McMoRan Sells Main Pass 299 Facilities to OFS

McMoRan Exploration Co. has made an agreement for its wholly-owned subsidiary, Freeport-McMoRan Sulphur LLC to convey all of FSC's rights, title and interest in its Main Pass 299 sulphur and oil and gas leases and facilities to Offshore Specialty Fabricators, Inc. OSFI would continue to produce oil at Main Pass 299. OSFI would reclaim and abandon all Main Pass sulphur facilities with the exception of Platform P1 which is integral to the oil and gas production because of the necessity of water injection to maintain mine pressure throughout the life of the oil reserves and Platform P2 because of the cuttings project that is currently being permitted by the Minerals Management Service (MMS) and for other alternate uses, such as oil and gas storage in the Main Pass dome and potential offshore LNG port site. In addition to the oil and gas and the sulphur rights under the respective Main Pass 299 leases, McMoRan has agreed to convey other consideration to OSFI, including the living quarters that was removed last year from Main Pass 299 and currently stored in OSFI's yard, a marine vessel, and a Venice, Louisiana shore base.

OSFI has also agreed to reclaim the Caminada mine/Grand Isle site which is an inactive sulphur platform. McMoRan's share of the Caminada reclamation cost is estimated to be $8.78 million.

The reclamation work at both Main Pass 299 and Caminada will be accomplished in the next 90 days and will satisfy all reclamation requirements, estimated to be approximately $45 million, for Freeport-McMoRan Sulphur to the MMS in the offshore Gulf of Mexico. Closing of this transaction with OSFI is subject to McMoRan obtaining certain approvals.

The Letter of Intent with Trinity Storage Services, L.P. to sell the Main Pass sulphur and related facilities has been terminated because of the agreement with OSFI, however, OSFI intends to continue discussions with Trinity and others regarding alternate uses for the Main Pass infrastructure that will be left in place.