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McMoRan Exploration Posts 1Q Loss

The Associated Press

NEW ORLEANS (AP) — McMoRan Exploration Co., an independent petroleum producer, on Monday posted a first-quarter loss, citing falling sales volumes and prices along with a net charge of $18 million related to nonrecurring items.

Its shares declined $1.40, or 24 percent, to $4.50 in morning trading, amid a drop in the broader market.

The New Orleans-based company reported a loss of $63.2 million, or 90 cents per share, compared with earnings of $32 million, or 46 cents per share, a year earlier.

Results include special items such as a $39 million charge related to certain fields reducing their net carrying value to fair value and a $16.2 million charge for an exploration expense linked to exploration wells which were determined to be noncommercial in the first-quarter. The company also recognized an $18.1 million mark-to-market gain on oil and gas derivative contracts and an $18.7 million gain from insurance proceeds related to the September 2008 hurricanes. These nonrecurring items amounted to a net charge of $18 million.

Analysts polled by Thomson Reuters, on average, predicted a loss of 43 cents per share. Analysts typically exclude one-time items.

Revenue tumbled 67 percent to $97.4 million, down from $295.5 million last year, amid a significant decline in energy prices. McMoRan realized an average gas price of $4.88 per thousand cubic feet, down from $9.06 a year ago, and an average oil price of $40.91 per barrel, down from $97.40. Analysts expected an average revenue of $111.3 million.

The company added that its first-quarter production fell to an average of 198 mmcfe, compared with 294 mmcfe per day in the same quarter last year. Current production is around 200 mmcfe per day. McMoRan expects second quarter production fall further to 180 mmcfe per day due to downtime at the Flatrock Field, which is undergoing planned facility expansion, maintenance and remediation activities.

McMoRan said it continues to work on the completion and testing of its Blackbeard West ultra-deep exploratory well, which it operates and owns a 32.3 percent working interest in. The geological data gathered from below 30,000 feet from this well, which is temporarily abandoned and not yet fully evaluated, is being used to enhance existing prospects and develop other ultra-deep opportunities, such as drilling in the Blackbeard area, the company said.

At the end of March, McMoRan's investment in Blackbeard West totaled $31.2 million. Plains Exploration & Production Co. and Energy XXI (Bermuda) Ltd. hold a 35 percent and 20 percent stake, respectively.