MacMoRan Completes Gulf Shelf Acquisition

McMoRan Exploration has completed its acquisition of the Gulf of Mexico Shelf oil and gas properties of Newfield Exploration and certain exploration rights for approximately $1.08 billion in cash.

The acquisition provides McMoRan a diversified portfolio of oil and gas properties with significant production and cash flow generating capacity and an expanded exploration acreage position to pursue opportunities on the Shelf of the Gulf of Mexico.

The transaction is effective July 1, 2007. The purchase price remains subject to post-closing adjustments. The transaction was funded with borrowings of approximately $394 million under a $700 million bank credit facility and $800 million in borrowings under a bridge facility. Additionally, McMoRan issued $100 million in letters of credit under its bank credit facility to support abandonment obligations associated with the acquired properties. In connection with the closing, McMoRan repaid an existing $100 million term loan. McMoRan expects to issue long-term notes and equity and equity-linked securities to replace the bridge loan facility.

James R. Moffett and Richard C. Adkerson, McMoRan's Co-Chairmen, said: "The acquisition of Newfield's Gulf of Mexico Shelf properties provides us with significant reserves and production together with expanded exploration opportunities in our focused area of operations. The substantial cash flows being generated from these properties will allow us to delever rapidly and invest in high potential exploration and development opportunities. We will benefit from having increased scale in the area where we have had historical success. Our recent Flatrock discovery is an excellent example of our strategy of targeting large structures below 15,000 feet with significant additional development and exploration opportunities."

The properties include 124 fields on 148 offshore blocks which produced approximately 260 million cubic feet of natural gas equivalents per day in the second quarter of 2007. Proved reserves as of July 1, 2007, for these properties, are estimated at 323 billion cubic feet of natural gas equivalents, approximately 70 percent of which are natural gas. Approximately ninety percent of the proved reserves for the acquired properties were based on estimates by Ryder Scott Company, L.P.

McMoRan acquired approximately 1.3 million gross acres of offshore leases. McMoRan also acquired a 50 percent interest in Newfield's nonproducing exploration leases on the Shelf and certain of Newfield's interests in leases associated with its Treasure Island prospect inventory.

McMoRan is retaining personnel and contractors who have supported Newfield's management of the acquired properties. In addition, the explorationists from McMoRan and Newfield will jointly pursue exploration activities on nonproducing leases on the Shelf held by Newfield.

In connection with the closing of the Newfield transaction, McMoRan has entered into hedging transactions comprising approximately 80 percent of its estimated proved producing volumes, excluding oil from Main Pass Block 299, as follows:

             Natural Gas Positions (million MMbtu)
       Open Swap Positions(1)         Put Options(2)
       ----------------------- ------------------------
         Annual     Average      Annual      Average        Total
        Volumes    Swap Price    Volumes      Floor        Volumes
       ---------- ------------ ----------- ------------ --------------
2008         16.4 $       8.60         6.6    $    6.00      23.0
2009          7.3 $       8.97         3.2    $    6.00      10.5
2010          2.6 $       8.63         1.2    $    6.00      3.8

                    Oil Positions (thousand bbls)
       Open Swap Positions(1)         Put Options(2)
       ----------------------- ------------------------
         Annual     Average      Annual      Average        Total
        Volumes    Swap Price    Volumes      Floor        Volumes
       ---------- ------------ ----------- ------------ --------------
2008          693 $      73.50         288    $   50.00      981
2009          322 $      71.82         125    $   50.00      447
2010          118 $      70.89          50    $   50.00      168

(1) Covering periods January-June and November-December
(2) Covering periods July-October

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