Successfully completed well in March 2012; gas flowed to
surface during limited test.
Blockage from drilling fluid associated with initial drilling
operations prevented McMoRan from obtaining a measurable flow
rate.
Workover operations currently underway to clear blockage and
provide access to all of the Wilcox reservoirs ("A" through
"F") totaling 200 net feet.
Expect measurable flow rate during the second quarter of 2012
followed by commercial production shortly thereafter.
Davy Jones No. 2
Expect to commence completion operations in the second half of
2012.
Blackbeard East
Well was drilled to a total depth of 33,318 feet in January
2012.
Exploration results indicate the presence of hydrocarbons
below the salt weld in geologic formations including
Upper/Middle Miocene, Frio, Vicksburg, and Sparta carbonate.
The Vicksburg and Sparta carbonate sections were logged in
first quarter 2012.
Evaluating development options. Front End Engineering & Design
(FEED) Studies under way.
Lafitte
Well was drilled to a total depth of 34,162 feet in March 2012.
Exploration results 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 and Sparta carbonate sections were logged in
first quarter 2012.
Evaluating development options. FEED Studies under way.
Blackbeard West No. 2
Commenced drilling on November 25, 2011. Drilling below 20,000
feet with a proposed total depth of 26,000 feet. Targeting
Miocene aged sands below the salt weld.
Lineham Creek onshore prospect
Operations commenced on December 31, 2011. Drilling below
13,800 feet with a proposed total depth of 29,000 feet.
Targeting Eocene/Paleocene objectives below the salt weld.
First-quarter 2012 production averaged 156 million cubic feet
of natural gas equivalents per day (MMcfe/d) net to McMoRan.
Excluding potential production from Davy Jones, average daily
production for 2012 is expected to approximate 135 MMcfe/d net to
McMoRan, including 145 MMcfe/d in second quarter 2012. Expect to
increase 2012 production estimates once commercial production is
established at Davy Jones.
Operating cash flows totaled $38.8 million for the first
quarter of 2012, net of $11.7 million in abandonment expenditures and
$4.9 million in working capital uses.
Capital expenditures totaled $165.1 million in the first
quarter of 2012.
Cash at March 31, 2012 totaled $431.7 million.
McMoRan Exploration Co. (NYSE: MMR) today reported a net loss applicable
to common stock of $4.9 million, $0.03 per share, for the first quarter
of 2012 compared with a net loss applicable to common stock of $27.6
million, $0.17 per share, for the first quarter of 2011.
James R. Moffett and Richard Adkerson, McMoRan's Co-Chairmen, said,
"We have made great progress in our efforts to define a major new
resource trend in the shallow waters of the Gulf of Mexico.Over
the last four years, we have successfully drilled five ultra-deep wells
and in March 2012 we achieved a major engineering milestone in
completing the first high-pressure, high-temperature sub-salt well in
the shallow waters of the Gulf of Mexico.Our exploration results
continue to be positive and we identified three new geologic formations
below the salt weld at Blackbeard East and Laffite during the first
quarter of 2012.We look forward to converting our geologic
success into commercial success, which would provide opportunities to
develop a low-cost, long-term source of natural gas in the shallow
waters of the Gulf of Mexico."
SUMMARY FINANCIAL TABLE*
First Quarter
2012
2011
(In thousands, except per
share amounts)
Revenues
$
110,647
$
137,004
Operating income (loss)
8,367
(9,265
)
Income (loss) from continuing operations
8,595
(14,534
)
Loss from discontinued operations
(3,103
)
(1,244
)
Net loss applicable to common stock(a, b)
$
(4,850
)
$
(27,550
)(c)
Diluted net loss per share:
Continuing operations
$
(0.01
)
$
(0.16
)
Discontinued operations
(0.02
)
(0.01
)
Applicable to common stock
$
(0.03
)
$
(0.17
)
Diluted average common shares outstanding
161,487
157,851
Operating cash flows(d)
$
38,769
$
33,546
EBITDAX(e)
$
61,301
$
78,651
Capital expenditures
$
165,080
$
96,542
* 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 March 31, 2012 Form 10-Q,
the related costs incurred through March 31, 2012 would be charged to
expense in McMoRan's first-quarter 2012 financial statements.McMoRan's
total drilling costs for its nine in-progress or unproven wells totaled
$1,551.9 million, including $700.3 million in allocated purchase costs
associated with property acquisitions. a. After
preferred dividends. b. Includes impairment
charges totaling $7.1 million and $21.4 million in the first quarters of
2012 and 2011, respectively, to reduce certain fields' net carrying
value to fair value. Also includes reclamation accrual adjustments for
asset retirement obligations associated with certain oil and gas
properties totaling approximately $2.0 million and $14.9 million in the
first quarters of 2012 and 2011, respectively. c.
Includes McMoRan's share of insurance reimbursements related to losses
incurred from the September 2008 hurricanes totaling $16.4 million in
the first quarter of 2011. d. Includes
reclamation spending of $11.7 million in first-quarter 2012 and $22.2
million in first-quarter 2011.Also includes working
capital uses of $4.9 million in first-quarter 2012 and $22.7 million in
first-quarter 2011. e. See reconciliation of
EBITDAX to net loss applicable to common stock on page II.
PRODUCTION ACTIVITIES
First-quarter 2012 production averaged 156 MMcfe/d net to McMoRan,
compared with 195 MMcfe/d in the first quarter of 2011. Production in
the first quarter of 2012 was in line with McMoRan's previously reported
estimate of 155 MMcfe/d in January 2012. Excluding potential production
from Davy Jones, production is expected to average approximately 135
MMcfe/d for the year 2012, including 145 MMcfe/d in the second 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 136 MMcfe/d (56 MMcfe/d net to McMoRan) in the first
quarter of 2012, and as anticipated was lower than the year ago period
which averaged 183 MMcfe/d (75 MMcfe/d net to McMoRan). McMoRan owns a
55.0 percent working interest and a 41.3 percent net revenue interest in
the Flatrock field.
EXPLORATION AND DEVELOPMENT ACTIVITIES
Since 2008, McMoRan's drilling activities in the shallow waters of the
Gulf of Mexico (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 five
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. Below is a summary of McMoRan's
geologic findings to date:
Ultra-Deep Well
Davy Jones
Davy Jones
Blackbeard
Blackbeard
Lafitte
No. 1
No. 2
West No. 1
East
120' Wilcox Sands;
171' Miocene;
Pay Counts (1)
200' Wilcox
192' Tuscaloosa
168' Miocene;
178' Miocene;
40' Frio;
Sands & Lower
52' Oligocene
First Frio Sand;
65' U. Eocene;
Cretaceous
300' Sparta
300' Sparta
Carbonate
Carbonate
Carbonate
MMR WI (2)
63.4%
63.4%
69.4%
72.0%
72.0%
MMR NRI (2)
50.2%
50.2%
56.5%
57.4%
58.3%
Miocene
Upper
*
Middle
*
*
*
Lower
*
*
Oligocene
*
Frio
Reached TD in
*
*
Vicksburg
Oligocene
*
Eocene
@ 32,997'
Upper Eocene
*
Sparta
*
*
Paleocene
Reached TD in
Reached TD in
Wilcox
*
*
Eocene
Eocene
Cretaceous
Reached TD in
@ 33,318'
@ 34,162'
Tuscaloosa
Paleocene
*
Lower Cretaceous
@ 29,000'
*
Reached TD in
Lower Cretaceous
@ 30,546'
NOTE: Flow testing will be required to confirm the
potential hydrocarbons and flow rates from these sandstone and
limestone formations.
(1) All pay counts above reflect net feet of sandstones,
with the exception of the Carbonate intervals which represent the
gross thickness of the limestone encountered.
(2) McMoRan's working interest partners in the ultra-deep
play include Energy XXI (NASDAQ: EXXI) and Moncrief Offshore LLC.JX Nippon Oil Exploration (Gulf) Limited is also a working
interest partner in Davy Jones Nos. 1 and 2.
As previously reported, the Davy Jones No. 1 well on South Marsh
Island Block 230 was successfully completed in March 2012 and work is
ongoing to establish commercial production from the well. The
perforation of the Wilcox "D" sandin March 2012resulted
inpositive pressure build-up in the wellbore followed by a gas
flare from the well. Initial samples indicated that the natural gas from
the Wilcox "D" sand is high quality and contains low levels of CO2
and no H2S. Blockage from drilling fluid associated with
initial drilling operations prevented McMoRan from obtaining a
measurable flow rate. Attempts to perforate the Wilcox "C" sand did not
clear the blockage. In April 2012, McMoRan commenced operations to
remove the tubing from the well, clear the residual drilling fluid, and
remove the perforating guns currently set across the Wilcox "F" sand to
provide access to all of the Wilcox reservoirs ("A" through "F")
totaling 200 net feet.
To maximize production from the well and enable effective formation
penetrations, McMoRan plans to use electric wireline casing guns that
are larger than the tubing guns used to perforate the Wilcox "C" and "D"
sands. McMoRan expects the operations currently under way will enable a
measurable flow rate during the second quarter of 2012 followed by
commercial production shortly thereafter.
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 expects to commence the
completion of the No. 2 well in the second half of 2012. 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
$846.9 million at March 31, 2012.
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. The Frio sands are the first
hydrocarbon bearing Frio sands encountered either on the GOM Shelf or in
the deepwater offshore Louisiana. McMoRan is evaluating development
options associated with these formations. Pressure and temperature data
below the salt weld 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 $301.4 million at March 31, 2012.
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, Vicksburg, 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. McMoRan is evaluating development options
associated with these formations. 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 (10,000 gross acres) is located west southwest of Lafitte and
Captain Blood (10,000 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 $191.0 million at March
31, 2012.
The Blackbeard West No. 2 ultra-deep exploration well commenced
drilling on November 25, 2011 and is drilling below 20,000 feet. The
well, which is located on Ship Shoal Block 188 within the Blackbeard
West unit, is targeting Miocene aged sands seen below the salt weld
approximately 13 miles east at Blackbeard East and has a proposed total
depth of 26,000 feet. 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 total investment in Blackbeard West No. 2 totaled
$31.1 million at March 31, 2012.
The Lineham Creek exploration prospect, which is located onshore
in Cameron Parish, Louisiana commenced operations on December 31, 2011.
The well, which is targeting Eocene and Paleocene objectives below the
salt weld, is currently drilling below 13,800 feet towards 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
EXXI (9.0%) and W. A. "Tex" Moncrief Jr. (5.0%).
REVENUES
McMoRan's first-quarter 2012 oil and gas revenues totaled $107.1
million, compared to $133.7 million during the first quarter of 2011.
During the first quarter of 2012, McMoRan's sales volumes totaled 8.8
Bcf of gas, 610,100 barrels of oil and condensate and 1.7 Bcfe of
natural gas liquids, compared to 11.7 Bcf of gas, 686,700 barrels of oil
and condensate and 1.7 Bcfe of natural gas liquids in the first quarter
of 2011. McMoRan's first-quarter comparable average realizations for gas
were $2.59 per thousand cubic feet (Mcf) in 2012 and $4.54 per Mcf in
2011; for oil and condensate McMoRan received an average of $112.70 per
barrel in first-quarter 2012 compared to $96.76 per barrel in
first-quarter 2011; for natural gas liquids McMoRan received an average
of $8.96 per Mcfe in first quarter 2012 compared to $8.02 per Mcfe in
first quarter 2011.
CASH, LIQUIDITY AND CAPITAL EXPENDITURES
At March 31, 2012, McMoRan had $431.7 million in cash. Total debt was
$554.8 million at March 31, 2012, including $254.8 million in
convertible securities. McMoRan had no borrowings and $100 million of
letters of credit issued under its revolving credit facility resulting
in total availability of $50 million at March 31, 2012.
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 $165.1 million for the first quarter of
2012. McMoRan expects 2012 capital expenditures to approximate $500
million, including approximately 50 percent on exploration and 50
percent on development. Capital spending is subject to change depending
on drilling results, follow-on development activities and general market
factors.
Net abandonment expenditures, which include scheduled conventional and
hurricane-related work, totaled $11.7 million for the first quarter of
2012. Abandonment expenditures are expected to approximate $60 million
in 2012.
WEBCAST INFORMATION
A conference call with securities analysts to discuss McMoRan's
first-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, May 18, 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 various oil and gas
discoveries, oil and gas exploration, development and production
activities and costs, capital expenditures, reclamation, indemnification
and environmental obligations and costs, the potential for or
expectation of successful flow tests, anticipated and potential
quarterly and annual production and flow rates, reserve estimates,
projected operating cash flows and liquidity 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, the ability to satisfy future cash obligations and
environmental costs, access to capital to fund drilling activities, as
well as other general exploration and development risks and hazards and
other factors described in more detail 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.
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
March 31,
2012
2011
(In Thousands, Except
Per Share Amounts)
Revenues:
Oil and natural gas
$
107,084
$
133,712
Service
3,563
3,292
Total revenues
110,647
137,004
Costs and expenses:
Production and delivery costs
38,662
47,957
Depletion, depreciation and amortization expense a
41,829
86,670
Exploration expenses
8,019
12,778
b
General and administrative expenses
14,933
15,952
Main Pass Energy Hub™ costs
66
235
Insurance recoveries
(1,229
)
(16,423
)c
Gain on sale of oil and gas properties
-
(900
)
Total costs and expenses
102,280
146,269
Operating income (loss) d
8,367
(9,265
)
Interest expense, net e
-
(5,449
)
Other income, net
228
180
Income (loss) from continuing operations before income taxes
8,595
(14,534
)
Income tax expense
-
-
Income (loss) from continuing operations
8,595
(14,534
)
Loss from discontinued operations
(3,103
)
(1,244
)
Net income (loss)
5,492
(15,778
)
Preferred dividends and inducement payments for early conversion
of convertible preferred stock
(10,342
)
(11,772
)f
Net loss applicable to common stock
$
(4,850
)
$
(27,550
)
Basic and diluted net loss per share of common stock:
Continuing operations g
$ (0.01
)
$ (0.16
)
Discontinued operations
(0.02
)
(0.01
)
Net loss per share of common stock
$ (0.03
)
$ (0.17
)
Average shares outstanding:
Basic and diluted
161,487
157,851
a. Includes impairment charges totaling $7.1 million and
$21.4 million in the first quarters of 2012 and 2011,
respectively. Also includes reclamation accrual adjustments for
asset retirement obligations associated with certain oil and gas
properties totaling approximately $2.0 million and $14.9 million
in the first quarters of 2012 and 2011, respectively.
b. Includes charges for non-productive well costs of $2.1
million.
c. Represents McMoRan's share of insurance reimbursements
related to losses incurred from the September 2008 hurricanes.
d. Includes non-cash stock-based compensation totaling $8.5
million and $9.8 million in the 2012 and 2011 periods,
respectively. These amounts include charges for immediately
vested stock options and stock options granted to
retirement-eligible employees which results in one-year's
compensation expense being immediately recognized at the date of
grant. These charges totaled $5.9 million and $7.2 million in the
first quarters of 2012 and 2011, respectively.
e. Net of interest capitalized to in-progress drilling
projects of approximately $14.3 million and $8.8 million in the
first quarters of 2012 and 2011, respectively.
f. Includes a $1.5 million payment to induce the conversion
of approximately 8,100 shares of McMoRan's 8% convertible
perpetual preferred stock into approximately 1.2 million shares of
its common stock in the first quarter of 2011.
g. For purposes of the earnings per share computations, the
net loss applicable to continuing operations includes preferred
stock dividends and inducement payments.
McMoRan EXPLORATION CO.
RECONCILIATION OF REPORTED AMOUNTS TO NON-GAAP ITEMS (SEE NOTE)
(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™ costs; exploration expenses;
depletion, depreciation and amortization expense; stock-based
compensation charged to general and administrative expenses;
insurance recoveries; and gain on sale of oil and gas
properties. EBITDAX should not be considered by itself or as a
substitute for net income (loss), operating income (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 income (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):
First Quarter
2012
2011
Net loss applicable to common stock, as reported
$
(4,850
)
$
(27,550
)
Preferred dividends and inducement payments for early conversion
of convertible preferred stock
10,342
11,772
Loss from discontinued operations
3,103
1,244
Income (loss) from continuing operations, as reported
8,595
(14,534
)
Other income, net
(228
)
(180
)
Interest expense, net
-
5,449
Income tax expense
-
-
Main Pass Energy Hub™ costs
66
235
Exploration expenses
8,019
12,778
Depletion, depreciation and amortization expense
41,829
86,670
Stock-based compensation charged to general and administrative
expenses
4,229
5,233
Insurance recoveries
(1,229
)
(16,423
)
Gain on sale of oil and gas properties
-
(900
)
Other
20
323
EBITDAX
$
61,301
$
78,651
McMoRan EXPLORATION CO.
OPERATING DATA (Unaudited)
First Quarter
2012
2011
Sales volumes:
Gas (thousand cubic feet, or Mcf)
8,795,100
11,669,400
Oil (barrels)
610,100
686,700
Natural gas liquids (NGLs, Mcf equivalent)
1,731,800
1,738,600
Average realizations:
Gas (per Mcf)
$
2.59
$
4.54
Oil (per barrel)
$
112.70
$
96.76
NGLs (per Mcf equivalent)
$
8.96
$
8.02
McMoRan EXPLORATION CO.
CONDENSED BALANCE SHEETS (Unaudited)
March 31,
December 31,
2012
2011
(In Thousands)
ASSETS
Cash and cash equivalents
$
431,735
$
568,763
Accounts receivable
68,998
72,085
Inventories
36,139
36,274
Prepaid expenses
12,604
9,103
Current assets from discontinued operations, including restricted
cash of $473
848
682
Total current assets
550,324
686,907
Property, plant and equipment, net
2,306,589
2,181,926
Restricted cash and other
59,928
61,617
Deferred financing costs
10,137
8,325
Long-term assets from discontinued operations
439
439
Total assets
$
2,927,417
$
2,939,214
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable
$
123,382
$
115,832
Accrued liabilities
130,839
160,822
Accrued interest and dividends payable
22,241
14,448
Current portion of accrued oil and gas reclamation costs
65,921
58,810
5¼% convertible senior notes
66,861
66,223
Current liabilities from discontinued operations, including sulphur
reclamation costs
4,508
5,264
Total current liabilities
413,752
421,399
11.875% senior notes
300,000
300,000
4% convertible senior notes
187,890
187,363
Accrued oil and gas reclamation costs
261,039
267,584
Other long-term liabilities
19,342
20,886
Other long-term liabilities from discontinued operations, including
sulphur reclamation costs
19,161
19,018
Total liabilities
1,201,184
1,216,250
Stockholders' equity
1,726,233
1,722,964
Total liabilities and stockholders' equity
$
2,927,417
$
2,939,214
McMoRan EXPLORATION CO.
STATEMENTS OF CASH FLOW (Unaudited)
Three Months Ended
March 31,
2012
2011
(In Thousands)
Cash flow from operating activities:
Net income (loss)
$
5,492
$
(15,778
)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Loss from discontinued operations
3,103
1,244
Depletion, depreciation and amortization expense
41,829
86,670
Exploration drilling and related expenditures
-
2,052
Compensation expense associated with stock-based awards
8,504
9,848
Amortization of deferred financing costs
1,716
1,515
Reclamation expenditures, net
(11,665
)
(22,238
)
Increase in restricted cash
(1,253
)
(1,255
)
Gain on sale of oil and gas properties
-
(900
)
Other
(976
)
(203
)
(Increase) decrease in working capital:
Accounts receivable
8,373
(14,695
)
Accounts payable and accrued liabilities
(9,888
)
(20,219
)
Prepaid expenses, inventories and other
(3,367
)
12,224
Net cash provided by continuing operations
41,868
38,265
Net cash used in discontinued operations
(3,099
)
(4,719
)
Net cash provided by operating activities
38,769
33,546
Cash flow from investing activities:
Exploration, development and other capital expenditures
(165,080
)
(96,542
)
Proceeds from sale of oil and gas properties
-
900
Net cash used in continuing operations
(165,080
)
(95,642
)
Net cash activity from discontinued operations
-
-
Net cash used in investing activities
(165,080
)
(95,642
)
Cash flow from financing activities:
Dividends paid and inducement payments on early conversion of
convertible preferred stock
(10,342
)
(6,924
)
Debt and equity issuance costs
-
(543
)
Proceeds from exercise of stock options and other, net
(375
)
548
Net cash used in continuing operations
(10,717
)
(6,919
)
Net cash activity from discontinued operations
-
-
Net cash used in financing activities
(10,717
)
(6,919
)
Net decrease in cash and cash equivalents
(137,028
)
(69,015
)
Cash and cash equivalents at beginning of year
568,763
905,684
Cash and cash equivalents at end of period
$
431,735
$
836,669
Financial & Media Contact: McMoRan Exploration Co. David
P. Joint, 504-582-4203
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