McMoRan Inks Multi-Year $200 Million Exploration Deal

McMoRan Exploration has entered into a three to five year Exploration Agreement with a private exploration and production company, which has committed to spend a minimum of $200 million of exploration funds. Under the agreement, the private company will participate for 40% of McMoRan's position in prospects that it drills during this period. The joint venture will target McMoRan's exploration prospect inventory outside of its rights to the acreage in JB Mountain/Mound Point area currently subject to a separate exploration agreement. Over the next twelve months, the joint venture expects to participate in the drilling of 10 to 12 wells, many of which are shallow-water, deep gas targets on the Shelf of the Gulf of Mexico. McMoRan's current inventory includes 17 prospects outside the JB Mountain/Mound Point area and McMoRan plans to spud at least three of these exploration prospects in the first quarter of 2004. The three prospects include the Deep Lombardi prospect at Vermilion Block 208, the Deep Tern prospect at Eugene Island Block 193, and the Phoenix prospect at Eugene Island Blocks 212/213.

James R. Moffett, Co-Chairman of McMoRan said, "We are pleased to announce this exploration arrangement with our new partner and our opportunities to pursue active exploration in the Gulf of Mexico. We have identified a series of high potential prospects outside of our JB Mountain/Mound Point area which are available to drill as we continue to aggressively pursue the potential for this area."

This new partner is a participant in the Dawson Deep prospect at Garden Banks Block 625 which currently is drilling below 21,700 feet. Drilling will continue to a measured depth of 23,700 feet (a true vertical depth of 22,000 feet) to test the deep exploration objectives. McMoRan owns a 30 percent working interest and a 24 percent net revenue interest in the well. Kerr-McGee Oil & Gas Corporation operates Dawson Deep and owns a 25 percent working interest. Nexen Petroleum Offshore U.S.A. Inc. owns a 15 percent working interest and Cal Dive International, Inc. owns the remaining 10 percent interest. The Dawson Deep prospect is located on a 5,760 acre block adjacent to the recently commissioned Gunnison spar facility which achieved first production in December 2003 and is located approximately 150 miles offshore Texas in over 2,900 feet of water.