USA: McMoran Announces 1Q 2011 Net Loss of USD 27.6 Million

McMoRan Exploration Co.  today reported a net loss applicable to common stock of $27.6 million, $0.17 per share, for the first quarter of 2011 compared with a net loss applicable to common stock of $66.2 million, $0.74 per share, for the first quarter of 2010.

James R. Moffett and Richard Adkerson, McMoRan’s Co-Chairmen, said, “The theme of McMoRan’s 2010 annual report, “Buried Treasures on the Shelf,” characterizes our deep drilling activities in the shallow waters of the Gulf of Mexico and highlights the significance of this developing trend. Results to date in our program indicate the potential for large structures, similar to large discoveries onshore South Louisiana and in the deepwater of the Gulf of Mexico. We have six wells currently drilling and an extensive prospect inventory, which provide opportunities for significant future production and reserve additions.”

Shallow Water, Ultra-Deep Exploration & Development Activities:

Davy Jones

o Offset appraisal well (Davy Jones No. 2) has been drilled to a true vertical depth (TVD) of 30,546 feet and McMoRan is preparing to evaluate the exploration objectives in the Cretaceous section below the identified Wilcox pay sands with wireline logs.

o In February 2011, preliminary log results from the Davy Jones No. 2 confirmed Wilcox sand continuity and the major structural features of the Davy Jones prospect.

o Completion and flow testing of the Davy Jones discovery well (Davy Jones No. 1) expected by year-end 2011.

Blackbeard East

o Drilled to a TVD of 32,559 feet. Plan to deepen, pending resolution of mechanical issue.

o Exploration results to date indicate updip potential in the Miocene (178 net feet of hydrocarbons) above 25,000 feet and downdip potential in the Oligocene (Frio) and Eocene (Sparta) below 30,000 feet.

Lafitte

o Commenced drilling on October 3, 2010 and is drilling below 20,950 feet towards a proposed total depth of 29,950 feet.

Shallow Water, Deep Gas Exploration & Development Activities:

Laphroaig No. 2

o Successful production test in April 2011 – gross rate of approximately 54 million cubic feet of natural gas per day (MMcf/d), approximately 16 MMcf/d net to McMoRan.

o Production expected to commence in the second quarter of 2011 and results from the production test will be used to determine the optimal flow rate.

o Hurricane Deep commenced drilling on January 20, 2011 and is drilling below 17,300 feet towards a proposed total depth of 21,700 feet.

o Boudin exploratory well commenced drilling on February 27, 2011 and is drilling below 10,800 feet towards a proposed total depth of 23,100 feet.

o Brazos A-23 development well commenced drilling on February 13, 2011, and is currently drilling below 14,100 feet with a planned total depth of 16,120 feet.

 First-quarter 2011 production averaged 195 MMcfe/d net to McMoRan, compared with 190 MMcfe/d in the first quarter of 2010.

 Average daily production for 2011 is expected to approximate 175 MMcfe/d net to McMoRan, including 190 MMcfe/d in second quarter 2011.

 Operating cash flows totaled $33.5 million for the first quarter of 2011, including working capital uses of $22.7 million and $22.2 million in abandonment expenditures.

 Capital expenditures totaled $96.5 million in the first quarter of 2011.

 Cash at March 31, 2011 totaled $836.7 million.

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Source: McMoRan,  April 18, 2011;