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McMoRan Updates Gulf of Mexico E&P Activities

In discussing its 2006 Gulf of Mexico exploration activities on Thursday, New Orleans-based McMoRan Exploration Co. announced successful production tests at the Liberty Canal and King of the Hill discovery wells, updated the status of two additional exploration prospects in progress and outlined development activities, including the establishment of initial production from the Long Point No. 1 and No. 2 wells.

The successful production test on the Liberty Canal discovery well located onshore Vermilion, Parish LA indicated a gross flow rate of 26 MMcf/d and 1,700 bbl/d of condensate (36 MMcfe/d gross, 10 MMcfe/d net to McMoRan). The well is expected to commence production in the third quarter of 2006. McMoRan is incorporating the results from this well with its 3-D seismic data and has developed the Zigler Canal exploratory prospect located two miles northwest of the Liberty Canal discovery. McMoRan currently has a rig on location and is preparing to commence drilling this prospect. McMoRan is continuing its mapping in this area to identify additional prospects. The company and its private partner each have a 37.5% working interest and a 27.7% net revenue interest in the Liberty Canal prospect.

McMoRan's successful production test on the King of the Hill No. 2 discovery well at High Island Block 131 flowed at a gross rate of 11.5 MMcf/d and 60 bbl/d of condensate (12 MMcfe/d gross, 2.3 MMcfe/d net to McMoRan). The well is expected to commence production in the third quarter of 2006. McMoRan and its private partner each own a 25% working interest and a 19.6% net revenue interest in the King of the Hill prospect.

McMoRan also currently has two exploratory wells drilling and is preparing to commence exploration wells at Zigler Canal, onshore Vermilion Parish, and Vermilion Block 54 and has commenced a development well at Hurricane No. 3 at South Marsh Island Block 217. Since inception in 2004 of a multi-year $500 million exploration venture, McMoRan and its private partner have participated in 12 discoveries on the 23 prospects that have been drilled and evaluated. Four additional prospects are either in progress or not fully evaluated. The company said it expects to commence drilling several additional exploratory prospects during 2006. McMoRan currently has rights to 400,000 gross acres, including over 100,000 gross acres acquired in January 2006 through a farm-in transaction of exploration rights in southern Louisiana and on the Gulf of Mexico shelf.

During the second quarter of 2006, McMoRan reported that it began production on five wells, including Cane Ridge, King Kong No. 3, Hurricane No. 2 and two wells at Long Point. In May 2006, initial production commenced at the Long Point No. 1 and No. 2 wells located at Louisiana State Lease 18090. Recent production rates from the two wells totals 60 MMcfe/d (16 MMcfe/d net to McMoRan). The company and its private partner each own a 37.5% working interest and a 26.8% net revenue interest in the Long Point field.

Four additional wells are expected to commence production in the third quarter of 2006, including Dawson Deep, Pecos, Liberty Canal, and King of the Hill No. 2. The discovery well at Point Chevreuil in St. Mary's Parish, LA is expected to commence production by year-end 2006. McMoRan's share of second quarter 2006 production is expected to average near the upper end of the previously reported second quarter average of 55-65 MMcfe/d, including 2,400 b/d (14 MMcfe/d) for McMoRan's share of oil production from Main Pass Block 299. McMoRan's current production rate exceeds 80 MMcfe/d and is expected to reach 100 MMcfe/d in the third quarter of 2006.

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