McMoRan Ramps Up 4Q11 Production

McMoRan reported net income applicable to common stock of $28.4 million, $0.16 per diluted share, for the fourth quarter of 2011 compared with a net loss applicable to common stock of $84.3 million, $0.83 per share, for the fourth quarter of 2010.

For the twelve months ended December 31, 2011, McMoRan reported a net loss applicable to common stock of $58.8 million, $0.37 per share, compared with a net loss applicable to common stock of $197.4 million, $2.08 per share, in the 2010 period.

James R. Moffett and Richard Adkerson, McMoRan's Co-Chairmen, said, "We are enthusiastic about the progress of our deep drilling activities, which has provided confirmation of our geologic model. Our drilling indicates a potential for large accumulations of hydrocarbons below the salt weld in the shallow waters of the Gulf of Mexico. The pending well test at Davy Jones and ongoing near-term drilling results will provide important data as we continue to define the potential for this major new geologic trend."

HIGHLIGHTS

  • Exploration & Development Activities:
    • Davy Jones
      • Completion activities of the Davy Jones No. 1 discovery well are in an advanced stage with flow testing expected in the first quarter of 2012.
      • Initial production expected shortly after a successful flow test.
      • Completion and flow testing of Davy Jones No. 2 well expected in the second half of 2012.
    • Blackbeard East
      • Preparing to log section below 30,800 feet.
      • Exploration results to date indicate updip potential in the Miocene (178 net feet of hydrocarbons) above 25,000 feet and downdip potential in the Oligocene (Frio) below 30,000 feet.
    • Lafitte
      • Exploration results indicated 211 net feet of possible productive sands, including 56 net feet in the Cris-R section of the Lower Miocene and 40 net feet in the Frio section.
      • Drilling below 32,400 feet to a proposed total depth of 33,000 feet to evaluate Oligocene and potential Eocene objectives.
    • Blackbeard West No. 2
      • Commenced drilling on November 25, 2011. Drilling below 11,700 feet with a proposed total depth of 26,000 feet. Targeting Miocene aged sands.
    • Lineham Creek
      • Operations commenced on December 31, 2011. Exploratory well has a proposed total depth of 29,000 feet and is targeting Eocene and Paleocene objectives below the salt weld.
  • Fourth-quarter 2011 production averaged 170 million cubic feet of natural gas equivalents per day (MMcfe/d) net to McMoRan. Full-year 2011 daily production averaged 187 MMcfe/d net to McMoRan.
  • Excluding production from Davy Jones which will be incorporated following the pending flow test, average daily production for 2012 is expected to approximate 130 MMcfe/d net to McMoRan, including 155 MMcfe/d in first quarter 2012. Expect to increase 2012 production estimates following a successful flow test at Davy Jones.
  • Operating cash flows totaled $48.5 million for the fourth quarter of 2011, including $56.6 million in abandonment expenditures, $39.1 million in insurance proceeds and $2.5 million in working capital sources.
  • Reached settlement with insurance underwriters to finalize all outstanding claims from the 2008 hurricane events and recorded $39.1 million in gains associated with final settlement and other insurance reimbursements during the fourth quarter of 2011.
  • Capital expenditures totaled $105.6 million in the fourth quarter of 2011 and $509.5 million for the twelve months ended December 31, 2011.
  • Cash at December 31, 2011 totaled $568.8 million.
  • Year-end 2011 proved reserves of oil, natural gas and natural gas liquids totaled 255.8 billion cubic feet of natural gas equivalents (Bcfe) based on independent reservoir engineers' preliminary estimates. Amounts exclude pending results from ultra-deep activities.

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