PRODUCTION ACTIVITIESFourth-quarter 2012 production averaged 119 MMcfe/d net to McMoRan, compared with 170 MMcfe/d in the fourth quarter of 2011. Production in the fourth quarter of 2012 was in line with McMoRan’s previously reported estimate of 120 MMcfe/d in October 2012. Production is expected to average approximately 100 MMcfe/d in the first quarter of 2013. McMoRan’s estimated production rates are dependent on the timing of planned recompletions, production performance, weather and other factors. Production from the Flatrock field averaged a gross rate of approximately 94 MMcfe/d (39 MMcfe/d net to McMoRan) in the fourth quarter of 2012, compared with 147 MMcfe/d (60 MMcfe/d net to McMoRan) in the fourth quarter of 2011. Production from Flatrock is expected to be lower in 2013 compared to 2012 as a result of normal declines in currently producing zones. Following depletion of currently producing zones, McMoRan is planning several recompletions to additional pay zones which are expected to increase production in future years. Cumulative 8/8ths production from Flatrock through December 31, 2012 totaled 299 Bcfe and independent reservoir engineers’ preliminary estimates at December 31, 2012 totaled 195 Bcfe (8/8ths), including 40 Bcfe (16.6 Bcfe net to McMoRan) in positive reserve adjustments during 2012 related to favorable production performance. McMoRan owns a 55.0 percent working interest and a 41.3 percent net revenue interest in the Flatrock field. ULTRA-DEEP EXPLORATION & DEVELOPMENT ACTIVITIES Since 2008, McMoRan’s drilling activities in the shallow waters of the 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 seven 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.