McMoRan Exploration Co. Reports First-Quarter 2005 Results and Updates Gulf of Mexico Exploration and Development & Main Pass Energy Hub Activities.NEW ORLEANS New Orleans (ôr`lēənz –lənz, ôrlēnz`), city (2006 pop. 187,525), coextensive with Orleans parish, SE La., between the Mississippi River and Lake Pontchartrain, 107 mi (172 km) by water from the river mouth; founded -- McMoRan Exploration Co. (NYSE NYSE See: New York Stock Exchange :MMR MMR measles-mumps-rubella (vaccine); see measles, mumps, and rubella vaccine live, under vaccine. MMR abbr. measles, mumps, rubella vaccine ):
HIGHLIGHTS
-- Continued active Deep Miocene Gas exploration program under
$500 million multi-year exploration venture. Four wells
currently drilling include:
-- Korn at South Timbalier Blocks 97/98
-- King Kong at Vermilion Blocks 16/17
-- Delmonico at Louisiana State Lease 1706
-- Little Bay at Louisiana State Lease 5097
-- Since inception of the exploration venture, McMoRan and its
private partner have participated in five discoveries on the
ten prospects that have been drilled and evaluated. Production
has been established on three of the discoveries currently
totaling 94 million cubic feet of natural gas equivalents per
day (Mmcfe/d) gross, 26 Mmcfe/d net to McMoRan.
-- First quarter 2005 exploratory drilling included positive
results at:
-- West Cameron Block 43
-- Blueberry Hill on Louisiana State Lease 340
-- At least eight additional exploratory wells are expected to
commence drilling by year-end 2005.
-- Commenced production at Hurricane Upthrown at South Marsh
Island Block 217 on March 30, 2005, less than three months
after reaching total depth. Current gross production
approximates 65 Mmcfe/d, 15 Mmcfe/d net to McMoRan. Production
was established on a 42/64th choke with flowing tubing
pressure of approximately 7,650 pounds per square inch.
Additional wells in this high-potential area are being
planned.
-- Successful production test at Deep Tern C-1 sidetrack well in
April 2005 indicated a gross rate of 30 Mmcfe/d, 6 Mmcfe/d net
to McMoRan, on a 29/64th choke with flowing tubing pressure of
approximately 8,000 pounds per square inch. Production
expected to commence in May 2005.
-- First-quarter 2005 production averaged 17 Mmcfe/d net to
McMoRan, compared with first-quarter 2004 average production
of 7 Mmcfe/d.
-- Second-quarter 2005 production expected to average 40 Mmcfe/d
net to McMoRan, excluding anticipated oil production from Main
Pass Block 299, reflecting increases associated with recent
discoveries.
-- Continued progress in establishment of major new liquefied
natural gas (LNG) port at Main Pass Energy Hub(TM) (MPEH(TM)).
United States Coast Guard (Coast Guard) statutory review
period for permit resumed on April 21, 2005. McMoRan expects a
record of decision on the permit application by year-end 2005.
-- On March 31, 2005, McMoRan had $192 million in unrestricted
cash.
McMoRan Exploration Co. (NYSE:MMR) today reported a net loss of $5.7 million, $0.24 per share, for the first quarter of 2005 compared with a net loss of $13.3 million, $0.78 per share, for the first quarter of 2004. McMoRan's net loss from its continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the first quarter of 2005 totaled $4.3 million, which includes $2.3 million of start-up Start-up The earliest stage of a new business venture. costs associated with the MPEH(TM) and $7.5 million of exploration expense. During the first quarter of 2004, McMoRan's net loss from continuing operations totaled $11.1 million, including $4.3 million of MPEH(TM) start-up costs and $3.3 million of exploration expense. SUMMARY FINANCIAL TABLE
First Quarter
-----------------------
2005 2004
----------- -----------
(In Thousands, Except
Per Share Amounts)
-----------------------
Revenues $14,667 $4,110
Operating loss (2,116) (9,078)
Net loss from continuing operations (4,304) (11,127)
Net loss from discontinued operations (1,029) (1,717)
Net loss applicable to common stock (5,744) (13,256)
Basic and diluted loss per share:
---------------------------------
Continuing operations $(0.20) $(0.68)
Discontinued operations (0.04) (0.10)
Applicable to common stock (0.24) (0.78)
Diluted average common shares outstanding 24,385 17,035
----------- -----------
James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. R. Moffett Moffett may refer to:
Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a C. Adkerson, Co-Chairmen of McMoRan, said, "The theme of our 2004 Annual Report, 'Opportunity Runs Deep,' reflects the potential of our dual objective business plan which encompasses a major Deep Miocene exploration program and our proposed Main Pass Energy Hub (1) See Web hub, digital media hub and intelligent hub. (2) In an Ethernet network, a device to which all clients and servers are wired. Most Ethernet hubs are active hubs and regenerate the data bits on the output side in order to maintain a strong signal. (TM) offshore LNG LNG (liquefied natural gas): see under natural gas. project. Our exploration results to date confirm the presence of hydrocarbons hydrocarbons (hīˈ·drō·kärˑ·b  nz),n. below 15,000 feet in the Gulf of Mexico Noun 1. Gulf of Mexico - an arm of the Atlantic to the south of the United States and to the east of Mexico Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east and Gulf Coast areas and the ability to establish high production rates quickly from successful wells. Our proposed MPEH(TM) offshore LNG project would potentially create significant values for our shareholders from its ability to deliver much needed natural gas to U.S. markets." GULF OF MEXICO EXPLORATION ACTIVITIES During 2004, McMoRan established a multi-year exploration venture with a private partner for an initial commitment of $500 million for future expenditures to acquire and exploit high-potential Adj. 1. high-potential - operating on or powered by a high voltage; "a high-voltage generator" high-voltage high-tension - subjected to or capable of operating under relatively high voltage; "high-tension wire" prospects, primarily Deep Miocene targets in the shallow waters See:
The Korn This article is about the band. For other uses, see Korn (disambiguation). Korn (or KoЯn) is a band from Bakersfield, California, and are credited with creating and popularizing the nu metal genre. prospect at South Timbalier Blocks 97/98 commenced drilling on February February: see month. 3, 2005, and is currently drilling below 19,600 feet. The Korn well has a proposed total depth of 23,000 feet and is located in 60 feet of water. McMoRan has an 18.8 percent working interest and a 15.4 percent net revenue interest in the well. McMoRan has rights to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 9,800 gross acres in the Korn prospect area. Leasehold An estate, interest, in real property held under a rental agreement by which the owner gives another the right to occupy or use land for a period of time. leasehold n. and related drilling costs incurred on Korn through March 31, 2005 totaled $3.5 million, net to McMoRan's interest. The King Kong King Kong giant ape brought to New York as “eighth wonder of world.” [Am. Cinema: Payton, 367] See : Giantism prospect at Vermilion vermilion, vivid red pigment of durable quality. It is a chemical compound of mercury and sulfur and is known as red sulfide of mercury; it was formerly obtained by grinding pure cinnabar but is now commonly prepared synthetically. Block 16/17 commenced drilling on February 20, 2005, and is currently drilling below 13,100 feet. The King Kong well has a proposed total depth of 19,500 feet and is located in 12 feet of water. McMoRan has a 40.0 percent working interest and a 29.2 percent net revenue interest in the well. McMoRan has rights to approximately 1,850 gross acres in the King Kong prospect area. Leasehold and related drilling costs incurred on King Kong through March 31, 2005 totaled $3.7 million, net to McMoRan's interest. The Delmonico Del·mon·i·co , Lorenzo 1813-1881. Swiss-born American restaurateur who popularized European cuisine in New York City and is largely credited with establishing the restaurant as an institution in American cities. prospect on Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. State Lease 1706 in the Lake
Sand Field Area commenced drilling on March 8, 2005, and is currently
drilling below 13,300 feet. The Delmonico well has a proposed total
depth of 19,000 feet and is located in 9 feet of water. McMoRan has a
25.0 percent working interest and an 18.8 percent net revenue interest
in the well. McMoRan has rights to approximately 8,800 gross acres in
the Delmonico prospect area.The Little Bay prospect on Louisiana State Lease 5097 in Atchafalaya Bay Atchafalaya Bay Inlet of the Gulf of Mexico on the Louisiana coast, U.S. Together with Four League Bay, it extends about 21 mi (34 km). The Atchafalaya River links the bay with Morgan City on the Gulf Intracoastal Waterway. The area includes many natural gas and oil fields. commenced drilling on March 11, 2005, and is currently drilling below 11,700 feet. The Little Bay well has a proposed total depth of 20,000 feet and is located in less than 10 feet of water. McMoRan has a 37.5 percent working interest and a 27.4 percent net revenue interest in the well. McMoRan has rights to approximately 6,250 gross acres in the Little Bay prospect area. Leasehold and related drilling costs incurred on Little Bay through March 31, 2005 totaled $3.1 million, net to McMoRan's interest. IN-PROGRESS WELLS(a)
Net Proposed
Working Revenue Water Total
Interest Interest Depth Depth Spud Date
----------------------------------------------------------------------
South Timbalier
Blocks 97/98 February 3,
"Korn" (b) 18.8% 15.4% 60' 23,000' 2005
----------------------------------------------------------------------
Vermilion Blocks February 20,
16/17 "King Kong" 40.0% 29.2% 12' 19,500' 2005
----------------------------------------------------------------------
Lake Sand Field March 8,
"Delmonico" 25.0% 18.8% 9' 19,000' 2005
----------------------------------------------------------------------
Louisiana State less
Lease 5097 than March 11,
"Little Bay" 37.5% 27.4% 10' 20,000' 2005
----------------------------------------------------------------------
(a) If any in-progress well or unproved property is determined to be
non-productive prior to the filing of McMoRan's first quarter 2005
Form 10-Q, the related drilling costs incurred through March 31,
2005 would be charged to exploration expense in the first quarter
2005 financial statements.
(b) Eligible for Deep Gas Royalty Relief under current Minerals
Management Service guidelines. Depending upon applicability of the
royalty relief eligibility criteria, the leases on which this well
are located could be eligible for royalty relief up to 25 Bcf.
McMoRan's net revenue interest would increase during the royalty
relief period for eligible leases.
The Blueberry Hill well at Louisiana State Lease 340 reached a total depth of 23,903 feet in the first quarter of 2005. Wireline logs indicated that the well encountered four potentially productive hydrocarbon hydrocarbon (hī'drōkär`bən), any organic compound composed solely of the elements hydrogen and carbon. The hydrocarbons differ both in the total number of carbon and hydrogen atoms in their molecules and in the proportion of hydrogen bearing sands. A 4 1/2 inch production liner liner /lin·er/ (lin´er) material applied to the inside of the walls of a cavity or container for protection or insulation of the surface. liner see teat cup liner. has been run and cemented to protect the identified potential pay zones. The drilling rig moved off location while the necessary 20,000-pound completion equipment for the anticipated high pressure well is procured. Subsequently, completion and testing of the well will determine future plans for this prospect. McMoRan operates Blueberry Hill, located seven miles east of the JB Mountain discovery and seven miles south southeast Southeast or south east is the ordinal direction halfway between south and east. It the opposite of northwest. Southeast or South East can refer to: McMoRan expects to participate in the drilling of at least eight additional exploration prospects in 2005. McMoRan currently has rights to approximately 250,000 gross acres and continues to identify prospects to be drilled on its lease acreage position. McMoRan is also actively pursuing opportunities through its exploration venture to acquire additional acreage and prospects through farm-in or other arrangements. GULF OF MEXICO PRODUCTION AND DEVELOPMENT ACTIVITIES First-quarter 2005 production averaged 17 Mmcfe/d net to McMoRan, benefiting from the establishment of production at Deep Tern C-2 in December December: see month. 2004 and Minuteman minuteman Colonial soldier of the American Revolution. Minutemen were first organized in Massachusetts in September 1774, when revolutionary leaders sought to eliminate Tories, or British sympathizers, from the militia by replacing all officers. in late February 2005. Second-quarter 2005 production is expected to average 40 Mmcfe/d net to McMoRan, excluding the anticipated resumption RESUMPTION. To reassume; to promise again; as, the resumption of payment of specie by the banks is general. It also signifies to take things back; as the government has resumed the possession of all the lands which have not been paid for according to the requisitions of the law, and the of oil production from Main Pass Block 299, more than double first quarter rates primarily as a result of establishing production at Hurricane hurricane, tropical cyclone in which winds attain speeds greater than 74 mi (119 km) per hr. Wind speeds reach over 190 mi (289 km) per hr in some hurricanes. Upthrown and anticipated production from the Deep Tern C-1 sidetrack well expected to commence in May. Below is a summary of McMoRan's production and development activities: The Hurricane Upthrown discovery commenced production on March 30, 2005 and the well is currently flowing at a gross rate of approximately 53 Mmcf/d of natural gas and 2,000 barrels of oil per day, totaling approximately 65 Mmcfe/d, 15 Mmcfe/d net to McMoRan on a 42/64th choke (jargon) choke - To fail to process input or, more generally, to fail at any endeavor. E.g. "NULs make System V's "lpr(1)" choke." See barf, gag. with flowing tubing pressure of approximately 7,650 pounds per square inch Noun 1. pounds per square inch - a unit of pressure psi pressure unit - a unit measuring force per unit area . The Hurricane lease is eligible for royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. relief on the first 5 billion cubic feet of gas equivalent (Bcfe) of gross production. McMoRan's net revenue interest will approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. 22.9 percent until 5 Bcfe is produced reverting re·vert intr.v. re·vert·ed, re·vert·ing, re·verts 1. To return to a former condition, practice, subject, or belief. 2. Law To return to the former owner or to the former owner's heirs. to 19.4 percent thereafter. McMoRan is planning additional wells in this high-potential area. The Hurricane well is utilizing the Tiger Shoal facilities, which are also being utilized to produce the JB Mountain and Mound Point discoveries. McMoRan has rights to approximately 7,700 gross acres in the Hurricane prospect area which is located offshore Louisiana in 10 feet of water. As previously reported, production was established from the Minuteman discovery at Eugene Island Eugene Island is a submerged mountain 70-85 miles off the Louisiana coast in the Gulf of Mexico. The nearby oil field Eugene Island 330 is best known for its unusual depletion profile. According to the article "Sustainable Oil?" by Chris Bennett WorldNetDaily. Block 213 on February 25, 2005. The well's current gross production approximates 13 Mmcfe/d, 4 Mmcfe/d net to McMoRan. The well is being produced at McMoRan's facilities at Eugene Island Block 215, seven miles away. The Minuteman lease has received royalty relief approval on the first 25 Bcf of gross natural gas production; consequently, McMoRan's net revenue interest will approximate 29.8 percent until 25 Bcf is produced, reverting to 24.3 percent thereafter. McMoRan also controls approximately 10,000 additional acres in the immediate area surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. the Minuteman prospect, which is located approximately 40 miles offshore Louisiana in 100 feet of water. The Deep Tern C-2 well at Eugene Island Block 193 produced at an average gross rate of approximately 16 Mmcfe/d, 7 Mmcfe/d net to McMoRan, during the first quarter of 2005. The Eugene Island Block 193 lease is eligible for royalty relief on the first 10 Bcf of gross natural gas production; as a result, McMoRan's net revenue interest will approximate 45.3 percent until 10 Bcf is produced. After 10 Bcf of production, McMoRan's net revenue interest will be 37.2 percent in the deeper Basal basal /ba·sal/ (ba´s'l) pertaining to or situated near a base; in physiology, pertaining to the lowest possible level. ba·sal adj. 1. Pliocene and Upper Miocene sections of the well. McMoRan controls 17,500 acres in the Deep Tern area which is located approximately 50 miles offshore Louisiana in 90 feet of water. ROYALTY RELIEF SUMMARY Production NRI, Before NRI, After Lease/Prospect Threshold Threshold Threshold ---------------------------------------------------------------------- Eugene Island Block 193 "Deep Tern C-2" 10 Bcf 45.3% 37.2% ---------------------------------------------------------------------- Eugene Island Block 213 "Minuteman" 25 Bcf 29.8% 24.3% ---------------------------------------------------------------------- South Marsh Island Block 217 "Hurricane Upthrown" 5 Bcfe 22.9% 19.4% ---------------------------------------------------------------------- West Cameron Block 43 15 Bcf 21.9% 18.0% ---------------------------------------------------------------------- The Deep Tern C-1 sidetrack well reached a total depth of 17,080 feet in April 2005. The well was successfully flow tested at a gross rate of 30 Mmcfe/d, 6 Mmcfe/d net to McMoRan, on a 29/64th choke with flowing tubing pressure of approximately 8,000 pounds per square inch. The well is expected to be brought on production in May 2005. McMoRan's owns a 20.6 percent net revenue interest in the C-1 well. As previously reported, the West Cameron Cam·er·on , Mount A peak, 4,342.6 m (14,238 ft) high, in the Rocky Mountains of central Colorado. Block 43 No. 3 exploratory well was drilled to a total depth of 18,800 feet in the first quarter of 2005. Wireline logs indicated that the well encountered three hydrocarbon bearing sands in the lower Miocene with a total gross interval in excess of 100 feet. McMoRan and its partners plan to commence drilling an additional exploratory well (West Cameron Block 43 No. 4) located 4,000 feet north of the discovery well in the second quarter of 2005. Development plans for the No. 3 well will be determined following evaluation of the results of the No 4 well. McMoRan holds a 23.4 percent working interest in the West Cameron Block 43 well which is located in 30 feet of water, 8 miles offshore. The West Cameron Block 43 lease is eligible for royalty relief on at least 15 Bcf of natural gas production; consequently, McMoRan's net revenue interest will approximate 21.9 percent until 15 Bcf is produced, reverting to 18.0 percent thereafter. Development plans are being finalized See finalization. at Dawson Dawson or Dawson City, city (1991 pop. 972), W Yukon Territory, Canada, at the confluence of the Yukon and Klondike rivers. It is the trade center of the Klondike mining region and a tourist center. Deep on Garden Banks Block 625. As previously reported, the "take point" well encountered hydrocarbon-bearing sands as indicated by more than 100 feet of total vertical thickness thickness (thik´nes) a measurement across the smallest dimension of an object. triceps skinfold (TSF) thickness of resistivity resistivity Electrical resistance of a conductor of unit cross-sectional area and unit length. The resistivity of a conductor depends on its composition and its temperature. in the shallow This article or section may contain original research or unverified claims. Please help Wikipedia by adding references. See the for details. This article has been tagged since October 2007. Shallow means not very deep. zones. An additional 100 feet of hydrocarbons were logged in the deepest zone which was the original objective of this "take point" well. This take point was drilled to a total depth of 22,790 feet. McMoRan owns a 30.0 percent working interest and a 24.0 percent net revenue interest in the Dawson Deep prospect. The Dawson Deep prospect is located on a 5,760 acre block located approximately 150 miles offshore Texas and is adjacent to the operator's Gunnison Gunnison, river, 180 mi (290 km) long, rising in W central Colo. and flowing SW, W, and NW to the Colorado River at Grand Junction. It flows through magnificent canyons, notably the Black Canyon of the Gunnison, a national park. Gunnison Tunnel, c. spar facility. Oil production from Main Pass Block 299 is currently shut-in shut-in n. A person confined indoors by illness or disability. adj. 1. Confined to a home or hospital, as by illness. 2. Disposed to avoid social contact; excessively withdrawn or introverted. following extensive damage from Hurricane Ivan This article is about the Atlantic hurricane of 2004. For other storms of the same name, see Tropical Storm Ivan (disambiguation). Hurricane Ivan was the strongest hurricane of the 2004 Atlantic hurricane season. to a third-party offshore terminal facility which provided throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. services for the sale of Main Pass 299 sour crude oil Sour crude oil contains the impurities hydrogen sulfide (H2S) and carbon dioxide, or mercaptans. All crude oil contains some impurities. When the total sulfide level in the oil is > 1 % the oil is called "sour". . We are completing alternative plans to resume processing and marketing future production and expect to resume production in the second quarter of 2005. Before Hurricane Ivan, the Main Pass 299 field was producing approximately 2,800 barrels of oil per day. McMoRan owns an 83.3 percent net revenue interest in Main Pass oil production. McMoRan is entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to receive certain insurance proceeds under its property and business interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. policy, which has partially mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. the impact of the storm event. JB MOUNTAIN/MOUND POINT AREA ACTIVITIES McMoRan is a participant in a program that began in 2002 and includes the JB Mountain and Mound Point Offset discoveries in the OCS OCS - Object Compatibility Standard 310 and Louisiana State Lease 340 areas, respectively. The program currently holds a 55 percent working interest and a 38.8 percent net revenue interest in the JB Mountain prospect and a 30.4 percent working interest and a 21.6 percent net revenue interest in the Mound Point Offset prospect. Under terms of the program, the third party partner is funding all of the costs attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to McMoRan's interests in the properties, and will own all of the program's interests until the program's aggregate production totals 100 Bcfe attributable to the program's net revenue interest, at which point 50 percent of the program's interests would revert re·vert v. 1. To return to a former condition, practice, subject, or belief. 2. To undergo genetic reversion. to McMoRan. All exploration and development costs associated with the program's interest in any future wells is to be funded by the third party partner during the period prior to when McMoRan's potential reversion reversion: see atavism. occurs. There are three producing wells and approximately 13,000 gross acres on Louisiana State Lease 340 and OCS 310 which remain subject to the 100 Bcfe arrangement. McMoRan believes there are further exploration and development opportunities associated with this acreage. The three producing wells in the program averaged an aggregate gross rate of 56 Mmcfe/d during the first quarter of 2005. REVERSIONARY re·ver·sion·ar·y also re·ver·sion·al adj. Law Of or connected with the reversion of an estate. Adj. 1. reversionary INTEREST STATUS In February 2002, McMoRan sold three oil and gas properties for $60.0 million and retained a potential reversionary interest in the three properties equal to 75 percent of the transferred interests following payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. of $60 million plus a specified spec·i·fy tr.v. spec·i·fied, spec·i·fy·ing, spec·i·fies 1. To state explicitly or in detail: specified the amount needed. 2. To include in a specification. 3. annual rate of return. The properties sold were Vermilion Block 196 (Lombardi Lom·bar·di , Vincent Thomas Known as "Vince." 1913-1970. American football coach who led the Green Bay Packers to six conference titles and five league championships between 1961 and 1968. ), Main Pass Block 86 (Shiner shiner: see minnow. shiner Any of several small freshwater fishes (genera Notemigonus and Notropis, family Cyprinidae). The common shiner (Notropis cornutus) is a blue and silver minnow up to 8 in. (20 cm) long. ), and 80 percent of McMoRan's interest in Ship Shoal Block 296 (Raptor). During the first quarter of 2005, we reached agreement with the third-party purchaser to assign our 75 percent reversionary interest in Raptor to us effective February 1, 2005. The second Shiner well commenced production in March 2005. Four wells subject to the reversion are currently producing at an average rate of 17 Mmcfe/d, net to the third party's interests. At March 31, 2005, the remaining amount of net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). required to reach payout approximated $7 million, a reduction of approximately $5 million from the December 31, 2004 balance. Based on the estimated future production from these properties and current natural gas and oil price projections, payout for these properties is expected to occur in the second quarter of 2005. The timing of the reversion will depend upon many factors including oil and gas prices, flow rates and expenditures. MAIN PASS ENERGY HUB(TM) UPDATE On April 21, 2005, the Coast Guard resumed its statutory review period under the Deepwater Deepwater or Deep Water may refer to:
Liquefied natural gas (LNG) A product of natural gas which consists primarily of methane. Its properties are those of liquid methane, slightly modified by minor constituents. project license application. As a result of this resumption, McMoRan expects a record of decision on the permit application by year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2005. The MPEH(TM) terminal would be capable of regasifying LNG at a rate of 1 Bcf per day. The use of existing facilities provides significant cost advantages and the proposed project's offshore location near established shipping lanes is advantageous. Additional investments are being considered to develop significant on-site on-site adj. Done or located at the site, as of a particular activity: on-site monitoring of a production run; an on-site film shoot. cavern storage for natural gas in the large salt dome salt dome Largely subsurface geologic structure that consists of a vertical cylinder of salt embedded in horizontal or inclined strata. In the broadest sense, the term includes both the core of salt and the strata that surround and are “domed” by the core. structure at this site and for pipeline connections to enhance gas delivery from Main Pass to markets in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The proximity PROXIMITY. Kindred between two persons. Dig. 38, 16, 8. of the proposed project to major natural gas markets and the availability of on-site salt dome cavern storage provide a potential opportunity to expand the project beyond a typical LNG receiving facility, creating opportunities for substantial additional values. The proposed design includes 28 Bcf of initial cavern storage availability and aggregate peak deliverability from the proposed terminal, including deliveries from storage, of up to 2.5 Bcf per day. McMoRan is continuing discussions with potential LNG suppliers in the Atlantic Basin and natural gas consumers in the United States to develop commercial arrangements for the facilities. REVENUES McMoRan's first-quarter 2005 oil and gas revenues totaled $11.4 million, compared to $3.6 million during the first quarter of 2004. During the first quarter of 2005, McMoRan's sales volumes totaled 1.4 Bcf of gas and 17,000 barrels of oil and condensate condensate, matter in the form of a gas of atoms, molecules, or elementary particles that have been so chilled that their motion is virtually halted and as a consequence they lose their separate identities and merge into a single entity. compared to 0.4 Bcf of gas and 25,600 barrels of oil and condensate in the first quarter of 2004. McMoRan's first-quarter comparable average realizations for gas were $6.84 per thousand cubic feet (Mcf) in 2005 and $5.93 per Mcf in 2004; for oil and condensate McMoRan received an average of $50.28 per barrel barrel: see English units of measurement. in first-quarter 2005 compared to $35.10 per barrel in first-quarter 2004. CASH AND CASH EQUIVALENTS AND CAPITAL EXPENDITURES On March 31, 2005, McMoRan had unrestricted cash and cash equivalents of approximately $192 million. Capital expenditures for the first quarter of 2005 totaled $40.2 million and are expected to total $135 million for the year. Capital expenditures for the remainder of 2005 are expected to approximate $75 million for exploration expenditures and approximately $20 million for currently identified development costs. Spending may be increased as additional opportunities become available or to fund additional development capital expenditures on successful wells. In addition, McMoRan plans to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. approximately $8 - $10 million to advance permitting and commercialization of the MPEH(TM) during the remainder of 2005. McMoRan Exploration Co. is an independent public company engaged in the exploration, development and production of oil and natural gas offshore in the Gulf of Mexico and onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. in the Gulf Coast area. McMoRan is also pursuing plans for the development of the MPEH(TM) which will be used for the receipt and processing of liquefied natural gas and the storage and distribution of natural gas. Additional information about McMoRan and the MPEH(TM) project is available on its internet website "www.mcmoran.com" and at "www.mpeh.com". CAUTIONARY STATEMENT: This press release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding various oil and gas discoveries, oil and gas exploration, development and production activities, anticipated and potential production and flow rates; anticipated revenues; potential reversionary interests and the potential payout of those reversionary interests; the economic potential of properties; estimated exploration costs; the potential Main Pass Energy Hub(TM) Project, the expected near-term near-term adj. Of, for, or involving a short period of time in the near future. funding of the related permitting process and the estimated capital costs for developing the project. Accuracy of the projections depends on assumptions about events that change over time and is thus susceptible susceptible /sus·cep·ti·ble/ (su-sep´ti-b'l) 1. readily affected or acted upon. 2. lacking immunity or resistance and thus at risk of infection. sus·cep·ti·ble adj. to periodic change based on actual experience and new developments. McMoRan cautions readers that it assumes no obligation to update or publicly release any revisions to the projections in this press release and, except to the extent required by applicable law, does not intend to update or otherwise revise the projections more frequently than quarterly. Important factors that might cause future results to differ from these projections include: variations in the market prices of oil and natural gas; drilling results; unanticipated fluctuations in flow rates of producing wells; oil and natural gas reserves expectations; the ability to satisfy future cash obligations and environmental costs; general exploration and development risks and hazards
Hazards is an independent, union-friendly magazine based in Sheffield, England, which has won major international awards. ; the feasibility fea·si·ble adj. 1. Capable of being accomplished or brought about; possible: a feasible plan. See Synonyms at possible. 2. of the potential Main Pass Energy Hub(TM) and the ability to obtain significant project financing Project financing A form of asset-based financing in which a firm finances a discrete set of assets on a stand-alone basis. and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals for such project. Such factors and others are more fully described in more detail in McMoRan's 2004 Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. on file with the Securities and Exchange Commission. A copy of this release is available on our web site at www.mcmoran.com. A conference call with securities analysts about the first-quarter 2005 results is scheduled for today at 10:00 AM Eastern Time. The conference call will be broadcast on the Internet. Interested parties may listen to the conference call live by accessing the call on "www.mcmoran.com". A replay of the call will be available through Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , May 13, 2005.
McMoRan EXPLORATION CO.
STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended
March 31,
---------------------
2005 2004
--------- ---------
(In Thousands, Except
Per Share Amounts)
Revenues
Oil & Gas $ 11,380 $ 3,591
Service 3,287 519
--------- ---------
Total revenues 14,667 4,110
Costs and expenses:
Production and delivery costs 3,700 1,538
Depletion, depreciation and amortization 3,916 1,376
Exploration expenses 7,536(a) 3,326
General and administrative expenses 4,390 2,665
Start-up costs for Main Pass Energy Hub(TM)(b) 2,284 4,283
Insurance recovery(c) (5,043) -
--------- ---------
Total costs and expenses 16,783 13,188
--------- ---------
Operating loss (2,116) (9,078)
Interest expense (3,787) (2,232)
Other income, net 1,599 183
--------- ---------
Loss from continuing operations (4,304) (11,127)
Loss from discontinued operations (1,029) (1,717)
--------- ---------
Net loss (5,333) (12,844)
Preferred dividends and amortization of
convertible preferred stock issuance costs (411) (412)
--------- ---------
Net loss applicable to common stock $ (5,744) $(13,256)
========= =========
Basic and diluted net loss per share of common
stock:
Continuing operations $(0.20) $(0.68)
Discontinued operations (0.04) (0.10)
-------- --------
Net loss per share of common stock $(0.24) $(0.78)
======== ========
Basic and diluted average shares outstanding 24,385 17,035
======== ========
a. Includes $2.9 million of nonproductive exploratory well and
leasehold costs, including the "Caracara" well at Vermilion Blocks
227/228 ($1.3 million) and the deeper zones at the "Hurricane
Upthrown" well at South Marsh Island Block 217 and the West
Cameron Block 43 No. 3 exploratory well.
b. Represents costs associated with the advancement of the licensing
process and the pursuit of commercial arrangements and financing
for the Main Pass Energy Hub(TM) project.
c. Reflects insurance recovery for the oil operations at Main Pass
Block 299. Main Pass has been shut in since Hurricane Ivan in
September 2004 because of extensive damage to a third-party
offshore facility and connecting pipelines that provided
throughput services for the sale of Main Pass' sour crude oil.
McMoRan expects to resume production from Main Pass in the second
quarter of 2005.
McMoRan EXPLORATION CO.
OPERATING DATA (Unaudited)
Three Months Ended
March 31,
-------------------
2005 2004
-------------------
Sales volumes:
Gas (thousand cubic feet, or Mcf) 1,410,500 408,500
Oil (barrels) 17,000 25,600
Plant products (equivalent barrels)(a) 7,100 6,700
Average realizations:
Gas (per Mcf) $6.84 $5.93
Oil (per barrel) 50.28 35.10
a. Results include approximately $0.3 million and $0.2 million of
revenues associated with plant products (ethane, propane, butane,
etc.) during the first quarters of 2005 and 2004, respectively.
McMoRan EXPLORATION CO.
CONDENSED BALANCE SHEETS (Unaudited)
March 31, December 31,
2005 2004
------------------------
(In Thousands)
ASSETS
Cash and cash equivalents, includes
restricted cash of $3.2 million at March
31, 2005 and $3.7 million at December 31,
2004 $194,901 $203,035
Cash and cash equivalents from discontinued
sulphur operations, $1.0 million
restricted at December 31, 2004 and 2003,
respectively 984 980
Restricted investments 15,150 15,150
Accounts receivable 22,790 27,403
Inventories 854 854
Prepaid expenses 1,229 1,122
Current assets from discontinued
operations, excluding cash 2,855 2,563
--------- ---------
Total current assets 238,763 251,107
Property, plant and equipment, net 134,805(a,b) 97,262
Sulphur business assets, net 312 312
Restricted investments and cash 21,033(c) 24,779
Other assets 9,986 10,460
--------- ---------
Total assets $404,899 $383,920
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable $ 50,867 $ 33,997
Accrued liabilities 31,456 28,197
Accrued interest 5,523 5,635
Current portion of accrued oil and gas
reclamation costs 238 238
Current portion of accrued sulphur
reclamation cost 2,550 2,550
Current liabilities from discontinued
operations 4,658 4,601
-------- --------
Total current liabilities 95,292 75,218
6% convertible senior notes 130,000 130,000
5 1/4% convertible senior notes 140,000 140,000
Accrued sulphur reclamation costs 12,326 12,086
Accrued oil and gas reclamation costs 20,172(b) 14,191
Postretirement medical benefits obligation 15,526 15,695
Other long-term liabilities 15,717 16,711
Mandatorily redeemable convertible
preferred stock 29,588 29,565
Stockholders' deficit (53,722) (49,546)
--------- ---------
Total liabilities and stockholders' deficit $404,899 $383,920
========= =========
a. Includes $12.3 million of exploratory drilling and related costs
associated with the four wells in-progress at March 31, 2005 and
$19.0 million associated with the Eugene Island 193 C-1 sidetrack
development well, the discovery at West Cameron Block 43 and the
potential discovery at the Blueberry Hill well at Louisiana State
Lease 340.
b. During the first quarter of 2005, McMoRan recorded $3.9 million to
property, plant and equipment related to the termination of a
third party's overriding royalty interest in Main Pass oil
production in return for assuming a reclamation obligation for
certain related facilities.
c. Decrease primarily reflects the semi-annual payment made on January
2, 2005 for McMoRan's 6% convertible senior notes.
McMoRan EXPLORATION CO.
STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended
March 31,
-------------------
2005 2004
--------- ---------
(In Thousands)
Cash flow from operating activities:
Net loss $ (5,333) $(12,844)
Adjustments to reconcile net loss to net
cash used in operating activities:
Loss from discontinued operations 1,029 1,717
Depreciation and amortization 3,916 1,376
Exploration drilling and related
expenditures 2,938 733
Compensation expense associated with stock-
based awards 263 240
Reclamation and mine shutdown expenditures (4) (45)
Amortization of deferred financing costs 557 352
Other (202) (34)
(Increase) decrease in working capital:
Accounts receivable 6,751 (5)
Accounts payable and accrued liabilities 18,525 6,124
Prepaid expenses and inventories (46) 317
--------- ---------
Net cash provided by (used in) continuing
operations 28,394 (2,069)
Net cash used in discontinued operations (1,021) (1,865)
--------- ---------
Net cash provided by (used in) operating
activities 27,373 (3,934)
--------- ---------
Cash flow from investing activities:
Exploration, development and other capital
expenditures (40,223) (4,632)
Proceeds from restricted investments 3,900 3,900
Increase in restricted investments (154) (56)
--------- ---------
Net cash used in continuing operations (36,477) (788)
Net cash used in discontinued operations - (6,285)(a)
--------- ---------
Net cash used in investing activities (36,477) (7,073)
--------- ---------
Cash flow from financing activities:
Dividends paid on convertible preferred stock (383) (383)
Proceeds from exercise of stock options and
other 1,357 282
--------- ---------
Net cash provided by (used in) continuing
operations 974 (101)
Net cash from discontinued operations - -
--------- ---------
Net cash provided by (used in) financing
activities 974 (101)
--------- ---------
Net decrease in cash and cash equivalents (8,130) (11,108)
Cash and cash equivalents at beginning of year 204,015 101,899
--------- ---------
Cash and cash equivalents at end of period 195,885 90,791
Less restricted cash from continuing operations (3,180) -
Less restricted cash from discontinued
operations (984) (966)
--------- ---------
Unrestricted cash and cash equivalents at end
of period $191,721 $ 89,825
========= =========
a. Amount reflects $7.0 million payment to repurchase the remaining
sulphur railcars through the termination of their existing lease.
Amount is net of proceeds from the sale of the railcars, which
totaled $0.7 million in the first quarter of 2004.
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