McMoRan provides operational update for its ongoing exploration, production and development activities.

McMoRan's exploration strategy has focused (1) 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 (2) on the “ultra-deep gas play” below 25,000 feet. McMoRan has three deep gas prospects being drilled currently and is engaged in designing engineering plans for the anticipated completion and production test of the South Timbalier Block 168 ultra-deep well, which is not yet fully evaluated.

The Tom Sauk deep gas exploratory prospect on Louisiana State Lease 340 commenced drilling on August 14, 2008 and is drilling below 17,700 feet towards a proposed total depth of 19,000 feet. McMoRan is in the process of logging the well. Tom Sauk, which is located in less than 10 feet of water, is a deep gas prospect which lies below the significant historical shallow production at Mound Point. McMoRan holds an 18.3 percent working interest and a 14.5 percent net revenue interest in the well. PXP holds a 24.4 percent working interest. McMoRan’s investment in Tom Sauk totaled $6.3 million at December 31, 2008.

The Gladstone East deep gas exploratory prospect on Louisiana State Lease 340 commenced drilling on November 16, 2008 and is drilling below 15,600 feet towards a proposed total depth of 18,050 feet. The well, which is located in less than 10 feet of water approximately 5 miles east of the Flatrock Field, is targeting similar potential Rob-L and Operc sands in the middle-Miocene. The Gladstone East prospect also lies below the significant historical shallow production on the western flank of Mound Point. McMoRan holds a 33.1 percent working interest and a 24.5 percent net revenue interest in the well. PXP holds a 44.1 percent working interest. McMoRan’s investment in Gladstone East totaled $5.6 million at December 31, 2008.

The Ammazzo deep gas exploratory prospect in 25 feet of water commenced drilling on November 22, 2008 and is drilling below 7,900 feet towards a proposed total depth of 24,500 feet. The Ammazzo prospect is targeting one of the largest undrilled deep structures below 15,000 feet on the Shelf of the Gulf of Mexico. It is located on the southern portion of the structural ridge extending from the Flatrock and JB Mountain discoveries (located approximately 16 and 11 miles northnorthwest, respectively), where McMoRan has successfully drilled to productive Rob-L, Operc and Gyro sands in the Middle Miocene. McMoRan is operating the well and holds a 25.9 percent working interest and 21.1 percent net revenue interest. McMoRan's partners, PXP and Energy XXI, hold a 28.1 percent working interest and 16.0 percent working interest, respectively. McMoRan's investment in Ammazzo totaled $5.3 million at December 31, 2008.

McMoRan and its partners are engaged in designing engineering plans for the anticipated completion and production test of the South Timbalier Block 168 No. 1 ultra-deep exploratory well (formerly known as Blackbeard West No. 1). As previously reported, this well was drilled to a total depth of 32,997 feet in October 2008 and logs indicated four potential hydrocarbon bearing zones below 30,067 feet that require further evaluation. The well has been temporarily abandoned while the necessary long-lead time completion equipment is being designed and procured for this anticipated high pressure test.

McMoRan will continue to review additional drilling opportunities on the flanks of the structure and on other acreage it holds in the ultra-deep trend. The South Timbalier Block 168 well is located on the top of the targeted structure. Seismic data on the prospect indicates the potential for significantly thicker sands on the flanks of the structure as has been confirmed in recent major deepwater discoveries by other companies. Based on information obtained to date from drilling the South Timbalier Block 168 well, McMoRan believes additional drilling on the flanks could result in significant reserve potential.

South Timbalier Block 168 is located in 70 feet of water approximately 115 miles southwest of New Orleans. McMoRan operates the well, which is the deepest well ever drilled below the mud line in the Gulf of Mexico, and owns a 32.3 percent working interest. McMoRan's partners, PXP and Energy XXI, hold a 35 percent working interest and 20 percent working interest, respectively. McMoRan's investment in South Timbalier Block 168 totaled $32.1 million at December 31, 2008. 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 1.2 million gross acres including 227,000 gross acres associated with the ultra-deep trend.

Tags: McMoRan Exploration Co.