New Orleans-based McMoRan Exploration Co. and Palace Exploration Co., a private energy company, plan to expand their business partnership to acquire and exploit high potential prospects in the Gulf of Mexico (GOM) deepwater as well as the Gulf Coast area. The venture, which committed $500 million initially toward exploration efforts, also is considering opportunities in other areas of the Caribbean Basin.

The two companies have been jointly conducting exploration activities in the GOM since December 2003, and in the new venture, they will share revenues and costs equally, spending funds as needed over a multi-year period on McMoRan’s existing inventory of deep shelf prospects and on newly acquired prospects.

Currently, the venture is drilling six wells in the GOM, including Dawson Deep at Garden Banks 625, Minuteman at Eugene Island Blocks 212/213 and Deep Tern at Eugene Island 193. At least 10-12 more wells are planned in the next six months.

“The joint venture and its decisions will be driven by pure economics and monies will be spent as needed, so as to most effectively maximize the economics of each prospect, without regard to fiscal year or other non economic considerations,” said Richard D. Siegal, chairman of Palace. “Currently, and it appears in the future, there is and will continue to be an unquenched thirst for increased oil and gas production in the United States,” and he said the joint venture’s goal is to become a major supplier to the United States.

Besides its exploration efforts, McMoRan is also pursuing plans for the development of the Main Pass Energy Hub, which will be used for the receipt and processing of liquefied natural gas and the storage and distribution of natural gas. Palace’s exploration efforts have been focused in the continental United States, the Gulf of Mexico, Western Canada and the North Sea. It owns interests in more than 1,400 producing oil or gas wells.

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