James R. Moffett and Richard Adkerson, McMoRan’s Co-Chairmen, said, “Our activities to validate the geologic prospectivity of the ultra-deep sub-salt trend and to develop advanced technologies required to drill and produce deep wells safely and efficiently have created opportunities for a multi-year high impact development program on the Gulf of Mexico Shelf and onshore in the Gulf Coast Area. McMoRan is uniquely positioned with multiple discoveries on this trend and an attractive acreage position with high quality prospects covering the Shelf’s primary structures. The McMoRan Ultra-Deep ‘franchise’ – comprised of data, technology, newly enhanced acreage position, and positive drilling results – provides opportunities to develop meaningful reserves over a 200 mile area in one of the most prolific basins in the world. We look forward to reporting results of the Davy Jones flow test which will mark the first of what we believe will be many completions associated with this emerging resource trend.”

SUMMARY FINANCIAL TABLE*
  Third Quarter     Nine Months  
2012     2011   2012     2011  
  (In thousands, except per share amounts)  
Revenues $ 91,776 $ 138,183 $ 292,718 $ 433,495
Operating income (loss) (47,195 ) 2,836 (102,370 ) (41,821 )
Income (loss) from continuing operations (53,062 ) 2,411 (107,800 ) (49,989 )
Loss from discontinued operations (645 ) (1,489 ) (5,573 ) (4,722 )
Net loss applicable to common stock (a,b,c) (64,013 ) (9,420

) d
(144,363 ) (87,168

) d
Diluted net loss per share:
Continuing operations $ (0.39 ) $ (0.05 ) $ (0.86 ) $ (0.52 )
Discontinued operations (0.01 ) (0.01 ) (0.03 ) (0.03 )
Applicable to common stock $ (0.40 ) $ (0.06 ) $ (0.89 ) $ (0.55 )
Diluted average shares outstanding 161,812 159,195 161,627 158,505
Operating cash flows (e) $ 12,058 $ 42,373 $ 62,528 $ 178,513
EBITDAX (f) $ 33,437 $ 66,668 $ 143,051 $ 242,258
Capital Expenditures $ 103,352   $ 144,995   $ 415,627   $ 403,889  

* 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 third-quarter 2012 Form 10-Q, the related costs incurred through September 30, 2012 would be charged to expense in McMoRan’s third-quarter 2012 financial statements. At September 30, 2012 McMoRan’s total drilling costs for its nine in-progress or unproven wells totaled $1,712.2 million, including $693.5 million in allocated value associated with property acquisitions.

a. After preferred dividends.

b. Includes impairment charges totaling $11.3 million in third-quarter 2011, $11.7 million in the first nine months of 2012 and $62.0 million in the first nine 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 $3.1 million in the third-quarter 2012, $10.4 million in the third-quarter 2011, $16.3 million in the first nine months of 2012 and $46.0 million in the first nine months of 2011.

c. Includes $37.2 million of charges to exploration expense in the third quarter of 2012 primarily resulting from the write-off of allocated carrying value of leasehold from the December 2010 property acquisition no longer being pursued as well as $93.5 million in charges in the first nine months of 2012 primarily for the write-off of these allocated leasehold costs and the lease expiration associated with the Boudin well. Also includes charges to exploration expense totaling $42.0 million in the first nine months of 2011 for non-commercial well costs primarily associated with the Blueberry Hill #9 STK1 well.

d. Includes McMoRan’s share of insurance reimbursements related to losses incurred from the September 2008 hurricanes totaling $22.6 million in third-quarter 2011 and $52.0 million in the first nine months of 2011.

e. Includes reclamation spending of $20.6 million in third-quarter 2012, $51.2 million in third-quarter 2011, $48.2 million in the first nine months of 2012 and $93.4 million in the first nine months of 2011. Also includes working capital sources of $16.3 million in third-quarter 2012, $21.8 million in third quarter 2011, $2.3 million in the first nine months of 2012 and $27.5 million in the first nine months of 2011.

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

PRODUCTION ACTIVITIES

Third-quarter 2012 production averaged 134 MMcfe/d net to McMoRan, compared with 187 MMcfe/d in the third quarter of 2011. McMoRan’s third-quarter 2012 production reflected unplanned downtime associated with Hurricane Isaac, which impacted GOM operations prior to making landfall on the coast of Louisiana on August 28, 2012. Excluding potential production from Davy Jones, production is expected to average approximately 137 MMcfe/d for the year 2012, including 120 MMcfe/d in the fourth 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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