the disconnect is versus the projections versus the more bottoms-up individual project analysis.

It is probably in the snapshot of the three years from a standpoint of the scheduling of when -- what projects are being funded in 2017 that affect 2018, 2019 production.

So it's a function of prices and also production sketching out there.

And when we sold the Eagle Ford and took that big chunk of production out of our production profile, filling that hole, we can debate a long time when we get it done but the sooner we fill it with production and then we have to just have to worry about price, the simpler our model will become.

And the only way to do that is to schedule our wells being hooked up that we've drilled are ready at a faster rate with outside funding.

So that is the model.

And I understand your frustration.

But you can imagine trying to put together a static model for you guys with so many moving parts, depending on what capital is coming in the door.

The other thing we have is through this period you see through 2017, we have existing rig contracts that were contracted for a couple years back.

What we're seeing is costs coming down.

And so we will be able post 2017 to do more with less cost.

So you will see the capital expenditure numbers reflecting longer term, reflecting lower cost of rigs and service cost, et cetera.

Okay.

Great, all right.

Thank you, appreciate it.

David Gagliano with BMO capital

Hi.

Thanks for taking my questions.

I have two questions related to the capital spending issue, and maybe you have are ready covered some of this.

But I still don't understand.

On the oil and gas side.

CapEx went up by about $1 billion.

Obviously volumes went up only 10% out in 2017.

My question is actually tied to Slide 22.

How much of the growth between 2018 and 2020 in the oil and gas on Slide 22 is now covered by these updated capital spending plans?

And how much more CapEx would be needed to get to the 400 million barrels per day target by 2020?

That's my question on the oil and gas side.

And then on the copper side, can you -- I missed this.

What were the main drivers for the $300 million increase in copper spending since the last conference call?

Let's see.

The second part is -- we don't have.

What you focusing on there, because we haven't really changed our --

The copper spending in 2015 is $3.7 billion.

That's a same as what it was before.

Actually we've taken down CapEx in 2016 and 2017 by a total of $300 million.

It's $300 million (multiple speakers)

We got that one backwards.

So that is helpful.

That answers that one.

Okay, and then on the oil and gas side?

Kathleen, keep going.

David, the swing here is you've got two types of capital.

You've got your drilling capital that Kathleen alluded to.

The costs are coming down on the spread rate.

I think we have 10% reduction this year, 15%, 20% and the 30% as we get past 2017 we will be able to reduce some of the drilling cost, assuming those costs continue to go down.

But the other big thing is the timing of the completions and the completion capital.

That's really our variable capital in our budget, our discretionary capital.

So I can't emphasize enough to your question is, it's going to be how much we spend early enough to get the production response so we self-funded with production versus continuing to bleed along without the capital, without the cap early.

Because if we are going to slow our program down, we could show for the next -- in two years we could be totally self-funding mid-2017 based on the $75 oil price and ramping up production and close the gap that Brian highlighted.

Or we could spend four years at a slow pace spending a less amount of money and continuing to fund a deficit to get to the same point.

And we have that flexibility in the assets, and that's really the question that we have been wrestling with here at Freeport, is what is the best thing for the shareholders?

That's why we are exploring the external option of the IPO, to accelerate that business so it becomes self-funding faster versus a longer deficit spend at a slower burn.

Okay.

Is there a way just to give a number on 2018 to 2020 incremental capital needed to get to the 400 million barrels, or is that just not --

The incremental capital is a function of what -- you are talking about the base plan to what we are talking about?

The current plan or the high-growth plan with outside capital?

I'm basically talk about the chart on Slide 22.

How much capital do you need to get to the 400 millions barrels of oil a day by 2020?

That would be, from this point forward, it would be as reflected in the numbers here on Page 23.

It would be the $3.8 billion in 2016 and $3.5 billion in 2017 on a 8H basis.

And then depending on what -- it's the delta between that would be the additional capital.

We would project 2018 through 2020, it'd be self-funding through the EBITDA growth.

I don't have that right in front of me, the EBITDA growth -- or the EBITDA in 2018 to 2020, but it's not a negative number, it is a positive.

Okay.

We'll have to get that to you.

All right.

Thanks.

Curt Woodworth with Nomura.

Good morning.

Good morning.

Jim, I wondered if you could address what the incremental CapEx would be under the funding scenario?

It looks like you're looking for about $1.5 billion of incremental spend in 2016 and 2017.

Then can you also talk about why you think an IPO would be more preferable to try to structure either a JV or a partnership on a project basis?

It all depends on what market is out there and so forth.

Currently the market that we see is a market that has capital in it from a JV basis, but everybody's got a lot of projects to do and there's not a lot of discretionary capital out there so it's very expensive.

The private equity market's very expensive as well because they're recapping a lot of their existing businesses.

We're just looking for the best form of capital.

I mean, we've got a fabulous growth profile in our business.

We've drilled the wells, taken the risk.

We're certainly not going to give them away just because we want to borrow a little money here.

That's not the prerogative.

We want to make sure we find we find the lowest, cheapest cost of capital and with the best benefits.

And the benefits we're getting the visibility to all of our shareholders to what we have achieved and the performance for oil and gas business along with what we think is an inexpensive form of equity for Freeport McMoRan in the form of equity at FOMG makes some sense.

Again, like Richard said, we are studying it.

We hope to have -- go through this process, but right now it looks the most favorable because the industry just issued $8 billion of equity here into a pretty dynamic environment.

Right now that's a very viable entity for us.

And we are encouraged by a lot of the investment banks to pursue it.

This is Jim Bob again.

Let me -- I want to go ahead and (inaudible) on this.

These three platforms that we have that are pushing in your deepwater side are going to be magnets.

Just imagine those as magnets.

As people buy leases out there, including ourselves, we will have a captive market for the leases.

We are in total agreement with people that buy leases because the differences is the lead time.

If they made a discovery and they build their own facility, be a five-year period.

We have 250,000 barrels a day to pass out there.

So to answer your question, today we may make one assessment, but the equity is right of way.

The partnerships you talk about may generate themselves.

But my comment again, just think about the platform as a magnets, because there is no other facility, nobody building out there.

People have to make a decision, do want to go to Freeport's platform or do you want to wait five years to get your stuff on production?

There's a huge advantage for that.

Thanks, Jim Bob.

And then Richard, just a question on Indonesia.

Can you comment on how the discussions are going with the MOU?

And specifically what the plan would be for the sell-down of PTFI?

As I understand, I think the new mining law requires an additional 19% to 20% stake reduction with the government having the first right to acquire that.

So I'm just curious on where that stands, and how do think that could be resolved potentially?

That is one of the points that is covered in the MOU.

And the government has regulations that apply to different types of mining arrangements they have to existing mines and so forth.

In terms of our working with the government and reconciling our contract of work which requires no divestitures and the government's new regulations, the MOU reflects a mutual agreement that we would increase the current 9.36% interest owned by the government to 30% over time.

And as you said, the way that that would be approached, that would be part of the set of points that we would agree to in getting the extension of our rights to operate under acceptable fiscal terms, is that would then be pursued over time and steps.

The agreement is that that sale would be at fair value.

And the first step would be offering it to the government.

We have talked about having a piece of that ultimately through a listing on the Indonesian stock exchange, and the government officials have expressed positive aspects of that.

The province of Papua has indicated an aspiration to own some interest, and we have done some financial structures to accomplish that.

All of this would come into play as part of reaching a resolution of the long-term operating rights that we have, but the MOU covers the extent of the future divestiture.

Okay, thank you.

Oscar Cabrera with Bank of America Merrill Lynch.

Thank you, operator.

Good morning, everyone.

Just Richard, wanted to get back to the -- and Jim, I wanted to get back to the oil and gas question that a couple people asked.

And if I may, you increase your CapEx from 15% to 17% by $1.6 billion.

With that increasing CapEx, will we get to -- again, Slide 22 has approximately 225,000 barrels a day, which my math is about 82 million barrels a year of oil equivalent.

Can we assume that that's a figure that you're looking for in 2018?

Under the growth plan, yes, with the additional capital.

That's correct.

So this is not something that is committed to in the future growth plan.

It's an opportunity for us.

And we are going to be assessing whether -- what we have given you in our budget plans that's part of the presentation is where we are today with our capital spending plans.

We have opportunities, provided we can get capital through a variety of sources.

Curt mentioned the joint venture opportunity with other companies.

Whether there is financing at a property level, whether there is financing available at the entity level.

And if we are able, Oscar, to get funding on a reasonable basis to pursue the growth plan, the chart that you are referring to is what would be achieved under that plan.

If we aren't able to -- if we conclude that the cost of capital is too expensive, then we will give you guidance as to how that would work out under our base plan.

And the opportunities won't go away.

It's like the projects we suspended in 2008 in our mining business.

Cerro Verde was being pursued before that.

We suspended it.

It didn't go away, and now we developed it later.

So we have rights to these resources that are long term.

And we will be managing how we spend money, how we finance that spending in a way that is responsive to market conditions, and market conditions are changing as we speak.

And so we are going to have our fingers on all these sources of financing.

And we will make decisions, and we will advise the market as to what the consequences of those decisions will be as we go forward.

Okay.

Maybe if I asked the question this way.

On Slide 31 you have oil and gas expenditures in 2015, 2016 and 2017 at $2.8 billion, $2.9 billion and $2.9 billion.

This compared to the last presentation is $1.6 billion more.

So you're presenting in 2017 oil and gas sales of $63 million -- sorry, 63 million barrels.

So with the additional capital, that we increase from last time we talked in the conference call to now, will that give you additional production of oil and gas in 2018?

I assume so.

And I'm trying to assess what's the level?

Is the level the one that you are showing in Slide 22?

And I can appreciate that there's opportunities.

(Multiple speakers) Slide 23, Oscar.

Slide 23, that is the current plan on top with the current -- our current funding that reflects on Page 31 reflects the volumes in the current plan.

This is what I was talking about, if we continue to put off the completion and hook-up and facilities needed to add new production as we drill it, we've already drilled it in the last two years, then we will not see it show up in the production numbers.

It will be what is in the current plan.

That production didn't go anywhere, like Richard is talking about, and it will take longer, years four and five, to get all that production on.

On a three-year outlook you will miss some of that production.

If we raise the additional funds, and we are able to put the wells on that we've already drilled on a timely basis, then you will see the graphs at the lower portion where it grows from 143 to 217 and the additional funding required.

And our variable funding there is the completion dollars which affects the timing.

And that is when, I think it was David or Curt or whoever, wanted 2018 through 2020, and we'll get it you, where you can see the reflection.

Basically in the current plan we would hit the same 217 a few years further out because of the just delayed spending in that funding.

Okay, thank you.

Then on -- in terms of the equity raise, or potential equity raise, I am assuming based on your comments that this will be done at the oil and gas business level.

How much, or have you thought about up to what level Freeport McMoRan, the holding company, would be willing to dilute of its holdings in the oil and gas business?

Oscar, we are under some restrictions under the securities laws about how much we can talk about details prior to filing a registration statement and getting SEC review.

We can say this.

If Freeport-McMoRan Oil and Gas would retain a significant majority interest in that, FCX would retain a significant majority interest in Freeport McMoRan Oil & Gas.

And the amount of the offering and the terms of it will be dependent on market conditions when we are ready to enter the market.

And we cannot do that for a number of months now because of the procedural requirements of SEC review.

Okay.

Then lastly, if I may, just a comment and a question.

The comment is just I wanted to say congratulations to Red Conger and team for the achievements in Cerro Verde.

And that has been remarkable project.

And then the question.

You have a comment here on your release talking about the MOU in Grasberg.

And it says no terms of this -- the COW other than those related to export duties, smelter bond and increased royalties will be changed.

Can you clarify that?

Is the government still trying to increase royalties or change the bond?

No.

Let me clarify that.

Those were agreed to last summer when we signed the original MOU.

We agreed to increase royalties to the current royalties under the mining law.

And there is no further adjustments to that.

We also agreed to put up a surety bond of $115 million to demonstrate our seriousness about pursuing the smelter deal.

There is no adjustment to that.

And then we agreed to pay an export duty on a sliding scale.

All that was agreed to in the summer of 2014.

And none of those terms were changed when we extended the MOU in January.

And they are not -- we're not being approached for further changes along those lines.

Okay, great.

Thanks very much for your answers.

Oscar, this is Jim Bob.

I want to give you a little color on questions you asked about the capital necessary to get production rates.

And let me set the scene for you.

We have these platforms that we keep talking about that have been billed: $6 billion worth of platform, sitting there waiting for production to be increased because they're unused capacity.

In the interim time between [after use] and what we have done today, we've now drilled wells that are sitting there with hundreds of feet of play in them, and it's a question of not guessing what's the reserves are going to be, but the resource has been drilled and so we have the platforms sitting there.

We have the wells sitting there that are drilled.

And the question mark is, how much money do you spend, what's a cost of the capital to get the oil from the wells onto the platform that is already been built, and already in our cost because we paid for it in the acquisition.

And we're geniuses around here doing extraordinary things.

But Mission Impossible is to say, what is the right decision sitting here today?

Because that's going to depend on what the pricing of oil does.

(Technical difficulties) copper does.

But so you understand the difference between the risk factor.

The platforms are built, the wells are drilled.

It just a question, when do we hook them up.

Yes, sir.

Understood.

It's just coming from doing about 15 years of mining research, oil and gas is new and we are just learning about this risk.

And it looks from a distance, it looks like that oil and gas and deepwater is a lot more riskier than onshore.

That's why we're trying to establish the parameters to give you the right value for those assets.

But thank you for your comments.

It's a good thing you've got a good teacher.

Jim Bob's the best teacher in oil and gas that you ever heard of.

Thank you.

Thanks, Oscar.

Brian MacArthur with UBS.

Good morning.

My question is going to be on capital, too.

But I just want to go back to the Grasberg capital.

You've cut the five-year forecast, your share from $700 million to $600 million.

But then you make a comment that there is an additional $300 million a year for the next five years for underground ore handling, et cetera.

My first question on that, is that all yours or does Rio Tinto fund some of that?

Rio Tinto does fund some of that, Brian.

The percentage varies, depending on their share production.

And that is nothing new.

Those numbers were always in our plan.

You see in the CapEx schedule that we reduce some of the CapEx in 2016 and 2017.

That is related to timing of some of those expenditures that we have pushed out.

But those capital expenditures for mill modification and power upgrades have always been part of our plan.

Right.

So that's what I thought.

But then it is fairly back-end loaded.

So a lot of that spending would be, if I'm trying to look at things out in 2018, there'll be much higher numbers out in 2018 as you spent instead of $600 million a year you'd be spending closer to $1 billion a year a year?

Should I think of it that way?

Yes.

We do -- we are planning when we need to do these mill modifications and pyrite handling and power upgrades.

And we are going to do it prudently and with an eye on trying to match it up with when we ultimately need it.

But yes, we will have some of those expenditures will be higher in the 2018, 2019 time frame.

Do you need, for the forecast you are giving us for those years, 2019 to 2021, because the production figures have moved around a little bit.

Do you need to do that to get to those numbers that you are talking about, i.e.

if you don't do this, will production be lower because of some complex metallurgy or something?

Or do you need to do these for sure just to get to those forecast levels?

Yes.

We need to do them.

And what we need to do is reflected in our long-range plans.

But some of this has been adjusted because the completion of the pit was originally supposed to occur at the end of 2016.

And it has been extended.

The pyrite processing does not affect all of the new ore that we will have from the underground.

It's needed for certain of the Grasberg Block Cave ore.

We need it long range for the Kucing Liar ore body, which has high pyrite content.

So as we look at issues of copper markets and physical activities, we adjust some of those things through our mine planning.

It's in our interest to defer these costs until they are absolutely needed.

And so that's what we are going through right now.

And that is some of the adjustments that you are seeing.

But the important news is that the planned capital expenditures for this project really aren't changing.

As we go forward our plan is being shown to be the right plan.

And as we go forward, we get some -- changing economics gives us some changing cost estimates because of the effects of worldwide global energy cost and the lower cost of steel and things like that.

So we have some impact, not a huge impact, from currency changes.

So -- but the basic plan has not changed, what we're going to do.

A little bit of change to when we are going to do it.

And some affect on the absolute amount of the cost because of the changing global commodity prices.

Great.

Thank you very much for that color.

That's helpful.

This is Jim Bob again.

Let me address something that Oscar just said.

We've got these bullets flying around here.

Oscar said the deepwater and the onshore.

Gives me a chance to talk about the Highlander well for just a minute.

The Highlander well, which we haven't talked about much in the detail.

The Highlander deep play has gotten the perfect situation with big structures and good reservoir.

The Tuscaloosa is sand that we perforated at 28,503 feet, is the largest well that has been completed since Mobile Bay.

Mobile Bay, as you may remember, was a 47 pcf field, and was such a big part of the ExxonMobil transaction at the time that the merger was made there, put the interest together.

Based on the performance of this well, oil's been flowing now for almost three months.

But the shut-in's at 19,500 pounds of pressure, which is the highest shut-in pressure ever recorded in an onshore well.

The structure, now that we have been flowing the well for three months, was (inaudible) calculation.

This well has had no drawdown.

We tested it as high as 75 million a day.

And they believe it can produce at the standard rate 100 million a day.

This is just like the Mobile Bay wells.

And the reason why that is important is the Mobile Bay was recompleted about 10 years ago.

And (inaudible) flow these wells, and some of the wells are producing over 250 Bcf and projected to produce to 400 Bcf.

So we appear to have a reservoir that's similar to the Mobile Bay reservoir that these structures cover anywhere from 30,000 to 60,000 (inaudible).

We have spent five years becoming experts in deep drilling -- in the deep potential.

This hole trends some 200 miles wide, as we've been opened up by this Highlander tier.

Prices of natural gas are down a little so expect the (inaudible).

But when you have people come into these export terminals, if you have some liquid projects, they're going to have to 500 million to 700 million cubic feet of gas a day.

And (technical difficulties) because of the lap in exploration for gas because everybody's been worried about the gas price and then focusing on oil exploration, when they look up and see that they've got to have 500 million to 700 million cubic feet of gas a day, I'm reminded of the time when we drilled the discovery of 1.25 million in 1981 and offset (inaudible).

The lease was owned by Gulf and Amoco and they were having to provide a contract but they had the Florida Gas for $300 million a day and they were having to pay for -- they were having to sell at $0.35 an Mcf.

The well we drilled to offset it was deregulated natural gas.

We sold the gas for $9 an Mcf.

This should tell you that the margins have a funny way of turning on you.

And when people make these commitments to be able to deliver gas and liquids, or export gas or LNG.

And you start looking for 500 million to 700 million cubic feet of gas a day, you better know your number's right.

Orest Wowkodaw with Scotiabank.

Hi.

Thank you.

Good morning.

Thanks for taking my question.

Again coming back to the questions around the CapEx.

I think a lot of us are still having trouble understanding what the rationale is for increasing your base case CapEx for the oil and gas business by $1.6 billion over the next three years when the incremental impact to your production over that same time frame is relatively negligible.

Thank you.

Again, Orest, it's timing.

The aspect of delaying the completions.

We increase the CapEx for a couple of reasons.

Let's talk about that first off.

The discoveries at Power Nap, the additional drilling there, the acceleration of -- offset exploitation projections like Deep Sleep by the operator that obviously we're going to participate in because of the low-risk nature of it and the derisking by the Power Nap well.

Also when we drill our exploratory wells, like (inaudible) we risk them at 25% success.

When they are successful, we have to complete them.

We have to add capital in for that.

We've also taken -- we are going to take a delivery of an additional drill ship called the Rowan Relentless here in the late third quarter to drill some development wells around the Horn Mountain area to further make our operation out there more efficient.

We have to shut those -- we're have to have shut that platform in for the facility modifications.

Those types of things are making our operation more efficient and making our reserve replacement more achievable and building our business over the long term.

You are not seeing it in the first three years with dynamic production growth because we're delaying a lot of the completion dollars for those projects because of budget concerns.

So the whole exercise on Page 23 that everybody is struggling with is that if we would spend the money to complete the wells earlier than what we planned in our current plan, and we had the capital to do it, we would see those production adjustments in 2017 as per the bottom part of Page 23 versus the current plan we have on the top part of the page.

It's strictly a production timing issue.

And we are going to get back.

David, do you all have some information on 2018, 2019, and 2020 when you'll see the rest of the production profile?

So if we have the additional capital we're able to accelerate those hook-ups.

Not the drilling, not the risk and so forth of drilling wells.

It's strictly hooking them up and the capital involved there.

Then you'll see the production response within the three-year period.

But under the current plan that we have, that's under the prudent finance plan of allocating capital, reducing our CapEx Company-wide, we're taking a more measured approach and bringing the capital forward.

If the Contango curve is correct, and we are in a $70 oil market in a couple of years, it's going to be much more beneficial to delay that production coming on because of price going forward.

That's where the magic of it.

Does that help clear it up?

It does to some extent.

But perhaps, can you quantify this $1.6 billion?

How much incremental production does that give you, say, in 2018 versus three months ago, the three months ago forecast?

It would give you another 30,000 barrels a day.

But that is not the historically.

Let's take the success we have had in the Vito basin area as an example.

We acquired an interest in this area that Shell has been working on a development plan.

Together with Shell we drilled this Power Nap well that has had tremendous amount of new information about the geology in that area, and it's a very best positive well.

It is leading us now to look to develop -- to drill another exploitation expiration-type well called Deep Sleep which we will provide us significant new information which has been derisked significantly and has the chance of identifying a huge structure there.

The information that we get from Power Nap and Deep Sleep could change the whole idea about how to develop that Vito basin area.

In best case for developing that, that's going to take a number of years because this is a case where we have to put in new production facilities.

It's not tying back to these existing producing facilities.

And so this has similarities to making decisions for major mine development.

You first have to understand the geology.

You have to develop a -- you have to come up with a development plan for it.

That development plan takes a number of years to put in place.

So the increment that has been added to capital expenditures because of success at Power Nap in Vito basin area is going to lead us to spend some more capital to understand what we have, how it should be developed, and make decisions on development.

And so that production is not going to come onstream for a number of years.

That's illustrated on Page 22.

In 2019 is when Vito area starts producing.

In 2020 it starts growing very fast.

To illustrate exactly what Richard just said.

We still don't know because when we drill this Deep Sleep well that may provide us some new insights as to how to develop this whole area.

It's something that is unfolding.

It takes time.

It is not going to be a question, like some of the hook-ups that Jim was talking about, could have production consequences much quicker.

But this is a major, major development project that could be one of the biggest projects in the entire deepwater Gulf of Mexico.

It's net 1 billion barrels for the Company.

Okay.

Thank you very much.

And just one more question on CapEx.

How much incremental CapEx should we assume will be spent on the smelter in Indonesia, which I assume was not in your guidance here?

No, it is not something where capital will be spent of significance until post 2016 because of the permitting time and so forth with that.

In order to give you a sense of that, to think of the smelter project because we have come up with an approach of expanding, not necessarily expanding, making a bolt-on type addition to our existing smelter at Gresik with our partner, Mitsubishi, being an expenditure on the order of $2 billion with working capital or something maybe something slightly more than that.

So our plans would be to obtain project-type financing for a majority of those costs.

And then there would be the underlying equity that would be funded by a partnership structure, which we would have the major part of.

But we would have other partners coming in, and we're negotiating that.

Our share of that project's costs would be a portion of the underlying equity for the project financing for a majority of that cost and that construction at best would be started in late 2016 or early 2017.

And Rio would be responsible for their proportionate share of that, as well?

Rio, and I'm sure everybody on the call knows that Rio is our partner now.

And their interest in Grasberg steps up to 40% both 2021.

They would have an Interest in seeing that we come up with an arrangement with the government for extending beyond 2021.

We are in discussions.

We have a great partnership with Rio, And we are talking with them about how best to proceed.

We don't have an agreement on that now, but I am confident we will get one that will be good for all of us.

Okay, but it sound like you are suggesting that we should not assume that Rio is planning to fund 40% of it.

Or am I misunderstanding?

Well, there's -- Mitsubishi is a potential partner.

There's other potential partners out there.

You shouldn't assume that we are going to fund 60% of it.

We're at the stage right now working with a Japanese construction firm on the construction contract.

We are working with the landowner, which is an adjacent fertilizer operation where we have an additional deal with on land ownership rights and sulfuric acid offtake.

We're working through permitting.

There's a lot of work to be going forward.

Let's go back to your original question about capital spending.

We are not looking at $2 billion of capital coming to Freeport.

We're looking at a smaller amount coming in over years in the future.

And we will update you as we go forward in getting the details and structure of this project completed.

Great.

Let me be sure that you understand.

If you change in your export that took place last year and (technical difficulties) giving.

Wasn't just for the cracker.

It was for cracker, aluminum, (inaudible), et cetera.

What this means, just so you add to Richard's comments, the smelter [is sitting] in Japan today.

But this export (technical difficulties) that they imposed (inaudible) means that you can't take it over from Indonesia and put it in a Japanese smelter without paying a big export tax.

That means the Japanese are sitting there with their smelters and no feed.

This is not just a problem for the exporter, the miner.

This is a problem that's caused a complete restructuring of the market.

In other words, to make it simple, everybody assumes that these smelters have been there for 100 years in Japan and other places are going to have feed.

And Indonesia says, we're not going to let you export without a huge tax, which is not (inaudible) the word.

That's why these negotiations are so interwoven.

If you -- so these smelters don't have a slam dunk (inaudible) we are just going to turn our eyes away from these.

They've got a huge problem (inaudible) no minerals and yet it has the downstream part of the business.

That's why it's so hard right now to say who is going to fund what because this is not just one guy's partner in the hot fire.

Everybody's got the same problem.

It's a complete restructuring of how the business is done between the concentrate and the smelter.

Thank you for the color.

Paretosh Misra from Morgan Stanley.

Thank you.

I had two questions on Grasberg.

One is based on your conversation with the government so far, do you get the sense that they're open to renew your contract sooner than 2019 as long as there is an agreement on other issues like divestment and et cetera?

Yes, that's our mutual objective.

And we are working towards that.

And the issue is, and we're working on that happening this year, sooner this year than later.

And the government officials we're working on recognize that as well.

Got it.

Out of the total CapEx this year, how much are you spending at Grasberg, including sustained CapEx?

Let's see.

Around $600 million.

The underground capital is in the $800 million range.

And sustaining is in the $200 million range.

Got it.

Actually, just one last one.

I know you've given in the past some sort of guidance for the cash cost at Grasberg when you build completely underground.

Can you just remind us what that number is?

The guidance we've given is based on getting the full capacity.

So in the earlier years as we're ramping up, it will be higher.

At current gold prices, we continue to expect that Grasberg underground will be the lowest cost in our portfolio.

Certainly less than $0.50 a pound.

So we are not seeing huge changes in the open pit cost versus underground because of the nature of underground mining and the absence of stripping.

We've got a very good cost structure.

Large scale, it'll be similar to the track record you have seen with Grasberg over the years.

With all of this noise that we've had to deal with for the past several years, none of us here lose sight of just what a fabulous ore body this is.

It's really special in terms of the copper grades and gold grades that you have available to us.

The ability to operate large-scale block caving operations is spectacular.

We are moving towards having a 250,000-ton per day concentrator mill filled totally by underground operations.

That is unique in this industry.

And we have shown that we can operate block cave scales.

Freeport has been block caving there since the early 1980s in our DOZ mine and its predecessors at shallower elevations have had years of successful operations.

We have the kind of ore, the kind of host rock that allows us to operate at truly world-leading scale to get to this high-grade ore.

And the rates of return on this project are spectacular.

This is Jim Bob again.

Looking at the deposit, if you just think about it this way.

We've been operating in an open pit.

In an open pit you have to mine both (technical difficulties) ore because you can't just make a straight hole just out of a pipe in the ground.

When you get into block caving, the (inaudible) rocks that surround your ore is all very substantial.

It's metamorphic rock.

And when you start to block cave, all you (inaudible) is get your ore that falls out of this block cave.

You don't have to deal with all the waste.

So imagine being up in that open pit in the fog and 300 inches of rain with all these trucks running around versus having to just sit there and scratch the bottom of this block cave and have the only thing that falls down is ore.

So the net of waste that you have to first blast and then truck out of there and find a place to put it has been an enormous part of a whole open pit mine.

That's because you had to build the pit wall before you really said you didn't exceed the angle of [repose].

And when you look up that years from now when you go in that underground mine, if you look up you're going to see a big silo that goes up.

All that has been the ore that's been [altered] by volcanic (technical difficulties).

That's why you have the change.

It sounds like going underground.

People historically thought underground was more expensive.

With the size of this ore body and the purity of the ore, not having to mine that waste changes the whole impression of how many trucks you need, how many people you need.

Brut remember, you're operating underground.

It doesn't rain underground, believe it or not.

There's no (inaudible) underground.

And for the industry as a whole, underground mining is a lot more expensive.

That's a unique characteristic of this Grasberg ore body is that we are able to mine such large volumes of high-grade ore and reduce that unit cost down to, depending on diesel fuel and so forth, the levels that are -- and the price of gold, levels that are consistent with our historical price/cost levels there.

It's a great asset,

Listen, we appreciate everybody's participation in I think a record-setting length of a conference call.

But we had a lot to talk about today.

We wanted to make sure that in the context of these commodity markets and the changes in our plans that you understood what our assets are that we have to work with, what options we have to do, how we're approaching it.

We are going to have, as I said, our fingers on all aspects of the markets for commodities, the markets for capital that are available to us.

And we're going to find the right alternative to go forward and achieve our strategic objectives, creating value out of these assets.

The reason we had too much to talk about is we had so many great properties.

All right everyone.

Thanks, and follow-up questions, David is available to be the point guy.

And we will get people to ask them for you.

Ladies and gentlemen, that concludes our call for today.

Thank you for your participation.

You may now disconnect.