McMoRan Updates Gulf of Mexico Activities

McMoRan Exploration reports on the status of its six wells currently in-progress under its Gulf of Mexico exploration program:

-- The Deep Tern C-2 well at Eugene Island Block 193 which commenced drilling on July 13, 2004, is currently drilling below 17,320 feet toward a total depth of 20,350 feet to test its exploration objective, the Miocene zone. The well has encountered 86 feet of true vertical interval of pay in the Basal Pliocene section which was previously productive in the C-1 well located 300 feet east of the C-2 well. The well, which could be producing by year-end 2004, would utilize McMoRan's facilities at Eugene Island Block 193.

-- The Dawson Deep Take Point well at Garden Banks Block 625 which commenced operations on August 18, 2004, is currently drilling below 21,791 feet. The take point well has encountered apparent hydrocarbon-bearing sands indicated by more than 100 feet of total vertical thickness of resistivity, measured by a log-while-drilling (LWD) logging tool. These sands are shallower than the objective zone that was seen in the sidetrack wells drilled earlier in 2004. The well is currently drilling toward a total depth of 23,760 feet to test the objective zone. The Dawson Deep prospect is adjacent to the Gunnison spar facility.

-- The Minuteman sidetrack well at Eugene Island Block 213 which commenced drilling on September 10, 2004, is currently drilling below 19,595 feet toward a total depth of approximately 21,135 feet. If successful, the well could be producing by year-end 2004 and would utilize McMoRan's facilities at Eugene Island Block 215 approximately 7 miles away.

-- The King of the Hill well at High Island Block 131 which commenced drilling on August 9, 2004, is currently drilling below 11,708 feet toward a total depth of 17,300 feet.

-- The Hurricane Upthrown well at South Marsh Island Block 217 which commenced drilling on September 7, 2004, is currently drilling below 1,900 feet toward a total depth of 19,500 feet.

-- The Poblano well at East Cameron Block 137 which commenced drilling on September 1, 2004, is currently drilling below 7,316 feet toward a total depth of 17,800 feet.

McMoRan has acquired an interest in the Blueberry Hill prospect which is expected to be the next well drilled on Louisiana State Lease 340 (Mound Point area). McMoRan currently holds a 30.4 working interest in Blueberry Hill and is working to acquire additional interest in the prospect. The Blueberry Hill exploration well, which is 7 miles east of the JB Mountain discovery, will commence drilling in late-October 2004. The well has a planned total depth of 22,000 feet.

The table below provides details on McMoRan's exploration wells currently in-progress:

                                    MMR   MMR Net
                                Working   Revenue    Water
Area/Prospect                  Interest  Interest(a) Depth   Spud Date
Eugene Island Block 193                                       July 13,
"Deep Tern Pliocene"(b)           26.7%     20.6%      90'       2004
"Deep Tern Miocene"               48.6%     37.2%      90'   Pliocene
Garden Banks Block 625                                      August 18,
"Dawson Deep Take Point"(b)       30.0%     24.0%   2,900'       2004
Eugene Island Blocks 212/213                                 August 7,
"Minuteman"                       33.3%     24.3%     100'       2004
High Island Block 131                                        August 9,
"King of the Hill"                25.0%     19.6%      40'       2004
East Cameron Block 137                                    September 1,
"Poblano"                         18.8%     15.4%      75'       2004
South Marsh Island Block 217                              September 7,
 "Hurricane Upthrown"             27.5%     19.4%      10'       2004

    (a) Each of the wells mentioned above, with the exception of
        Dawson Deep, are eligible for Deep Gas Royalty Relief under
        current Mineral Management Service guidelines which could
        result in an increased net revenue interest for early

    (b) Development well.

McMoRan currently has rights to approximately 225,000 gross acres and continues to identify prospects to be drilled on its lease acreage position. McMoRan is also actively pursuing opportunities to acquire additional acreage and prospects through farm-in or other arrangements and recently has augmented its portfolio with additional shallow-water, deep gas prospects. McMoRan plans to commence drilling on at least 3 additional prospects, Blueberry Hill, West Cameron Block 43, and Vermilion Blocks 227/228 (Caracara) during the fourth quarter. Drilling of the South Marsh Island Block 224 (JB Mountain Deep) is expected to follow the Blueberry Hill well. Other exploratory wells may be drilled as prospects are developed and ownership arrangements are negotiated.


McMoRan continues to advance efforts to develop the Main Pass Energy Hub(TM) (MPEH(TM)), which would include an offshore LNG regasification terminal and natural gas storage facility located at Main Pass Block 299. The proposed terminal would be capable of receiving LNG and conditioning 1 Bcf per day of natural gas and is being designed to accommodate potential future expansions. The massive 2-mile diameter caprock and salt dome located at the site would provide significant storage capacity for natural gas. Additional plans for the MPEH(TM) would include 28 Bcf of initial cavern storage availability and aggregate peak deliverability from the proposed terminal, including deliveries from storage, of up to 2.5 Bcf per day.

During the first quarter of 2004, McMoRan filed an application under the U.S. Deepwater Port Act for the establishment of MPEH(TM) and expects a decision on the application by mid-2005.

McMoRan continues active discussions with potential LNG suppliers in the Atlantic Basin and natural gas consumers in the United States regarding commercial arrangements for the facilities. In connection with our discussions with potential LNG suppliers, we are also considering opportunities to participate in certain oil and gas exploration and production activities as an extension of our proposed LNG terminaling activities.

MPEH(TM) is located at Main Pass Block 299 in 210 feet of water which allows deepwater access for large LNG tankers and is in close proximity to shipping channels. McMoRan plans to use the existing platforms and infrastructure at the site for the LNG vaporization and surface storage facilities, providing construction timing advantages and cost savings. The facilities could be operational during 2008, which would make MPEH(TM) one of the first U.S. offshore LNG terminals. McMoRan believes that safety and security aspects of the facility are enhanced by its offshore location.

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