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McMoRan Exploration Slips To Loss - Update

McMoRan Exploration Co. (MMR) Friday reported a net loss for the fourth quarter, compared with a profit last year, hurt by lower revenues. The company said sales of oil and gas slackened, and selling prices of oil witnessed a slump.

McMoRan, which is being acquired by Freeport-McMoRan Copper & Gold Inc. (FCX), has been posting losses over the past few quarters, and has incurred expenses from failure to launch a salient gas well, known as the Davy Jones No. 1 well in the Gulf of Mexico.

Freeport-McMoRan in early December said it will acquire McMoRan and Plains Exploration & Production Co. for $9 billion. However, due to McMoRan's failure related to the Davy Jones well, Freeport-McMoRan about the end of December lowered its offer to acquire the company by 5 percent to $14.75 per share.

McMoRan said that recent operations in the Davy Jones well confirmed that the perforations were open and that the Wilcox formation could accept fluid. McMoRan is currently evaluating plans to pump a hydraulic fracture treatment including proppant to facilitate hydrocarbon movement into the wellbore.

New Orleans, Louisiana-based McMoRan reported fourth-quarter net loss to common shares of $1.2 million or $0.01 per share, compared with net profit of $28 million or $0.16 per share last year.

On average, 9 analysts polled by Thomson Reuters expected a loss of $0.12 per share for the quarter. Analysts' estimates typically exclude special items.

Fourth quarter 2012 results included $39.7 million in net gains associated with the sale of two traditional Gulf of Mexico property packages.

McMoRan reported a decline in fourth-quarter revenues to $84 million from $122 million a year ago.

Analysts expected revenues of $90.03 million for the quarter.

McMoRan's production for the quarter slid to 119 million cubic feet of natural gas equivalent per day (MMcfe/d) from 170 MMcfe/d in the prior year.

McMoRan's sales volumes for the quarter totaled 7.1 Bcf of gas, 456,500 barrels of oil and condensate and 193,100 barrels of natural gas liquids. This compares with 10.4 Bcf of gas, 577,000 barrels of oil and condensate and 298,000 barrels of natural gas liquids a year ago.

The company expects production to average about 100 MMcfe/d in the first quarter of 2013.

McMoRan stock is trading at $15.92, down 0.44%, on the NYSE.

by RTTNews Staff Writer

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