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McMoRan Exploration Co. Reports Fourth-Quarter/Twelve-Month 2012 Results

The Lineham Creek exploration prospect, which is located onshore in Cameron Parish, Louisiana is currently drilling below the salt weld at 26,500 feet. As previously reported in November 2012, the well encountered what appears to be hydrocarbon bearing porous sands above 24,000 feet, as identified by wireline logs. The well, which is targeting Eocene and Paleocene objectives below the salt weld, has a proposed total depth of 29,000 feet. Chevron U.S.A. Inc., as operator of the well, holds a 50 percent working interest. McMoRan is participating for a 36.0 percent working interest. Other working interest owners include Energy XXI (NASDAQ: EXXI) (9.0%) and W. A. “Tex” Moncrief Jr. (5.0%). McMoRan’s investment in Lineham Creek totaled $53.6 million at December 31, 2012.

The Lomond North ultra-deep prospect, which is located in the Highlander area, primarily in St. Martin Parish, Louisiana, is currently drilling below 13,500 feet. This exploratory well has a proposed total depth of 30,000 feet and is targeting Eocene, Paleocene and Cretaceous objectives below the salt weld. McMoRan controls rights to approximately 80,000 gross acres in Iberia, St. Martin, Assumption and Iberville Parishes, Louisiana. McMoRan is operator and currently holds a 72.0 percent working interest. Other working interest owners include EXXI (18.0%) and W. A. “Tex” Moncrief Jr. (10.0%). McMoRan’s investment in Lomond North totaled $40.1 million at December 31, 2012.

The Blackbeard West No. 2 ultra-deep exploration well on Ship Shoal Block 188 was drilled to a total depth of 25,584 feet in January 2013. As previously reported, McMoRan has set a production liner, which would enable completion, and is preparing to release the rig. Through logs and core data, McMoRan has identified three potential hydrocarbon bearing Miocene sand sections between approximately 20,800 and 24,000 feet. Initial completion efforts are expected to focus on the development of approximately 50 net feet of laminated sands in the Middle Miocene located at approximately 24,000 feet. Additional development opportunities in the well bore include approximately 80 net feet of potential low-resistivity pay at approximately 22,400 feet and an approximate 75 foot gross section at approximately 20,900 feet. Pressure and temperature data indicate that a completion at these depths could utilize conventional equipment and technologies. McMoRan holds a 69.4 percent working interest and a 53.1 percent net revenue interest in Ship Shoal Block 188. Other working interest owners include EXXI (22.9%) and Moncrief Offshore LLC (7.7%). McMoRan’s investment in Blackbeard West No. 2 totaled $90.6 million at December 31, 2012.

Operations to flow test the Davy Jones No. 1 well on South Marsh Island Block 230 are ongoing. During January 2013, McMoRan re-perforated the Wilcox zones in the well with electric wireline through tubing perforating guns. Recent operations confirmed that the perforations were open and that the Wilcox formation could accept fluid. McMoRan is currently evaluating plans to pump a hydraulic fracture treatment including proppant to facilitate hydrocarbon movement into the wellbore. McMoRan plans to incorporate potential core and log data from Lineham Creek in evaluating future plans at Davy Jones.

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 additional 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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