PXP to Divest GOM Shallow Water Assets for $818MM

Plains E&P (PXP) has executed an agreement with McMoRan to divest PXP's interests in properties located in Gulf of Mexico shallow water for a combination of cash and stock. PXP will receive $75 million in cash and 51 million shares of McMoRan common stock in exchange for PXP's interests in all of its Gulf of Mexico leasehold located in less than 500 feet of water ($818 million total consideration using McMoRan's stock price of $14.57 on September 17, 2010). These properties are currently producing approximately 45 million cubic feet of natural gas equivalents per day net to PXP and include estimated proved reserves of approximately 63.9 billion cubic feet of natural gas equivalents as of June 30, 2010. In conjunction with the transaction, McMoRan has secured $900 million of committed financing from an investor group and PXP will have the right to designate two directors to McMoRan's Board of Directors. Separately, PXP has begun the process of marketing the Company's Gulf of Mexico deepwater assets.

James C. Flores, Chairman, President and CEO of PXP commented, "Our Gulf of Mexico exploration program has been an on-going success for PXP's shareholders and a consistent value creation strategy by using our exploration expertise in this prolific hydrocarbon basin. We are proud of the Gulf of Mexico exploration accomplishments achieved by PXP and its partners.

"The transaction with McMoRan creates a premium operator/ownership structure that maximizes value for both PXP and McMoRan shareholders from the ultra-deep program's existing discoveries and exploratory potential. Through PXP's ownership position in McMoRan, PXP will maintain upside exposure to the multi-trillion cubic feet equivalent ultra-deep exploratory potential without the substantial long-lead time capital requirements. Starting nearly four years ago, the highly successful shallow water exploration program began with the Flatrock discovery and its subsequent development and follow up discoveries at Hurricane Deep and Blueberry Hill. Recent exploration efforts in the sub-salt, ultra-deep program continue that success, initially with the Blackbeard West discovery followed by the latest successful discovery at the Davy Jones mega structure announced earlier this year. With the ongoing development of the existing discoveries and additional exploration drilling required on additional related structures, the combination of PXP's position with our partner/operator McMoRan is a unique opportunity for PXP shareholders to maintain equity growth exposure to this dynamic and emerging play. As everyone knows, we have great admiration for Jim Bob Moffett and his entire team in which PXP has been and will continue to be a valued partner in its new role as a significant McMoRan shareholder."

The transaction is effective August 1, 2010 and is expected to close by year-end 2010, subject to McMoRan shareholder approval and customary closing conditions and adjustments. PXP plans to provide updated financial and operating guidance after the transaction is closed.

The planned Gulf of Mexico deepwater divestment is aimed at optimizing the value of PXP's deepwater portfolio. The portfolio is anchored by Friesian and Lucius, two high-quality oil discoveries, and a comprehensive exploration portfolio with interests in 107 blocks, 9 well defined prospects and an additional 22 prospects or leads in Pliocene, Miocene and Lower Tertiary reservoirs. The data room process is underway with final bids expected in late-October to mid-November. PXP expects the transaction to close by year-end 2010.