Freeport-McMoRan 2013 Annual Report Download - page 42

MANAGEMENT’S DISCUSSION AND ANALYSIS
40 | FREEPORT-McMoRan
in 2012, compared with 2011, primarily reflected lower volumes in
Indonesia and South America, partly offset by increased copper
production in North America and Africa. Refer to “Operations” for
further discussion of sales volumes at our operating divisions.
Metal Price Realizations
Our consolidated revenues can vary significantly as a result of
fluctuations in the market prices of copper, gold, molybdenum,
silver and cobalt. Following is a summary of our average price
realizations for the years ended December 31:
2013 2012 2011
Copper (per pound) $ 3.30 $ 3.60 $ 3.86
Gold (per ounce) $ 1,315 $ 1,6 65 $ 1,583
Molybdenum (per pound) $ 11.8 5 $ 14.26 $ 16.98
Silver (per ounce) $ 2 2 .13 $ 3 0. 06 $ 3 6.24
Cobalt (per pound) $ 8.02 $ 7.83 $ 9.99
We generally recognized lower price realizations from our mining
operations in 2013, compared with 2012, and also in 2012,
compared with 2011. Refer to “Markets” for further discussion.
Provisionally Priced Sales
Impacts of net adjustments for prior year provisionally priced
sales primarily relates to copper sales. Substantially all of our
copper concentrate and cathode sales contracts provide final
copper pricing in a specified future month (generally one to four
months from the shipment date) based primarily on quoted LME
monthly average spot copper prices (refer to “Disclosures About
Market Risks — Commodity Price Risk” for further discussion).
Revenues included (unfavorable) favorable net adjustments to
prior years’ provisionally priced copper sales totaling $(26) million
in 2013, $101 million in 2012 and $(12) million in 2011.
Purchased Copper
From time to time, we purchase copper cathode for processing
by our Rod & Refining segment when production from our
North America copper mines does not meet customer demand.
Atlantic Copper Revenues
The decrease in Atlantic Copper’s revenues in 2013, compared
with 2012, primarily reflected the impact of a major maintenance
turnaround in 2013. The decrease in Atlantic Copper’s revenues
in 2012, compared with 2011, primarily reflected lower gold
volumes. Refer to “Operations” for further discussion.
Oil & Gas Revenues
Consolidated sales of 38.1 MMBOE for the seven-month period
following the acquisition date, included 26.6 MMBbls of crude oil,
54.2 Bcf of natural gas and 2.4 MMBbls of NGLs. Our average
realized prices, for the seven-month period following the
acquisition date, were $98.32 per barrel for crude oil, $3.99 per
MMBtu for natural gas and $38.20 per barrel for NGLs. Refer to
“Operations” for further discussion of sales volumes at our oil
and gas operations.
Revenues
Consolidated revenues totaled $20.9 billion in 2013, $18.0 billion in
2012 and $20.9 billion in 2011, and included the sale of copper
concentrates, copper cathodes, copper rod, gold, molybdenum
and other metals by our North and South America copper mines;
the sale of copper concentrates (which also contain significant
quantities of gold and silver) by our Indonesia mining operations;
the sale of copper cathodes and cobalt hydroxide by our Africa
mining operations; the sale of molybdenum in various forms by
our Molybdenum operations; the sale of copper cathodes, copper
anodes, and gold in anodes and slimes by Atlantic Copper; and
beginning June 1, 2013, the sale of oil, natural gas and NGLs
by our oil and gas operations. Our consolidated revenues for 2013
included sales of copper (69 percent), oil (11 percent), gold
(8 percent) and molybdenum (5 percent). Following is a summary of
year-to-year changes in our consolidated revenues (in millions):
2013 2012
Consolidated revenues – prior year $ 18 , 0 10 $ 20,880
Mining operations:
Higher (lower) sales volumes from
mining operations:
Copper 1,576 (194)
Gold 323 (583)
Molybdenum 151 61
Silver 53 (38)
Cobalt 6 (6)
(Lower) higher price realizations from
mining operations:
Copper (1,226) (948)
Gold (421) 82
Molybdenum (225) (225)
Silver (70) (44)
Cobalt 5 (54)
(Unfavorable) favorable impact of net adjustments
for prior year provisionally priced sales (133) 132
Higher (lower) revenues from purchased copper 313 (469)
Lower Atlantic Copper revenues (668) (275)
Other, including intercompany eliminations 611 (309)
Oil and gas operations:
Oil and gas revenues, including net realized
losses on derivative contracts 2,928 —
Net unrealized and noncash realized
losses on crude oil and natural gas
derivative contracts (312) —
Consolidated revenues – current year $ 20,9 21 $ 18,010
Mining Sales Volumes
Consolidated sales volumes totaled 4.1 billion pounds of copper,
1.2 million ounces of gold and 93 million pounds of molybdenum
in 2013, compared with 3.65 billion pounds of copper, 1.0 million
ounces of gold and 83 million pounds of molybdenum in 2012
and 3.7 billion pounds of copper, 1.4 million ounces of gold and
79 million pounds of molybdenum in 2011. Higher consolidated
copper and gold sales volumes in 2013, compared with 2012,
primarily reflected improved volumes throughout our global mining
operations. Lower consolidated copper and gold sales volumes