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McMoRan Exploration Co. Reports Fourth-Quarter/Twelve-Month 2012 Results

  McMoRan Exploration Co. Reports Fourth-Quarter/Twelve-Month 2012 Results

Business Wire

NEW ORLEANS -- January 18, 2013

McMoRan Exploration Co. (NYSE: MMR):

HIGHLIGHTS

  *On December 5, 2012, McMoRan entered into an agreement whereby
    Freeport-McMoRan Copper & Gold Inc. (FCX) would acquire McMoRan for
    per-share consideration consisting of $14.75 in cash and 1.15 units of a
    royalty trust, which will hold a 5 percent overriding royalty interest in
    future production from McMoRan’s existing ultra-deep exploration
    prospects. The transaction, which is subject to McMoRan shareholder
    approval, is expected to close in the second quarter of 2013.
  *McMoRan currently has two onshore ultra-deep exploration prospects
    in-progress:

       *Lineham Creek prospect – Encountered positive results above 24,000
         feet in November 2012; currently drilling below 26,500 feet to
         proposed total depth of 29,000 feet to evaluate primary targets.
       *Lomond North prospect in Highlander area – Currently drilling below
         13,500 feet with a proposed total depth of 30,000 feet.

  *Ultra-Deep development opportunities include:

       *Blackbeard West No. 2 reached total depth of 25,584 feet in January
         2013. Initial completion efforts are expected to focus on the
         development of laminated sands in the Middle Miocene located at
         approximately 24,000 feet.
       *Operations to flow test Davy Jones No. 1 are ongoing. Completion and
         testing of Davy Jones No. 2 expected to commence following review of
         results from Davy Jones No. 1.
       *Development plans for Blackbeard East and Lafitte are pending
         approval by the Bureau of Safety and Environmental Enforcement
         (BSEE).

  *Fourth-quarter 2012 production averaged 119 million cubic feet of natural
    gas equivalents per day (MMcfe/d) net to McMoRan, and 137 MMcfe/d for the
    twelve months ended December 31, 2012.
  *Operating cash flows totaled $(28.9) million for the fourth quarter of
    2012, including $31.0 million in working capital uses and $28.4 million in
    abandonment expenditures, and $33.7 million for the twelve months of 2012.
  *Capital expenditures totaled $89.5 million in the fourth quarter of 2012
    and $505.1  million for the twelve months of 2012.
  *Cash at December 31, 2012 totaled $114.9 million.
  *In January 2013 completed sale of the Laphroaig field for $80 million.
    After closing adjustments, the combined cash proceeds from the Laphroaig
    transaction and the two transactions completed in the fourth quarter of
    2012 totaled $135.9 million.
  *Year-end 2012 proved reserves of oil, natural gas and natural gas liquids
    totaled 206.9 billion cubic feet of natural gas equivalents (Bcfe) based
    on independent reservoir engineers’ preliminary estimates. Amounts exclude
    pending results from ultra-deep activities.

McMoRan Exploration Co. (NYSE: MMR) today reported a net loss applicable to
common stock of $1.2 million, $0.01 per share, for the fourth quarter of 2012
compared with net income of $28.4 million, $0.16 per share, for the fourth
quarter of 2011. Fourth quarter 2012 results include $39.7 million in net
gains associated with the sale of two traditional Gulf of Mexico (GOM)
property packages. For the year 2012, McMoRan reported a net loss attributable
to common stock of $145.6 million, $0.90 per share, compared with $58.8
million, $0.37 per share, for the year 2011.

James R. Moffett and Richard Adkerson, McMoRan’s Co-Chairmen, said, “The
geologic data from our drilling results on seven wells associated with the
ultra-deep sub-salt trend indicate significant resource potential on the Shelf
of the Gulf of Mexico and onshore in the Gulf Coast area. These results,
combined with advances in proprietary technologies required to develop and
produce these large structures, establish a multi-year program to unlock a
significant long-term natural gas resource. Through the proposed acquisition
transaction, McMoRan shareholders will receive cash compensation for the value
potential of this emerging new trend and an ongoing participation through the
distribution of royalty trust units.”

SUMMARY FINANCIAL TABLE*

                   Fourth Quarter                 Twelve Months             
                   2012           2011           2012           2011      
                  (In thousands, except per share amounts)
    Revenues       $  84,170       $  121,919      $  376,888      $ 555,414
    Operating         10,724          43,189          (91,646   )    1,368
    income (loss)
    Income (loss)
    from              10,767          43,385          (97,033   )    (6,604  )
    continuing
    operations
    Loss from
    discontinued      (1,688   )      (4,642   )      (7,261    )    (9,364  )
    operations
    Net income
    (loss)                     )                                )            )
    applicable to     (1,207   ^d     28,400   ^e     (145,570  ^d   (58,768 ^
    common                                                                   e
    stock^(a,b,c)
    Diluted net
    income (loss)
    per share:
    Continuing     $  (0.00    )   $  0.19         $  (0.86     )  $ (0.31   )
    operations

    
    Discontinued      (0.01    )      (0.03    )      (0.04     )    (0.06   )
    operations
    Applicable to  $  (0.01    )   $  0.16         $  (0.90     )  $ (0.37   )
    common stock
    Diluted
    average shares    161,928         181,436         161,702        159,216
    outstanding
    Operating cash $  (28,878  )   $  48,535       $  33,650       $ 227,048
    flows^(f)
    EBITDAX^(g)    $  37,022       $  67,558       $  180,073      $ 309,815
    Capital        $  89,505      $  105,606     $  505,132     $ 509,494 
    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 2012 Form 10-K, the related costs incurred through
*   December 31, 2012 would be charged to expense in McMoRan’s 2012 financial
    statements.At December 31, 2012 McMoRan’s total drilling costs for its
    nine in-progress or unproven wells totaled $1,828.2 million, including
    $693.5 million in allocated value associated with property acquisitions.

    
    After preferred dividends.
^a.
    
    Includes impairment charges totaling $34.5 million in fourth-quarter
    2012, $9.1 million in fourth-quarter 2011, $46.2 million in 2012 and $71.1
    million in 2011 to reduce certain fields’ net carrying value to fair
    value.Also includes adjustments for asset retirement obligations
^b. associated with certain of McMoRan’s oil and gas properties totaling
    approximately $1.3 million in the fourth-quarter 2012, $11.4 million in
    the fourth-quarter 2011, $17.6 million in 2012 and $57.3 million in 2011.

    
    Includes $93.5 million of charges to exploration expense in 2012
    primarily resulting from the write-off of allocated carrying value of
    leasehold interests from the December 2010 property acquisition no longer
    being pursued as well as the write-off of costs associated with the lease
^c. expiration of the Boudin well.Also includes charges to exploration
    expense totaling $42.3 million in 2011 for non-commercial well costs
    primarily associated with the Blueberry Hill #9 STK1 well.

    
    Includes gain on sale of oil and gas properties resulting from McMoRan’s
    completed sale of two traditional GOM shelf oil and gas property packages
^d. totaling $39.7 million in the fourth quarter 2012 and $40.5 million in
    2012.

    
    Includes McMoRan’s share of insurance reimbursements related to losses
    incurred from the September 2008 hurricanes totaling $39.1 million in
^e. fourth quarter 2011 and $91.1 million in 2011.

    
    Includes reclamation spending of $28.4 million in fourth-quarter 2012,
    $56.6 million in fourth-quarter 2011, $76.6 million in 2012 and $150.0
    million in 2011.Also includes working capital sources/(uses) of $(31.0)
^f. million in fourth-quarter 2012, $2.5 million in fourth quarter 2011,
    $(28.7) million in 2012 and $30.4 million in 2011.

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

PROPOSED TRANSACTION UPDATE

On December 5, 2012, McMoRan entered into an agreement whereby
Freeport-McMoRan Copper & Gold Inc. (FCX) would acquire McMoRan for per-share
consideration consisting of $14.75 in cash and 1.15 units of a royalty trust,
which will hold a 5 percent overriding royalty interest in future production
from McMoRan’s existing ultra-deep exploration prospects. In connection with
the proposed transaction, Gulf Coast Ultra Deep Royalty Trust, the royalty
trust formed, has filed with the Securities and Exchange Commission a
registration statement on Form S-4 that includes a preliminary proxy statement
of McMoRan that also constitutes a prospectus of the royalty trust. In
addition to the transaction requiring McMoRan’s shareholder approval, U.S.
antitrust clearance under the Hart-Scott-Rodino Act is also required. On
December 26, 2012, the Federal Trade Commission granted early termination of
the Hart-Scott-Rodino waiting period. The transaction is expected to close in
the second quarter of 2013.

PRODUCTION ACTIVITIES

Fourth-quarter 2012 production averaged 119 MMcfe/d net to McMoRan, compared
with 170 MMcfe/d in the fourth quarter of 2011. Production in the fourth
quarter of 2012 was in line with McMoRan’s previously reported estimate of 120
MMcfe/d in October 2012. Production is expected to average approximately 100
MMcfe/d in the first quarter of 2013. McMoRan’s estimated production rates are
dependent on the timing of planned recompletions, production performance,
weather and other factors.

Production from the Flatrock field averaged a gross rate of approximately 94
MMcfe/d (39 MMcfe/d net to McMoRan) in the fourth quarter of 2012, compared
with 147 MMcfe/d (60 MMcfe/d net to McMoRan) in the fourth quarter of 2011.
Production from Flatrock is expected to be lower in 2013 compared to 2012 as a
result of normal declines in currently producing zones. Following depletion of
currently producing zones, McMoRan is planning several recompletions to
additional pay zones which are expected to increase production in future
years. Cumulative 8/8ths production from Flatrock through December 31, 2012
totaled 299 Bcfe and independent reservoir engineers’ preliminary estimates at
December 31, 2012 totaled 195 Bcfe (8/8ths), including 40 Bcfe (16.6 Bcfe net
to McMoRan) in positive reserve adjustments during 2012 related to favorable
production performance. McMoRan owns a 55.0 percent working interest and a
41.3 percent net revenue interest in the Flatrock field.

ULTRA-DEEP EXPLORATION & DEVELOPMENT ACTIVITIES

Since 2008, McMoRan’s drilling activities in the shallow waters of the GOM
below the salt weld (i.e. listric fault) have successfully confirmed McMoRan’s
geologic model and the highly prospective nature of this emerging geologic
trend. The data from seven wells drilled to date indicate the presence below
the salt weld of geologic formations including Upper/Middle/Lower Miocene,
Frio, Vicksburg, Upper Eocene, Sparta carbonate, Wilcox, Tuscaloosa and
Cretaceous carbonate, which have been prolific onshore, in the deepwater GOM
and in international locations. The results of these activities indicate the
potential for a major new geologic trend spanning 200 miles in the shallow
waters of the GOM and onshore in the Gulf Coast area. Further drilling and
flow testing will be required to determine the ultimate potential of this new
trend.

The Lineham Creek exploration prospect, which is located onshore in Cameron
Parish, Louisiana is currently drilling below the salt weld at 26,500 feet. As
previously reported in November 2012, the well encountered what appears to be
hydrocarbon bearing porous sands above 24,000 feet, as identified by wireline
logs. 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. McMoRan is
participating for a 36.0 percent working interest. Other working interest
owners include Energy XXI (NASDAQ: EXXI) (9.0%) and W. A. “Tex” Moncrief Jr.
(5.0%). McMoRan’s investment in Lineham Creek totaled $53.6 million at
December 31, 2012.

The Lomond North ultra-deep prospect, which is located in the Highlander area,
primarily in St. Martin Parish, Louisiana, is currently drilling below 13,500
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 controls rights to approximately 80,000 gross acres in Iberia, St.
Martin, Assumption and Iberville Parishes, Louisiana. 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 $40.1 million at December 31, 2012.

The Blackbeard West No. 2 ultra-deep exploration well on Ship Shoal Block 188
was drilled to a total depth of 25,584 feet in January 2013. As previously
reported, McMoRan has set a production liner, which would enable completion,
and is preparing to release the rig. Through logs and core data, McMoRan has
identified three potential hydrocarbon bearing Miocene sand sections between
approximately 20,800 and 24,000 feet. Initial completion efforts are expected
to focus on the development of approximately 50 net feet of laminated sands in
the Middle Miocene located at approximately 24,000 feet. Additional
development opportunities in the well bore include approximately 80 net feet
of potential low-resistivity pay at approximately 22,400 feet and an
approximate 75 foot gross section at approximately 20,900 feet. Pressure and
temperature data indicate that a completion at these depths could utilize
conventional equipment and technologies. 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 $90.6 million at
December 31, 2012.

Operations to flow test the Davy Jones No. 1 well on South Marsh Island Block
230 are ongoing. During January 2013, McMoRan re-perforated the Wilcox zones
in the well with electric wireline through tubing perforating guns. Recent
operations confirmed that the perforations were open and that the Wilcox
formation could accept fluid. McMoRan is currently evaluating plans to pump a
hydraulic fracture treatment including proppant to facilitate hydrocarbon
movement into the wellbore. McMoRan plans to incorporate potential core and
log data from Lineham Creek in evaluating future plans at Davy Jones.

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.

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: 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 $1,024.0 million at December 31, 2012.

Development plans to complete and test the Middle Miocene sands at Blackbeard
East on South Timbalier Block 144 and the Jackson/Yegua sands in the Upper
Eocene at Lafitte on Eugene Island Block 223 are pending approval from the
BSEE. McMoRan holds a 72.0 percent working interest and a 57.4 percent net
revenue interest in Blackbeard East. 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 $308.8 million at December
31, 2012. 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 $196.8 million at December 31, 2012.

REVENUES

McMoRan’s fourth-quarter 2012 oil and gas revenues totaled $80.6 million,
compared to $118.6 million during the fourth quarter of 2011. During the
fourth quarter of 2012, McMoRan’s sales volumes totaled 7.1 Bcf of gas,
456,500 barrels of oil and condensate and 193,100 barrels of natural gas
liquids, compared to 10.4 Bcf of gas, 577,000 barrels of oil and condensate
and 298,000 barrels of natural gas liquids in the fourth quarter of 2011.
McMoRan’s fourth-quarter comparable average realizations for gas were $3.68
per thousand cubic feet (Mcf) in 2012 and $3.57 per Mcf in 2011; for oil and
condensate McMoRan received an average of $103.61 per barrel in fourth-quarter
2012 compared to $111.46 per barrel in fourth-quarter 2011; for natural gas
liquids McMoRan received an average of $37.66 per barrel in fourth-quarter
2012 compared to $56.90 per barrel in fourth-quarter 2011.

ASSET SALES

As previously reported in October and November 2012, McMoRan completed the
sale of two traditional GOM shelf oil and gas property packages. The combined
net cash proceeds from the two transactions (after closing adjustments)
totaled $55.9 million and reclamation obligations assumed by the buyers
totaled $45.6 million. McMoRan’s fourth-quarter 2012 results included net
gains totaling approximately $39.7 million in the connection with these
transactions.

On January 17, 2013, McMoRan completed the sale of the Laphroaig field to EXXI
for cash consideration of $80 million, before closing adjustments, and the
assumption of related abandonment obligations. The field represented
approximately 10 percent of McMoRan’s total average daily production for the
fourth quarter 2012. The transaction was effective January 1, 2013. McMoRan
expects to record a net gain of approximately $74 million in the first quarter
of 2013 in connection with this transaction.

CASH, LIQUIDITY AND CAPITAL EXPENDITURES

At December 31, 2012, McMoRan had $114.9 million in cash. Total debt was
$557.3 million at December 31, 2012, including $257.3 million in convertible
securities. Currently, McMoRan has no borrowings and $115 million in
availability under its revolving credit facility. In January 2013, McMoRan
reached agreement with the beneficiary of a $100 million letter of credit for
future abandonment obligations to suspend the letter of credit requirement
until June 30, 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 $89.5 million for the fourth quarter of 2012 and
$505.1 million for the twelve-months ended December 31, 2012. Net abandonment
expenditures, which include scheduled conventional and hurricane-related work,
totaled $28.4 million for the fourth quarter of 2012 and $76.6 million for the
twelve-months ended December 31, 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 to receive, store, condition, and liquefy
domestic natural gas for export as liquefied natural gas (LNG). Natural gas
would be received by pipeline at MPEH™, processed, and then transferred to
on-site Floating Liquefaction Storage & Offloading vessels for liquefaction
and offloading to LNG transport vessels for export to foreign locations. MPEH™
is located offshore in the GOM 37 miles east of Venice, Louisiana on Main Pass
Block 299 and is close to significant Gulf Coast natural gas production and
numerous interstate pipelines and offshore gathering systems.

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 January 4, 2013, the Department of Energy (DOE) authorized export of
domestically produced LNG by vessel from the proposed MPEH™ Deepwater Port to
any country that has or subsequently enters into a free trade agreement (FTA)
with the United States. The approval allows export of up to 24 million tonnes
of LNG per annum (3.2 bcf per day) for a 30-year term, beginning on the
earlier of the date of first export or 8 years from the date the authorization
is issued (January 4, 2021), pursuant to one or more long-term contracts with
third parties that do not exceed the term of the authorization.

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. A non-FTA application, seeking approval to export to countries
without free trade agreements with the United States, is being developed.

RESERVE UPDATE

Independent reservoir engineers’ preliminary estimates of McMoRan’s proved
oil, natural gas and natural gas liquid reserves as of December 31, 2012, were
206.9 Bcfe, compared with 255.8 Bcfe at December 31, 2011. Year-end 2012
reserves reflect positive reserve revisions from certain of McMoRan’s
producing properties (principally Flatrock), offset by 2012 production and
divestitures. Amounts exclude pending results from ultra-deep activities.

Below is a summary of changes in proved reserves:

                                                    Bcfe
Proved Reserves at 12/31/11                          255.8
2012 Production                                      (50.2          )
Divestitures                                         (22.0          )
Net Revisions*                                       23.3
Proved Reserves at 12/31/12                          206.9
* Positive revisions principally from Flatrock (16.6 Bcfe) and West Cameron
Block 73 override (2.1 Bcfe).

WEBCAST INFORMATION

A conference call with securities analysts to discuss McMoRan’s fourth-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,
February 15, 2013.

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 merger with FCX, the potential MPEH^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
MPEH^TM project, the failure to consummate the merger with FCX 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 Securities and
Exchange Commission (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.

Additional Information about the Proposed Transaction and Where to Find It

In connection with the proposed transaction, the royalty trust formed in
connection with the transaction has filed with the SEC a registration
statement on Form S-4 that includes a preliminary proxy statement of McMoRan
that also constitutes a prospectus of the royalty trust. FCX, the royalty
trust and McMoRan also plan to file other relevant documents with the SEC
regarding the proposed transaction. INVESTORS ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IF AND
WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
You may obtain a free copy of the definitive proxy statement/prospectus (if
and when it becomes available) and other relevant documents filed by FCX, the
royalty trust and McMoRan with the SEC at the SEC’s website at www.sec.gov.
You may also obtain these documents by contacting FCX’s Investor Relations
department at (602) 366-8400, or via e-mail at ir@fmi.com; or by contacting
McMoRan’s Investor Relations department at (504) 582-4000, or via email at
ir@fmi.com.

FCX and McMoRan and their respective directors and executive officers and
other members of management and employees may be deemed to be participants in
the solicitation of proxies in respect of the proposed transaction.
Information about FCX’s directors and executive officers is available in FCX’s
proxy statement dated April 27, 2012, for its 2012 Annual Meeting of
Stockholders. Information about McMoRan’s directors and executive officers is
available in McMoRan’s proxy statement dated April 27, 2012, for its 2012
Annual Meeting of Stockholders. Other information regarding the participants
in the proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in the
definitive proxy statement/prospectus and other relevant materials to be filed
with the SEC regarding the merger when they become available. Investors should
read the definitive proxy statement/prospectus carefully when it becomes
available before making any voting or investment decisions. You may obtain
free copies of these documents from FCX or McMoRan using the sources indicated
above.

This document shall not constitute an offer to sell or the solicitation of an
offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S. Securities Act
of 1933, as amended.

McMoRan EXPLORATION CO.

STATEMENTS OF OPERATIONS (Unaudited)

(In Thousands, Except Per Share Amounts)
                                                   
                        Three Months Ended      Year Ended
                         December 31,            December 31,
                         2012        2011        2012           2011
                                                                            
    Revenues:
    Oil and natural    $  80,608      $  118,581   $ 362,995      $ 542,310
    gas
    Service              3,562         3,338      13,893        13,104
    Total revenues        84,170         121,919     376,888        555,414
    Costs and
    expenses:
    Production and        36,407         45,269      155,141        206,319
    delivery costs
    Depletion,
    depreciation
    and                   57,168         59,164      173,817        307,902
    amortization
    expense ^a
    Exploration           5,231          2,910       127,994  ^b    81,742  ^b
    expenses
    General and
    administrative        14,217         10,419      52,977         49,471
    expenses
    Insurance             -              (39,058 )   (1,229   )     (91,076 )
    recoveries ^c
    Gain on sale of
    oil and gas           (39,654  )     -           (40,453  )     (900    )
    properties ^d
    Main Pass
    Energy Hub™          77            26         287           588
    costs
    Total costs and      73,446        78,730     468,534       554,046
    expenses
    Operating             10,724         43,189      (91,646  )     1,368
    income (loss)
    Interest
    expense, net ^        -              -           -              (8,782  )
    e
    Loss on debt          -              -           (5,955   )^f   -
    exchange
    Other income,        43            196        568           810
    net
    Income (loss)
    from continuing
    operations            10,767         43,385      (97,033  )     (6,604  )
    before income
    taxes
    Income tax           -             -          -             -
    expense
    Income (loss)
    from continuing       10,767         43,385      (97,033  )     (6,604  )
    operations
    Loss from
    discontinued         (1,688   )    (4,642  )  (7,261   )    (9,364  )
    operations
    Net income            9,079          38,743      (104,294 )     (15,968 )
    (loss)
    Preferred
    dividends and
    inducement
    payments for
    early
    conversion of
    convertible          (10,286  )    (10,343 )  (41,276  )    (42,800 )
    preferred stock
    Net income
    (loss)             $  (1,207   )  $  28,400    $ (145,570 )   $ (58,768 )
    applicable to
    common stock
                                                                            
    Basic net
    income (loss)
    per share of
    common stock:
    Continuing            $(0.00   )     $0.21       $(0.86   )     $(0.31  )
    operations ^ g
    Discontinued         (0.01    )    (0.03   )  (0.04    )    (0.06   )
    operations
    Net income
    (loss) per           $(0.01   )    $0.18      $(0.90   )    $(0.37  )
    share of common
    stock
                                                                            
    Diluted net
    income (loss)
    per share of
    common stock:
    Continuing            $(0.00   )     $0.19       $(0.86   )     $(0.31  )
    operations ^ g
    Discontinued         (0.01    )    (0.03   )  (0.04    )    (0.06   )
    operations
    Net income
    (loss) per           $(0.01   )    $0.16      $(0.90   )    $(0.37  )
    share of common
    stock
                                                                            
    Average common
    shares
    outstanding:
    Basic                161,928       161,328    161,702       159,216
    Diluted              161,928       181,436    161,702       159,216
                                                                            
    Includes impairment charges totaling $34.5 million and $46.2 million in
    the fourth quarter and year ended December 31, 2012, and $9.1 million and
    $71.1 million in the fourth quarter and year ended December 31, 2011,
    respectively. Also includes reclamation accrual adjustments for asset
^a. retirement obligations associated with certain oil and gas properties
    totaling approximately $1.3 million and $17.6 million in the fourth
    quarter and year ended December 31, 2012, respectively and approximately
    $11.4 million and $57.3 million in the fourth quarter and year ended
    December 31, 2011, respectively.
    Includes charges for non-productive well costs and unproven leasehold
^b. cost impairments of $93.5 million and $42.3 million for the years ended
    December 31, 2012 and 2011, respectively.
^c. Primarily represents McMoRan’s share of insurance reimbursements related
    to losses incurred from prior hurricane events.
    2012 amounts include $39.7 million of gains on sale of certain Gulf of
^d. Mexico oil and gas properties for net cash proceeds of approximately $55.9
    million and the assumption of related abandonment obligations recorded in
    the fourth quarter of 2012.
    Net of interest capitalized to in-progress drilling projects of
    approximately $14.1 million and $56.5 million in the fourth quarter and
^e. year ended December 31, 2012, respectively, and $14.2 million and $47.4
    million in the fourth quarter and year ended December 31, 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.
    For purposes of the earnings per share computations, the net loss
^g. 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 income
(loss).EBITDAX is derived from net income (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; loss on debt exchange; and hurricane damage repairs.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):
                                                                            
                                                   Year Ended
                  Fourth Quarter                
                                                   December 31,
                    2012         2011          2012           2011
Net income (loss)
applicable to     $  (1,207   )  $  28,400      $  (145,570  )  $  (58,768  )
common stock, as
reported
Preferred
dividends and
inducement
payments for         10,286         10,343         41,276          42,800
early conversion
of convertible
preferred stock
Loss from
discontinued        1,688         4,642         7,261          9,364
operations
Income (loss)
from continuing      10,767         43,385         (97,033   )     (6,604   )
operations, as
reported
                                                                            
Other income, net    (43      )     (196     )     (568      )     (810     )
Interest expense,    -              -              -               8,782
net
Income tax           -              -              -               -
expense
Main Pass Energy     77             26             287             588
Hub^TM costs
Exploration          5,231          2,910          127,994         81,742
expenses
Depletion,
depreciation and     57,168         59,164         173,817         307,902
amortization
expense
Stock-based
compensation
charged to           1,939          1,486          9,756           9,945
general and
administrative
expenses
Insurance            -              (39,058  )     (1,229    )     (91,076  )
recoveries
Gain on sale of
oil and gas          (39,654  )     -              (40,453   )     (900     )
properties
Loss on debt         -              -              5,955           -
exchange
Hurricane damage    1,537         (159     )    1,547          246
repairs and other
EBITDAX           $  37,022      $  67,558      $  180,073      $  309,815

McMoRan EXPLORATION CO.

OPERATING DATA (Unaudited)
                                                    
                              Fourth Quarter           Year Ended December 31,
                              2012       2011         2012        2011
Sales volumes:
Gas (thousand cubic feet,     7,056,800   10,361,800   31,797,400   45,000,000
or Mcf)
Oil (barrels)                 456,500     577,000      2,107,300    2,716,900
Natural gas liquids (NGLs,    193,100     298,000      965,500      1,154,200
in barrels)
Average realizations:
Gas (per Mcf)                 $ 3.68      $ 3.57       $ 2.92       $ 4.32
Oil (per barrel)              $ 103.61    $ 111.46     $ 107.58     $ 104.45
NGLs (per barrel)             $ 37.66     $ 56.90      $ 44.66      $ 54.78

McMoRan EXPLORATIONCO.

CONDENSED BALANCE SHEETS (Unaudited)

(In Thousands)
                                                               
                                                   December 31,   December 31,
                                                   2012           2011
                                                   
ASSETS
Cash and cash equivalents                          $  114,867     $  568,763
Accounts receivable                                   52,548         72,085
Inventories                                           28,532         36,274
Prepaid expenses                                      15,186         9,103
Current assets from discontinued operations,
including restricted cash
of $473                                              2,013         682
Total current assets                                  213,146        686,907
Property, plant and equipment, net                    2,394,522      2,181,926
Restricted cash and other                             61,319         61,617
Deferred costs                                        7,696          8,325
Long-term assets from discontinued operations        439           439
Total assets                                       $  2,677,122   $  2,939,214
                                                                     
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable                                   $  83,937      $  115,832
Accrued liabilities                                   131,648        160,822
Accrued interest and dividends payable                14,433         14,448
Current portion of accrued oil and gas                57,336         58,810
reclamation costs
5¼% convertible senior notes                          67,832         66,223
Current liabilities from discontinued                 2,328          5,264
operations, including sulphur reclamation costs
Total current liabilities                             357,514        421,399
11.875% senior notes                                  300,000        300,000
4% convertible senior notes                           189,470        187,363
Accrued oil and gas reclamation costs                 188,245        267,584
Other long-term liabilities                           17,204         20,886
Other long-term liabilities from discontinued        21,478        19,018
operations, including sulphur reclamation costs
Total liabilities                                    1,073,911     1,216,250
Stockholders' equity                                 1,603,211     1,722,964
Total liabilities and stockholders' equity         $  2,677,122   $  2,939,214

McMoRan EXPLORATION CO.

STATEMENTS OF CASH FLOW (Unaudited)

(In Thousands)
                                                   
                                                     Year Ended
                                                     December 31,
                                                     2012         2011
                                                                             
Cash flow from operating activities:
Net loss                                             $ (104,294 ) $ (15,968  )
Adjustments to reconcile net loss to net cash
provided by operating activities:
Loss from discontinued operations                      7,261        9,364
Depletion, depreciation and amortization expense       173,817      307,902
Exploration drilling and related expenditures          93,506       42,339
Loss on debt exchange                                  5,955        -
Compensation expense associated with stock-based       17,445       18,325
awards
Reclamation expenditures, net                          (76,615  )   (150,021 )
Increase in restricted cash                            (5,006   )   (5,012   )
Gain on sale of oil and gas properties                 (40,453  )   (900     )
Amortization of deferred financing costs and other     68           5,563
(Increase) decrease in working capital:
Accounts receivable                                    20,821       (22,996  )
Accounts payable and accrued liabilities               (59,719  )   45,944
Prepaid expenses, inventories and other               10,191      7,490
Net cash provided by continuing operations             42,977       242,030
Net cash used in discontinued operations              (9,327   )  (14,982  )
Net cash provided by operating activities             33,650      227,048
                                                                             
Cash flow from investing activities:
Exploration, development and other capital             (505,132 )   (509,494 )
expenditures
Acquisition of oil and gas properties                  -            (9,520   )
Proceeds from sale of oil and gas properties          56,679      900
Net cash used in continuing operations                 (448,453 )   (518,114 )
Net cash activity from discontinued operations        -           -
Net cash used in investing activities                 (448,453 )  (518,114 )
                                                                             
Cash flow from financing activities:

Dividends paid and inducement payments on early        (41,295  )   (37,951  )
conversion of convertible preferred stock
Payment of 5 ¼% convertible senior notes               (345     )   (6,543   )
Credit facility refinancing fees                       -            (1,745   )
Debt and equity issuance costs                         (59      )   (562     )
Proceeds from exercise of stock options and other     2,606       946
Net cash used in continuing operations                 (39,093  )   (45,855  )
Net cash activity from discontinued operations        -           -
Net cash used in financing activities                 (39,093  )  (45,855  )
Net decrease in cash and cash equivalents              (453,896 )   (336,921 )
Cash and cash equivalents at beginning of year        568,763     905,684
Cash and cash equivalents at end of period           $ 114,867    $ 568,763
                                                                    
Supplemental non-cash investing & financing
activities:
Issuance of 2.8 million shares of common stock and
other non-cash purchase price consideration            $    -     $ 39,123
related to property acquisition

Contact:

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