McMoRan Notes Workover Activities at Davy Jones

McMoRan Exploration Co. Monday provided an update on the Davy Jones No. 1 workover currently in progress on South Marsh Island Block 230. As previously reported McMoRan successfully perforated 165 feet of Wilcox sands and on July 13 commenced operations to run production tubing. Prior to removing the blow out preventer and installing the production tree, McMoRan performed a routine pressure test on the seal system, which indicated that the seal assembly located at approximately 16,400 feet needed to be replaced. McMoRan believes the seal assembly was impacted by the increased use of high density mud used in operations designed to suppress flow in the well. Once the well is stable, McMoRan plans to install a production packer above a new seal assembly which would enable a double seal completion. As a result, the flow test previously anticipated during the week of July 30 is now expected to be conducted during the month of August 2012.

"In our efforts to unlock 'Davy Jones' Locker', we encountered flow in the well prior to setting all of the production tubing. To address this, we have modified our original design to include a double seal which should allow us to achieve a measurable flow test and bring the well on production safely. While we are disappointed by the delay, we are encouraged by the well's attempts to flow. We look forward to obtaining results from the measurable flow test as soon as possible to determine the potential of the first shallow water, ultra-deep sub-salt completion on the Gulf of Mexico Shelf," said Co-Chairman, President and CEO of McMoRan James R. Moffett.

As previously reported, McMoRan has drilled two successful ultra-deep sub-salt wells in the Davy Jones field. The Davy Jones No. 1 well logged 200 net feet of pay in multiple Wilcox sands, which were all full to base. The Davy Jones offset appraisal well (Davy Jones No. 2), which is located two and a half miles southwest of Davy Jones No. 1, confirmed 120 net feet of pay in multiple Wilcox sands, indicating continuity across the major structural features of the Davy Jones prospect, and also encountered 192 net feet of potential hydrocarbons in the Tuscaloosa and Lower Cretaceous carbonate sections.

Davy Jones involves a large ultra-deep structure encompassing four OCS lease blocks (20,000 acres). McMoRan is the operator and holds a 63.4 percent working interest and a 50.2 percent net revenue interest in Davy Jones. Other working interest owners in Davy Jones include: Energy XXI (EXXI) (15.8%), JX Nippon Oil Exploration (Gulf) Limited (12%) and Moncrief Offshore LLC (8.8%).