McMoRan Exploration Co. (NYSE: MMR):
HIGHLIGHTS
- Second-quarter 2009
production averaged 187 Million cubic feet of natural gas
equivalents per day (MMcfe/d) net to McMoRan and 192 MMcfe/d for
the six-month period ended June 30, 2009. Average daily production
for 2009 is expected to approximate 210 MMcfe/d net to McMoRan,
including 220 Mmcfe/d in third quarter 2009.
- Flatrock Nos. 5 and 6 wells
have commenced production. The Flatrock field is currently
producing at a gross rate of approximately 300 Mmcfe/d (55 Mmcfe/d
net to McMoRan).
- Exploratory Activities:
- Positive drilling results at
the Blueberry Hill deep gas exploratory well on Louisiana State
Lease 340 indicate a potential major discovery. McMoRan plans to
deepen the well to evaluate additional objectives.
- McMoRan currently has two
additional exploration prospects in-progress:
- Sherwood deep gas prospect on
High Island Block 133
- Davy Jones ultra-deep
prospect on South Marsh Island Block 230
- McMoRan continues to evaluate
additional deep gas and ultra-deep opportunities.
- Operating cash flows totaled
$19.7 million for the second quarter of 2009 and $53.5 million for
the six months ended June 30, 2009.
- Capital expenditures totaled
$55.2 million in the second quarter of 2009 and $84.3 million for
the six months ended June 30, 2009. McMoRan expects capital
expenditures to approximate $180 million for the year.
- In June 2009, McMoRan
completed $176 million in equity financings through the issuance of
15.5 million shares of common stock at a price of $5.75 per share
and $86 million of 8% Convertible Perpetual Preferred
Stock.
- Cash at June 30, 2009 totaled
$225 million. McMoRan had no borrowings under its revolving bank
credit facility.
- Total debt was $375 million
at June 30, 2009, including $75 million in convertible senior
notes.
McMoRan Exploration Co. (NYSE: MMR) today reported a net loss
applicable to common stock of $100.6 million, $1.40 per share, for
the second quarter of 2009 compared with net income applicable to
common stock of $49.7 million, $0.63 per fully diluted share, for
the second quarter of 2008. For the six months ended June 30, 2009,
McMoRan reported a net loss of $163.9 million, $2.30 per share,
compared with net income of $81.7 million, $1.09 per fully diluted
share, in the 2008 period.
James R. Moffett and Richard Adkerson, McMoRan�s Co-Chairmen,
said, �We are continuing our focused strategy of drilling high
potential exploratory wells in the shallow waters of the Gulf of
Mexico. We are encouraged by the recent positive drilling
results at our Blueberry Hill deep gas exploratory well and by the
important data we have gained on the potentially significant
ultra-deep trend. We are engaging in an active drilling
program during the second half of the year. The equity
financings completed during the second quarter strengthened our
financial position as we pursue aggressively these
opportunities. We will continue to be prudent about our
capital spending programs in light of the currently weak natural
gas market but remain optimistic about the potential for
significant value creation through our drilling
activities.�
�
SUMMARY FINANCIAL
TABLE*
� � �
Second Quarter � � �
Six Months 2009 � �
2008 � � �
2009 � �
2008 � � � (In thousands,
except per share amounts) Revenues $ 96,552 � � $ 375,508 � � � $
193,928 � � $ 670,984 Operating income (loss)(d) (87,258 ) 70,256
(136,397 ) 126,081 Income (loss) from continuing operations(d)
(94,707 ) 54,830 (154,199 ) 92,061 Loss from discontinued
operations (3,050 ) (748 ) (4,117 ) (1,604 ) Net income (loss)
applicable to common stock(a,d) (100,612 ) 49,725 (163,853 ) 81,734
Diluted net income (loss) per share:
Continuing operations $ (1.36 ) $
0.64
(b)
$ (2.24 ) $
1.11
(b)
Discontinued operations �
(0.04 ) �
(0.01 ) �
(0.06
) �
(0.02 ) Applicable to
common stock $ (1.40 ) $
0.63
(b)
$ (2.30 ) $
1.09
(b)
Diluted average shares outstanding 71,943
88,278
(b)
71,209
86,783
(b)
Operating cash flows $ 19,738 $ 209,411 $ 53,531 $ 382,225
EBITDAX(c) $ 58,905 $ 269,342 $ 126,834 $ 479,501 Capital
Expenditures � � $ 55,168 � � � $ 59,680 � � � � $ 84,331 � � � $
111,059 �
*
�
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 June 30, 2009 Form 10-Q, the related costs incurred
through June 30, 2009 would be charged to expense in McMoRan�s
second-quarter 2009 financial statements. McMoRan�s investment in
its four in-progress or unproved wells totaled $46.2 million at
June 30, 2009, including the Blueberry Hill exploration well where
subsequent to June 30, 2009, McMoRan encountered positive drilling
results.
a.
After preferred dividends.
b.
Reflects assumed conversion of
McMoRan�s 6% and 5�% Convertible Senior Notes, 6.75% Mandatory
Convertible Preferred Stock, and the dilutive effect of outstanding
stock options and warrants into 30.8 million and 31.1 million
shares for the second-quarter and six-month periods, respectively,
resulting in the exclusion of $1.3 million in interest expense and
$4.4 million in dividends in second-quarter 2008 and $4.1 million
in interest expense and $8.7 million in dividends for the 2008
six-month period.
c.
See reconciliation of EBITDAX to
net income (loss) applicable to common stock on page III.
d.
Notable items impacting the
financial results for the 2009 and 2008 periods are included in the
following table:
� �
Second Quarter � � �
Six Months 2009 � �
2008 � � �
2009 � �
2008 � � � (In thousands)
Non-productive exploration well charges $ (38,143
)(1)
� � $ (13,147 ) � � � $ (54,369 ) � � $ (12,412 ) Impairment
charges (14,591
)(2)
(7,423 ) (53,545
)(2)
(7,423 )
Gain (loss) on oil and gas
derivative contracts
(2,972
)
(70,775
)
15,886
�
(116,006
) Insurance Proceeds � � � 35 � � � � 3,391 � � � � �
18,742
(3)
� � � 3,391 �
(1)
�
Primarily relating to the Ammazzo
and Cordage exploration wells which were determined to be
non-commercial in the second quarter of 2009.
(2)
Reduction of certain fields� net
carrying value to fair value based on period-end pricing and cost
assumptions.
(3)
Initial payment related to the
September 2008 hurricanes in the Gulf of Mexico.
PRODUCTION AND DEVELOPMENT ACTIVITIES
Second-quarter 2009 production averaged 187 MMcfe/d net to
McMoRan, compared with 294 MMcfe/d in the second quarter of 2008.
Production in the second quarter exceeded publicly reported
estimates of 180 MMcfe/d but was lower than the first quarter
average of 198 MMcfe/day because of scheduled maintenance
activities at the Flatrock field. Production is expected to average
approximately 220 MMcfe/d in the third quarter of 2009 and 210
MMcfe/d for the year. Current annual estimates are lower than the
previously announced estimate of 215 MMcfe/d because of longer than
anticipated delays in the startup of third party downstream
production facilities and pipeline availability following shut-ins
for hurricane repairs and the timing of certain planned
recompletions. McMoRan continues to work to restore production
shut-in as a result of the September 2008 hurricanes in the Gulf of
Mexico. An estimated 30 MMcfe/d of McMoRan�s production continues
to be shut-in because of pipeline restrictions. McMoRan�s
production rates are dependent on the timing of restoring
downstream pipelines and facilities damaged by the September 2008
hurricanes, the timing of planned recompletions and production
performance.
Following the Flatrock discovery in OCS 310 on South
Marsh Island Block 212 in July 2007, McMoRan has drilled five
additional successful wells in the field. In May 2009, the operator
completed a planned facility expansion at the Tiger Shoal
production facility and production from the Flatrock Nos. 5 and 6
wells commenced in July 2009 and June 2009, respectively. The field
is currently producing at a gross rate of approximately 300 MMcfe/d
(55 MMcfe/d net to McMoRan). McMoRan has a 25.0 percent working
interest in Flatrock and Plains Exploration & Production
Company (NYSE: PXP) holds a 30.0 percent working interest.
EXPLORATION ACTIVITIES
McMoRan�s exploration strategy is focused on the �deep gas
play,� drilling to depths of 15,000 to 25,000 feet in the shallow
waters of the Gulf of Mexico and Gulf Coast area to target large
structures in the Deep Miocene, and on the �ultra-deep gas play�
below 25,000 feet. McMoRan is one of the largest acreage holders on
the Shelf of the Gulf of Mexico and onshore in the Gulf Coast area
with rights to approximately 1.1 million gross acres including
188,000 gross acres associated with the ultra-deep trend. McMoRan
has two deep gas prospects and one ultra-deep prospect in-progress.
McMoRan also continues to evaluate additional deep gas and
ultra-deep opportunities.
On March 29, 2009, McMoRan re-entered a previously existing well
bore and commenced sidetracking operations at the Blueberry
Hill deep gas prospect located on Louisiana State Lease 340.
Drilling results to date confirm McMoRan�s wedge model where sands
thicken on the flank of the structure. As previously reported, the
exploratory sidetrack well was drilled to a true vertical depth of
21,900 feet and log-while-drilling tools indicated resistive zones
approximating 150 gross feet. These zones will be evaluated with
wireline logs. After encountering a mechanical issue during
drilling, McMoRan has commenced by-pass operations at 18,600 feet
and plans to deepen the well to a proposed total depth of 24,000
feet to evaluate the resistive zones further and to assess deeper
targets. The well is targeting Gyro sands in a down-dip position on
the flank of the structure that were encountered in the original
Blueberry Hill well. The results to date indicate a large structure
which McMoRan believes could lead to additional exploration and
development opportunities.
Blueberry Hill is located in approximately 10 feet of water near
existing infrastructure. McMoRan is reviewing the possibility of
using production processing facilities in the area. McMoRan owns a
42.9 percent working interest and a 29.7 percent net revenue
interest in the Blueberry Hill well. PXP holds a 47.9 percent
working interest. McMoRan�s investment in Blueberry Hill totaled
$31.4 million at June 30, 2009, $8.1 million of which was incurred
on the sidetrack and $23.3 million on the original well. As
previously reported, in February 2005 McMoRan encountered four
hydrocarbon bearing sands in the Gyro section below 22,200 feet in
the original Blueberry Hill exploratory well; however, completion
efforts in 2007 were unsuccessful because of blockage above the
perforated intervals.
The Blueberry Hill discovery follows prior discoveries McMoRan
has made in the Tiger Shoal/Mound Point area (OCS Block
310/Louisiana State Lease 340), including Flatrock, Hurricane,
Hurricane Deep, JB Mountain, and Mound Point. McMoRan controls
150,000 gross acres in this important area and believes it has
multiple additional exploration opportunities on this large acreage
position. McMoRan is incorporating the new information from
Blueberry Hill into its existing database for this high potential
area.
The Sherwood deep gas exploratory prospect commenced
drilling on July 2, 2009 and is drilling below 5,700 feet towards a
proposed total depth of 16,200. The Sherwood prospect, which is
located in 48 feet of water, is targeting Cris R sands in the Lower
Miocene. McMoRan owns a 29.3 percent working interest and a 23.5
percent net revenue interest in the Sherwood prospect. Mariner
Energy, Inc. (NYSE: ME) is the operator of the well and holds a
60.0 percent working interest. McMoRan�s investment in Sherwood
totaled $0.3 million at June 30, 2009.
A drilling rig is on location at the Davy Jones
ultra-deep prospect. McMoRan is re-entering a previously abandoned
well bore located on South Marsh Island Block 230, which had been
drilled to 19,957 feet, and plans to deepen the well to a proposed
total depth of 28,000 feet. The Davy Jones prospect involves a
large ultra-deep structure located in 20 feet of water. This
exploratory well, which McMoRan will operate, will test Eocene
(Wilcox), Paleocene and possibly the Cretaceous (Tuscaloosa)
sections below the salt weld (i.e. listric fault) on the Shelf of
the Gulf of Mexico. McMoRan�s partners in the well will include PXP
and Energy XXI (NASDAQ: EXXI). The 8/8th investment in Davy Jones
totaled $6.0 million at June 30, 2009, most of which is expected to
be shared with partners.
As previously reported, in May 2009 the Minerals Management
Service granted McMoRan�s request for a geophysical Suspension of
Operations (SOO) to extend its leases in the Blackbeard
area, including South Timbalier Block 168. The SOO will provide
time for seismic re-processing, which will provide additional
information about the deep structure, and allow McMoRan to evaluate
whether to drill deeper at Blackbeard West, drill an offset
location or complete the well to test the existing zones. McMoRan
is operator and owns a 32.3 percent working interest in the
Blackbeard West well and PXP and Energy XXI hold a 35 percent
working interest and 20 percent working interest, respectively.
McMoRan�s investment in Blackbeard West totaled $31.8 million at
June 30, 2009.
McMoRan is reviewing plans for a sidetrack of the Hurricane
Deep well on the southern flank of the Flatrock structure for
an up dip test of the significant Gyro sand encountered in the
Hurricane Deep well (No. 226) on South Marsh Island Block 217. As
previously reported, the Hurricane Deep exploratory well was
drilled to a true vertical depth of 20,712 feet in the first
quarter of 2007 and logs indicated an exceptionally thick upper
Gyro sand totaling 900 gross feet, the top 40 feet of which was
hydrocarbon bearing. McMoRan believes an up dip well has the
potential to contain a thicker hydrocarbon column.
Second-quarter 2009 exploration expense includes $35.4 million
in costs for two previously reported non productive wells at the
Ammazzo and Cordage prospects.
REVENUES
McMoRan�s second-quarter 2009 oil and gas revenues totaled $94.1
million, compared to $372.3 million during the second quarter of
2008. During the second quarter of 2009, McMoRan�s sales volumes
totaled 11.2 Bcf of gas; 751,500 barrels of oil and condensate and
1.3 Bcfe of plant products, compared to 17.9 Bcf of gas; 1,125,400
barrels of oil and condensate and 2.1 Bcfe of plant products in the
second quarter of 2008. McMoRan�s second-quarter comparable average
realizations for gas were $3.92 per thousand cubic feet (Mcf) in
2009 and $12.11 per Mcf in 2008; for oil and condensate McMoRan
received an average of $58.24 per barrel in second-quarter 2009
compared to $122.99 per barrel in second-quarter 2008.
EQUITY FINANCINGS
As previously reported, in June 2009 McMoRan raised $168 million
in net proceeds ($176 million gross proceeds) through the sale of
15.5 million shares of common stock at $5.75 per share and $86
million of 8.00% convertible perpetual preferred stock. The
preferred stock is convertible into common stock at a price of
$6.84 per share. McMoRan currently has approximately 86 million
shares of common stock outstanding and approximately 111 million
after assuming conversion of McMoRan�s newly issued 8.00%
convertible perpetual preferred stock and the outstanding 6�%
mandatory convertible preferred stock.
CASH, LIQUIDITY AND CAPITAL EXPENDITURES
At June 30, 2009, McMoRan had $225 million in cash. Total debt
was $375 million at June 30, 2009, including $75 million in
convertible senior notes due in 2011 with a conversion price of
$16.575 per share. McMoRan currently has no borrowings outstanding
on its $235 million revolving credit facility and $135 million in
availability after considering $100 million in outstanding letters
of credit. Capital expenditures totaled $55.2 million for the
second quarter of 2009 and $84.3 million for the six-months ended
June 30, 2009. Capital expenditures are expected to approximate
$180 million for the year. In addition, abandonment expenditures,
which include scheduled conventional and hurricane related work,
are expected to approximate $80 million in 2009.
DERIVATIVE CONTRACTS
During the second quarter of 2009, McMoRan financially settled
swap positions hedging 2.8 Bcf of natural gas and 126,000 barrels
of oil at average prices of $8.92 per Mcf and $71.93 per barrel,
respectively. McMoRan received $16.8 million in cash for these
positions. At June 30, 2009, McMoRan had a total of 3.7 Bcf of
natural gas and 163,000 barrels of oil hedged through 2010 through
open swap positions and 4.4 Bcf of natural gas and 175,000 barrels
of oil hedged through 2010 through puts. Following is a summary of
open swap and put positions at June 30, 2009:
�
Natural Gas Positions (million
MMbtu)
�
Open Swap Positions(1) �
Put
Options(2) � Annual � Average Annual � Average
Total
Volumes Swap Price
Volumes Floor Volumes 2009
1.1 $ 8.97 3.2 $ 6.00 4.3 2010 2.6 $ 8.63 1.2 $ 6.00 3.8
Oil Positions (thousand bbls)
Open Swap Positions(1) Put
Options(2) Annual Average Annual Average Total
Volumes Swap Price Volumes
Floor Volumes 2009 45 $ 71.16 125 $ 50.00
170 2010 118 $ 70.89 50 $ 50.00 168 �
(1) Remaining 2009 swaps cover
periods November-December; 2010 swaps cover periods January-June
and November-December
(2) Covering periods July-October
These derivative contracts have not been designated as hedges
for accounting purposes. Accordingly, these contracts are subject
to mark-to-market fair value adjustments and unrealized gains and
losses are recognized in our operating results. McMoRan�s
second-quarter 2009 results included a net loss of $3.0 million for
mark-to-market accounting adjustments associated with derivative
contracts based on changes in their respective fair market values
through June 30, 2009. McMoRan�s derivative contracts� fair value
was $18.5 million at June 30, 2009.
McMoRan Exploration Co. is an independent public company engaged
in the exploration, development and production of oil and natural
gas offshore in the Gulf of Mexico 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 certain
forward-looking statements regarding various oil and gas
discoveries, oil and gas exploration, development and production
activities, capital expenditures, reclamation costs and anticipated
and potential production and flow rates. Accuracy of these
forward-looking statements depends on assumptions about events that
change over time and is thus susceptible to periodic change based
on actual experience and new developments. McMoRan cautions readers
that it assumes no obligation to update or publicly release any
revisions to the forward-looking statements in this press release
and, except to the extent required by applicable law, does not
intend to update or otherwise revise these statements more
frequently than quarterly. Important factors that might cause
future results to differ from these forward-looking statements
include: adverse conditions such as high temperature and pressure
that could lead to mechanical failures or increased costs;
variations in the market prices of oil and natural gas; drilling
results; unanticipated fluctuations in flow rates of producing
wells; oil and natural gas reserves expectations; the ability to
satisfy future cash obligations and environmental costs; as well as
other general exploration and development risks and hazards. These
and other factors are more fully described in McMoRan�s 2008 Annual
Report on Form 10-K on file with the Securities and Exchange
Commission (SEC).
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 defined under GAAP. As required by SEC Regulation
G, reconciliations of this measure to amounts reported in McMoRan�s
consolidated financial statements are included in the supplemental
schedules of this press release.
A copy of this release is available on McMoRan�s web site at
www.mcmoran.com. A conference call with securities analysts about
second-quarter 2009 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, August 14,
2009.
�
McMoRan EXPLORATION CO.
STATEMENTS OF OPERATIONS
(Unaudited)
� � � Three Months Ended � � Six Months Ended June 30, June 30,
2009 � � 2008 2009 � � 2008 (In Thousands, Except Per Share
Amounts)
Revenues: Oil and natural gas $ 94,065 $ 372,321 $
189,147 $ 664,267 Service � 2,487 � � 3,187 � � 4,781 � � 6,717 �
Total revenues 96,552 375,508 193,928 670,984
Costs and
expenses: Production and delivery costs
48,800
a
69,505
97,846
a
125,151 Depletion, depreciation and amortization b 73,970 121,001
167,367 242,333 Exploration expenses c, d 46,836 27,480 75,262
34,293 (Gain) loss on oil and gas derivative contracts 2,972 70,775
(15,886 ) 116,006 General and administrative expenses c 10,916
18,237 23,362 27,249 Start-up costs for Main Pass Energy Hub� c 351
1,645 1,116 3,262 Insurance recoveries
(35)
e
� (3,391 )
(18,742)
e
� (3,391 ) Total costs and expenses � 183,810 � � 305,252 � �
330,325 � � 544,903 � Operating income (loss) (87,258 ) 70,256
(136,397 ) 126,081 Interest expense, net (10,275 ) (12,520 )
(20,941 ) (29,631 ) Other income (expense), net � 2,843 � � (1,897
) � 3,172 � � (2,524 ) Income (loss) from continuing operations
before income taxes (94,690 ) 55,839 (154,166 ) 93,926 Provision
for income taxes � (17 ) � (1,009 ) � (33 ) � (1,865 ) Income
(loss) from continuing operations (94,707 ) 54,830 (154,199 )
92,061 Loss from discontinued operations � (3,050 ) � (748 ) �
(4,117 ) � (1,604 ) Net income (loss) (97,757 ) 54,082 (158,316 )
90,457 Preferred dividends � (2,855 ) � (4,357 ) � (5,537 ) �
(8,723 ) Net income (loss) applicable to common stock $ (100,612 )
$ 49,725 � $ (163,853 ) $ 81,734 � �
Basic net income (loss) per
share of common stock: Continuing operations $ (1.36 ) $ 0.88 $
(2.24 ) $ 1.50 Discontinued operations � (0.04 ) � (0.01 ) � (0.06
) � (0.03 ) Net income (loss) per share of common stock $ (1.40 ) $
0.87 � $ (2.30 ) $ 1.47 � �
Diluted net income (loss) per share
of common stock: Continuing operations $ (1.36 ) $ 0.64 $ (2.24
) $ 1.11 Discontinued operations � (0.04 ) � (0.01 ) � (0.06 ) �
(0.02 ) Net income (loss) per share of common stock $ (1.40 ) $
0.63 � $ (2.30 ) $ 1.09 � �
Average common shares
outstanding: Basic � 71,943 � � 57,450 � � 71,209 � � 55,703 �
Diluted � 71,943 � � 88,278 � � 71,209 � � 86,783 � �
McMoRan EXPLORATION CO.
FOOTNOTES TO STATEMENTS OF
OPERATIONS (Unaudited)
� a. � Includes hurricane assessment and repair charges totaling
$3.8 million and $14.7 million in the second quarter and six months
ended June 30, 2009, respectively. b. Includes impairment charges
totaling $14.6 million and $53.5 million in the second quarter and
six months ended June 30, 2009, respectively, and $7.4 million in
the second quarter and six months ended June 30, 2008. c. Non-cash
stock-based compensation of the following amounts is included in
the respective expense categories shown below (in thousands): � �
Second Quarter � � Six Months 2009 � � 2008 2009 � � 2008 General
and administrative expenses $ 1,446 $ 9,140 $ 4,566 $ 10,121
Exploration expenses 1,309 9,158 4,355 10,047 Main Pass Energy Hub
start-up costs � 78 � 636 � 259 � 707 Total stock-based
compensation cost $ 2,833 $ 18,934 $ 9,180 $ 20,875 d. � Includes
non-productive well costs of $38.1 million and $54.4 million in the
second quarter and six months ended June 30, 2009, respectively,
and $13.1 million and $12.4 million in the second quarter and six
months ended June 30, 2008, respectively. e. Represents McMoRan�s
share of the initial payment of insurance proceeds related to
losses incurred as a result of the September 2008 hurricanes. �
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. �EBITDAX� is derived from net income (loss) from
continuing operations before other (income) expense, interest
expense (net), income taxes, start-up costs for the Main Pass
Energy HubTM project, exploration expenses, depletion, depreciation
and amortization expense, stock-based compensation charged to
general and administrative expense, change in fair value of oil and
gas derivative contracts, hurricane-related charges and insurance
recoveries. 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 income (loss) applicable to common stock to EBITDAX (in
thousands): � � � Second Quarter � � Six Months 2009 � � 2008 2009
� � 2008 Net income (loss) applicable to common stock, as reported
$ (100,612 ) $ 49,725 $ (163,853 ) $ 81,734 Preferred dividends
2,855 4,357 5,537 8,723 Loss from discontinued operations � 3,050 �
� 748 � � 4,117 � � 1,604 � Income (loss) from continuing
operations, as reported (94,707 ) 54,830 (154,199 ) 92,061 � Other
(income) expense (2,843 ) 1,897 (3,172 ) 2,524 Interest expense,
net 10,275 12,520 20,941 29,631 Income taxes 17 1,009 33 1,865
Start-up costs for Main Pass Energy HubTM project 351 1,645 1,116
3,262 Exploration expenses 46,836 27,480 75,262 34,293 Depletion,
depreciation and amortization expense 73,970 121,001 167,367
242,333
Hurricane-related charges included
in production and delivery costs
3,831 - 14,676 -
Stock-based compensation charge to
general and administrative expenses
1,446 9,140 4,566 10,121 Insurance recoveries (35 ) (3,391 )
(18,742 ) (3,391 )
Change in fair value of oil and
gas derivative contracts
� 19,764 � � 43,211 � � 18,986 � � 84,802 � EBITDAX $ 58,905 � $
269,342 � $ 126,834 � $ 497,501 � �
McMoRan EXPLORATION CO.
OPERATING DATA
(Unaudited)
� � � Three Months Ended � � Six Months Ended June 30, June 30,
2009 � � 2008 2009 � � 2008 Sales volumes: Gas (thousand cubic
feet, or Mcf) 11,206,000 17,858,000 23,371,600
�
35,401,400 Oil (barrels) 751,500 1,125,400 1,500,700 2,214,500
Plant products (per Mcf equivalent) a 1,301,700 2,114,000 2,419,800
4,479,000 Average realizations: Gas (per Mcf) $ 3.92 $ 12.11 $ 4.42
$ 10.60 Oil (per barrel) 58.24 122.99 49.59 110.40 a. � Results
include approximately $6.2 million and $11.2 million of revenues
associated with plant products (ethane, propane, butane, etc.)
during the second quarter and six months ended June 30, 2009,
respectively. Plant product revenues for the comparable prior year
periods totaled $21.0 million and $44.1 million. One Mcf equivalent
is determined using the ratio of six Mcf of natural gas to one
barrel of crude oil, condensate or natural gas liquids. �
McMoRan EXPLORATION CO.
CONDENSED BALANCE SHEETS
(Unaudited)
� � � June 30, � � December 31, 2009 2008 (In Thousands)
ASSETS Cash and cash equivalents $ 225,483 $ 93,486 Accounts
receivable 97,106 112,684 Inventories 47,490 31,284 Prepaid
expenses 2,340 13,819 Fair value of oil and gas derivative
contracts 16,784 31,624
Current assets from discontinued
operations, including restricted cash of $0.5 million
� 479 � 516 Total current assets 389,682 283,413 Property, plant
and equipment, net 866,410 992,563 Restricted investments and cash
37,327 29,789 Deferred financing costs 13,959 15,658 Fair value of
oil and gas derivative contracts 2,231 5,847 Sulphur business
assets � 3,005 � 3,012 Total assets $ 1,312,614 $ 1,330,282 �
LIABILITIES AND STOCKHOLDERS� EQUITY Accounts payable $
68,434 $ 77,009 Accrued liabilities 65,336 89,565 Accrued interest
and dividends payable 7,819 7,586 Current portion of accrued oil
and gas reclamation costs 53,350 103,550 Current portion of accrued
sulphur reclamation costs 303 785 Fair value of oil and gas
derivative contracts 421 - Current liabilities from discontinued
operations � 3,031 � 1,317 Total current liabilities 198,694
279,812 5�% convertible senior notes 74,720 74,720 11.875% senior
notes 300,000 300,000 Accrued oil and gas reclamation costs 366,260
317,651 Accrued sulphur reclamation costs 23,219 22,218 Fair value
of oil and gas derivative contracts 110 - Other long-term
liabilities 20,166 20,023 Other long-term liabilities from
discontinued operations � 6,953 � 6,835 Total liabilities � 990,122
� 1,021,259 Stockholders' equity � 322,492 � 309,023 Total
liabilities and stockholders' equity $ 1,312,614 $ 1,330,282 �
McMoRan EXPLORATION CO.
STATEMENTS OF CASH FLOWS
(Unaudited)
� � � Six Months Ended June 30, 2009 � � 2008 (In Thousands)
Cash flow from operating activities: Net income (loss) $
(158,316 ) $ 90,457
Adjustments to reconcile net
income (loss) to net cash provided by operating activities:
Loss from discontinued operations 4,117 1,604 Depletion,
depreciation and amortization 167,367 242,333 Exploration drilling
and related expenditures, net 54,370 11,873 Compensation expense
associated with stock-based awards 9,180 20,875 Amortization of
deferred financing costs 1,862 2,757
Change in fair value of oil and
gas derivative contracts
18,986 84,802 Loss on induced conversions of convertible senior
notes - 2,663 Reclamation expenditures, net of prepayment by third
parties (25,522 ) (1,146 ) Increase in restricted cash (7,537 )
(7,567 ) Other (47 ) (262 ) (Increase) decrease in working capital:
Accounts receivable 5,461 (82,176 ) Accounts payable and accrued
liabilities (10,007 ) 22,295 Prepaid expenses and inventories �
(4,728 ) � (2,024 ) Net cash provided by continuing operations
55,186 386,484 Net cash used in discontinued operations � (1,655 )
� (4,259 ) Net cash provided by operating activities � 53,531 � �
382,225 � �
Cash flow from investing activities:
Exploration, development and other capital expenditures (84,331 )
(111,059 ) Other � - � � 1,112 � Net cash used in continuing
operations (84,331 ) (109,947 ) Net cash from discontinued
operations � - � � - � Net cash used in investing activities �
(84,331 ) � (109,947 ) �
Cash flow from financing
activities: Net proceeds from the sale of common stock 84,933 -
Net proceeds from the sale of 8%
convertible perpetual preferred stock
83,228 - Payments under senior secured revolving credit facility,
net - (269,500 ) Dividends paid on preferred stock (5,364 ) (9,108
) Payments for induced conversion of convertible senior notes -
(2,663 ) Proceeds from exercise of stock options and other � - � �
4,686 � Net cash provided by (used in) continuing operations
162,797 (276,585 ) Net cash from discontinued operations � - � � -
� Net cash provided by (used in) financing activities � 162,797 � �
(276,585 ) Net increase (decrease) in cash and cash equivalents
131,997 (4,307 ) Cash and cash equivalents at beginning of year �
93,486 � � 4,830 � Cash and cash equivalents at end of period $
225,483 � $ 523 �
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