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TheStreet Open House

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

Production from the Flatrock field averaged a gross rate of approximately 121 MMcfe/d (50 MMcfe/d net to McMoRan) in the second quarter of 2012, and as anticipated was lower than the year ago period which averaged 172 MMcfe/d (70 MMcfe/d net to McMoRan). McMoRan owns a 55.0 percent working interest and a 41.3 percent net revenue interest in the Flatrock field.

EXPLORATION AND DEVELOPMENT ACTIVITIES

Since 2008, McMoRan’s drilling activities in the shallow waters of the Gulf of Mexico (GOM) below the salt weld (i.e. listric fault) have successfully confirmed McMoRan’s geologic model and the highly prospective nature of this emerging geologic trend. The data from five wells drilled to date indicate the presence below the salt weld of geologic formations including Upper/Middle/Lower Miocene, Frio, Vicksburg, Upper Eocene, Sparta carbonate, Wilcox, Tuscaloosa and Cretaceous carbonate, which have been prolific onshore, in the deepwater GOM and in international locations. The results of these activities indicate the potential for a major new geologic trend spanning 200 miles in the shallow waters of the GOM and onshore in the Gulf Coast area. Further drilling and flow testing will be required to determine the ultimate potential of this new trend. Below is a summary of McMoRan’s geologic findings to date:

Ultra-Deep Well

 

 

Pay Counts (1)

  Davy Jones No. 1

 

200’ Wilcox

 

Davy Jones No. 2

120’ Wilcox Sands;192’ TuscaloosaSands & LowerCretaceous Carbonate

 

Blackbeard West No.1

 

168’ Miocene;52’ Oligocene

 

Blackbeard East

 

178’ Miocene;First Frio Sand;300’ SpartaCarbonate

 

Lafitte

 

171’ Miocene;40’ Frio;

65’ U. Eocene;

300’ SpartaCarbonate

MMR WI (2)   63.4%   63.4%   69.4%   72.0%   72.0%
MMR NRI (2) 50.2% 50.2% 56.5% 57.4% 58.3%
Miocene
Upper

*

Middle

*

*

*

Lower

*

*

Oligocene

*

Frio Reached TD in

*

*

Vicksburg Oligocene

*

Eocene @ 32,997’
Upper Eocene

*

Sparta

*

*

Paleocene Reached TD in Reached TD in
Wilcox

*

*

Eocene Eocene
Cretaceous Reached TD in @ 33,318’ @ 34,162’
Tuscaloosa Paleocene

*

Lower Cretaceous @ 29,000’

*

      Reached TD in

Lower Cretaceous

@ 30,546’

           

NOTE: Flow testing will be required to confirm the potential hydrocarbons and flow rates from these sandstone and limestone formations.

(1) All pay counts above reflect net feet of sandstones, with the exception of the Carbonate intervals which represent the gross thickness of the limestone encountered.

(2) McMoRan’s working interest partners in the ultra-deep play include Energy XXI (NASDAQ: EXXI) and Moncrief Offshore LLC. JX Nippon Oil Exploration (Gulf) Limited is also a working interest partner in Davy Jones Nos. 1 and 2.

During June 2012, McMoRan successfully perforated 165 feet of Wilcox sands in the Davy Jones No.1 discovery well with electric wireline casing guns. On July 13, McMoRan commenced operations to run production tubing and expects to conduct a measurable flow test during the week of July 30 with commercial production expected shortly thereafter. Completion and testing of the Davy Jones offset appraisal well (Davy Jones No. 2) is expected to commence following review of results from Davy Jones No. 1. Davy Jones is located on a 20,000 acre structure that has multiple follow on drilling opportunities.

As previously reported, McMoRan has drilled two successful sub-salt wells in the Davy Jones field. The Davy Jones No. 1 well logged 200 net feet of pay in multiple Wilcox sands, which were all full to base. The Davy Jones offset appraisal well (Davy Jones No. 2), which is located two and a half miles southwest of Davy Jones No. 1, confirmed 120 net feet of pay in multiple Wilcox sands, indicating continuity across the major structural features of the Davy Jones prospect, and also encountered 192 net feet of potential hydrocarbons in the Tuscaloosa and Lower Cretaceous carbonate sections.

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