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McMoRan Exploration Co. Reports Second-Quarter/Six-Month 2012 Results

James R. Moffett and Richard Adkerson, McMoRan’s Co-Chairmen, said, “Our activities to define the ultra-deep sub-salt trend have opened up the potential for a major new resource play on the Shelf and onshore in the Gulf Coast Area. We are pleased that the geologic data and results gained to date from each of the five ultra-deep wells we have drilled have validated our geologic model and reduced the exploration risk of this exciting new play. We have also advanced new technologies to drill and complete deep wells safely and efficiently, and our experience to date will enable us to achieve meaningful cost reductions on future operations. The results from the recent GOM lease sale further validate the attractiveness of this new play. As a recognized industry leader in the development of the ultra-deep trend, we are well positioned as we seek to build meaningful reserves, production and values for shareholders.”

SUMMARY FINANCIAL TABLE*

  Second Quarter   Six Months  
2012   2011   2012   2011  
  (In thousands, except per share amounts)  
Revenues $ 90,295 $ 158,308 $ 200,942 $ 295,312
Operating loss (63,542 ) (35,392 ) (55,175 ) (44,657 )
Loss from continuing operations (63,333 ) (37,866 ) (54,738 ) (52,400 )
Loss from discontinued operations (1,825 ) (1,989 ) (4,928 ) (3,233 )
Net loss applicable to common stock (a,b,c) (75,500 ) (50,198

) d

(80,350 ) (77,748 ) d

Diluted net loss per share:

Continuing operations

$

(0.46 )

$

(0.31 )

$

(0.47 )

$

(0.47 )
Discontinued operations (0.01 ) (0.01 ) (0.03 ) (0.02 )
Applicable to common stock $ (0.47 ) $ (0.32 ) $ (0.50 ) $ (0.49 )
Diluted average shares outstanding 161,577 158,454 161,532 158,154
Operating cash flows (e) $ 11,698 $ 102,594 $ 50,467 $ 136,140
EBITDAX (f) $ 48,313 $ 96,939 $ 109,614 $ 175,590
Capital Expenditures $ 147,192   $ 162,352   $ 312,272   $ 258,894  

* If any in-progress well or unproved property is determined to be non-productive or no longer meets the capitalization requirements under applicable accounting rules after the date of this release but prior to the filing of McMoRan’s June 30, 2012 Form 10-Q, the related costs incurred through June 30, 2012 would be charged to expense in McMoRan’s second-quarter 2012 financial statements. At June 30, 2012 McMoRan’s total drilling costs for its eight in-progress or unproven wells totaled $1,585.6 million, including $685.5 million in allocated purchase costs associated with property acquisitions.

a. After preferred dividends.

b. Includes impairment charges totaling $4.6 million in second-quarter 2012, $29.2 million in second-quarter 2011, $11.7 million in the first six months of 2012 and $50.7 million in the first six months of 2011 to reduce certain fields’ net carrying value to fair value. Also includes adjustments for asset retirement obligations associated with certain of McMoRan’s oil and gas properties totaling approximately $11.2 million in the second-quarter 2012, $20.4 million in the second-quarter 2011, $13.2 million in the first six months of 2012 and $35.1 million in the first six months of 2011.

c. Includes charges to exploration expense for non-commercial well costs primarily associated with the lease expiration on the Boudin well totaling $56.3 million in second-quarter and first six months of 2012 and the Blueberry Hill #9 STK1 well totaling $36.8 million in second-quarter 2011 and $38.9 million in the first six months of 2011.

d. Includes McMoRan’s share of insurance reimbursements related to losses incurred from the September 2008 hurricanes totaling $12.9 million in second-quarter 2011 and $29.4 million in the first six months of 2011.

e. Includes reclamation spending of $16.0 million in second-quarter 2012, $20.0 million in second-quarter 2011, $27.6 million in the first six months of 2012 and $42.2 million in the first six months of 2011. Also includes working capital sources (uses) of $(9.1) million in second-quarter 2012, $28.4 million in second quarter 2011, $(14.0) million in the first six months of 2012 and $5.7 million in the first six months of 2011.

f. See reconciliation of EBITDAX to net loss applicable to common stock on page II.

PRODUCTION ACTIVITIES

Second-quarter 2012 production averaged 140 MMcfe/d net to McMoRan, compared with 197 MMcfe/d in the second quarter of 2011. Production in the second quarter of 2012 was below McMoRan’s previously reported estimate of 145 MMcfe/d in April 2012 because of unplanned downtime for repairs to platforms and third party pipelines and weather related shipping delays. Excluding potential production from Davy Jones, production is expected to average approximately 137 MMcfe/d for the year 2012, including 135 MMcfe/d in the third quarter of 2012. McMoRan’s estimated production rates are dependent on the timing of planned recompletions, production performance, weather and other factors.

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