The South Marsh Island Block 223 #221 ("JB Mountain No. 3") well commenced drilling on December 15, 2003. This development well, which is drilling below 13,000 feet, has a proposed total depth of 21,000 feet and is located approximately one mile south of the original JB Mountain discovery well.
The JB Mountain and Mound Point deep-gas prospects are located in a shallow water area where McMoRan is a participant in an exploration program which currently controls approximately 45,000 acres of an approximate 80,000-acre exploratory area in which McMoRan is involved, including portions of OCS Lease 310 and portions of the adjoining Louisiana State Lease 340. The program currently holds a 55 percent working interest and a 38.8 percent net revenue interest in the JB Mountain prospect and a 30.4 percent working interest and a 21.6 percent net revenue interest in the Mound Point Offset prospect. As previously reported, under terms of the program, the operator is funding all of the costs attributable to McMoRan's interests in four prospects, including the JB Mountain and Mound Point Offset prospects, and will own all of the program's interests until the program's aggregate production from the prospects totals 100 billion cubic feet of gas equivalent attributable to the program's net revenue interest, at which point 50 percent of the program's interests would revert to McMoRan. Under the terms of this program, all exploration and development costs associated with the program's interest in any future wells in these areas will be funded by the exploration partner during the period prior to when McMoRan's potential reversion occurs.
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