McMoRan Exploration Co. Reports Third-Quarter 2006 Results and Updates Gulf of Mexico Exploration and Development & Main Pass Energy Hub(TM) 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 * In-progress exploration and development activities: * Successful development well at South Marsh Island Block 217 (Hurricane No. 3) with initial production expected in the fourth quarter of 2006. * Laphroaig well drilling Well drilling is the process of drilling a hole in the ground for the extraction of a natural resource such as ground water, natural gas, or petroleum. Drilling for the exploration of the nature of the material underground (for instance in search of metallic ore) is best described in inland waters Canals, lakes, rivers, water courses, inlets, and bays that are nearest to the shores of a nation and subject to its complete sovereignty. Inland waters, also known as internal waters, are subject to the total sovereignty of the country as much as if they were an actual part , onshore St. Mary Parish, Louisiana St. Mary Parish (French: Paroisse de Sainte-Marie) is a parish located in the U.S. state of Louisiana. The parish seat is Franklin. As of 2000, the population was 53,500. Two prominent politicians have come from St. Mary Parish in recent years. * Zigler Canal well drilling onshore Vermilion Parish, Louisiana Vermilion Parish (French: Paroisse de Vermilion) is a parish located in the U.S. state of Louisiana. The parish seat is Abbeville and as of 2000, the population was 53,807. Geography The parish has a total area of 3,984 km² (1,538 mi²). * 12 discoveries on 25 prospects drilled and evaluated since 2004. Four additional prospects in progress or not fully evaluated. * Commenced production from four wells since June 30, 2006. Three additional wells under development. Since the beginning of the year, McMoRan has initiated production from 11 wells. * Third-quarter 2006 production averaged 75 million cubic feet of natural gas equivalents per day (MMcfe/d) net to McMoRan compared with an average of 41 MMcfe/d in the third quarter of 2005. * Fourth-quarter 2006 production expected to average 75-80 MMcfe/d. * License application for Main Pass Energy Hub[TM] (MPEH[TM]) LNG LNG (liquefied natural gas): see under natural gas. project nearing completion. Record of decision expected in early January 2007. [TABLE OMITTED] [TABLE OMITTED] McMoRan Exploration Co. (NYSE: MMR) today reported a net loss of $18.1 million, $0.64 per share, for the third quarter of 2006 compared with net income of $6.7 million, $0.21 per share, for the third quarter of 2005. 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 third quarter of 2006 totaled $15.3 million, which includes $3.2 million of start-up costs associated with MPEH[TM] and $22.5 million of exploration expense. During the third quarter of 2005, McMoRan's net income from continuing operations totaled $8.8 million, including $2.7 million of MPEH[TM] start-up costs and $5.8 million of exploration expense. James R. Moffett and Richard C. Adkerson, Co-Chairmen of McMoRan, said, "We continue to pursue large Deep Miocene exploration targets in the shallow waters See:
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 onshore in South Louisiana with the potential to add meaningful value for shareholders. We are encouraged by the results to date, which have allowed us to expand our production significantly and establish a leadership position in the Deep Miocene trend. We also are advancing our Main Pass Energy Hub[TM] LNG project to create values from the attractive commercial potential of this project." EXPLORATION ACTIVITIES Since 2004, McMoRan has participated in 12 discoveries on 25 prospects that have been drilled and evaluated, including four discoveries announced in 2006. Four additional prospects are either in progress or not fully evaluated. The Laphroaig exploratory well in St. Mary Parish, Louisiana commenced drilling on April 8, 2006. The well was recently sidetracked and is currently drilling below 15,500 feet with a planned total depth of 19,000 feet. McMoRan has a 37.5 percent working interest and a 27.8 percent net revenue interest. McMoRan's investment totaled $11.2 million at September 30, 2006. The Zigler Canal well onshore Vermilion Parish, Louisiana commenced drilling on June 17, 2006. The well is currently drilling below 17,600 feet and has a proposed total depth of 18,500 feet. McMoRan has a 37.5 percent working interest and a 26.8 percent net revenue interest. McMoRan's investment totaled $8.3 million at September 30, 2006. The 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 54 well commenced drilling on August 4, 2006 and was drilled to a total depth of 14,669 feet. The Long Point Deep exploratory well at Louisiana State Lease 18091 in Vermilion Parish commenced drilling on April 27, 2006 and was drilled to a total depth of 21,838 feet. Evaluation determined that the wells did not contain commercial quantities of hydrocarbons hydrocarbons (hīˈ·drō·kärˑ·b  nz),n. . They are being plugged and abandoned. Third-quarter 2006 exploration expense totaled $22.5 million, including $17.6 million associated with the drilling and related costs through September 30, 2006 for the Vermilion Block 54 ($6.1 million) and Long Point Deep ($11.5 million) wells. Fourth-quarter 2006 exploration expense for these two wells is expected to include $2.6 million for costs incurred after September 30, 2006. McMoRan has received the long-lead time equipment required to test the Blueberry blueberry, plant of the large genus Vaccinium, widely distributed shrubs (occasionally small trees) of the family Ericaceae (heath family), usually found on acid soil. They are often confused with the related huckleberry. Hill well at Louisiana State Lease 340 in the fourth quarter of 2006. As previously reported, the Blueberry Hill well, which is located five miles east of JB Mountain Deep, 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 below 22,200 feet. Both areas (JB Mountain Deep and Blueberry Hill) demonstrate similar geologic settings and are targeting deep Miocene sands equivalent in age. Information obtained from the testing of the Blueberry Hill well will be incorporated in future plans for the JB Mountain Deep well. McMoRan's investment in Blueberry Hill and JB Mountain Deep totaled $11.6 million and $29.5 million, respectively, at September 30, 2006. McMoRan expects to commence drilling at least two exploratory prospects during the fourth quarter of 2006, including Hurricane Deep at South Marsh Island Block 217 and Marlin at Grand Isle Grand Isle can refer to:
[TABLE OMITTED] PRODUCTION AND DEVELOPMENT ACTIVITIES Third-quarter 2006 production averaged 75 MMcfe/d net to McMoRan, including oil production of 1,840 bbls/d (11 MMcfe/d) from Main Pass Block 299, compared with 41 MMcfe/d, including oil production of 1,800 bbls/d (11 MMcfe/d) from Main Pass Block 299, in the third quarter of 2005. McMoRan initiated production from three wells in the third quarter of 2006 including Dawson Deep, Pecos and King of the Hill. Third quarter 2006 production was adversely impacted by the slower than expected start-up of Liberty Canal and West Cameron Block 43 No. 3 (from third quarter to fourth quarter), an eight day shut-in of Main Pass Block 299 for repairs and lower than expected production from the Hurricane No. 2 well. In August 2006, initial production commenced at the Pecos well located at West Pecan pecan: see hickory. pecan Nut and tree (Carya illinoinensis) of the walnut family, native to temperate North America. Occasionally reaching a height of about 160 ft (50 m), the tree has deeply furrowed bark and feather-shaped leaves. Island. Recent production rates from the well approximated 10 MMcfe/d (3.6 MMcfe/d net to McMoRan). McMoRan owns a 50 percent working interest and a 36.0 percent net revenue interest in the Pecos discovery well. In August 2006, initial production commenced at the King of the Hill No. 2 well located at High Island Block 131. Recent production rates from the well approximated 24 MMcfe/d (4.8 MMcfe/d net to McMoRan). McMoRan owns a 25.0 percent working interest and a 19.6 percent net revenue interest in the King of the Hill discovery. In October 2006, initial production commenced at the Liberty Canal well located onshore Vermilion Parish. Recent production rates from the well approximated 21 MMcfe/d (5.8 MMcfe/d net to McMoRan). McMoRan owns a 37.5 percent working interest and a 27.7 percent net revenue interest in the Liberty Canal discovery well. The Hurricane No. 3 development well commenced drilling on June 14, 2006. The well was drilled to a total depth of 16,000 feet and encountered 45 feet of net hydrocarbon pay over a 180 foot gross interval. The well has been completed and is expected to commence production in the fourth quarter of 2006. McMoRan owns a 27.5 percent working interest and a 19.4 percent net revenue interest in the Hurricane field. McMoRan's share of fourth quarter 2006 production is expected to average 75-80 MMcfe/d, including production from three additional wells in the fourth quarter of 2006, including Hurricane No. 3, West Cameron Block 43 No. 3 and Liberty Canal. McMoRan also plans to recomplete the Deep Tern C-1 and C-2 and the King Kong King Kong giant ape brought to New York as “eighth wonder of world.” [Am. Cinema: Payton, 367] See : Giantism No. 2 wells in the fourth quarter. The discovery well at Point Chevreuil in St. Mary's Parish, Louisiana is expected to commence production in early 2007. Following start-up of these wells and planned activities from existing production, McMoRan expects its share of total production to reach 90 MMcfe/d. 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 will own all of the program's interests until the program's aggregate production totals 100 billion cubic feet of natural gas equivalents (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 that remain subject to the 100 Bcfe arrangement. McMoRan believes there are further exploration and development opportunities on this acreage. The wells averaged an aggregate gross rate of 26 MMcfe/d during the third quarter of 2006. One of the wells was shut-in during the quarter and remedial work is being evaluated by the operator. MAIN PASS ENERGY HUB([TM]) UPDATE In September 2006, the United States Coast Guard United States Coast Guard U.S. military service that enforces maritime laws. It is under the jurisdiction of the Department of Homeland Security; in wartime it functions as part of the U.S. Navy. The Coast Guard enforces federal laws on the high seas and waters within U.S. (Coast Guard) and the Maritime Administration (MARAD) published an Environmental Assessment (EA) and Draft Finding of No Significant Impact for the MPEH[TM] LNG license application. The Coast Guard issued a public notice on September 19, 2006, establishing a timeline for a record of decision on the project. In September 2006, McMoRan received a letter from the Department of Natural Resources Many sub-national governments have a Department of Natural Resources or similarly-named organization:
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 benefits from its offshore location near established shipping lanes. McMoRan is continuing discussions with potential LNG suppliers as well as gas marketers and consumers 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. to develop commercial arrangements for the facilities. McMoRan is also considering investments to develop substantial cavern storage for a pipeline header system that would allow deliveries into U.S. gas markets. Current plans for the MPEH([TM]) include 28 Bcf of initial cavern storage capacity and aggregate peak deliverability from the proposed terminal, including deliveries from storage, of up to 2.5 Bcf per day. As previously announced, McMoRan received approval from the Federal Energy Regulatory Commission The Federal Energy Regulatory Commission (FERC) is the United States federal agency with jurisdiction over electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing, and oil pipeline rates. to bring gas onshore using its proposed 36-inch pipeline into Coden, Alabama Coden is a small fishing village near Bayou la Batre, Alabama, approximately 20 miles (32 km) southwest of Mobile. The name of the town is derived from the French "Coq d'Inde," meaning "Turkey. . REVENUES McMoRan's third-quarter 2006 oil and gas revenues totaled $57.8 million, compared to $41.4 million during the third quarter of 2005. During the third quarter of 2006, McMoRan's sales volumes totaled 4.4 Bcf of gas and 449,500 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. , including 195,800 barrels from Main Pass Block 299, compared to 2.0 Bcf of gas and 366,900 barrels of oil and condensate in the third quarter of 2005, including 235,000 barrels from Main Pass Block 299. McMoRan's third-quarter comparable average realizations for gas were $6.51 per thousand cubic feet (Mcf) in 2006 and $10.31 per Mcf in 2005; for oil and condensate, including Main Pass Block 299, McMoRan received an average of $65.11 per barrel in third-quarter 2006 compared to $57.17 per barrel in third-quarter 2005. CASH AND CASH EQUIVALENTS AND CAPITAL EXPENDITURES On September 30, 2006, McMoRan had unrestricted cash and cash equivalents of $9.5 million and $5.0 million in borrowings under its credit facility. During the quarter, availability under the credit facility was increased from $55 million to $70 million following a redetermination Noun 1. redetermination - determining again determination, finding - the act of determining the properties of something, usually by research or calculation; "the determination of molecular structures" of the borrowing base. Capital expenditures for the third quarter of 2006 totaled $60.3 million and $202.9 million for the nine-months ended September 30, 2006. McMoRan's capital expenditures included significant development activities in addition to exploration drilling. Capital expenditures are expected to approximate $260 million for the year, including approximately $130 million for exploration expenditures and $130 million for currently identified development costs. Capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. may change as additional opportunities become available or to fund additional development capital expenditures on successful wells. In addition, McMoRan plans to incur approximately $3 million to advance commercialization of the MPEH[TM] over the remainder of 2006. Additional expenditures for the MPEH[TM] would be required following the receipt of the permit. McMoRan may pursue additional financing for its oil and gas and MPEH[TM] activities. 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 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 liquefied natural gas: see under natural gas. 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. 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 re·ver·sion·ar·y also re·ver·sion·al adj. Law Of or connected with the reversion of an estate. Adj. 1. 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 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 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; and the ability to obtain regulatory approvals and 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. for the potential Main Pass Energy Hub(TM )project. Such factors and others are more fully described in more detail in McMoRan's 2005 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. and subsequent Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. 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 third-quarter 2006 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, November 10, 2006. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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