McMoRan Gains Ground at GOM Prospects

McMoRan updated its shallow water Gulf of Mexico exploration and development activities, including in-progress drilling at three ultra-deep prospects and two deep gas prospects and other activities.

Shallow Water, Ultra-deep Exploration Activities

The Blackbeard East ultra-deep exploration well commenced drilling on March 8, 2010 and is currently drilling below 29,000 feet. The well has a proposed total depth of 29,950 feet and McMoRan has applied for a permit to deepen the well to a new proposed total depth of 31,500 feet.

In addition to deepening the well to evaluate additional targets, McMoRan is formulating plans to evaluate the 178 net feet of hydrocarbon bearing sands encountered in the Blackbeard East well to date. McMoRan's opportunities at Blackbeard East include 84 net feet of hydrocarbon bearing sands between 19,500 and 19,700 feet in the Upper Miocene, 54 net feet of hydrocarbon bearing sands on 15 feet of water at 24,200 feet in the Middle Miocene and 40 net feet of hydrocarbon bearing sands on 22 feet of water at 24,600 feet in the Middle Miocene. Assuming the sands below 24,000 feet have similar thicknesses higher on the structure, the up-dip potential would approximate 69 feet and 62 feet, respectively. Net pay counts were determined from additional petrophysical evaluation of wireline logs, side wall cores and formation tests.

Blackbeard East is located in 80 feet of water on South Timbalier Block 144. McMoRan holds a 38.5 percent working interest and 30.7 percent net revenue interest in the well. Upon completion of the previously announced acquisition of Plains Exploration & Production's shallow water Gulf of Mexico (GOM) shelf assets, McMoRan would hold a 70.0 percent working interest and 56.2 percent net revenue interest in Blackbeard East. The PXP transaction is subject to McMoRan shareholder approval of the issuance of common stock to PXP, as required by New York Stock Exchange rules, the completion of financing transactions, receipt of regulatory approvals and other customary closing conditions. Other working interest owners in Blackbeard East include: Energy XXI (18.0%), W.A. "Tex" Moncrief, Jr. (10.0%) and a private investor (2.0%).

On April 7, 2010, McMoRan commenced drilling the Davy Jones offset appraisal well on South Marsh Island Block 234, two and a half miles southwest of the Davy Jones discovery well. The well is currently drilling below 24,300 feet towards a proposed total depth of 29,950 feet. The offset appraisal well (Davy Jones #2) is expected to test similar sections up-dip to the discovery well, as well as deeper objectives, including potential additional Wilcox and possibly Cretaceous (Tuscaloosa) sections.

Davy Jones involves a large ultra-deep structure encompassing four OCS lease blocks (20,000 acres). McMoRan holds a 32.7 percent working interest and 25.9 percent net revenue interest in Davy Jones. Upon completion of the PXP transaction, McMoRan would hold a 60.4 percent working interest and 47.9 percent net revenue interest in Davy Jones. Other working interest owners in Davy Jones include: EXXI (15.8%), Nippon Oil Exploration USA Limited (12%), W.A. "Tex" Moncrief, Jr. (8.8%) and a private investor (3%).

The Lafitte ultra-deep exploration well commenced drilling on October 3, 2010 and is currently drilling below 9,700 feet towards a proposed total depth of 29,950 feet. Lafitte is located on Eugene Island Block 223 in 140 feet of water. The well is targeting Middle and Deep Miocene objectives below the salt weld. McMoRan holds a 40.5 percent working interest and 32.8 percent net revenue interest in the prospect. Upon completion of the PXP transaction, McMoRan would hold a 72.0 percent working interest and 58.3 percent net revenue interest in Lafitte. Other working interest owners in Lafitte include: EXXI (18.0%), and W.A. "Tex" Moncrief, Jr. (10.0%).

Shallow Water, Deep Gas Exploration Activities

The Laphroaig No. 2 well in St. Mary Parish, Louisiana commenced drilling on September 24, 2010, and is currently drilling below 16,500 feet with a planned total depth of 20,000 feet. The well is targeting proven undeveloped reserves identified by the discovery well as well as additional exploration potential. The Laphroaig discovery well was drilled in 2007. McMoRan has a 37.3 percent working interest and a 28.5 percent net revenue interest in the Laphroaig prospect. EXXI holds an 18.6 percent working interest.

The Platte deep gas exploration well in Vermilion Parish, Louisiana commenced drilling on November 19, 2010 and is currently drilling below 3,500 feet. The well has a proposed total depth of 17,000 feet and is targeting lower Miocene age sands. McMoRan holds a 50.0 percent working interest in Platte. EXXI holds a 50 percent working interest.

In November 2010, a production test was performed on the previously reported 105 net feet of hydrocarbon bearing sands encountered in the Blueberry Hill #9 STK1 well. Results from the production test indicated a range of rates and pressures. The well flowed at a gross rate as high as approximately 22 million cubic feet of natural gas per day (MMcf/d) and 1,250 barrels of condensate on a 22/64th choke with flowing tubing pressure of 13,090 pounds per square inch (PSI) and the rate at the end of the testing period approximated 16 MMcf/d and 838 barrels of condensate on a 23/64th choke with flowing tubing pressure of 7,750 PSI. The well has been shut in while flow test results are being evaluated to assess the decrease in flowing tubing pressure. Future operations will include additional flow testing to further evaluate the changes in reservoir pressures.

Blueberry Hill is located on Louisiana State Lease 340 in approximately 10 feet of water. McMoRan currently owns a 42.9 percent working interest and a 29.7 percent net revenue interest in the Blueberry Hill well. Upon completion of PXP transaction, McMoRan would own a 90.8 percent working interest and a 62.8 percent net revenue interest in Blueberry Hill.

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