McMoRan Exploration Co. Reports First-Quarter 2006 Results and Updates Gulf of Mexico Exploration and Development & Main Pass Energy Hub(TM) Activities

HIGHLIGHTS

-- First-quarter 2006 drilling included five successful development wells, including Long Point No. 2 at Louisiana State Lease 18090, Hurricane No. 2 at South Marsh Island Block 217, King Kong No. 3 at Vermilion Blocks 16/17 and Raptor A-3 and A-4 at Ship Shoal Block 296; and positive exploratory results from the King of the Hill No. 2 well at High Island Block 131.

-- Continued active Deep Miocene Gas exploration program under $500 million multi-year exploration venture. Four wells currently drilling:

-- JB Mountain Deep at South Marsh Island Block 224

-- Liberty Canal located onshore Vermilion Parish, Louisiana

-- Laphroaig located in inland waters, onshore St. Mary Parish, Louisiana

-- Long Point Deep at Louisiana State Lease 18091

-- Since inception of the exploration venture, McMoRan and its private partner have participated in nine discoveries on the 20 prospects that have been drilled and evaluated. Seven additional prospects are either in progress or not fully evaluated.

-- First-quarter 2006 production averaged 46 MMcfe/d net to McMoRan, compared with first-quarter 2005 average production of 17 MMcfe/d.

-- Second-quarter 2006 production expected to average 55-65 MMcfe/d net to McMoRan, reflecting increases associated with successful exploration and development activities. Seven wells are in completion phase which are expected to add significant production in the second half of 2006.

-- The United States Coast Guard (Coast Guard) published the Final Environmental Impact Statement (EIS) for the MPEH(TM) license application and public hearings have been conducted. A record of decision on the application is scheduled to be reached by the end of June 2006.

-- Established a $100 million Revolving Credit Facility, with an initial borrowing base of $55 million.

-- Completed privately negotiated transactions to induce conversion of approximately $54 million of convertible debt into approximately 3.6 million shares of common stock.

-- On March 31, 2006, McMoRan had approximately $56 million in unrestricted cash.

McMoRan Exploration Co. (NYSE: MMR) today reported a net loss of$13.5 million, $0.50 per share, for the first quarter of 2006 comparedwith a net loss of $5.7 million, $0.24 per share, for the firstquarter of 2005. McMoRan's net loss from its continuing operations forthe first quarter of 2006 totaled $11.4 million, which includes $20.6million of exploration expense ($12.3 million of nonproductivedrilling and related costs) and $1.8 million of start-up costsassociated with the MPEH(TM). During the first quarter of 2005,McMoRan's net loss from continuing operations totaled $4.3 million,including $7.5 million of exploration expense ($2.9 million ofnonproductive drilling and related costs) and $2.3 million of MPEH(TM)start-up costs.

On January 1, 2006, McMoRan adopted Statement of FinancialAccounting Standards No. 123 (revised 2004), "Share-Based Payment"(SFAS 123R). Stock-based compensation costs totaled $9.7 million,$0.36 per share in the 2006 quarter compared with $0.3 million ($0.01per share) in the first quarter of 2005. Approximately $5.0 million ofthe first quarter 2006 expense was included in exploration costs and$4.7 million in general and administrative expenses. For the year,McMoRan expects stock-based compensation expense under SFAS 123R forstock-based awards issued through March 31, 2006 to totalapproximately $15.5 million (including approximately $2.0 million perquarter in the balance of the year). First quarter 2006 compensationcosts include the total fair value of immediately-vested stock optionsgranted during the period in lieu of 2006 cash compensation for seniorexecutive management.
SUMMARY FINANCIAL TABLE
----------------------------------------------------------------------
First Quarter
--------------------------
2006 2005
--------------------------
(In Thousands, Except Per
Share Amounts)
------------------------------------------ --------------------------
Revenues $ 39,746 $ 14,667
Operating loss (6,378) (2,116)
Net loss from continuing operations (11,405) (4,304)
Net loss from discontinued operations (1,677) (1,029)
Net loss applicable to common stock (13,485) (5,744)
Basic and diluted net loss per share:
-------------------------------------
Continuing operations $ (0.44) $ (0.20)
Discontinued operations (0.06) (0.04)
Applicable to common stock (0.50) (0.24)
Diluted average common shares outstanding 26,832 24,385
----------------------------------------------------------------------

James R. Moffett and Richard C. Adkerson, Co-Chairmen of McMoRan,said, "The theme of our 2005 Annual Report, 'McMoRan Momentum,'highlights the advancement of efforts to create values from our DeepMiocene exploration program and our proposed Main Pass Energy Hub(TM)offshore LNG project. We anticipate continuing momentum in 2006through expanding our oil and gas production, drilling high impactexploration targets and completing the permitting process andadvancing our MPEH(TM) project."

EXPLORATION ACTIVITIES

Since inception in 2004 of a multi-year, $500 million explorationventure, McMoRan and its private partner have participated in ninediscoveries on the 20 prospects that have been drilled and evaluated.Seven additional prospects are either in progress or not fullyevaluated. McMoRan currently has four exploratory wells drilling.

McMoRan announced today a discovery at the King of the Hill No. 2exploratory well at High Island Block 131. The well, which commenceddrilling on January 28, 2006, was drilled to a total depth of 16,290feet and was evaluated with wireline logs. We are evaluatingadditional drilling opportunities on this acreage position. McMoRanand its private partner each own a 25.0 percent working interest and a19.6 percent net revenue interest in the King of the Hill prospect.The High Island Block 131 lease is eligible for Deep Gas RoyaltyRelief.

The Point Chevreuil exploratory well in Louisiana state waters inthe South Belle Isle Field, St. Mary Parish, Louisiana commenceddrilling on November 18, 2005 and was drilled to a total depth of17,011 feet. The well is being evaluated. McMoRan has a 25 percentworking interest and a 17.5 percent net revenue interest in the PointChevreuil prospect. McMoRan's investment in Point Chevreuil totaled$5.4 million at March 31, 2006.

The Pecos exploratory well commenced drilling on January 5, 2006and was drilled to a total depth of 18,795 feet. The well is beingevaluated. The Pecos prospect at West Pecan Island is located onshorein Vermilion Parish, Louisiana and was drilled as a directional wellfrom an offshore location in less than 10 feet of water to a bottomhole location onshore. McMoRan's investment in Pecos totaled $8.3million at March 31, 2006.
----------------------------------------------------------------------
Proposed
Net Total
Working Revenue Current Vertical
Interest Interest Depth Depth Spud Date
------------------- -------- -------- -------- -------- --------------
Exploration
In-Progress
----------------------------------------------------------------------
South Marsh Island
Block 224
"JB Mountain Deep"(a) 35.0% 24.8% 24,450' 25,000' July 14, 2005
------------------- -------- -------- -------- -------- --------------
Onshore Vermilion
Parish, LA
"Liberty Canal" 37.5% 27.7% 14,000' 16,500' March 5, 2006
------------------- -------- -------- -------- -------- --------------
St. Mary Parish, LA
"Laphroaig" 37.5% 27.8% 4,500' 19,000' April 8, 2006
------------------- -------- -------- -------- -------- --------------
Louisiana State
Lease 18091 Rig on
"Long Point Deep" 37.5% 26.8% Location 23,000' April 2006
----------------------------------------------------------------------
Near-Term Exploration Wells(b)
----------------------------------------------------------------------
Second-Quarter
Vermilion Block 54 30.0% 24.2% n/a 15,400' 2006
------------------- -------- -------- -------- -------- --------------
South Marsh Island
Block 217 Second-Quarter
"Hurricane Deep" 27.5% 19.4% n/a 21,500' 2006
----------------------------------------------------------------------

(a) Depending upon applicability of the Deep Gas Royalty Relief
eligibility criteria, the leases on which this well is located
could be eligible for royalty relief up to 25 Bcf under current
Minerals Management Service guidelines subject to pricing
thresholds. McMoRan's net revenue interest would increase during
the royalty relief period for eligible leases.

(b) Timing is subject to change.

The JB Mountain Deep exploratory well No. 224 commenced drillingon July 14, 2005 and has a planned total depth of 25,000 feet. Thewell is currently drilling at 24,450 feet. As previously reported,drilling activities were temporarily suspended in February 2006 whilethe drilling rig was used to perform workover activities on theHurricane No. 1 discovery well at South Marsh Island Block 217.Following a successful workover at Hurricane No. 1, the rig returnedto the JB Mountain Deep location in March 2006 to complete drillingand evaluation of the prospect. McMoRan and its private partnercontrol 5,200 gross acres in the area including portions of SouthMarsh Island Blocks 224, 228 and 229. This acreage is not included inthe JB Mountain/Mound Point program where McMoRan has a reversionaryinterest. McMoRan operates the JB Mountain Deep prospect and, ifsuccessful, McMoRan and its private partner would each earn a 35.0percent working interest and a 24.8 percent net revenue interest inthe well. We expect the well would be eligible for Deep Gas RoyaltyRelief. McMoRan's investment in JB Mountain Deep totaled $24.3 millionat March 31, 2006.

The Liberty Canal exploratory well commenced drilling on March 5,2006 and is currently drilling below 14,000 feet, with a planned totaldepth of 16,500 feet. McMoRan has a 37.5 percent working interest anda 27.7 percent net revenue interest in the Liberty Canal prospect,which is located onshore in Vermilion Parish, Louisiana. Liberty Canalwas acquired from El Paso Production Company in 2005, as part of a sixprospect "deep gas" program which includes the recent discoveries atLong Point and Cane Ridge. McMoRan's investment in Liberty Canaltotaled $2.3 million at March 31, 2006.

The Laphroaig exploratory well in St. Mary Parish, Louisianacommenced drilling on April 8, 2006, and is currently drilling below4,500 feet with a planned total depth of 19,000 feet. McMoRan has a37.5 percent working interest and a 27.8 percent net revenue interestin the Laphroaig prospect.

The Long Point Deep exploratory well at Louisiana State Lease18091 in Vermilion Parish is expected to commence drilling in April2006 and has a planned total depth of 23,000 feet. The well which is7,000 feet southwest of the Long Point No. 1 discovery well will testadditional horizons in a separate fault block than the discovery welland the successful No. 2 offset well. McMoRan has a 37.5 percentworking interest and a 26.8 percent net revenue interest in Long PointDeep, which is located in inland waters.

The Denali well on South Pass Block 26 commenced drilling onDecember 15, 2005, and was drilled to a total depth of 17,442 feet.Evaluation of the well determined that it did not contain commercialquantities of hydrocarbons and it was plugged and abandoned.

McMoRan's first-quarter 2006 exploration expenses associated withnonproductive wells totaled $12.3 million, consisting of $8.1 millionof drilling and related costs for Denali and the first quarter 2006expenditures associated with the previously announced nonproductivewells at Elizabeth ($1.7 million) and Cabin Creek ($2.5 million).

McMoRan expects to commence drilling at least seven additionalexploratory prospects during 2006, including Vermilion Block 54 andHurricane Deep at South Marsh Island Block 217 in the second quarterof 2006. McMoRan currently has rights to approximately 400,000 grossacres, including over 100,000 gross acres acquired in January 2006through a farm-in transaction of exploration rights in southernLouisiana and on the Gulf of Mexico shelf. McMoRan is also activelypursuing opportunities through its exploration venture to acquireadditional acreage and prospects through farm-in or otherarrangements.

PRODUCTION AND DEVELOPMENT ACTIVITIES

First-quarter 2006 production averaged 46 MMcfe/d net to McMoRan,including oil production of approximately 2,400 bbls/d (14 MMcfe/d)from Main Pass Block 299, nearly three times the average rates infirst quarter 2005. The first quarter 2006 rates include the effectsof downtime associated with remedial activities at the Hurricane No. 1well. The remedial activities have been completed and the well iscurrently producing at a gross rate of 30 MMcf/d and 1,600 bbls/d ofcondensate (7.5 MMcfe/d net to McMoRan).

During the first quarter of 2006, McMoRan participated in fivesuccessful development wells, including Long Point No. 2, HurricaneNo. 2, King Kong No. 3 and Raptor A-3 and A-4. McMoRan is engaged indevelopment operations at King Kong No. 3 at Vermilion Blocks 16/17,Hurricane No. 2 at South Marsh Island Block 217, Long Point Nos. 1 and2 at Louisiana State Lease 18090, West Cameron Block 43 and DawsonDeep at Garden Banks Block 625.

McMoRan's share of second quarter 2006 production is expected toaverage 55-65 MMcfe/d, including approximately 2,500 bbls/d (14MMcfe/d) for McMoRan's share of oil production from Main Pass Block299. The increase from first quarter rates reflects resumption ofproduction from Hurricane No. 1 and new production from Cane Ridge,West Cameron Block 43 and other development activities. Seven wellsare under development and are expected to add significant productionvolumes during the second half of 2006.
PRODUCTION TIMELINE
----------------------------------------------------------------------
Working Net Revenue Expected
Interest Interest Start-Up Date
---------------------------- ------------ ------------ ---------------
Onshore Vermilion Parish, LA Second-Quarter
"Cane Ridge" 37.5% 27.5% 2006
---------------------------- ------------ ------------ ---------------
Vermilion Blocks 16/17 Second-Quarter
"King Kong No. 3" 40.0% 29.2% 2006
---------------------------- ------------ ------------ ---------------
West Cameron Block 43 Second-Quarter
"No. 3"(a) 23.4% 18.0% 2006
---------------------------- ------------ ------------ ---------------
South Marsh Island Block 217 Second-Quarter
"Hurricane No. 2" 27.5% 19.4% 2006
---------------------------- ------------ ------------ ---------------
Louisiana State Lease 18090
"Long Point No. 1" 37.5% 26.8% Mid-2006
---------------------------- ------------ ------------ ---------------
Louisiana State Lease 18090
"Long Point No. 2" 37.5% 26.8% Mid-2006
---------------------------- ------------ ------------ ---------------
Garden Banks Block 625
"Dawson Deep" 30.0% 24.0% Mid-2006
----------------------------------------------------------------------

(a) Lease is eligible for Deep Gas Royalty Relief under MMS
guidelines.

The Long Point No. 2 development well commenced drilling onNovember 30, 2005 and was drilled to a total depth of 19,617 feet inthe first quarter of 2006. The well encountered a total of 135 feet ofnet hydrocarbon bearing sands including the original pay zoneidentified by the No. 1 discovery well and three additionalpotentially significant pay zones. During the second quarter of 2006,a successful production test was conducted on the Long Point No. 2well, which indicated a gross flow rate of approximately 37 MMcf/d and450 barrels of condensate per day (40 MMcfe/d, 10.6 MMcfe/d net toMcMoRan) on a 20/64ths choke with flowing tubing pressure of 11,400pounds per square inch. Long Point No. 2 is located approximately2,000 feet northwest from the Long Point No. 1 discovery well.

The Long Point No. 1 discovery well was drilled to 19,000 feet inOctober 2005. The well was evaluated with log-while-drilling tools andwireline logs, indicating an interval approximating 116 net feet ofhydrocarbon bearing sands with excellent porosity. In November 2005,McMoRan conducted a successful production test on the Long Pointdiscovery, which indicated a gross flow rate of approximately 41MMcf/d and 860 barrels of condensate per day (46 MMcfe/d, 12 MMcfe/dnet to McMoRan) on a 29/64ths choke with flowing tubing pressure of10,200 pounds per square inch. McMoRan and its private partner eachown a 37.5 percent working interest and a 26.8 percent net revenueinterest in the Long Point field.

Both Long Point wells are expected to commence production inmid-2006. Initial gross production from the Long Point field isexpected to be limited to 60-70 MMcf/d until additional pipelinecapacity becomes available.

The Hurricane No. 2 development well at South Marsh Island Block217 commenced drilling on August 21, 2005, and was drilled to 14,000feet. The well was evaluated with log-while-drilling tools andwireline logs, indicating an interval approximating 35 net feet ofhydrocarbon bearing sands in a partial penetration of the producingreservoir in the Hurricane No. 1 discovery well. The No. 2 well isexpected to commence production during the second quarter of 2006. TheHurricane No. 2 well is located northwest of the Hurricane discoverywell where successful workover activities were performed during thefirst quarter of 2006. The Hurricane No. 1 well is currently producingat a gross rate of 30 MMcf/d and 1,600 bbls/d of condensate (7.5MMcfe/d net to McMoRan) and is being ramped up to 40 MMcf/d and 2,000bbls/d of condensate (10 MMcfe/d net to McMoRan). McMoRan holds a 27.5percent working interest and a 19.4 percent net revenue interest inthis field and has rights to approximately 7,700 gross acres in theHurricane area, which is located offshore Louisiana in 10 feet ofwater. Additional penetrations in this important reservoir are beingstudied. Production from the Hurricane well uses the Tiger Shoalfacilities, which are also being used to produce the JB Mountain andMound Point discoveries in the OCS 310/State Lease 340 area.

Completion activities are under way at the King Kong No. 3development well at Vermilion Blocks 16/17. In April 2006, asuccessful production test was conducted on the well indicating agross flow rate of approximately 12 MMcf/d and 100 barrels ofcondensate per day (3.7 MMcfe/d net to McMoRan) on a 22/64ths chokewith flowing tubing pressure of 4,556 pounds per square inch. The No.3 well is expected to commence production in the second quarter of2006. Pipeline limitations at this location have been resolved andduring the first quarter of 2006 the field averaged 16 MMcfe/d gross(4.8 MMcfe/d net to McMoRan), principally from the No. 1 well. The No.2 well was shut-in in mid-February 2006 for workover operations whichhave been completed and production recommenced in April 2006. The No.2 well is currently producing at a gross rate of 4 MMcfe/d (1 MMcfe/dnet to McMoRan) with flowing tubing pressure of 1,950 pounds persquare inch. We are evaluating additional drilling opportunities onthis acreage position where we have rights to approximately 3,300gross acres. McMoRan and its private partner each have a 40.0 percentworking interest and a 29.2 percent net revenue interest in the KingKong prospect, which is located in 12 feet of water.

The Raptor A-3 and A-4 development wells were successfullycompleted and commenced production during the first quarter of 2006.The Raptor field's current gross production is approximately 37MMcfe/d, 13 MMcfe/d net to McMoRan compared to an average of 18MMcfe/d, 6 MMcfe/d net in the fourth quarter of 2005. McMoRan has a49.4 percent working interest and a 34.8 percent net revenue interestin the field.

Completion activities are under way at the Cane Ridge discoverylocated onshore in Vermilion Parish, Louisiana. During the firstquarter of 2006, a successful production test was conducted on theCane Ridge discovery well, which indicated a gross flow rate ofapproximately 13.2 MMcfe/d (3.6 MMcfe/d net to McMoRan). The well isexpected to commence production during the second quarter of 2006.McMoRan and its private partner each own a 37.5 percent workinginterest and a 27.5 percent net revenue interest in the Cane Ridgewell.

Completion activities at West Cameron Block 43 No. 3 are under waywith initial production expected in the second quarter of 2006.McMoRan holds a 23.4 percent working interest and an 18.0 percent netrevenue interest in the West Cameron Block 43 No. 3 well. The WestCameron Block 43 No. 4 well encountered mechanical issues duringcompletion and sidetrack operations are being considered for the well.McMoRan holds a 41.7 percent working interest and a 32.3 percent netrevenue interest in the West Cameron Block 43 No. 4 well. The WestCameron Block 43 lease, located in 30 feet of water, 8 miles offshore,is eligible for Deep Gas Royalty Relief.

Completion activities at the Dawson Deep discovery at Garden BanksBlock 625 are under way and initial production is expected to commencein mid-2006. McMoRan owns a 30.0 percent working interest and a 24.0percent net revenue interest in the Dawson Deep discovery. Dawson Deepis located on a 5,760 acre block located approximately 150 milesoffshore Texas.

The equipment for the completion of the Blueberry Hill well atLouisiana State Lease 340 is expected to be delivered in the thirdquarter of 2006. As previously reported, the Blueberry Hillexploratory well reached a total depth of 23,903 feet in the firstquarter of 2005. Wireline logs indicated four potentially productivehydrocarbon bearing sands. A 4 1/2 inch production liner was installedand cemented to protect the identified potential pay zones. Thedrilling rig moved off location while the necessary 20,000-pound persquare inch completion equipment, tubulars and liners for theanticipated high pressure well are procured. Completion and testing ofthe well will determine future plans for this prospect. McMoRanoperates Blueberry Hill, located seven miles east of the JB Mountaindiscovery and seven miles south southeast of the Mound Point Offsetdiscovery. McMoRan and its private partner each hold a 35.3 percentworking interest and a 24.2 percent net revenue interest in theBlueberry Hill well. McMoRan's investment in Blueberry Hill totaled$12.6 million at March 31, 2006.

JB MOUNTAIN/MOUND POINT AREA ACTIVITIES

McMoRan is a participant in a program that began in 2002 andincludes the JB Mountain and Mound Point Offset discoveries in the OCS310 and Louisiana State Lease 340 areas, respectively. The programcurrently holds a 55 percent working interest and a 38.8 percent netrevenue interest in the JB Mountain prospect and a 30.4 percentworking interest and a 21.6 percent net revenue interest in the MoundPoint Offset prospect. Under terms of the program, the third partypartner is funding all of the costs attributable to McMoRan'sinterests in the properties, and will own all of the program'sinterests until the program's aggregate production totals 100 Bcfeattributable to the program's net revenue interest, at which point 50percent of the program's interests would revert to McMoRan. Allexploration and development costs associated with the program'sinterest in any future wells is to be funded by the third partypartner during the period prior to when McMoRan's potential reversionoccurs.

There are three producing wells and approximately 13,000 grossacres on Louisiana State Lease 340 and OCS 310 that remain subject tothe 100 Bcfe arrangement. McMoRan believes there are furtherexploration and development opportunities on this acreage. The threeproducing wells averaged an aggregate gross rate of 34 MMcfe/d duringthe first quarter of 2006.

MAIN PASS ENERGY HUB(TM) UPDATE

On March 10, 2006, the United States Coast Guard (Coast Guard) andthe Maritime Administration (MARAD) published the Final EnvironmentalImpact Statement (EIS) for the MPEH(TM) license application. The CoastGuard conducted public hearings during the week of March 20, 2006. TheGovernors in the adjacent coastal states (Louisiana, Mississippi andAlabama for MPEH(TM)) have until May 7, 2006 to respond to MARAD onthe license application, with a record of decision on the applicationscheduled to be reached by the end of June 2006.

The Final EIS evaluated potential impacts associated with MPEH(TM)and concluded that the environmental impacts associated with theconstruction and operation of MPEH(TM) would be expected to result inminor long-term adverse impacts. The EIS assessed the impact tofisheries of using the Open Rack Vaporizer alternative for the projectand indicated that this system would have "direct, adverse, minorimpacts on biological resources." The methodology used in the EIS toassess the impact on biological resources did not consider potentialbenefits from varying the depth of seawater intakes or mitigationstrategies that could reduce the potential impacts. Based onadditional technical studies not included in the EIS which considerthe unique location of MPEH(TM) in 210 feet of water and mitigationmeasures expected to be included in the project's deepwater portlicense, McMoRan expects the potential environmental impacts fromMPEH(TM), evaluated to be minor in the EIS, can be further reduced. Ina recent Environmental Protection Agency (EPA) memorandum establishingguidelines for the review of technology options for Deepwater LNGports, the EPA indicated that site specific evaluation is required anduse of an Open Rack Vaporizer, enhanced by certain design features,practices, measures, and treatment techniques (all of which areplanned for MPEH(TM)), could represent "Best Available Technology"with respect to a particular Deepwater LNG port. In this evaluationconsideration must be given to all available information and uniquefactors relating to the applicant such as design factors, economics,energy requirements and air emissions.

The MPEH(TM) terminal would be capable of regasifying LNG at arate of 1 billion cubic feet of natural gas (Bcf) per day. The use ofexisting facilities provides significant cost advantages, and theproposed project benefits from its offshore location near establishedshipping lanes. Additional investments are being considered to developsignificant on-site cavern storage for natural gas in the large saltdome structure at this site and for pipeline connections to enhancegas delivery from Main Pass to a broad range of markets in the UnitedStates. The access of the proposed project to major natural gasmarkets and the availability of on-site salt dome cavern storageprovide a potential opportunity to expand the project beyond a typicalLNG receiving facility, creating potential opportunities forsubstantial additional values. The proposed design includes 28 Bcf ofinitial cavern storage availability and aggregate peak deliverabilityfrom the proposed terminal, including deliveries from storage, of upto 2.5 Bcf per day. McMoRan is continuing discussions with potentialLNG suppliers, gas marketers and consumers in the United States todevelop commercial arrangements for the facilities.

REVENUES

McMoRan's first-quarter 2006 oil and gas revenues totaled $35.4million, compared to $11.4 million during the first quarter of 2005.During the first quarter of 2006, McMoRan's sales volumes totaled 2.2Bcf of gas and 311,200 barrels of oil and condensate, including199,300 barrels from Main Pass Block 299, compared to 1.4 Bcf of gasand 24,100 barrels of oil and condensate in the first quarter of 2005.McMoRan's first-quarter comparable average realizations for gas were$8.12 per thousand cubic feet (Mcf) in 2006 and $6.84 per Mcf in 2005;for oil and condensate, including Main Pass Block 299, McMoRanreceived an average of $57.15 per barrel in first-quarter 2006compared to $50.28 per barrel in first-quarter 2005. Main Pass Block299 was shut in during the first quarter of 2005 following damage to athird party terminal resulting from Hurricane Ivan in September 2004.

FINANCING TRANSACTIONS

McMoRan has established a new four-year $100 million SeniorSecured Revolving Credit Facility for McMoRan Oil & Gas LLC. Thefacility has an initial borrowing base of $55 million and will besecured by McMoRan's oil and gas properties. The facility may beincreased to $150 million with additional lender commitments.

Since the beginning of 2006, McMoRan has privately negotiatedtransactions to induce conversion of $29.1 million of its 6%convertible notes and $25.0 million of its 5 1/4% convertible notes,into an approximately 3.6 million shares of its common stock based onthe respective conversion price for each set of convertible notes.McMoRan paid an aggregate $4.3 million in the transactions andrecorded an approximate $4.0 million net charge to expense in thefirst quarter of 2006. McMoRan funded approximately $3.5 million ofthe cash payment from restricted cash held in escrow for funding ofthe first six semi-annual interest payments on the convertible notesand the remaining portion with available unrestricted cash. As aresult of these transactions, the annual interest cost savings areestimated to approximate $3.1 million. After giving effect to thisconversion, our common shares outstanding total approximately 28.3million shares as of March 31, 2006.

CASH AND CASH EQUIVALENTS AND CAPITAL EXPENDITURES

On March 31, 2006, McMoRan had unrestricted cash and cashequivalents of approximately $56 million. Capital expenditures for thefirst quarter of 2006 totaled $68.8 million and are expected to total$240 million for the year, including approximately $140 million forexploration expenditures and approximately $100 million for currentlyidentified development costs. Spending may be increased as additionalopportunities become available or to fund additional developmentcapital expenditures on successful wells. In addition, McMoRan plansto incur approximately $6 million to advance commercialization of theMPEH(TM) in the remainder of 2006. Additional expenditures for theMPEH(TM) would be required following the receipt of the permit.McMoRan may pursue additional funding through potential debt or equityfinancing for its oil and gas and MPEH(TM) activities.

McMoRan Exploration Co. is an independent public company engagedin the exploration, development and production of oil and natural gasoffshore in the Gulf of Mexico and onshore in the Gulf Coast area.McMoRan is also pursuing plans for the development of the MPEH(TM)which will be used for the receipt and processing of liquefied naturalgas and the storage and distribution of natural gas. Additionalinformation about McMoRan and the MPEH(TM) project is available on itsinternet website "www.mcmoran.com" and at "www.mpeh.com."

CAUTIONARY STATEMENT: This press release contains certainforward-looking statements regarding various oil and gas discoveries,oil and gas exploration, development and production activities,anticipated and potential production and flow rates; anticipatedrevenues; potential reversionary interests and the potential payout ofthose reversionary interests; the economic potential of properties;estimated exploration costs; the potential Main Pass Energy Hub(TM)Project, the expected near-term funding of the related permittingprocess and the estimated capital costs for developing the project.Accuracy of the projections depends on assumptions about events thatchange over time and is thus susceptible to periodic change based onactual experience and new developments. McMoRan cautions readers thatit assumes no obligation to update or publicly release any revisionsto the projections in this press release and, except to the extentrequired by applicable law, does not intend to update or otherwiserevise the projections more frequently than quarterly. Importantfactors that might cause future results to differ from theseprojections include: variations in the market prices of oil andnatural gas; drilling results; unanticipated fluctuations in flowrates of producing wells; oil and natural gas reserves expectations;the ability to satisfy future cash obligations and environmentalcosts; general exploration and development risks and hazards; and theability to obtain regulatory approvals and significant projectfinancing for the potential Main Pass Energy Hub(TM) project. Suchfactors and others are more fully described in more detail inMcMoRan's 2005 Annual Report on Form 10-K on file with the Securitiesand Exchange Commission.

A copy of this release is available on our web site atwww.mcmoran.com. A conference call with securities analysts about thefirst-quarter 2006 results is scheduled for today at 10:00 AM EasternTime. The conference call will be broadcast on the Internet.Interested parties may listen to the conference call live by accessingthe call on "www.mcmoran.com". A replay of the call will be availablethrough Friday, May 12, 2006.
McMoRan EXPLORATION CO.
STATEMENTS OF OPERATIONS (Unaudited)

Three Months Ended
March 31,
--------------------
2006 2005
--------- --------
(In Thousands, Except
Per Share Amounts)
Revenues:
Oil & natural gas $ 35,441 $11,380
Service 4,305 3,287
--------- --------
Total revenues 39,746 14,667
Costs and expenses:
Production and delivery costs 10,759 3,700
Depletion, depreciation and amortization 5,844 3,916
Exploration expenses 20,620(a,b) 7,536
General and administrative expenses 8,224(b) 4,390
Start-up costs for Main Pass Energy Hub(TM) 1,846 2,284
Insurance recovery(c) (1,169) (5,043)
--------- --------
Total costs and expenses 46,124 16,783
--------- --------
Operating loss (6,378) (2,116)
Interest expense (1,833) (3,787)
Other (expense) income, net (3,194)(d) 1,599
--------- --------
Loss from continuing operations (11,405) (4,304)
Loss from discontinued operations (1,677) (1,029)
--------- --------
Net loss (13,082) (5,333)
Preferred dividends and amortization of
convertible preferred stock issuance costs (403) (411)
--------- --------
Net loss applicable to common stock $(13,485) $(5,744)
========= ========

Basic and diluted net loss per share
of common stock:
Continuing operations $(0.44) $(0.20)
Discontinued operations (0.06) (0.04)
-------- -------
Net loss per share of common stock $(0.50) $(0.24)
======== =======

Basic and diluted average shares outstanding 26,832(e) 24,385
======== =======

(a) Includes $12.3 million of nonproductive exploratory well
drilling and related leasehold costs, including the "Denali" well at
South Pass Block 26 ($8.1 million) and the cost incurred during the
first quarter of 2006 for the "Cabin Creek" well at West Cameron Block
95 ($2.5 million) and "Elizabeth" well at South Marsh Island Block 230
($1.7 million). Nonproductive exploratory well drilling and related
costs totaled $2.9 million in the first quarter of 2005.

(b) McMoRan adopted Statement of Financial Accounting Standards
No. 123R "Share Based Payment" effective January 1, 2006. McMoRan's
total non-cash stock-based compensation charges totaled $9.7 million
in the first quarter of 2006, including $4.7 million charged to
general and administrative expense and the remaining $5.0 million to
exploration expense. McMoRan's total non-cash stock-based compensation
charges totaled $0.3 million in the first quarter of 2005, including
$0.1 million charged to general and administrative expense and $0.2
million to exploration expense.

(c) Primarily reflects insurance recovery for the oil operations
at Main Pass Block 299, reflecting initial recovery in the 2005 period
and final settlement in the 2006 period of the Hurricane Ivan
insurance claim. Amount in the 2006 period also includes approximately
$0.5 million of additional insurance proceeds associated with the
final settlement of class action litigation.

(d) Includes a $4.3 million charge related to McMoRan debt
conversion transactions completed in first quarter of 2006 (see
Balance Sheet note b).

(e) Includes approximately 3.6 million of common stock shares
issued in connection with McMoRan debt conversion transactions
completed during the first quarter of 2006 (see Balance Sheet note b).




McMoRan EXPLORATION CO.
OPERATING DATA (Unaudited)

Three Months Ended
March 31,
-----------------------
2006 2005
---------- ----------
Sales volumes:
Gas (thousand cubic feet, or Mcf) 2,159,400 1,410,500
Oil (barrels) 296,900(a) 17,000
Plant products (equivalent barrels)(b) 14,300 7,100
Average realizations:
Gas (per Mcf) $8.12 $6.84
Oil (per barrel) 57.15 50.28

(a) After being shut-in in September 2004 as a result of damage to
a third-party facility and connecting pipelines caused by Hurricane
Ivan, Main Pass 299 resumed production in May 2005 following
completion of modifications to existing facilities to allow
transportation of oil from the field by barge. In the first quarter of
2006, sales volumes from Main Pass 299 totaled approximately 199,300
barrels. Main Pass 299 produces sour crude oil, which sells at a
discount to other crude oils.

(b) Results include approximately $0.8 million and $0.3 million of
revenues associated with plant products (ethane, propane, butane,
etc.) during the first quarters of 2006 and 2005, respectively.




McMoRan EXPLORATION CO.
CONDENSED BALANCE SHEETS (Unaudited)


March 31, Dec. 31,
2006 2005
--------- ---------
(In Thousands)
ASSETS
Cash and cash equivalents:
Continuing operations, includes restricted
cash of $0.3 million at December 31, 2005 $ 55,844 $131,179
Discontinued operations, all restricted 548 1,005
Restricted investments 9,049 15,155
Accounts receivable 46,633 36,954
Inventories 18,687 7,980
Prepaid expenses 1,555 1,348
Current assets from discontinued operations,
excluding cash 3,454 2,550
--------- ---------
Total current assets 135,770 196,171
Property, plant and equipment, net 260,078(a) 192,397
Sulphur business assets, net 372 375
Restricted investments and cash 8,850 10,475
Other assets 6,269(b) 8,218
--------- ---------
Total assets $411,339 $407,636
========= =========

LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable $ 68,221 $ 63,398
Accrued liabilities 55,495 49,817
Accrued interest 4,448 5,635
Current portion of accrued sulphur
reclamation cost 4,205 4,724
Current liabilities from discontinued
operations 4,669 5,462
-------- --------
Total current liabilities 137,038 129,036
6% convertible senior notes 100,895(b) 130,000
5 1/4% convertible senior notes 115,000(b) 140,000
Accrued sulphur reclamation costs 17,410 17,062
Accrued oil and gas reclamation costs 22,161 21,760
Postretirement medical benefits obligation 11,779 11,517
Other long-term liabilities 16,014 15,890
Mandatorily redeemable convertible preferred
stock 28,991 28,961
Stockholders' deficit (37,949)(b) (86,590)
--------- ---------
Total liabilities and stockholders' deficit $411,339 $407,636
========= =========

(a) Includes $34.9 million of exploratory drilling and related
costs associated with the three unevaluated exploratory wells
in-progress at March 31, 2006 as well as $12.6 million associated with
the potential discovery at the Blueberry Hill well at Louisiana State
Lease 340 and $5.4 million associated with the Point Chevreuil well
that is being evaluated.

(b) Primarily reflects completion of debt conversion transactions
in the first quarter of 2006. In these transactions, McMoRan converted
$29.1 million of its 6% convertible senior notes due in 2008 and $25.0
million of its 5 1/4% convertible senior notes due in 2011 into
approximately 3.6 million shares of McMoRan common stock based on the
respective conversion prices ($14.25 per share for the 6% convertible
notes and $16.575 per share for the 5 1/4% convertible notes).




McMoRan EXPLORATION CO.
STATEMENTS OF CASH FLOWS (Unaudited)

Three Months Ended
March 31,
-------------------
2006 2005
--------- ---------
(In Thousands)
Cash flow from operating activities:
Net loss $(13,082) $ (5,333)
Adjustments to reconcile net income loss to net
cash used in operating activities:
Loss from discontinued operations 1,677 1,029
Depreciation, depletion and amortization 5,844 3,916
Exploration drilling and related expenditures 12,342 2,938
Compensation expense associated with
stock-based awards 9,675 263
Amortization of deferred financing costs 481 557
Loss on conversions of convertible senior
notes 4,301 -
Reclamation and mine shutdown expenditures - (4)
Other 470 (202)
(Increase) decrease in working capital:
Accounts receivable 506 6,751
Accounts payable and accrued liabilities (17,237) 18,525
Prepaid expenses and inventories (10,892) (46)
--------- ---------
Net cash (used in) provided by continuing
operations (5,915) 28,394
Net cash used in discontinued operations (3,490) (1,021)
--------- ---------
Net cash (used in) provided by operating
activities (9,405) 27,373
--------- ---------

Cash flow from investing activities:
Exploration, development and other capital
expenditures (68,847) (40,223)
Proceeds from restricted investments 7,400 3,900
Decrease (increase) in restricted investments 69 (154)
--------- ---------
Net cash used in continuing operations (61,378) (36,477)
Net cash used in discontinued operations - -
--------- ---------
Net cash used in investing activities (61,378) (36,477)
--------- ---------

Cash flow from financing activities:
Payments to induce early conversion of
senior notes (4,301) -
Dividends paid on convertible preferred stock (747) (383)
Proceeds from exercise of stock options and other 39 1,357
--------- ---------
Net cash (used in) provided by continuing
operations (5,009) 974
Net cash from discontinued operations - -
--------- ---------
Net cash (used in) provided by financing
activities (5,009) 974
--------- ---------
Net decrease in cash and cash equivalents (75,792) (8,130)
Cash and cash equivalents at beginning of year 132,184 204,015
--------- ---------
Cash and cash equivalents at end of period 56,392 195,885
Less restricted cash from continuing operations (1) (3,180)
Less restricted cash from discontinued operations (548) (984)
--------- ---------
Unrestricted cash and cash equivalents at
end of period $ 55,843 $191,721
========= =========