McMoRan Exploration Co. Reports Third-Quarter/Nine-Month 2012 Results

  McMoRan Exploration Co. Reports Third-Quarter/Nine-Month 2012 Results

Business Wire

NEW ORLEANS -- October 19, 2012

McMoRan Exploration Co. (NYSE: MMR):

HIGHLIGHTS

  *Ultra-Deep Development Activities

       *Davy Jones No. 1 well has been successfully cleaned out following
         delays associated with removing residual barite material in the
         bottom of the wellbore. McMoRan is preparing to re-install production
         tubing before flow testing the well, which has 165 feet of perforated
         sand sections.
       *Completion and testing of Davy Jones No. 2 expected to commence
         following review of results from Davy Jones No. 1. As previously
         reported, Davy Jones No. 2 confirmed 120 net feet of pay in multiple
         Wilcox sands and also encountered 192 net feet of potential
         hydrocarbons in the Tuscaloosa and Lower Cretaceous carbonate
         sections.
       *Submitted development plans to complete and test the Upper Miocene
         sands at Blackbeard East and the Jackson/Yegua sands in the Upper
         Eocene at Lafitte with the Bureau of Safety and Environmental
         Enforcement (BSEE).

  *Ultra-Deep Exploration Activities

       *Blackbeard West No. 2

            *Drilling below 23,600 feet with a proposed total depth of 24,500
              feet.
            *Targeting Miocene aged sands seen below the salt weld at
              Blackbeard East.
            *If successful, completion could utilize conventional equipment
              and technologies.

       *Lineham Creek onshore prospect

            *Drilling below 23,100 feet with a proposed total depth of 29,000
              feet. Targeting Eocene/Paleocene objectives below the salt weld.

       *Lomond North prospect onshore in Highlander area

            *Commenced drilling exploratory well on September 19, 2012.
            *Drilling below 6,700 feet with a proposed total depth of 30,000
              feet.
            *Targeting Eocene, Paleocene and Cretaceous objectives seen below
              the salt weld in the Davy Jones wells.
            *Identified multiple high potential prospects on 80,000 acre
              position in the Highlander area.

       *Bureau of Ocean Energy Management (BOEM) awarded McMoRan all 14
         leases, including eight bids made jointly with Chevron U.S.A., from
         the June 2012 Central Gulf of Mexico Lease Sale 216/222.

  *Third-quarter 2012 production averaged 134 million cubic feet of natural
    gas equivalents per day (MMcfe/d) net to McMoRan, and 143 MMcfe/d for the
    nine months ended September 30, 2012.
  *Average daily production for 2012 is expected to approximate 137 MMcfe/d
    net to McMoRan, including 120 MMcfe/d in fourth quarter 2012.
  *Operating cash flows totaled $12.1 million for the third quarter of 2012,
    including $16.3 million in working capital sources and $20.6 million in
    abandonment expenditures, and $62.5 million for the nine months of 2012.
  *Capital expenditures totaled $103.4 million in the third quarter of 2012
    and $415.6  million for the nine months of 2012.
  *Cash at September 30, 2012 totaled $191.9 million.
  *Agreed to sell two traditional Gulf of Mexico (GOM) property packages for
    cash consideration totaling $64.8  million and the assumption of $43.4
    million of related abandonment obligations.

McMoRan Exploration Co. (NYSE: MMR) today reported a net loss applicable to
common stock of $64.0 million, $0.40 per share, for the third quarter of 2012
compared with a net loss of $9.4 million, $0.06 per share, for the third
quarter of 2011. Third quarter 2012 results include charges to exploration
expense primarily resulting from the write-off of allocated carrying value of
leasehold from the December 2010 property acquisition no longer being pursued
totaling $37.2 million.

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      (47,195 )     2,836           (102,370 )     (41,821 )
(loss)
Income (loss)
from continuing       (53,062 )     2,411           (107,800 )     (49,989 )
operations
Loss from
discontinued          (645    )     (1,489  )       (5,573   )     (4,722  )
operations
Net loss
applicable to         (64,013 )     (9,420  )^d     (144,363 )     (87,168 )^d
common
stock^(a,b,c)
Diluted net loss
per share:
Continuing          $ (0.39   )   $ (0.05   )     $ (0.86    )   $ (0.52   )
operations
Discontinued          (0.01   )     (0.01   )       (0.03    )     (0.03   )
operations
Applicable to       $ (0.40   )   $ (0.06   )     $ (0.89    )   $ (0.55   )
common stock
Diluted average
shares                161,812       159,195         161,627        158,505
outstanding
Operating cash      $ 12,058      $ 42,373        $ 62,528       $ 178,513
flows^(e)
EBITDAX^(f)         $ 33,437      $ 66,668        $ 143,051      $ 242,258
Capital             $ 103,352    $ 144,995      $ 415,627     $ 403,889 
Expenditures

* 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.

Production from the Flatrock field averaged a gross rate of approximately 112
MMcfe/d (46 MMcfe/d net to McMoRan) in the third quarter of 2012 and, as
anticipated, was lower than the year ago period which averaged 164 MMcfe/d (67
MMcfe/d net to McMoRan). Following depletion of currently producing zones,
McMoRan is planning several recompletions to additional pay zones which are
expected to increase production in future years. McMoRan owns a 55.0 percent
working interest and a 41.3 percent net revenue interest in the Flatrock
field.

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 six 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.

At Davy Jones No. 1, McMoRan successfully cleaned out the wellbore to
approximately 28,630 feet which will enable testing of all 165 feet of
perforated sand sections in the Wilcox. Operations to clear the wellbore of
the heavy drilling mud used to suppress flow in the well required more time
than expected following Hurricane Isaac because residual barite material
hardened at the perforations in the bottom of the wellbore while operations
were interrupted. McMoRan has replaced heavy mud in the hole with clear
completion fluid, which is the last step required before installing the
production tubing. Once the tubing is set, McMoRan will remove the blow out
preventer and install the production tree. During initial attempts to
perforate and flow test the Wilcox "F" sand in March 2012 when the hydraulic
perforating equipment malfunctioned, these steps took approximately two weeks.
Once these steps are complete, McMoRan expects to commence flow testing from
the first shallow water, ultra-deep sub-salt completion on the GOM Shelf.
Commercial production is expected shortly thereafter. Timing of these
activities depend on operating conditions in the well and other factors.

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.

Davy Jones involves a large ultra-deep structure encompassing four OCS lease
blocks (20,000 acres). McMoRan is the operator and holds a 63.4 percent
working interest and a 50.2 percent net revenue interest in Davy Jones. Other
working interest owners in Davy Jones include: Energy XXI (NASDAQ: EXXI)
(15.8%), JX Nippon Oil Exploration (Gulf) Limited (12%) and Moncrief Offshore
LLC (8.8%). McMoRan’s total investment in Davy Jones, which includes $474.8
million in allocated property acquisition costs, totaled $961.0 million at
September 30, 2012.

During the third quarter of 2012, McMoRan submitted initial development plans
for Blackbeard East to BSEE. McMoRan is seeking approval to test and complete
the Upper Miocene sands during 2013 using conventional equipment and
technologies. Additional plans for development of the deeper zones are being
evaluated.

As previously reported, the Blackbeard East ultra-deep exploration by-pass
well was drilled to a total depth of 33,318 feet in January 2012. Exploration
results from the well indicate the presence of hydrocarbons below the salt
weld in geologic formations including Upper/Middle Miocene, Frio, Vicksburg,
and Sparta carbonate. Pressure and temperature data below the salt weld in the
Miocene sands between 19,500 feet and 24,600 feet at Blackbeard East indicate
that a completion at these depths could utilize conventional equipment and
technologies. These exploration results enhance the potential of McMoRan’s
other acreage in the Blackbeard strategic area, including McMoRan’s Blackbeard
West No. 2, Barbosa and Queen Anne’s Revenge ultra-deep prospects.

Blackbeard East is located in 80 feet of water on South Timbalier Block 144.
McMoRan holds a 72.0 percent working interest and a 57.4 percent net revenue
interest in the well. Other working interest owners in Blackbeard East include
EXXI (18.0%) and Moncrief Offshore LLC (10.0%). McMoRan’s total investment in
Blackbeard East, which includes $130.5 million in allocated property
acquisition costs, totaled $305.9 million at September 30, 2012.

In October 2012, McMoRan submitted initial development plans for Lafitte to
the BSEE. McMoRan is seeking approval to complete and test the Jackson/Yegua
sands below 33,300 feet in the Upper Eocene. This completion will require the
development of 30,000 psi equipment. McMoRan logged two hydrocarbon bearing
zones in the Upper Eocene section of the Lafitte well with an aggregate
thickness of approximately 65 net feet.

The Lafitte ultra-deep exploration well, which is located on Eugene Island
Block 223 in 140 feet of water, was drilled to a total depth of 34,162 feet in
March 2012. Exploration results from the well indicate the presence of
hydrocarbons below the salt weld in geologic formations including Middle/Lower
Miocene, Frio, Upper Eocene, and Sparta carbonate. The Upper Eocene sands are
the first hydrocarbon bearing Upper Eocene sands encountered either on the GOM
Shelf or in the deepwater offshore Louisiana. These exploration results
enhance the potential of McMoRan’s other acreage in the Lafitte strategic
area, including McMoRan’s Barataria and Captain Blood ultra-deep prospects.
Barataria (25,000 gross acres) is located west southwest of Lafitte, and
Captain Blood (25,000 gross acres) is located immediately south of Lafitte.

McMoRan holds a 72.0 percent working interest and a 58.3 percent net revenue
interest in Lafitte. Other working interest owners in Lafitte include EXXI
(18.0%) and Moncrief Offshore LLC (10.0%). McMoRan’s total investment in
Lafitte, which includes $35.8 million in allocated property acquisition costs,
totaled $194.7 million at September 30, 2012.

EXPLORATION UPDATE

The Blackbeard West No. 2 ultra-deep exploration well on Ship Shoal Block 188
is currently drilling below 23,600 feet towards a proposed total depth of
24,500 feet to evaluate deeper Miocene targets. Recent logging data indicate
the presence of potential low-resistivity pay zones, one of which is
approximately 80 feet thick and requires further evaluation. In addition,
wireline logs encountered Middle Miocene sands below 22,500 feet with 24
percent porosity, which have potential hydrocarbon columns on water. The
presence of sands with high porosity is significant, indicating that sands can
retain excellent characteristics in a high-temperature, high-pressure
environment on the Shelf below the salt weld. 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 $71.5
million at September 30, 2012.

The information obtained from Blackbeard West No. 2 provides positive data
supporting McMoRan’s “cupola” play, which targets Miocene objectives
immediately below the salt weld. These objectives are typically above 25,000
feet, where lower pressure and temperatures may enable the use of more
conventional equipment and technologies, and potentially increase the amount
of liquid hydrocarbons accompanying the natural gas. McMoRan’s drilling
results from Blackbeard West No. 2 enhance the prospectivity of other “cupola”
prospects on McMoRan’s leasehold position, including the Barbosa and Calico
Jack prospects.

The Lineham Creek exploration prospect, which is located onshore in Cameron
Parish, Louisiana is currently drilling below the salt weld at 23,100 feet.
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. Lineham Creek is
approximately 55 miles northwest of Davy Jones. McMoRan is participating for a
36.0 percent working interest. Other working interest owners include EXXI
(9.0%) and W. A. “Tex” Moncrief Jr. (5.0%). McMoRan’s investment in Lineham
Creek totaled $41.6 million at September 30, 2012.

McMoRan also announced today that drilling commenced on September 19, 2012 in
the Highlander area on the Lomond North ultra-deep prospect. Lomond North,
which is located in St. Martin Parish, LA, is currently drilling below 6,700
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 has identified multiple exploratory prospects in the Highlander area
where it controls rights to approximately 80,000 gross acres in Iberia, St.
Martin, Assumption and Iberville Parishes, Louisiana. Lomond North is
approximately 65 miles north of Davy Jones. 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 $23.1 million at September 30, 2012.

McMoRan believes that the deepwater, Shelf and the onshore are all one
geologic basin. Onshore ultra-deep prospects like Lineham Creek and Lomond
North have structural similarities both in shape and size to major sub-salt
structures in the deepwater GOM. Lineham Creek and the Highlander Area are
approximately 95 miles apart.

LEASE SALE 216/222 UPDATE

BOEM has awarded McMoRan all 14 leases from the June 2012 Central Gulf of
Mexico Lease Sale 216/222 held in New Orleans, Louisiana. As previously
reported, six of the 14 bids were sole bids by McMoRan and the remaining eight
bids were made jointly with Chevron U.S.A. Inc. These blocks enhance McMoRan’s
shallow water, ultra-deep exploration acreage in and around Davy Jones West,
England, Calico Jack, Barataria, Captain Blood and Lafitte. Below is a summary
of the total acres under control on these structures:

                                   Acreage
                                                 Acreage
                                   Held Before   Acquired in   Total Acreage
                                              June 2012    Under Control
                                   June 2012     Lease Sale    on Lease Sale
                                   Lease Sale                  Prospects
                                                 
                                   
Leases Held Jointly with Chevron                           
Davy Jones West                    -             14,404        14,404
England                            5,000         18,334        23,334
Calico Jack                        3,750         5,000         8,750
McMoRan 100% Leases
Lafitte/Barataria Complex          25,000        15,000        40,000
Captain Blood                      10,000        15,000        25,000
Total                              43,750        67,738        111,488

Including these newly awarded leases, McMoRan’s leasehold inventory
approximates 920,000 gross acres, including 385,000 gross acres associated
with the ultra-deep trend.

OTHER

In 2010, McMoRan farmed out its 70.0 percent working interest in a portion of
West Cameron Block 73 to a third party operator and retained a 5 percent of
8/8^ths overriding royalty interest (ORRI). Recently, the operator encountered
positive drilling results and is evaluating completion opportunities to
develop the approximate 400 net feet of pay identified in seven sands between
14,500 feet and nearly 18,000 feet. In addition to benefiting from the 5
percent ORRI, production from the well will be processed through McMoRan’s
existing West Cameron Block 73 “A” platform under which McMoRan will collect
processing fees. Additionally, following these positive exploratory results
McMoRan is considering additional drilling opportunities on the West Cameron
Block 73 structure. MMR holds a 70 percent working interest in various depths
across the entire 5,000 acre block including deep rights.

REVENUES

McMoRan’s third-quarter 2012 oil and gas revenues totaled $88.1 million,
compared to $134.5 million during the third quarter of 2011. During the third
quarter of 2012, McMoRan’s sales volumes totaled 7.7 Bcf of gas, 534,800
barrels of oil and condensate and 241,500 barrels of natural gas liquids,
compared to 11.4 Bcf of gas, 674,700 barrels of oil and condensate and 292,700
barrels of natural gas liquids in the third quarter of 2011. McMoRan’s
third-quarter comparable average realizations for gas were $3.12 per thousand
cubic feet (Mcf) in 2012 and $4.38 per Mcf in 2011; for oil and condensate
McMoRan received an average of $103.43 per barrel in third-quarter 2012
compared to $100.94 per barrel in third-quarter 2011; for natural gas liquids
McMoRan received an average of $36.42 per barrel in third-quarter 2012
compared to $56.35 per barrel in third-quarter 2011.

ASSET SALES

On October 2, 2012, McMoRan completed the sale of three GOM Shelf oil and gas
properties in the West Delta and Mississippi Canyon areas for cash
consideration before closing adjustments of $28.0 million and the assumption
of related abandonment obligations. The assets represented approximately one
percent of McMoRan’s total average daily production for the third quarter of
2012 and three percent of McMoRan’s total estimated reserves at June 30, 2012.
Independent reserve estimates of proved reserves at June 30, 2012, totaled
approximately 942,000 barrels of oil and 1.7 billion cubic feet of natural gas
(7.4 billion cubic feet of natural gas equivalents). The transaction was
effective July 1, 2012.

Additionally, McMoRan expects the previously disclosed pending sale of a
package of GOM traditional shelf oil and gas properties in the Eugene Island
area to a third party for cash consideration before closing adjustments of
$36.8 million and the assumption of related abandonment obligations to close
in the fourth quarter of 2012. The assets included in the transaction
represented approximately six percent of McMoRan’s total average daily
production for the third quarter 2012 and six percent of McMoRan’s total
estimated reserves at June 30, 2012. Independent reserve engineers’ estimates
of proved reserves at June 30, 2012 approximated 15.2 billion cubic feet of
natural gas equivalents, with approximately 78 percent from natural gas and 21
percent proved developed producing. The transaction will be effective July 1,
2012 and is subject to the completion of certain customary closing conditions.

The combined cash proceeds from the two transactions before closing
adjustments will total $64.8 million and assumed reclamation obligations will
total $43.4 million. McMoRan expects to record net gains totaling
approximately $40 million in the fourth quarter of 2012 in connection with
these transactions.

CASH, LIQUIDITY AND CAPITAL EXPENDITURES

At September 30, 2012, McMoRan had $191.9 million in cash. Total debt was
$557.1 million at September 30, 2012, including $257.1 million in convertible
securities. At September 30, 2012, McMoRan had no borrowings and $100 million
of letters of credit issued under its revolving credit facility.

McMoRan is engaged in discussions regarding financing of its future
exploration and development activities. The company’s positive exploration
results to date have significantly reduced the exploration risk of the play
and have established the potential for the development of a major new resource
trend. Successful flow testing of discoveries will further reduce development
risks. The technologies and proprietary processes developed by McMoRan,
combined with significant potential resources drilled to date and our
extensive inventory of prospects and acreage position, are expected to provide
multiple financing options and opportunities to advance value creation through
joint ventures or other financing transactions. In addition, the company may
consider additional sales of noncore assets.

On September 13, 2012 McMoRan completed an exchange offer for up to $68.2
million aggregate principal amount of its 5¼% Convertible Senior Notes due
2012 (“existing notes”). A total of $67.8 million of the existing notes were
accepted for exchange for an equal principal amount of newly issued 5¼%
Convertible Senior Notes due 2013 (“new notes”). McMoRan repaid the remaining
$0.3 million of the existing notes, which matured on October 6, 2012. The
terms of the new notes are substantially identical to the terms of the
existing notes, except that the new notes have a maturity date of October 6,
2013.

McMoRan has approximately 162 million shares of common stock outstanding.
Assuming conversion of McMoRan’s remaining outstanding 8% Convertible
Perpetual Preferred Stock, 4% Convertible Senior Notes, 5¾% Convertible
Perpetual Preferred Stock and 5¼% Convertible Senior Notes, McMoRan would have
approximately 224 million common shares outstanding on a fully converted
basis.

Capital expenditures totaled $103.4 million for the third quarter of 2012 and
$415.6 million for the nine-months ended September 30, 2012. McMoRan expects
2012 capital expenditures to approximate $550 million, including approximately
50 percent on exploration and 50 percent on development. McMoRan is reviewing
plans for its 2013 capital expenditures budget. Capital spending will be
driven by the results of current exploration and development activities,
opportunities on new exploration projects, the availability of financing and
general market factors.

Net abandonment expenditures, which include scheduled conventional and
hurricane-related work, totaled $20.6 million for the third quarter of 2012
and $48.2 million for the nine-months ended September 30, 2012. Abandonment
expenditures are expected to approximate $80 million in 2012.

MAIN PASS ENERGY HUB™

Freeport-McMoRan Energy LLC, a subsidiary of McMoRan, and United LNG are
engaged in efforts to utilize McMoRan’s Main Pass Energy Hub™ (MPEH™) as a
potential Deepwater Port facility/terminal to receive, store and condition
natural gas for offloading to Floating Liquefaction Storage & Offloading
vessels located on-site for export. MPEH™ is located offshore in the GOM 37
miles east of Venice, Louisiana on Main Pass Block 299.

The project would utilize existing offshore structures of the McMoRan owned
MPEH™ Deepwater Port, which was approved by the U.S. Maritime Administration
in 2007 as a Deepwater Port for the importation and regasification of LNG,
conditioning of natural gas to produce NGLs, and storage of natural gas in
salt caverns. Modification of the Main Pass facilities to accommodate use as
an LNG export facility would require additional permit approvals.

On September 11, 2012, the parties filed an application with the Department of
Energy (DOE) for long-term, multi-contract authorization to export
domestically-produced liquefied natural gas (LNG). The DOE application seeks
approval to export up to 24 million tonnes of LNG per annum (3.2 bcf per day)
to countries with free trade agreements with the United States. Preparation of
a non-free trade agreement application is in progress. MPEH™ is located close
to significant Gulf Coast natural gas production and numerous interstate
pipelines and offshore gathering systems.

McMoRan and United LNG are engaged in studies to define the project and
related permitting requirements and are developing commercial arrangements
required to support the significant capital investments involved in the
project.

WEBCAST INFORMATION

A conference call with securities analysts to discuss McMoRan’s third-quarter
2012 results is scheduled for today at 10:00 a.m. Eastern Time. The conference
call will be broadcast on the internet along with slides. Interested parties
may listen to the conference call live and view the slides by accessing
“www.mcmoran.com”. A replay of the webcast will be available through Friday,
November 16, 2012.

McMoRan Exploration Co. is an independent public company engaged in the
exploration, development and production of natural gas and oil in the shallow
waters of the GOM Shelf and onshore in the Gulf Coast area. Additional
information about McMoRan is available on its internet website
“www.mcmoran.com”.

CAUTIONARY STATEMENT: This press release contains forward-looking statements
that involve a number of assumptions, risks and uncertainties that could cause
actual results to differ materially from those contained in the
forward-looking statements. We caution readers that forward-looking statements
are not guarantees of future performance or exploration and development
success, and our actual exploration experience and future financial results
may differ materially from those anticipated, projected or assumed in the
forward-looking statements. Such forward-looking statements include, but are
not limited to, statements regarding potential oil and gas discoveries, oil
and gas exploration, development and production activities and costs, amounts
and timing of capital expenditures, reclamation, indemnification and
environmental obligations and costs, the potential for or expectation of
successful flow tests, potential quarterly and annual production and flow
rates, reserve estimates, projected operating cash flows and liquidity, the
potential Main Pass Energy Hub^TM project and other statements that are not
historical facts. No assurance can be given that any of the events anticipated
by the forward-looking statements will transpire or occur, or if any of them
do so, what impact they may have on our results of operations or financial
condition. Important factors that may cause actual results to differ
materially from those anticipated by forward-looking statements include, but
are not limited to, those associated with general economic and business
conditions, failure to realize expected value creation from acquired
properties, variations in the market demand for, and prices of, oil and
natural gas, drilling results, unanticipated fluctuations in flow rates of
producing wells due to mechanical or operational issues (including those
experienced at wells operated by third parties where we are a participant),
changes in oil and natural gas reserve expectations, the potential adoption of
new governmental regulations, unanticipated hazards for which we have limited
or no insurance coverage, failure of third party partners to fulfill their
capital and other commitments, the ability to satisfy future cash obligations
and environmental costs, adverse conditions, such as high temperatures and
pressure that could lead to mechanical failures or increased costs, the
ability to retain current or future lease acreage rights, access to capital to
fund drilling activities, the ability to obtain regulatory approvals and
significant project financing for the potential Main Pass Energy Hub^TM
project, as well as other general exploration and development risks and
hazards and other factors described in Part I, Item 1A. "Risk Factors"
included in our Annual Report on Form 10-K for the year ended December 31,
2011 filed with the SEC, as updated by McMoRan’s subsequent filings.

Investors are cautioned that many of the assumptions upon which our
forward-looking statements are based are likely to change after our
forward-looking statements are made, including for example the market prices
of oil and natural gas, which we cannot control, and production volumes and
costs, some aspects of which we may or may not be able to control. Further, we
may make changes to our business plans that could or will affect our results.
We caution investors that we do not intend to update our forward-looking
statements more frequently than quarterly, notwithstanding any changes in our
assumptions, changes in our business plans, our actual experience, or other
changes, and we undertake no obligation to update any forward-looking
statements.

This press release contains a financial measure, earnings before interest,
taxes, depreciation, amortization and exploration expenses (EBITDAX), commonly
used in the oil and natural gas industry but not recognized under GAAP. As
required by SEC Regulation G, reconciliations of this measure to amounts
reported in our consolidated financial statements are included in the
supplemental schedules of this press release.

McMoRan EXPLORATION CO.
                                                               
STATEMENTS OF OPERATIONS (Unaudited)
                                               
                    Three Months Ended            Nine Months Ended
                    September 30,                September 30,
                    2012      2011             2012          2011    
                    (In Thousands, Except Per Share Amounts)
Revenues:
Oil and natural    $ 88,097      $  134,548       $ 282,387      $ 423,729
gas
Service             3,679        3,635         10,331       9,766   
Total revenues       91,776         138,183         292,718        433,495
Costs and
expenses:
Production and
delivery costs       47,925         61,182          118,734        161,050
^a
Depletion,
depreciation and     29,926         66,730          116,649        248,738
amortization
expense ^b
Exploration          48,895         18,158          122,763        78,832
expenses ^c
General and
administrative       12,111         11,877          38,760         39,052
expenses
Main Pass Energy                    49
Hub™ costs           114                            210            562
                                    
Insurance            -              (22,649 )^d     (1,229   )     (52,018 )^d
recoveries
Gain on sale of
oil and gas         -            -             (799     )    (900    )
properties
Total costs and     138,971      135,347       395,088      475,316 
expenses
Operating income     (47,195 )      2,836           (102,370 )     (41,821 )
(loss)
Interest             -              (629    )       -              (8,782  )
expense, net ^ e
Loss on debt         (5,955  )      -               (5,955   )     -
exchange ^ f
Other income,       88           204           525          614     
net
Income (loss)
from continuing
operations           (53,062 )      2,411           (107,800 )     (49,989 )
before income
taxes
Income tax          -            -             -            -       
expense
Income (loss)
from continuing      (53,062 )      2,411           (107,800 )     (49,989 )
operations
Loss from
discontinued        (645    )     (1,489  )      (5,573   )    (4,722  )
operations
Net income           (53,707 )      922             (113,373 )     (54,711 )
(loss)
Preferred
dividends and
inducement
payments for        (10,306 )     (10,342 )      (30,990  )    (32,457 )^g
early conversion
of convertible
preferred stock
Net loss
applicable to      $ (64,013 )   $  (9,420  )     $ (144,363 )   $ (87,168 )
common stock
                                                                   
Basic and
diluted net loss
per share of
common stock:
Continuing           $(0.39  )      $(0.05  )       $(0.86   )     $(0.52  )
operations ^ h
Discontinued        (0.01   )     (0.01   )      (0.03    )    (0.03   )
operations
Net loss per
share of common     $(0.40  )     $(0.06  )      $(0.89   )    $(0.55  )
stock
Average common
shares
outstanding:
Basic and           161,812      159,195       161,627      158,505 
diluted

      Includes approximately $7.6 million in the third quarter and nine months
      ended September 30, 2012 for an unproductive workover drilling project.
^a.  Also includes approximately $15.3 million in the third quarter and nine
      months ended September 30, 2011 for an unproductive workover drilling
      project.
      Includes no impairment charges in the third quarter ended September 30,
      2012 and impairment charges totaling $11.7 million in the nine months
      ended September 30, 2012, and $11.3 million and $62.0 million in the
      third quarter and nine months ended September 30, 2011, respectively.
^b.   Also includes reclamation accrual adjustments for asset retirement
      obligations associated with certain oil and gas properties totaling
      approximately $3.1 million and $16.3 million in the third quarter and
      nine months ended September 30, 2012, respectively and approximately
      $10.4 million and $46.0 million in the third quarter and nine months
      ended September 30, 2011, respectively.
      Includes charges for non-productive well costs and unproven leasehold
      cost impairments of $37.2 million and $93.5 million in the third quarter
^c.   and nine months ended September 30, 2012, respectively, and $3.1 million
      and $42.0 million in the third quarter and nine months ended September
      30, 2011, respectively.
^d.   Represents McMoRan’s share of insurance reimbursements related to losses
      incurred from hurricane events in 2008.
      Net of interest capitalized to in-progress drilling projects of
      approximately $13.9 million and $42.4 million in the third quarter and
^e.   nine months ended September 30, 2012, respectively, and $12.7 million
      and $33.2 million in the third quarter and nine months ended September
      30, 2011, respectively.
      Represents the debt extinguishment accounting loss recorded in September
^f.   2012 resulting from McMoRan’s exchange of $67.8 million of its 5¼%
      convertible senior notes due October 2012 for an equal principal amount
      of newly issued 5¼% convertible senior notes due October 2013.
      Includes payments of $1.5 million to induce the conversion of
^g.   approximately 8,100 shares of McMoRan’s 8% convertible perpetual
      preferred stock (8% preferred stock) into approximately 1.2 million
      shares of its common stock in the nine months ended September 30, 2011.
      For purposes of the earnings per share computations, the net loss
^h.   applicable to continuing operations includes preferred stock dividends
      and conversion inducement payments.

                           McMoRan EXPLORATION CO.

       RECONCILATION OF REPORTED AMOUNTS TO NON-GAAP ITEMS (Unaudited)

EBITDAX is a financial measure commonly used in the oil and natural gas
industry but is not a recognized accounting term under accounting principles
generally accepted in the United States of America (GAAP). As defined by
McMoRan, EBITDAX reflects the Company’s adjusted oil and gas operating loss.
EBITDAX is derived from net loss from continuing operations before other
income, net; interest expense, net; income tax expense; Main Pass Energy
Hub^TM costs; exploration expenses; depletion, depreciation and amortization
expense; stock-based compensation charged to general and administrative
expenses; insurance recoveries; gain on sale of oil and gas properties; and
loss on debt exchange. EBITDAX should not be considered by itself or as a
substitute for net loss, operating loss, cash flows from operating activities
or any other measure of financial performance presented in accordance with
GAAP, or as a measure of McMoRan’s profitability or liquidity. Because EBITDAX
excludes some, but not all, items that affect net loss, the computation of
this non-GAAP financial measure may be different from similar presentations of
other companies, including oil and gas companies in our industry. As a result,
the EBITDAX data presented below may not be comparable to similarly titled
measures of other companies.

McMoRan’s management utilizes both the GAAP and non-GAAP results presented in
this news release to evaluate McMoRan’s performance and believes that
comparative analysis of results are useful to investors and other internal and
external users of our financial statements in evaluating our operating
performance, and such analysis can be enhanced by excluding the impact of
these items to help investors meaningfully compare our results from period to
period. The following is a reconciliation of reported amounts from net loss
applicable to common stock to EBITDAX (in thousands):

                             Third Quarter            Nine Months
                               2012      2011      2012        2011
Net loss applicable to        $ (64,013 ) $ (9,420  ) $ (144,363 ) $ (87,168 )
common stock, as reported
Preferred dividends and
inducement payments for         10,306      10,342      30,990       32,457
early conversion of
convertible preferred stock
Loss from discontinued         645        1,489      5,573       4,722
operations
Income (loss) from
continuing operations, as       (53,062 )   2,411       (107,800 )   (49,989 )
reported
                                                                             
Other income, net               (88     )   (204    )   (525     )   (614    )
Interest expense, net           -           629         -            8,782
Income tax expense              -           -           -            -
Main Pass Energy Hub^TM         114         49          210          562
costs
Exploration expenses            48,895      18,158      122,763      78,832
Depletion, depreciation and     29,926      66,730      116,649      248,738
amortization expense
Stock-based compensation
charged to general and          1,697       1,588       7,817        8,460
administrative expenses
Insurance recoveries            -           (22,649 )   (1,229   )   (52,018 )
Gain on sale of oil and gas     -           -           (799     )   (900    )
properties
Loss on debt exchange           5,955       -           5,955        -
Other                          -          (44     )  10          405
EBITDAX                       $ 33,437    $ 66,668    $ 143,051    $ 242,258

McMoRan EXPLORATION CO.

OPERATING DATA (Unaudited)
                                                    
                              Third Quarter            Nine Months
                              2012       2011         2012        2011
Sales volumes:
Gas (thousand cubic feet,     7,652,600   11,367,900   24,740,600   34,638,200
or Mcf)
Oil (barrels)                 534,800     674,700      1,650,800    2,139,800
Natural gas liquids (NGLs,    241,500     292,700      772,400      856,300
in barrels)
Average realizations:
Gas (per Mcf)                 $ 3.12      $ 4.38       $ 2.70       $ 4.54
Oil (per barrel)              $ 103.43    $ 100.94     $ 108.68     $ 102.56
NGLs (per barrel)             $ 36.42     $ 56.35      $ 46.41      $ 54.04

McMoRan EXPLORATIONCO.

CONDENSED BALANCE SHEETS (Unaudited)
                                               
                                                 September 30,    December 31,
                                                 2012             2011
                                                 (In Thousands)
ASSETS
Cash and cash equivalents                        $  191,934       $  568,763
Accounts receivable                                 56,044           72,085
Inventories                                         35,551           36,274
Prepaid expenses                                    16,636           9,103
Current assets from discontinued operations,       797             682
including restricted cash of $473
Total current assets                                300,962          686,907
Property, plant and equipment, net                  2,378,285        2,181,926
Restricted cash and other                           62,575           61,617
Deferred costs                                      9,023            8,325
Long-term assets from discontinued operations      439             439
Total assets                                     $  2,751,284     $  2,939,214
                                                                     
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable                                 $  89,635        $  115,832
Accrued liabilities                                 145,779          160,822
Accrued interest and dividends payable              20,704           14,448
Current portion of accrued oil and gas              64,571           58,810
reclamation costs
5¼% convertible senior notes due October 2012       345              66,223
Other current liabilities                           6,480            -
Current liabilities from discontinued
operations, including sulphur reclamation           2,717            5,264
costs
Total current liabilities                           330,231          421,399
5¼% convertible senior notes due October 2013       67,832           -
11.875% senior notes                                300,000          300,000
4% convertible senior notes                         188,943          187,363
Accrued oil and gas reclamation costs               227,279    ^a    267,584
Other long-term liabilities                         19,896           20,886
Other long-term liabilities from discontinued
operations, including sulphur reclamation          18,624          19,018
costs
Total liabilities                                  1,152,805       1,216,250
Stockholders' equity                               1,598,479       1,722,964
Total liabilities and stockholders' equity       $  2,751,284     $  2,939,214

      Includes an aggregate of $43.4 million of reclamation obligations
^a.  assumed by purchasers related to one completed and one pending oil and
      gas property sale during the fourth quarter of 2012.

McMoRan EXPLORATION CO.

STATEMENTS OF CASH FLOW (Unaudited)
                                                  
                                                     Nine Months Ended
                                                     September 30,
                                                     2012         2011
                                                     (In Thousands)
Cash flow from operating activities:
Net loss                                             $ (113,373 ) $ (54,711  )
Adjustments to reconcile net loss to net cash
provided by operating activities:
Loss from discontinued operations                      5,573        4,722
Depletion, depreciation and amortization expense       116,649      248,738
Exploration drilling and related expenditures          93,468       42,046
Loss on debt exchange                                  5,955        -
Compensation expense associated with stock-based       14,011       15,618
awards
Reclamation expenditures, net                          (48,224  )   (93,411  )
Increase in restricted cash                            (3,754   )   (3,760   )
Gain on sale of oil and gas properties                 (799     )   (900     )
Amortization of deferred financing costs and           (498     )   4,162
other
(Increase) decrease in working capital:
Accounts receivable                                    15,721       (47,648  )
Accounts payable and accrued liabilities               (15,139  )   68,058
Prepaid expenses, inventories and other               1,761       7,056
Net cash provided by continuing operations             71,351       189,970
Net cash used in discontinued operations              (8,823   )  (11,457  )
Net cash provided by operating activities             62,528      178,513
                                                                             
Cash flow from investing activities:
Exploration, development and other capital             (415,627 )   (403,889 )
expenditures
Acquisition of oil and gas properties                  -            (10,000  )
Deposits received for pending divestitures             6,480        -
Proceeds from sale of oil and gas properties          745         900
Net cash used in continuing operations                 (408,402 )   (412,989 )
Net cash activity from discontinued operations        -           -
Net cash used in investing activities                 (408,402 )  (412,989 )
                                                                             
Cash flow from financing activities:
Dividends paid and inducement payments on early        (30,990  )   (27,609  )
conversion of convertible preferred stock
Credit facility refinancing fees                       -            (1,712   )
Debt and equity issuance costs                         (59      )   (543     )
Proceeds from exercise of stock options and           94          929
other
Net cash used in continuing operations                 (30,955  )   (28,935  )
Net cash activity from discontinued operations        -           -
Net cash used in financing activities                 (30,955  )  (28,935  )
Net decrease in cash and cash equivalents              (376,829 )   (263,411 )
Cash and cash equivalents at beginning of year        568,763     905,684
Cash and cash equivalents at end of period           $ 191,934    $ 642,273
                                                                    
Supplemental non-cash investing & financing
activities:
Issuance of 2.8 million shares of common stock
and other non-cash purchase price consideration        $    -     $ 39,198
related to property acquisition

Contact:

McMoRan Exploration Co.
Financial & Media Contact:
David P. Joint, 504-582-4203
 
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