Freeport-McMoRan Inc. (FCX) Q4 2015 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Freeport-McMoRan Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. 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. Kathleen L. Quirk - Chief Financial Officer, Treasurer & Executive VP: Thank you and good morning. Welcome to the Freeport-McMoRan fourth quarter 2015 earnings conference call. Our results 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 call today is being broadcast live on the Internet, and anyone may listen to the call by accessing our website homepage and clicking on the webcast link for the 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'd like to remind everyone that our press release today and certain of our comments on the call include forward-looking statements and actual results may differ materially. We'd like to refer everyone to the cautionary language included in our press release and presentation materials and to the risk factors described in our Form 10-K and subsequent SEC filings. On the call today are Richard Adkerson, Jim Flores, Red Conger's here, Mark Johnson's here, as well as several other senior members of our team. I'll start by briefly summarizing the financial results and then turn the call over to Richard, who will be focusing today's discussion on how we are positioned in our operations and addressing our balance sheet in the current market environment. As usual, after our remarks, we'll open up the call for questions. Today, FCX reported a net loss attributable to common stock of $4.1 billion, $3.47 per share for the fourth quarter 2015. As indicated in the press release, where we have a reconciliation, the net loss included charges totaling $4.1 billion or $3.45 per share, primarily for the reduction of the carrying values of our oil and gas properties. After adjusting for these net charges, the fourth quarter 2015 adjusted net loss attributable to common stock totaled $21 million or $0.02 per share. Our adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, for the fourth quarter totaled $919 million. We have a reconciliation of that in our slide materials for your reference. The consolidated copper sales totaled 1.15 billion pounds in the fourth quarter. Our gold sales totaled 338,000 ounces. We sold 20 million pounds of molybdenum and 13.2 million barrels of oil equivalents during the quarter. Our average realized copper price was $2.18 per pound. That was below 2014's fourth quarter average of $2.95 per pound. Gold prices averaged $1,067per ounce in the fourth quarter of 2015. And our realized price for crude oil was $48.88 per barrel, which included $11 per barrel of realized cash gains on derivative contracts. We generated operating cash flows during the fourth quarter of $612 million and funded capital expenditures totaling $1.3 billion during the quarter. We ended the year with $20.4 billion in debt and consolidated cash was $224 million. As indicated in the release, since August of 2015, a total of $2 billion of gross proceeds have been raised under FCX's at-the-market equity program, including approximately $1 billion during the fourth quarter of 2015. And we ended the year with approximately 1.25 billion common shares outstanding and had no amounts drawn under our $4 billion bank credit facility. I'll turn the call over to Richard, who will be using the slide materials that are on our website. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Good morning, everyone. This is going to be a different call than we have – have been done in the past for obvious reasons. We face serious challenges because of what's going on in the marketplace and because of the situation with our balance sheet, and we want to convey that we're addressing this seriously and with a degree of urgency and we're very focused on it. So let's think about what's changed for us since our last earnings call. On slide 3, we show the obvious, the drop in copper prices, the drop in oil prices. And as we talked about it at the end of the third quarter, we were looking at various scenarios that ranged from a further decline in prices at that time to other more positive scenarios. We're experiencing the worst of those scenarios right now, with copper dropping to $2 and oil dropping to $30. And we're also facing a market of where market sentiment continues to be negative, particularly negative about China, and we have to prepare for that. So the issue is what are we doing? What's Freeport going to do about this right now? And I want to convey to you what we are doing. And turn to slide 4. We are aggressively managing cost, CapEx, production, cash flow and working for capital raising transactions to address our balance sheet. At the third quarter earning release, we talked about how we had restructured our board of directors. We had gone from 16 previous members to seven. We added two representatives of Carl Icahn, a significant shareholders of ours now. I can tell you, we have a board that's fully engaged and fully supportive of what we need to do and very active. And we're listening to the input of our board members and reviewing our plans as we go forward. At that time, we had also revised our management structure from the previous Office of the Chairman to go to a different structure, and that structure was further changed in December with Jim Bob stepping down as Executive Chairman of our company. Gerry Ford, our Lead Director, has been elected as a Non-Executive Chairman. And I now have, effective January 1, executive responsibility for our Global Business, including our Oil & Gas business and our business in Indonesia. Jim Bob continues to work as an advisor and he's working very helpfully in dealing with our ongoing discussions with the government in Indonesia. But we have a clear strategic direction of our company now, and that strategic direction is to create shareholder value out of our copper and minerals business as we go forward. We're going to be looking at our oil and gas assets as a way to generate value to help support that strategy. And we're going to be focused immediately on addressing our balance sheet issues. And one thing I believe is, that's been lost in the noise of the turmoil in the commodities market business, the issues relating to our over-leverage as a result to the Oil & Gas transaction in 2013, the concerns about credit generally for natural resource companies is the fact that we have a very profitable mining business underlying all this that's going to give us the way forward for the future. We had over $19 million dollars of EBITDA in the fourth quarter – $900 million of EBITDA in the fourth quarter of 2015. We've made significant reductions in our capital spending and we're continuing to review that. We've adjusted mine plans to improve cash flows. We've deferred our Oil & Gas drilling activities to conserve cash. We're engaged in strategic review about those assets, and we're looking at all alternatives including sales of the business, sales of assets, and how we might manage it going forward because of the market condition we're in. You'll see that we have reduced our copper and oil unit cost of production significantly. We've also and I want to comment about the success we've had with the Cerro Verde project; a project we wouldn't start today in these market conditions, but that's the nature of mining assets. We actually began to work on this expansion with Cerro Verde in 2010, a $4.6 billion project that we brought in without having a significant cost overrun, the world's largest concentrator facilities at a mine anywhere in the world, and it's come up without cost overrun at all in a very efficient – effective way and it will be a great long-term asset for our company going forward. We've taken steps to protect our balance sheet by suspending our dividend. We raised equity proceeds through two ATM initiatives that have generated $2 billion of equity for us. Now we're going to talk about further steps. As we look at restoring our balance sheet to reflect current market conditions, we're going to focus and manage our cost and capital and continue to generate cash flow in a safe way. We're going to take immediate steps to reduce debt to enhance shareholder value. We are in active discussions with a number of parties on alternatives for asset sales. Besides the review of the oil and gas business, we are looking at transaction involving a wide range of our copper assets that involve alternatives. But we have interested parties. We have great assets that could lead to sales or joint venture arrangements that will be important steps for dealing with our balance sheet. I mentioned in the oil and gas business, we're engaged in a review for that. Our board has hired Lazard as the board's financial advisor on that. Working together with our traditional banker, JPMorgan, we are canvassing the market to understand what the current market value is in an obviously tough market. And we are engaged with interested parties now who are being provided recent access to our year-end updates of our oil and gas reserve information in our various plants. We expect all of these to achieve progress that we'll be reporting to you as it occurs during the first half of 2016. Look at slide six to show what we've done with capital. The capital we spent in 2015, which reflected the Cerro Verde project's completion of a project, as I said, that started a number of years ago, but that is now completed. The oil and gas capital spending reflected plans and commitments for our drilling rig equipment and other support facilities that were structured during the time when we were planning on investing for growth in that business. And we're making adjustments that reduce capital spending for 2016 to $3.4 billion, and our plans for 2017 show capital dropping to $2.3 billion. The $1.5 billion for oil and gas reflects a couple of factors that we'll be carrying over in the early part of the year. We had some cash cost to pay for costs that were actually incurred last year. We are restructuring our drilling rig contracts. We are undertaking a plan to idle all three of the deepwater rigs. And so we will be seeing that spending dropping off markedly after midyear of this year. And you can see that by 2017, the CapEx will be down to $600 million. That excludes idle rig costs that we will be incurring for the commitments we have under these contracts, which we are negotiating how to arrange those with the drilling rig contractors. But excluded from the CapEx plans are $600 million of idle rig cost in 2016 and $400 million in 2017. These are going to be reflected as expenses in our income statement rather than as capital spending. So major reductions and continued focus on how to continue to restrain capital. We've adjusted our mine plans. We look at each one of our mines; we talked about this earlier. But we evaluate each of our mines with looking at a $2 copper price and considering sustaining capital. And we have made adjustments that aggregate roughly 350 million pounds, about 9% of our 2015 sales by adjusting production at four of our mines. We have stress-tested our current operating plans for our copper prices below $2 and developed contingency actions to take if the market weakens further. And we will be monitoring that on a day-by-day basis. Jim's doing a great job to do that. The facts are that we have such an attractive cost structure that we will generate cash flows – free cash flows out of our mining business even at much lower prices than $2. And we've taken these actions to preserve our very valuable significant long-term resources but while reducing near-term supply and generating cash flow. To show the results of these actions as it reflects in our unit cost, we look at slide eight, you can see on the chart that in 2015 our consolidated site production and delivery cost before by-product credits was $1.78. With our new plans, we are reducing our outlook for that for next year by 25% to $1.34. And when you take into account by-product credits, for gold at Grasberg, molybdenum in several of our mines, cobalt in Africa, you get down to a unit net cash cost even at these low commodity prices levels for by-products of $1.10 consolidated for our company going forward. We're doing this through aggressive cost and equipment fleet management in addition to curtailing high cost production. We get the benefits of scale at Cerro Verde. We have Grasberg's ore grades improving beginning in the second half of this year, as we execute our plan to complete mining in the open pit by the end of 2017, managing working capital, taking advantage of low input cost. Our oil and gas cash production cost are being reduced by nearly 20% and that reflects the fact that we're having increasing volumes from our gas (17:37) drilling work in the Gulf of Mexico where our unit costs are lower than in California, and also work that our oil and gas team is doing to take advantage of lower costs from contractors and being more efficient in general. More on our mining unit net cost presented on page nine, you can see this by region, where in the Americas, our before capital expenditure cost level is about $1.50 per pound. And in Indonesia, where costs are lower, reflecting the higher grade volumes that we have coming to us through our mine plan, the average is $1.10. And then after showing capital expenditures for sustaining capital, you can see that it averages $1.32. The Grasberg number includes the capital we're spending on underground development so that we have the underground mines available to continue Grasberg as a high-volume, low-cost, long-term operation after the completion of the mining of the open pit in 2017. So much talk about copper market commentary that I'm just going to make a couple of comments about it. Unquestionably, the uncertainty about the global economy is negatively impacting financial market sentiment. China's demand growth is slowing. Our Western demand is not as good as we and others had hoped it would be, but it's still expanding gradually. I'm not going to debate anyone about the market. The market is what the market is. But the facts are that in the copper business differs from other commodities in that there is not an enormous excess supply in inventories. We just show here the exchange stocks that's developed from the end of 2014 to the current date, similar story when you look at total global inventories. But here we have exchange stocks not rising significantly, remaining low by historical standards, at a time when the copper price has gone from $2.88 to $2 from the end of 2014 to the current date. It is – even looking at the decline in prices so dramatically since the third quarter, inventories are not building. The story is fundamentally, in today's world, the business we're seeing is not as negative as the financial markets are reacting to it. We have no particular insight as to what's going to happen in China in the future. We have to prepare ourselves for what the market is and the market is we've got $2 copper and we've got to react to it. To date, industry wide, there have been reduction in high-cost mines. Wood Mackenzie says 730,000 tons a year, there will be other cuts if prices stay at this level. The supply from new mines like Cerro Verde, like Morenci that began construction years ago are coming to an end now. The current level of balance in the marketplace is not yielding a surplus as high as people had predicted. And all the time, lower-grade ores are coming from existing mines. Mines are depleting. Mines are moving underground. All these things will lead to an ultimate price recovery, in my view, absent just a collapse in the world's economy because today's price is not high enough to incentivize any future development. So we have enormous resources. We're not going to be spending money on developing those resources until the market improves. And if we were to start today, if the price of copper were to magically jump to $4 a pound, it would be on the order of 10 years before new production could come out of our resources. So we remain confident about the long-term copper markets and dealing with the reality of today's low prices. Now, looking at just how good our copper business is, we talked about 2015 being a bridge year. Well, we crossed the bridge and now we're looking at a big uphill climb because of the current price. But even at current prices, our mining business at $2 yields $4.2 billion of EBITDA. And you can see that steps up, if we were to have higher prices and our CapEx and our mining business is $1.9 billion. So we have a company – we have a business that earns profits at low prices. We've cut back capital and we have that providing support for what we're doing. We have a great set of assets and we have five mines that have the potential of producing 1 billion pounds of copper per year. Three of them are already doing that: the Morenci, Cerro Verde, Grasberg mines. Tenke Fungurume has great growth opportunities, as does our El Abra mine in Chile. So we have a very attractive long-term set of assets to deal with. Quality assets, which gives us the opportunities to deal with the financing issues we face with our balance sheet. Very large reserves that I'm sure most of you know about. We've got 100 billion pounds of copper at $2 mine plans, adding in another like amount of mineralized material that's already been identified. As I said, that's there for our company for the long run. We're not going to be developing new projects until the market improves. Grasberg is a great asset. It is a very special asset with a high grade ore and copper and gold combined. And we have been working with the government of Indonesia in a challenging political environment in that country. We have a commitment from the government that was reflected in communication we received on October 7 from the Minister of Energy and Mines about our proposal to extend the primary term of our contract, which primary term of our 1991 contract goes to 2021. It gives us the rights to two 10-year extensions to 2041. We've been working with the government and we received the positive letter from the minister saying the government will grant approval for the contract and will preserve our rights in the same level of legal and fiscal certainty in the existing contract. We have recent reaffirmation of that commitment from senior government officials. The process going forward has been complicated by recent political developments in the country including the investigations related to the taped conversation with the former Speaker of the Indonesian parliament and the reviews by parliament of that and the investigation with it. But we remain confident and have support from senior government officials that their policy about extending our contract remains in place. The issue is when that happens and how the government deals with the existing regulations for extending contracts. And consistent with our agreement with the government – with the government's agreement to extend our contract and that we are advancing plans for the development of new smelting capacity with the government and with the vesting interest in our ownership of PTFI, we submitted recently a valuation in response to the government asking for that of our valuation of PTFI. And it reflected a valuation of approximately $16 billion, which reflects standard market ways of looking at values of mining assets. And we've agreed to offer, over time, 20.64% interest of PTFI to Indonesian ownership, whether that's the government state-owned companies, listing on the stock exchange, or sales to other Indonesian interest at fair market value. We've had ongoing discussions with the government on renewing our export license. Members – certain officials within the Ministry of Energy and Mines have suggested that we should continue to pay an export duty that we should make a sizable escrow deposit to support the smelter development. These points are inconsistent with the arrangements that we had worked with the government on beginning in mid-2014. And our discussions with the government continue. I'm here today to tell you that we have full confidence that the government will come up with a favorable decision and issue the export license to ensure the continuity of our mining operations. And in doing so, we'll serve the interest of Indonesia's mining industry in general. So that's the status. We have not, to-date, been given that export license, but we have confidence that we will. Now, turning to our oil and gas business, I want to reiterate things we've talked about in the past. These are very good assets that have valuable infrastructure and associated resources. We've had successful drilling activities since their acquisition by Freeport in mid-2013. And this successful drilling has de-risked the opportunities around the underutilized production facilities that we acquired in the transaction. We drilled 14 wells with positive results, four wells have been brought on production. And even though we are deferring drilling for the foreseeable future because of market conditions, the success we've had in past drilling would allow us to connect certain of these discoveries in a way that our near-term production volumes will actually be increasing because of the past drilling successes. Major property that we have an interest in Heidelberg, operated by Anadarko, produced its first oil this month and it will be ramping up as we go into 2016. We will also expect to place six additional wells on production from our own drilling in 2016. This will result, as I mentioned earlier, a reduction in our cash production cost to a consolidated of approximately $15 a barrel that reflects $10 a barrel in the Gulf of Mexico. We are deferring for the foreseeable future our exploration development activities. As I said, all three of our deepwater drilling rigs are being idled. Two are already idled and one is completing in the imminent future, in the immediate future, a completion activity that it's currently working on. But the business has very long-term production and development potential that will be there for the ultimate recovery in oil prices. There's a big inventory of drilling locations that will be available to create incremental value over the long period of time and that comes about because of our focus area in the deepwater where we have three major underutilized platforms: Marlin, Holstein and Horn Mountain where our recent tieback drilling has been done and where we've identified significant incremental drilling opportunities. We have interest in the Lucius and Heidelberg fields on non-operated basis and interest in the Vito area that has significant long-term development potential. On slide 18, we show what the EBITDA for this business would be generating and what the CapEx would be, excluding the idle rig cost. You can see that this business is very highly leveraged, of course, to the price of oil and can generate substantial free cash flows in the environment depending on the price of oil. We are planning our business not with an expectation that price increases will occur, but preserving values for an eventual recovery in prices. We're taking a very hard look at G&A cost as we go forward with this oil and gas review process. I've been working with Jim and his team in Houston. We're targeting a near term 30% reduction in G&A cost. And then, as we complete the oil and gas review process, we will assess the structure of our business at that time if, in fact, we don't sell the entire business. And then, we will organize the business to fit with what comes out of the oil and gas review process. Throughout our organization and with our team in Houston, I'm encouraged by the very positive and cooperative approach that all of our team is dealing with to deal with this price environment. Jim, do have anything you like to comment on? James C. Flores - Vice Chairman; President/CEO, Oil & Gas, Freeport-McMoRan, Inc.: Well, Richard, more just a continuation of the direction you're going with the call because with the Board of Directors and with Richard's guidance and help working through the process of the 70% drop in crude oil, we brought CapEx 70% when you go 2014 through 2017, as you see pro forma. And we're going to right size to reflect the LOEs to the new environment, lease operating expenses as well G&A, as you mentioned. And then also, on top of that, as per the Board of Directors instructions, were also fully manned to support the strategic review process as we get third parties to evaluate the assets, and go forward, to give the board a view of – a clear look at what evaluation is of the oil and gas business currently and, go forward, we make the right decision at FCX. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Thanks a lot, Jim. Let's go to slide 19 and update our outlook for 2016. Copper sales at 5.1 billion pounds. And you can see gold, molybdenum and oil at 57.6 million barrels equivalent, 74% of which is oil. Unit cost, we talked about earlier, at $2 copper that would generate $3.4 billion of operating cash flows including the impact of idle rig cost. We got significant leverage to copper, of course, and we've reviewed capital expenditures. In looking at our sales profile, going into 2016 and 2017, you can see the level of copper sales, which reflects Cerro Verde, Grasberg's positive results and continued operations at our existing mines, net of our curtailed production. And you can see in 2017, as we complete mining the Grasberg open pit the significant volumes of gold that will be produced. And looking at the bottom of the slide, with oil and gas sales, even with the suspension of drilling activities, because of our past drilling successes and completing the tieback wells, we're not seeing a falloff in our oil and gas sales profile. 21 shows EBITDA cash flow numbers at various prices. At $2, this is the average of 2016-2017. $5 billion of EBITDA at $2, $3 billion of operating cash flow. And you can see our leverage to higher prices, and I again want to emphasize, we are also stress testing our business to respond to a scenario where prices may go lower. Looking at our debt levels, this is the focus of what we have to deal with, and we have to deal with it in today's marketplace. We have total debt at the end of December of just over $20 billion. We have adequate liquidity, as we go forward. We have very limited amounts, $200 million of debt maturing in 2016. We have no funds drawn under our $4 billion bank credit facility. I'm sure you all have followed the rating actions taken on our company and have also followed the rating agency's public comment about their broadly based reviews of credits in the metals and mining and energy sector. We have worked with agencies over the year to demonstrate our commitment to protecting our balance sheet, and we'll continue to do so. In light of the recent ratings actions and the sentiments by the rating agencies, we have prepared contingency plans to address our financial assurance obligations for our mining properties under a scenario where we're not investment-grade rated. We would develop plans that would allow us to address these in a fashion that would either not require or minimize using letters of credit under our bank credit facilities and we have a number of alternatives for doing that. So, we're working to come up with plans to reduce debt, to get our balance sheet stronger and improve our financial flexibility and protect our liquidity in the short run. So, we are – start out telling you we're serious and we are serious and focused to take advantage of our large scale current production base of resources. We've established these long lived reserves that are going to be there for the future of our company, and we have significant underdeveloped resources that will be available for the future. We're very proud and pleased to represent a global organization of such highly-qualified management, workers and people that we work with, they're first class in every respect. Our mining business, we've shown generates free cash flows at very low prices and we're taking prudent management steps and will continue to do so to respond to these market conditions. We are going to address our asset, our balance sheet debt levels through asset sales, other initiatives to raise capital, and we have the assets to do that. And throughout all of this, throughout all of this, we're going to have a positive outlook for our company based on the long-term global demand and supply fundamentals for the commodities that we produced and given our high-quality asset base. I know you have a lot of questions and I look forward to responding to them. Kathleen L. Quirk - Chief Financial Officer, Treasurer & Executive VP: Operator, we'll take questions now.

Ladies and gentlemen, we will now begin the question-and-answer session. Our first question comes from the line of David Gagliano with BMO Capital Markets. Please go ahead.

Okay. I just have a couple of quick questions. First of all, on a near-term basis, there's been some chatter lately about the – in the press, anyway, about the pending export license situation in Indonesia. There's some indication that Indonesia is requiring a deposit towards the smelter construction in order to renew the license for the next six months. And I was wondering if that is correct. And if so, where does that stand? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: The press is accurate in reporting that the Director General in Mining has raised that as a potential condition for getting our export license that there'd be a substantial deposit. We have responded that our view that that's inconsistent with the understanding we had with the government that we had made a commitment to progress the smelter project and we fulfilled that commitment to progress it. We have sites developed for it. We're working with our current partner in the Gresik smelter that we developed in the mid-1990s, that Gresik, Mitsubishi who will work with us as we're going forward. We're working with the contractor to do it. Our position is that we've met our obligations to the government. We developed an engineering procurement contract with Chiyoda, the Japanese engineering firm. And so, we are engaged in discussions with the government about that. And as I said, we have, as Freeport's management, full confidence that we're going to be able to get our export permit extended on mutually agreeable terms with the government.

Okay. Okay. I'll leave it at that for now. Just a clarification question on some of the numbers this quarter versus the last quarter. Specifically, the idled rig costs, were the $600 million of expected idle rig cost in 2016 and $400 million in 2017, were those numbers previously included in the previous oil and gas CapEx or are those new expected cash outflows? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: No. The cost of the rigs under the plans that we had in place at the third quarter were included in capital expenditures. We are engaged in discussions with the owners of those rigs, the other party to our contracts, in terms of restructuring the terms of the contracts in view of our new plan to idle all three of those rig cost. And what we've included in our estimate of idled rig cost is our expectation as to how these negotiations will be completed. They're not yet completed, but this is our expectation. It involves two things. One, a transfer of the amounts we pay to the drilling contractor under what we believe will be revised terms out of CapEx into idled rig cost. And then, we are taking also out of CapEx the cost of operating those rigs because our plans previously included a continuation of drilling activity. So, we're seeing not new cost, but restructured lower cost as a result of our plan to idle all three of the deepwater rigs.

Okay. All right. So if CapEx in oil and gas went down, versus December, it went down by $300 million but there was $600 million taken out, am I reading it the wrong way that that implies there's a $300 million increase somewhere else in CapEx or is that not how I should be thinking about that? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: This all reflects our – we've restructured our plans, idle the rig cost, completing the wells that we could complete near-term to keep our production off, and most of those costs are early in 2016. So, it reflects our new plan to complete the wells that were available for completion, to suspend, stop drilling for new activities and what you're seeing is the net impact of those revised plans.

Okay. Great. Thank you.

Your next question comes from the line of Brian Yu with Citi. Please go ahead.

Yeah. Thanks. Hey, Richard, in the beginning of the call you mentioned about how you had cut back on your copper output last year in response to market conditions and I'm just wondering, on the oil and gas side, with California and the cost laid out, it seems from someone on the outside that it's EBITDA and cash flow negative. Can you talk about those operations specifically and maybe there are other factors that we're not really taking into consideration for why you're continuing to run it? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Well, we're continuing to run it because even with the level of operating cost by constraining capital it is cash flow positive for us and it preserves the asset. Jim, why don't you comment on our strategy and plans for California? James C. Flores - Vice Chairman; President/CEO, Oil & Gas, Freeport-McMoRan, Inc.: Yeah, Brian. That's a correct assessment when you look on historical cost basis and we look on a cost-forward basis of what we're doing on the LOE cost and fuel going down and so forth that we see a 20%, 25% reduction on LOE cost. Granted, we're not making a lot of money at $30 a barrel but we are not losing money in California on an LOE as-produced basis as we go forward through the year. There'll be a quarter where they'll be a negative. There'll be a quarter it will be a positive. So, we'll continue to maintain production out there if oil stays around $30, just to maintain the price upside option as long as it don't cost FCX any money. If oil goes to $20 obviously, you know, sustaining and so forth that would be a different ball game. We'll revisit your issue. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: And Brian, also I want to mention, we have shut in the offshore production in Point Arguello... James C. Flores - Vice Chairman; President/CEO, Oil & Gas, Freeport-McMoRan, Inc.: Yeah. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: ...which we had the ability to do that. And that was high cost. It's not a huge part of our production but it was a high-cost segment of our production.

All right. Okay. Apologies, I'm not, as you know, with the oil and gas business but in the presentation slide it says operating costs in California are $33 per barrel. What's the difference between that and LOE? Are there some non-cash items in there? James C. Flores - Vice Chairman; President/CEO, Oil & Gas, Freeport-McMoRan, Inc.: Yeah. LOE and operating costs are basically the same thing. But operating costs also captures development activity like workovers and things of that nature which are production-sustaining operations which help build LOE. If you stop working over every well then you just get down to the base LOE, which is your – all your cost to run the oil fields without any capital investment. So, you drop those development activity and that's before any CapEx. And then, I'm just strictly on the LOE basis, you continue to cost, you manage your chemicals, you manage your trucking, you manage your employee levels and compensation and so forth to where they make sure the oil field continues to produce at least break even. You don't want to lose money producing oil at this point in time. And what Richard talked about in the Point Arguello, so forth, that's in the historical numbers. So, we see a reduction now in the low $20s of LOE by $22 to $22.50 a barrel on California going forward. And that's why $30 a barrel it will justify continuing to produce. Say, at $20 a barrel it would be another story so that – we hope they don't get to that point but you never know. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Essentially, what we have Brian is an operation out there at current levels of oil prices that's close to breakeven. But it is from terms of the value of that asset, it is highly, highly leveraged, of course, to oil prices and relatively small increases in the price of oil results in generating substantial values in that asset. So, it's a great asset for people who have an optimistic view about oil price recoveries, and we're reading more about that in today's marketplace. And so, it's an asset that today we can manage without losing money but preserving that value opportunity either for ourselves and for our buyer of the company.

Got it. And then just a good question on the potential copper sales. Are there assets that you would consider kind of core and important to FCX's DNA or is it a situation more or like, perhaps, for the right price and you would consider any operation? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: We would consider any operation and are considering any operation, every one of our assets are. Our objective is to respond to this market condition, respond to our balance sheet situation and find the place of where we can generate the most value to achieve that objective while preserving a business that's going to be valuable for our shareholders as we go forward. So, we are considering – we've talked about Grasberg, where we have this agreement to sell an additional 20% interest in a very valuable asset there, and we're looking at our assets across the board. We're finding that, as I feel, there are people in the marketplace who are taking a longer term view of the copper markets in a positive way. And we're engaged in active discussions with people on a number of alternative overlapping possibilities. I know everyone would like to be more specific now. I would like to be more specific now. The situation has developed in a negative way very quickly and aggressively, and we're responding to it. And we will report to you at a time when we can be more specific. But today, we can't.

All right. Thanks and good luck.

Your next question comes from the line of Tony Rizzuto with Cowen & Company. Please go ahead. Anthony Rizzuto - Cowen & Co. LLC: Hi, everyone. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Hi, Tony. Anthony Rizzuto - Cowen & Co. LLC: I've got a couple questions here. Richard, my first question is, obviously, you mentioned a big uphill climb and obviously very serious challenges that the company is facing. Is the intention to return FCX to a pure play in copper and gold, ultimately, if you can get out from underneath, all of what you're dealing with right now? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Well, as I said, our strategic focus is around our mining business, so that's going to be the focus. We are looking to see what market opportunities we have available to us with our oil and gas asset to generate value, and we're going to assess how to do that either near term or over time. I mean, we are not going to make irrational decisions based on just current market conditions. But we have a number of interested parties who are anxious to talk with us about how we might go forward with it. But our strategic focus for the company is clear. That was established back in our October timeframe. We talked about restructuring our board. The strategic focus of our company is on our copper and related minerals businesses. Anthony Rizzuto - Cowen & Co. LLC: Okay. And some follow-up questions here. So, from your comments, I mean, it sounds like you're not averse to selling certain mining assets in their entirety. Is that a fair assessment? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: We are going to find the best opportunity to achieve our goals. And if that involves that sale of assets in their entirety, we will do that. Now, it's just where the company is. It's not something – we don't like selling equity at these prices. We don't like selling assets that we know are going to be valuable in the long run. But we have a big portfolio of assets, a big portfolio of reserves, and that's what's going to give us the chance to deal with this current problem and come out of this as a profitable company that's going to be of long-term values for our shareholders. So, we're going to be measuring how to deal with the balance sheet issues and how to create long-term value from a sized-down business to deal with the near-term problems. Anthony Rizzuto - Cowen & Co. LLC: Just a question on this is... Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: We have the assets to do it. Anthony Rizzuto - Cowen & Co. LLC: Okay. Just a follow up on the offshore rigs, and I think you guys have had contracts with Rowan and Noble, and those contracts have been costing about, maybe $1.3 billion to $1.5 billion a year, I believe that's been the case. And I think that was going into what I think the middle of 2017, if I recall correctly. But you are now including – you are telling us that you are assuming now that you'll have a successful outcome with those two companies regarding those contracts. Is that correct? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Yes. We still have the contracts, and we're going to live up to our contractual obligations, okay. Now, what we're doing is, when you operate these deepwater rigs, you have to pay the drilling contractor and those have been in the range of $500,000 to $600,000 a day, and then you incur, in past times, a similar amount in operating them. So, our plan now, eliminate the cost of operating them as the rigs will be idled, and we're negotiating with the drilling rig companies to reduce our near-term financial obligations in some mutually-accepted way that recognizes the value the contractors have in the contract and they're working with us to be responsive to our desires to reduce near-term cash requirements. Kathleen L. Quirk - Chief Financial Officer, Treasurer & Executive VP: But Tony, the numbers – this is Kathleen. The numbers that you were using included the spread and that's what's being removed. So, even though we're having to pay and satisfy these contractual obligations, we are reducing our overall cost by idling the rigs and not incurring additional cost to other contractors. And so, that's the objective here is to conserve cash. And as we've talked about, we benefit from having an inventory of wells already drilled. And so, we don't have to continue drilling and incurring the additional costs. And so, what we solve for is how do we get the best cash flow answer in this environment. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Yeah. Anthony Rizzuto - Cowen & Co. LLC: Okay. I'm sorry... Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: And Tony, these are tough... Anthony Rizzuto - Cowen & Co. LLC: Yes, Richard. Sorry. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: These are tough decisions. Anthony Rizzuto - Cowen & Co. LLC: Absolutely. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: I mean these are the best drilling rigs in the world. We've got attractive prospects to drill and because of market conditions and our company's financial position, we're having to take these really tough decision to idle these, just like we're having to make really tough decisions about selling interest in our mining properties. I mean, we are where we are. We can't wish the market away. We can't wish this debt away. We've got to deal with it, and that's the hard decisions that we're making. Anthony Rizzuto - Cowen & Co. LLC: Understood. Just – I want to go back to Indonesia. Obviously, it's very critical to your success overall in getting those costs down to the $1.10 level. And I'm wondering – it's hard for us on this side of the world and all the statements that come out of the press and what may be factual, what may not be factual, but it makes it very, very difficult and the uncertainty as you expressed. And I'm wondering, with all of these stuff that's going on, I mean is there any risk to these numbers which are back-end loaded in 2016 because it is a critical part of the success for the mining company going forward? How would you – and you're spending, what, about $800 million, $900 million a year there right now? Kathleen L. Quirk - Chief Financial Officer, Treasurer & Executive VP: Right. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Yeah. On that order, yeah. I mean, it's really important to us. Indonesia has been a interesting, complicated country to work in over the 40 years that we've been there. And we've been through lots of changes, about as many changes as you can imagine with a country. And we have successfully managed our way through those changes over 40 years. It's important to us, but please remember, this is important to Indonesia. I mean, where we operate in Papua, which is a challenging political, socio-economic region of Indonesia that's important to the country strategically, in our area where we employ over 30,000 workers, we represent, in the province we work in, over 90% of their economy. The taxes, the employment, the exports that we generate for the country of Indonesia is important to the country as a whole. Like all countries around the world and all developing countries in Asia, Indonesia is being challenged by the downturn in China and the global economy, and so we're important to them as they are important to us. And Indonesia, today, is a true democracy where there's a freedom of the press and political figures are free to comment on it. That's a good thing. And some of the comments reflect, as we see around the world and to a significant degree here in the United States, a feeling of nationalism. Witness (01:00:41) comments that are made about free trade here in the United States. And so what you're reading is the functioning of a democratic system where people have views about nationalism. Underlying that is a company that's been a long-term investor in Indonesia that has plans to make significant investments in developing the underground resources that we have there that provides employment and economic benefits to a province that is in very much of need of development as Papua and as a country that's in need of this. And so we have a mutual need for each other. It's a mutual need and that's what's going to lead us to finding a resolution of these issues that's mutually acceptable to both sides. And we're doing this in a positive way. Anthony Rizzuto - Cowen & Co. LLC: Richard, assuming you're able to go on that path and get that resolution you need, which obviously is required, can you give us comfort that looking out beyond 2017 -- I know you've not really talked about that a whole lot, but you've presented it in your slide deck where the production does come off as you are involved in the transition to underground. Can you give us further comfort about that transition and might it be a less steep drop-off post 2017 at this point in time? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Well, Tony, you've been working with us for so many years. You will recall that, you go back a number of years and that drop-off was much more steep then than it is now, we've had great success in expanding our ore bodies there. In the third quarter, we began producing from the deep MLZ mine, which is an extension of our underground block-caving operations that started in the early 1980s. This is the most recent significant extension to it. It's very high grades of copper and gold, a very long life. That mine has come up to speed very efficiently. We are progressing with our underground development for the Grasberg underground ore to the block cave mine plants that we have. We're stockpiling ore to produce beyond 2017. This is where we are currently with our plans is what you see, as you say, in the slide deck. And Mark Johnson and his team, with our team at jobsite, is working every day to see how we can minimize the impact of that transition. But it is a reality. It is a reality that there will be a transition because we can't begin mining the Grasberg underground ore body until we complete mining the pit, because the pit subsides and the ground falls in on the cave, so you physically can't do it. And yet, we're taking every step we can to mitigate that increase. That was one of our reasons for developing Cerro Verde. That was one of our reasons for developing Tenke and Morenci, was to drive volumes for us during that time period when we were making the transition to Grasberg. So what you see today is our best estimate of where we are. We're going to work to do our dead level best to improve that. We've had success in the past of doing that. We've got a great team working on it. And that's what we're working on. Anthony Rizzuto - Cowen & Co. LLC: Thanks, Richard. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: But we're very confident technically about our ability to do it. This organization has operated the most complex mine in the world, and I feel comfortable in saying that and I think the rest of the mining industry would agree with it, at 13,000 feet in the middle of Papua where it rains, absent El Niño, 200 inches to 400 inches a year, where we mine the pit, we mine the underground, we can do this. So technically, we're very comfortable and we're confident about working in Indonesia where we've been for over 40 years. It's complicated. I'm not going to underestimate the complications. But you got a team here that can handle it. Anthony Rizzuto - Cowen & Co. LLC: Thanks, Richard. I appreciate that. Thank you very much. Good luck with everything, too. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Thanks, Tony.

Your next question comes from the line of Jeremy Sussman with Clarkson. Please go ahead.

Hi. Thanks very much for taking the question. You talked in your prepared remarks and in the press release, I guess, about the physical copper market being close to imbalance. And you guys have certainly taken some proactive steps and you especially did so, I guess, in the financial crisis when you took down production by a decent amount. On one hand, all of your even higher cost operations are still nicely free cash flow positive. On the other hand, you've got the potential ability, I guess, to influence the market. So how do you sort of balance the two, let's say, if copper prices stay around the $2 range where they're currently at? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Well, Jeremy, you're very accurate in pointing out that we generate cash from our business there, and we need this cash. I mean, we need to reduce our debt levels. So we've adjusted it so far to take out the production that's not cash flow positive or marginally cash flow positive at the $2 level. And so with unit cost consolidated average $1.10 that reflects Grasberg, as Tony pointed out, but you look at our other properties in the Americas, that average is about $1.50 a pound, that generates substantial cash, which is something we need. But if this market deteriorates, if the worst predictions for China are true in terms of its economy shrinking and its demand for copper shrinks, then we have the assets that we'll further adjust to that. But at a $2 price level, we're where we need to be.

Okay. That makes a lot of sense. And just real quickly, you talked about evaluating alternatives for the Oil & Gas business. Again, obviously, maybe even a more difficult environment on Oil & Gas. What are several alternatives that you're looking at in the current environment? Thank you. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Okay. Thanks, Jeremy. What we're looking at is reviewing and canvassing the market. We're making data available, we're making our management team available to discuss our assets to parties that might be interested in buying the business or might be interested in buying assets as part of the business. As you point out, it's a difficult marketplace. And yet, and I was listening to comments coming out of Davos and out of the financial community, this low oil price is ultimately going to have an impact on the level of oil that's being produced globally. It's putting pressure on producers here in the United States, but also producers in countries around the world. So ultimately, low prices will have an impact on supplies. And there are people out there who are making comments about how attractive it is to invest in natural resources at this point in the marketplace. So we're going to find out what the interests are, and it's a wide range of activities. We're not going to do anything dumb with these assets because we know what their values are and what their leverage to prices are. We're going to manage our balance sheet and, again, approach it in a way that creates long-term value for our shareholders.

Thanks very much.

Your next question comes from the line of Chris Mancini with Gabelli & Company. Please go ahead.

Hi. Thanks a lot. Just regarding Tony's question about, and what you were saying, Richard, about the $500,000 a day to $600,000 a day of lease cost, to what degree could you just put that back to Noble and the other contractors? Or do you have to spend that $500,000 a day to $600,000 a day even if the rigs are idle and not pumping? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Okay. Well, let me take that in two steps. First of all, what we have signed are standard contracts for the offshore drilling industry. These are contracts that we had entered into that are similar to contracts that all other operators have entered into. And if you read, you can find that there are a number of other operators who are also idling rigs and doing this. So we can't get out of the contracts. I mean, they are what they are. They're standard. They have obligations that we have entered into. These contractors, as a company, we honor our contracts. So we start with that. We can't just get out of – we can't just...

Okay. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: ...not pay them because we want to.

Okay. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Now, what we're doing is minimizing the cost, given our contractual obligations. We're doing that, one, by idling the rigs, which involves the spread cost that we incur when the rigs are operating. And two, we're entering into negotiations with the contractor companies to mitigate the near-term cash obligations that we have in ways that we can mutually agree to that's in the benefit of both companies. And we have positive relationships and we want to maintain positive relationships with these contractors. They're very good companies. They're people that are – whoever operates this business in the long run is going to want to have good relationships with them. They want to have good relationships with us. They have very high quality rigs. And so it gives us a basis for talking with them, which they're doing, to try to achieve our objectives in ways that's consistent with their rights under the contract.

Okay. Okay. So, I guess, that kind of answers my second question, which was – I mean, in terms of the ability, at one point, if the price of oil does decline more, do you – can you make the decision to just put the business on care and maintenance, so to speak, the oil and gas business on care and maintenance? What kind of – like, what's the analysis there in terms of when you can still perhaps maintain the optionality of the business but not burn as much cash? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: That's what we're doing.

Okay. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: In some respect, that's what we're doing right now. I mean, we're taking these drilling rigs and idling them to save cost. We're preserving this inventory of prospects for future drilling when market conditions warrant. We're maximizing cash that we get out of production by bringing on-stream some successful wells that we've drilled to keep our production levels up. We're cutting lease operating expenses that Jim talked about. We're reducing G&A. So we're doing what you call care and maintenance. And as you see, by 2017, we get our CapEx down to $600 million where it was $3 billion plus. So what you're saying this is what we're doing.

All right. Okay. And then I was going to say even in extreme scenario where if you can't sell the business, you don't have the ability to place any FCX debt on the oil and gas business and then, say, even declare – file for bankruptcy for the oil and gas business and then you could get rid of some liabilities potentially and also get rid of these idle rig costs and just have again the mining business, which we had in the past. Because my understanding, again, is that all the liabilities are – they are obligations of FCX corporate, right? You can't place liabilities – there are no liabilities that are just on the oil and gas business. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: All right. Just think about this, Chris.

Yes. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: There's absolutely no way you can transfer debt to an entity and then declare a bankruptcy for it.

Right. Right. Right. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: You just can't do that. And we have a business, since oil and gas business has a lot of value.

Right. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: And so – and that value is now owned by FCX as the owner of those assets. And we need to manage FCX's debt level and preserve the values that have been created. Now, the values are less now than they were two-and-a-half years ago because oil price have gone from over $100 to $30, just like our copper assets. The value that we put on ETFI, which is $16 billion reflecting today's market is a lot less than it was when copper prices were $3 or more. So we've got to recognize realities, but in the midst of all – and I said this earlier – in the midst of all of this noise about negative investor sentiment, about commodities in China and global growth, and in the midst of all the concerns about Freeport because of our debt level in Indonesia, we've got a great set of assets underlying this. And that's going to be our salvation and our opportunity to create a recovery and value for the future. That's why I'm still working here. I'm still invested in FCX stock and all of our team is as well. So that's what we're going to do.

Right. Right. No, I would definitely agree that the mining business has a lot of, lot of value. We like the mining assets a lot. Thanks a lot. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: All right. Thank you.

Your next question comes from the line of Matt Murphy with UBS. Please go ahead.

Thanks for taking my question. I have another question on asset sales, an issue people have been consistently asking me about. I agree, on the asset front, there's a lot of value there. But the question is regarding the ability to sell assets as it relates to your bond indentures and any restrictions that might exist on asset sales. Can you provide any thoughts on whether or not that's something you are needing to consider as you evaluate alternatives? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: The bonds were issued as investment-grade rated company and they don't have restrictions. We recently restructured our bank credit facility so that we've agreed that half of any asset sales we have will be used to reduce debt. Practicality of it is we're going to use proceeds from asset sales to reduce debt. I mean, that's just what – that's why we're doing it. So there's not any real restriction now. We'll have to deal with our financial situation going forward. But the whole purpose of asset sales is to reduce debt. We're not going to be restoring investment activities until we solve the balance sheet problem and until market conditions improve.

Okay. That makes sense. And you also mentioned just making tough decisions and including, you said, issuing equity. I'm just wondering if there's any thoughts on whether the board would consider another at-the-market equity program. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Well, we're looking at all alternatives. We've completed these last two rounds. It goes without saying, none of us want to issue equity at these levels, none of us want to sell assets in this market, but we have to do what we have to do. And we're looking with our banks at what access to capital market transactions, private market transactions we might have. A lot of this is driven by our progress on our asset sales. And I'm encouraged by the opportunities that are emerging for us. So there's got to be a holistic answer to it, and we have to keep all options open. But at the present time, we're focused on what kind of opportunities we have in the asset sale joint venture arena.

Okay. Thanks a lot.

Your next question comes from the line of Orest Wowkodaw with Scotiabank. Please go ahead.

I've got a couple of questions as well. I was wondering if you could quantify what your debt reduction target might be. Or perhaps you can give a range like you're looking to sort of reduce net debt in the sort of $3 billion to $5 billion range or we're just trying to get a sense of how many assets could be sold if the pricing makes sense in this environment. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: $5 billion to $10 billion is our target.

$5 billion to $10 billion. Okay. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: That's not something we won't be able to do in one transaction.

Sure. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: And it's not going to be something we do. I'm not giving you a specific timeframe on it. We're going to make significant progress, I believe, in the first half of the year, but we need to get our debt down over time into that range.

Okay. So, $5 billion to $10 billion through multiple transactions would be your target? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Correct.

Okay. And in terms of your exposure, your financial exposure, if your credit is downgraded from investment grade, I know you're looking at alternatives to posting letters of credit. But could you give us a sense of what your maximum cash exposure would be that would potentially eat into your $4 billion credit line availability? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: We believe we have opportunities to deal with this in a way that would not eat into our line of credit. And we're working on those structures now and I don't want to go because of the state of analysis and considerations, but we've come up with some creative ideas about how to fulfill our obligations, which we will do. We're going to fulfill our obligations to states and the federal government, but we believe we can do it in a way that will preserve our credit facility, the availability on our credit facility.

Well, could you give us a sense that if for some reason those alternatives did not come to fruition what the financial exposure would be from a liquidity perspective? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Okay. It's not so much a specific amount that gets triggered all at one point in time. Kathleen, you want to comment on this? Kathleen L. Quirk - Chief Financial Officer, Treasurer & Executive VP: Yeah. I was going to say, Orest, it's in the $500 million range currently, and it's something that the states review on an ongoing basis along with the company to look at what those ultimate closure obligations are. So it's not a static number, but that's the approximate level currently.

Okay. That's wonderful, thank you. And then just finally, just changing gears in terms of the assets. Can you give us a sense of if water issues are still impacting Grasberg? I know you had sort of alluded to that coming into the fourth quarter. And sort of how you see that playing out through 2016? And I was also wondering about Cerro Verde, whether you have all the water you need there to ramp up the expansion this year. Thank you. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: All right. We'll have Mark Johnson speak about Grasberg. Mark is our executive who's the President of our operations there. So, Mark? Mark J. Johnson - President & Chief Operating Officer – Indonesia: Yeah. The El Niño effect that we talked or hear about so much, it affected us definitely in 2015. That started to relax for us as far as daily rainfall in December. And so far in 2016, we haven't had any constraints with the water. We've had normal rainfall return back, like I said, in mid-December and this continued through January. We don't expect that we're going to see, and none of our numbers include, any sort of constraints because of the lack of water. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: And Red Conger is here who manages our business in the Americas and in Africa, and Red's recently been to Peru, and can talk to you about our water situation there. Harry “Red” Conger - President & Chief Operating Officer – Americas and Africa Mining: Yeah, Orest, in the El Niño pattern, that part of the country is drier than it normally is. This is typically the rainy season there now and it hasn't really started raining yet. We've had a storm or two up in the mountains. The water levels right now in the reservoirs are roughly the same as they were last year, so we don't see a shortage yet. But it needs to rain and it hasn't rained yet. We've not been impacted to this point. So we're cautiously optimistic that we'll still get some rain this year. But to this point, we have not. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: And the water access that we've had for Cerro Verde is coming from this wastewater collection and treatment system that we built for the city of Arequipa. So it's providing a source of water for our expanded operations. The El Niño effect is giving concerns to farmers in the area, and that's caused some, let me say, discussions with us and with the city about our water access. And while we have to deal with that, the long-term solution for water at Cerro Verde has been a very innovative and successful one of working cooperatively with the community in Arequipa.

Okay. So, at this point, it doesn't sound like you're concerned you're going to be water constrained in either operation this year? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: That's correct.

Okay. Thank you very much. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Thank you.

Your next question comes from the line of John Tumazos with John Tumazos Very Independent Research. Please go ahead.

Thank you for all your actions and tough work in the tough time. Concerning the $5 billion to $10 billion asset sale target, does that include the proceeds from selling a 10% or 20% slug of Grasberg? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Yes.

And other than Grasberg, are there other mining assets for sale with the asset sales focused more on the Oil & Gas assets that are not as positive cash flow generative? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Well, it does include consideration of potential sales of oil and gas assets whether they're cash flow or not. It considers that. John, the point I was trying to make and I hope I got across is we have a number of alternatives. In fact, we're looking at all of our assets across the company's board to see how can we generate cash to reduce debt and how we can preserve values for long-term shareholders. So every one of our assets are being considered. And we are going to understand the market's interest, we're going to understand where we can find transactions and including potential for capital markets transactions that might involve placements of various types of securities. But we're looking across the board how can we achieve these two goals in the best fashion, how can we deal with our balance sheet, how we can come out of that with a company that can be there with significant cash flows, development opportunities for the long-run business. I know you would like and I would like to know exactly how we're going to do that, but the market is such that I can't tell you right now. But I can tell you, our commitment to it in our across-the-board consideration of alternatives.

Thank you. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Thank you, John.

Our final question comes from the line of Lucas Pipes with FBR Capital Markets. Please go ahead. Lucas N. Pipes - FBR Capital Markets & Co.: Hey. Good morning, everybody. So... Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Good morning. Lucas N. Pipes - FBR Capital Markets & Co.: ...I wanted to quickly follow up on Indonesia. And in the press release, you've stated, I believe, that the timing of the capital expenditures continue to be reviewed. And I wondered if you could maybe give us an update on what is encompassed in this review and the potential reductions or options that we could be looking at. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Yeah. We've been working very closely with Mark and his team to defer all the capital we can defer, and we've come up with some adjustments to mine plans and restructuring approaches to the long-term development of the resources, and that's reflected in our current plans. We are continuing with our investments to develop the underground ore bodies, the access to them and to prepare the Grasberg block cave for bringing it on stream beginning in roughly 2018 – beginning of 2018. So the review process is that's predicated on our ability to continue to export concentrate. So the current discussions we have about getting an extension for that export is important to those decisions to continue to invest. As I said, we are presently very confident that we are going to get this export permit arranged for us. But if there was any aspects of our work with the Government of Indonesia that would change that, then unfortunately we'd be forced to curtail development activities, curtail employment, take actions to preserve our company. We don't expect that to happen, but those are the sorts of things that were referenced in terms of the comment you saw about reviewing. Lucas N. Pipes - FBR Capital Markets & Co.: That's helpful. Thank you. And then along the same lines, maybe a quick follow-up on the smelter development. Richard, in the past, you've added some details regarding potential partners for the smelter. Could you give us an update on that? What do you expect, at this point in time, to be Freeport's contribution to the smelter? Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Well, as this thing is progressing, we're looking at what the capital costs would be, what are the potential sources of outside financing for that, and we're engaged in discussions with banks on that. To get financing, we have to have the contract extension done and we advised the government of that. And then potential partners would include our joint venture partner in Grasberg, it would include the operator of the project as potential. So that is still a work in progress. Lucas N. Pipes - FBR Capital Markets & Co.: All right. Well, good luck and thanks for that color. Richard C. Adkerson - Vice Chairman, President & Chief Executive Officer: Okay. Thank you for your question. And thank everyone for your interest in the company and all the questions that you have. And we look forward to reporting progress on this plan as we go into 2016 further. Thanks.

Ladies and gentlemen, that concludes our call for today. Thank you for your participation. You may now disconnect.