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Dispositions | 9 Months Ended
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Sep. 30, 2016
Discontinued Operations and Disposal Groups [Abstract] |
DISPOSITIONS | DISPOSITIONS Timok. On May 2, 2016, Freeport Minerals Corporation (FMC), a wholly owned subsidiary of FCX, sold an interest in the Timok exploration project in Serbia to Reservoir Minerals Inc. for consideration of $135 million in cash and contingent consideration of up to $107 million payable to FCX in stages upon achievement of defined development milestones (no amounts are recorded for the contingent consideration as of September 30, 2016). As a result of this transaction, FCX recorded a gain of $133 million in second-quarter 2016. Morenci. On May 31, 2016, FCX sold a 13 percent undivided interest in its Morenci unincorporated joint venture to Sumitomo Metal Mining Co., Ltd. (SMM) for $1.0 billion in cash. FCX recorded a $576 million gain on the transaction and used losses to offset cash taxes on the transaction. Proceeds from the transaction were used to repay borrowings under FCX's unsecured bank term loan (Term Loan) and revolving credit facility. The Morenci unincorporated joint venture was owned 85 percent by FCX and 15 percent by Sumitomo Metal Mining Arizona Inc. (Sumitomo). As a result of the transaction, the unincorporated joint venture is owned 72 percent by FCX, 15 percent by Sumitomo and 13 percent by an affiliate that is wholly owned by SMM. Oil and Gas Operations. On June 17, 2016, FM O&G sold certain oil and gas royalty interests to Black Stone Minerals, L.P. for cash consideration of $102 million, before closing adjustments. In addition, on July 25, 2016, FM O&G sold its Haynesville shale assets for cash consideration of $87 million, before closing adjustments. Under the full cost accounting rules, the proceeds from these transactions were recorded as a reduction of capitalized oil and gas properties, with no gain or loss recognition. On September 12, 2016, FM O&G entered into an agreement to sell its Deepwater Gulf of Mexico (GOM) properties to Anadarko Petroleum Corporation (Anadarko) for cash consideration of $2.0 billion (before closing adjustments) and up to $150 million in contingent payments. The contingent payments would be received over time as Anadarko realizes future cash flows in connection with FM O&G’s third-party production handling agreement for the Marlin platform. Anadarko will assume future abandonment obligations associated with these properties. The transaction has an effective date of August 1, 2016, and is expected to close in fourth-quarter 2016, subject to customary closing conditions. Under the full cost accounting rules, this transaction will require gain (loss) recognition because of its significance to the full cost pool, but the amount is not expected to be material. In accordance with the mandatory prepayment provisions of FCX's Term Loan, one half of the proceeds from this transaction must be applied toward repaying FCX's Term Loan. In connection with the sale of the Deepwater GOM properties, FM O&G entered into an agreement to amend the terms of the Plains Offshore Operations Inc. (Plains Offshore, a subsidiary of FM O&G) preferred stock that is reported as redeemable noncontrolling interest on FCX's consolidated balance sheets. The amendment provides FM O&G the right to call these securities any time between September 12, 2016, and January 10, 2017, for $582 million. FM O&G expects to exercise this option at the time the Deepwater GOM sale closes. If the option is not exercised, the terms will revert to the original purchase agreement as discussed in Note 2 of FCX's annual report on Form 10-K for the year ended December 31, 2015, as recast in the Form 8-K filed on November 9, 2016. No other terms of the Plains Offshore preferred stock were changed by this amendment. On October 14, 2016, FM O&G entered into an agreement to sell its onshore California oil and gas properties to Sentinel Peak Resources California LLC (Sentinel) for cash consideration of $592 million (before closing adjustments) and contingent consideration of up to $150 million, consisting of $50 million per year for 2018, 2019 and 2020 if the price of Brent crude oil averages $70 per barrel or higher in each of these calendar years. Sentinel will assume future abandonment obligations associated with the properties. The transaction has an effective date of July 1, 2016, and is expected to close in fourth-quarter 2016, subject to customary closing conditions. Under the full cost accounting rules, this transaction will require gain (loss) recognition because of its significance to the full cost pool, but the amount is not expected to be material. In accordance with the mandatory prepayment provisions of FCX's Term Loan, one half of the proceeds from this transaction must be applied toward repaying FCX's Term Loan. As part of the terms to sell the onshore California oil and gas properties, FM O&G entered into derivative contracts during October 2016 for a portion of the projected sales of oil from the properties and projected purchases of natural gas. Sentinel will assume these contracts upon completion of the sale. These derivative contracts consist of crude oil swaps and costless collars, and natural gas swaps, none of which were designated as hedges for accounting purposes. The derivatives will be recorded at fair value with the mark-to-market gains and losses recorded in revenues (oil contracts) and production costs (natural gas contracts). As of October 31, 2016, FM O&G had hedged (i) approximately 72 percent of its forecasted crude oil sales through 2020 with fixed-rate swaps for 19.4 million barrels from November 2016 through December 2020 at a price of $56.04 per barrel and costless collars for 5.2 million barrels from January 2018 through December 2020 at a put price of $50.00 per barrel and a call price of $63.69 per barrel, and (ii) approximately 48 percent of its forecasted natural gas purchases through 2020 with fixed-rate swaps for 28.9 million British thermal units (MMBtu) from November 2016 through December 2020 at a price of $3.1445 per MMBtu related to its onshore California properties that are being sold to Sentinel. TF Holdings Limited - Discontinued Operations. On May 9, 2016, FCX entered into a definitive agreement to sell its 70 percent interest in TFHL to China Molybdenum Co., Ltd. (CMOC) for $2.65 billion in cash and contingent consideration of up to $120 million in cash, consisting of $60 million if the average copper price exceeds $3.50 per pound and $60 million if the average cobalt price exceeds $20 per pound, both during calendar years 2018 and 2019 (no amounts were recorded for the contingent consideration as of September 30, 2016). Through its interest in TFHL, FCX has an effective 56 percent interest in Tenke Fungurume Mining S.A. (TFM or Tenke) located in the Democratic Republic of Congo (DRC). The closing of the transaction is currently subject to customary closing conditions, including the resolution of the right of first offer (which expires on November 15, 2016) of Lundin Mining Corporation (which holds a 30 percent interest in TFHL), and the parties are working towards a satisfactory resolution in order to complete the transaction in fourth-quarter 2016. In addition, La Générale des Carrières et des Mines (Gécamines), which is wholly owned by the DRC government and holds a 20 percent non-dilutable interest in TFM, recently filed an arbitration proceeding with the International Chamber of Commerce (ICC) International Court of Arbitration challenging the transaction; however, FCX believes that Gécamines’ claims have no legal basis. In accordance with the mandatory prepayment provisions of FCX's Term Loan, one half of the proceeds from this transaction will be applied toward repaying FCX's Term Loan. In accordance with accounting guidance, FCX has reported the results of operations of TFHL as discontinued operations in the consolidated statements of operations and presented the assets and liabilities of TFHL as held for sale in the consolidated balance sheets for all periods presented. The consolidated statements of comprehensive income (loss) were not impacted by discontinued operations as TFHL did not have any other comprehensive income (loss), and the consolidated statements of cash flows are reported on a combined basis without separately presenting discontinued operations. The carrying amounts of TFHL's major classes of assets, liabilities and noncontrolling interests, which are presented as held for sale in the consolidated balance sheets, follow (in millions):
| September 30, 2016 |  | December 31, 2015 |
Assets |  |  |  |
Cash and cash equivalents | $ | 68 |  |  | $ | 29 |  |
Inventories | 1,129 |  |  | 584 |  |
Receivables and other current assets | 140 |  |  | 131 |  |
Property, plant, equipment and mining development costs, net | 3,062 |  |  | — |  |
Other assets | 250 |  |  | — |  |
Total current assets held for sale | $ | 4,649 |  | a | $ | 744 |  |
Property, plant, equipment and mining development costs, net | $ | — |  |  | $ | 3,261 |  |
Inventories | — |  |  | 608 |  |
Other assets | — |  |  | 241 |  |
Total long-term assets held for sale | $ | — |  |  | $ | 4,110 |  | a
Liabilities |  |  |  |
Accounts payable and accrued liabilities | $ | 84 |  |  | $ | 108 |  |
Deferred income taxes | 691 |  |  | — |  |
Asset retirement obligations and other liabilities | 46 |  |  | — |  |
Total current liabilities held for sale | $ | 821 |  |  | $ | 108 |  |
Deferred income taxes | $ | — |  |  | $ | 681 |  |
Asset retirement obligations and other liabilities | — |  |  | 37 |  |
Total long-term liabilities held for sale | $ | — |  |  | $ | 718 |  |
Noncontrolling interests | $ | 1,192 |  |  | $ | 1,178 |  |
a. | Amount differs from the totals on FCX's consolidated balance sheets because of other assets held for sale.
Net (loss) income from discontinued operations in the consolidated statements of operations consists of the following (in millions):
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2016 |  | 2015 |  | 2016 |  | 2015
Revenues a | $ | 261 |  |  | $ | 299 |  |  | $ | 819 |  |  | $ | 991 |
Costs and expenses: |  |  |  |  |  |  |
Production and delivery costs | 248 |  |  | 207 |  |  | 730 |  |  | 637 |
Depreciation, depletion and amortization | — |  | b | 65 |  |  | 80 |  | b | 195 |
Interest expense allocated from parent c | 12 |  |  | 6 |  |  | 33 |  |  | 20 |
Other costs and expenses, net | 4 |  |  | 7 |  |  | 10 |  |  | 24 |
(Loss) income before income taxes and estimated loss on disposal | (3 | ) |  | 14 |  |  | (34 | ) |  | 115 |
Estimated loss on disposal d | (5 | ) |  | — |  |  | (182 | ) |  | — |
Net (loss) income before income taxes | (8 | ) |  | 14 |  |  | (216 | ) |  | 115 |
Benefit from (provision for) income taxes | 2 |  |  | 11 |  |  | 25 |  |  | (20 | )
Net (loss) income from discontinued operations | $ | (6 | ) |  | $ | 25 |  |  | $ | (191 | ) |  | $ | 95 |
a. | In accordance with accounting guidance, amounts are net of eliminations of intercompany sales totaling $53 million in third-quarter 2016, $29 million in third-quarter 2015, $125 million for the first nine months of 2016 and $98 million for the first nine months of 2015.
b. | In accordance with accounting guidance, depreciation, depletion and amortization is not recognized subsequent to classification as assets held for sale.
c. | In accordance with accounting guidance, interest associated with FCX's Term Loan that will be required to be repaid as a result of the sale of TFHL has been allocated to discontinued operations.
d. | In accordance with accounting guidance, an estimated loss on disposal was recorded, which will be adjusted through closing of the transaction.
Cash flows from discontinued operations included in the consolidated statements of cash flows follow (in millions):
| Nine Months Ended
| September 30,
| 2016 |  | 2015
Net cash provided by operating activities | $ | 213 |  |  | $ | 186 |
Net cash used in investing activities | (71 | ) |  | (173 | )
Net cash used in financing activities | (103 | ) |  | (55 | )
Increase (decrease) in cash and cash equivalents in assets held for sale | $ | 39 |  |  | $ | (42 | )
FCX has also agreed to negotiate exclusively with CMOC (until December 31, 2016) to enter into a definitive agreement to sell its interest in Freeport Cobalt for $100 million and the Kisanfu exploration project in the DRC for $50 million in separate transactions. Freeport Cobalt includes the large-scale cobalt refinery in Kokkola, Finland, and the related sales and marketing business, in which FCX owns an effective 56 percent interest. Kisanfu is a copper and cobalt exploration project, located near Tenke, in which FCX holds a 100 percent interest.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=65878427&loc=SL51721533-107759 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721665-107760 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5C -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721675-107760 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3A -URI http://asc.fasb.org/extlink&oid=64862545&loc=SL51724579-110230 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721663-107760 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=64862545&loc=d3e2941-110230 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=64827811&loc=d3e1361-107760 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5B -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721673-107760 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3A -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721659-107760 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5A -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721671-107760 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5D -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721677-107760 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=64827811&loc=d3e1474-107760 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721683-107760 + Details
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