2010-09-28-2010-09-20-2011-01-05

Bought shallow-water GOM interests on 197 blocks, nine prospects and an additional 22 prospects or leads in Pliocene, Miocene and Lower Tertiary reservoirs, gaining 45 MMcfe/d, 63.9 Bcfe proved.

McMoRan Exploration Co., New Orleans, (NYSE: MMR) has closed its acquisition of certain shallow-water interests in the Gulf of Mexico from Plains Exploration & Production Co., Houston, (NYSE: PXP) for approximately $991 million in cash and stock.

McMoRan paid $86 million in cash and issued 51 million shares valued at approximately $17.75 each. The cash portion was originally set for $75 million and was increased due to working capital adjustments, The shares were trading at approximately $14.57 when the deal was announced on Sept. 20. Separately, Plains plans to market its deepwater Gulf assets.

The assets include the Friesian and Lucius oil discoveries, and an exploration portfolio with interests in 107 blocks, nine prospects and an additional 22 prospects or leads in Pliocene, Miocene and Lower Tertiary reservoirs. The assets are all in less than 500 feet of water.

The properties also include Plains' 27.7% interest in the ultra-deep discovery at Davy Jones, a 35% interest in Blackbeard West and all of Plains' interests in deep gas and ultra-deep exploration prospects on the Gulf shelf including Blackbeard East; 30% working interest in the multi-well Flatrock Field, 47.9% interest in Blueberry Hill and 30% working interest in Hurricane Deep.

Production is approximately 45 million net cubic feet of gas equivalents per day. Proved reserves as of June 30 were 63.9 billion cubic feet equivalent.

McMoRan funded the acquisition with previously announcted $900 million of committed financing from an investor group, an additional $400 million in investments from institutional investors and $500 million of convertible preferred stock from Freeport-McMoRan Copper & Gold Inc.

McMoRan has added Plains chairman, president and chief executive James C. Flores and Plains executive vice president John F. Wombwell to its board.

Flores says, "The Gulf of Mexico shallow water ultra-deep exploration program has been and continues to be a successful value creation strategy, and we look forward to our future participation as a significant McMoRan shareholder. The unique operator/ownership structure approved today maximizes value for both PXP and McMoRan shareholders from the ultra-deep program's current discoveries and exploration potential…"

McMoRan co-chairman James R. Moffett and Richard C. Adkerson report, "We are pleased to complete this important acquisition which enables us to effectively double our participation in our key exploration and production projects in the shallow waters of the GOM. Our multi-year efforts have enabled us to define and de-risk the significant geologic potential of this exciting new exploration frontier and develop substantial expertise in executing our drilling and development program. The financing transactions completed today provide McMoRan with significant financial resources to pursue our plans as we work to create asset values and build on our success."

Barclays Capital and Jefferies & Co. were financial advisors to Plains. Hanover Advisors was financial advisor to McMoRan.58