McMoRan Updates on Gulf of Mexico E&P Activities

McMoRan Exploration has updated its Gulf of Mexico exploration and production activities, including results from the Ammazzo exploratory well, drilling at the Cordage and Blueberry Hill deep gas prospects, plans for the Davy Jones and the Blackbeard West ultra-deep prospects.

The Ammazzo deep gas exploratory prospect on South Marsh Island Block 251 commenced drilling on November 22, 2008 and was drilled to measured depth of 25,488 feet (25,431 feet true vertical depth) in May 2009. The well encountered a significant sand section with high quality reservoir rock below 24,500 feet, which was determined to be wet. While the well was evaluated to be nonproductive, the important geological information gained from the well continues to support McMoRan's belief that there are large, deep structures with the potential to contain significant hydrocarbon reserves available on the Shelf. The Ammazzo well will be temporarily abandoned as future plans are considered.

McMoRan's second-quarter 2009 exploration expense will include approximately $23 million for drilling and related costs associated with the Ammazzo well. McMoRan's partners in the well included Plains Exploration & Production Company and Energy XXI.

James R. Moffett, Co-Chairman of McMoRan, said, "Our Flatrock discovery confirmed the presence of sands with high permeability and porosity below 15,000 feet and the results from the Ammazzo well indicate sands with high porosity, similar to the porosity present in large deepwater discoveries, also exist at 24,500 feet. The data from these wells, together with information from the Blackbeard West well and McMoRan's extensive 3-D database, are allowing us to correlate the depositional trends from the onshore and the deepwater, which will enable us to continue to pursue a major new exploration frontier on the Shelf of the Gulf of Mexico."


The Cordage deep gas exploratory prospect commenced drilling on March 18, 2009 and is drilling below 17,400 feet towards a proposed total depth of 19,500 feet. The Cordage prospect, which is located in 50 feet of water on West Cameron Block 207, is targeting Rob-L and Rob-M (Operc) sands in the Middle Miocene. McMoRan owns a 38.0 percent working interest and a 30.5 percent net revenue interest in the well. Mariner Energy, Inc. is the operator of the well and holds a 50 percent working interest. Upon completion of operations at Cordage, the rig will be moved to the Sherwood prospect on High Island Block 133 to commence exploration drilling activities. McMoRan owns a 29.3 percent working interest and a 23.5 percent net revenue interest in the Sherwood prospect.

On March 29, 2009, McMoRan re-entered a previously existing well bore and commenced sidetracking operations at the Blueberry Hill deep gas prospect located on Louisiana State Lease 340 in 10 feet of water. The well is currently drilling below 14,700 feet with a proposed total depth of 24,000 feet. As previously reported, in February 2005 McMoRan encountered four hydrocarbon bearing sands in the Gyro section below 22,200 feet in the original Blueberry Hill exploratory well. Completion efforts in 2007 were unsuccessful because of blockage above the perforated intervals. The sidetrack currently in-progress is targeting the same Gyro sands, which McMoRan believes could be better developed in a down dip position on the flank of the structure. McMoRan owns a 42.9 percent working interest and a 29.7 percent net revenue interest in the well.

McMoRan is currently conducting a feasibility assessment to determine the practicality of re-entering a previously abandoned well bore to evaluate the Davy Jones ultra-deep prospect. Davy Jones is a very large ultra-deep structure located in 20 feet of water, northwest of Ammazzo. This exploratory well, which McMoRan will operate, has a proposed total depth of 28,000 feet and will test the Eocene and Paleocene (Wilcox) sections.

In May 2009, the Minerals Management Service granted McMoRan's request for a geophysical Suspension of Operations (SOO) to extend our leases in the Blackbeard area, including South Timbalier Block 168. The SOO will provide time for seismic re-processing, which will provide a clearer picture of the deep structure, and allow us to evaluate whether to drill deeper at Blackbeard West, drill an offset location or complete the well to test the existing zones.


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