In 2010, McMoRan farmed out its 70.0 percent working interest in a portion of West Cameron Block 73 to a third party operator and retained a 5 percent of 8/8 ths overriding royalty interest (ORRI). Recently, the operator encountered positive drilling results and is evaluating completion opportunities to develop the approximate 400 net feet of pay identified in seven sands between 14,500 feet and nearly 18,000 feet. In addition to benefiting from the 5 percent ORRI, production from the well will be processed through McMoRan’s existing West Cameron Block 73 “A” platform under which McMoRan will collect processing fees. Additionally, following these positive exploratory results McMoRan is considering additional drilling opportunities on the West Cameron Block 73 structure. MMR holds a 70 percent working interest in various depths across the entire 5,000 acre block including deep rights.
McMoRan’s third-quarter 2012 oil and gas revenues totaled $88.1 million, compared to $134.5 million during the third quarter of 2011. During the third quarter of 2012, McMoRan’s sales volumes totaled 7.7 Bcf of gas, 534,800 barrels of oil and condensate and 241,500 barrels of natural gas liquids, compared to 11.4 Bcf of gas, 674,700 barrels of oil and condensate and 292,700 barrels of natural gas liquids in the third quarter of 2011. McMoRan’s third-quarter comparable average realizations for gas were $3.12 per thousand cubic feet (Mcf) in 2012 and $4.38 per Mcf in 2011; for oil and condensate McMoRan received an average of $103.43 per barrel in third-quarter 2012 compared to $100.94 per barrel in third-quarter 2011; for natural gas liquids McMoRan received an average of $36.42 per barrel in third-quarter 2012 compared to $56.35 per barrel in third-quarter 2011.ASSET SALES On October 2, 2012, McMoRan completed the sale of three GOM Shelf oil and gas properties in the West Delta and Mississippi Canyon areas for cash consideration before closing adjustments of $28.0 million and the assumption of related abandonment obligations. The assets represented approximately one percent of McMoRan’s total average daily production for the third quarter of 2012 and three percent of McMoRan’s total estimated reserves at June 30, 2012. Independent reserve estimates of proved reserves at June 30, 2012, totaled approximately 942,000 barrels of oil and 1.7 billion cubic feet of natural gas (7.4 billion cubic feet of natural gas equivalents). The transaction was effective July 1, 2012.