SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.  20549
                                  ________________
 
                                     FORM 10-K
      (Mark One)
          x         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                       OF THE SECURITIES EXCHANGE ACT OF 1934
                     For the fiscal year ended December 31, 1997

                                         OR

                  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                       OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from             to             

                           Commission File Number 1-13617

                            FREEPORT-McMoRan SULPHUR INC.
               (Exact name of registrant as specified in its charter)

                    Delaware                           72-1392855          
          (State or other jurisdiction of           (I.R.S. Employer
          incorporation or organization)         Identification Number)

             1615 Poydras Street,                        70112
            New Orleans, Louisiana                     (zip code)
    (Address of principal executive offices)

         Registrant's telephone number, including area code: (504) 582-4000

             Securities registered pursuant to Section 12(b) of the Act:

                       Title of Each Class           Name of Each Exchange   
                                                     on Which Registered  
             -------------------------------------   -----------------------
             Common Stock Par Value $.01 per Share   New York Stock Exchange
             Preferred Stock Purchase Rights         New York Stock Exchange


             Securities registered pursuant to Section 12(g) of the Act:

                                        None

               Indicate by check mark whether the registrant (1) has  filed
          all reports required to  be filed by Section  13 or 15(d) of  the
          Securities Exchange Act  of 1934 during  the preceding 12  months
          (or for such shorter period that  the registrant was required  to
          file such  reports), and  (2) has  been  subject to  such  filing
          requirements for the past 90 days.  Yes [X]    No [ ] 

               Indicate by check  mark if disclosure  of delinquent  filers
          pursuant to Item 405 of Regulation  S-K is not contained  herein,
          and will not be contained, to the best of registrant's knowledge,
          in definitive  proxy or  information statements  incorporated  by
          reference in Part III of this Form 10-K or any amendment to  this
          Form 10-K.[ ]            

               The aggregate market value of the voting stock held by  non-
          affiliates of the  registrant was  approximately $126,000,000  on
          March 2, 1998.

               On  March  2,  1998,  there  were  issued  and   outstanding
          9,994,678 shares  of  the registrant's  common  stock  (excluding
          treasury shares).

                         Documents Incorporated by Reference

               Portions of the  registrant's Proxy  Statement submitted  to
          the registrant's stockholders in connection with its 1998  Annual
          Meeting  of  Stockholders  to  be  held  on  May  12,  1998   are
          incorporated by reference into Part III of this Report.



                            Freeport-McMoRan Sulphur Inc.
                                  TABLE OF CONTENTS

                                                                           
                                                                        Page
                                                                        ----
          PART I........................................................  1

               Items 1. and 2. Business and Properties..................  1

               Item 3.  Legal Proceedings................................16

               Item 4.  Submission of Matters to a Vote of Security
                        Holders..........................................16

               Item 4(a).  Executive officers............................16

          PART II .......................................................17

               Item 5.  Market for  Registrant's Common Equity and 
                        Related Stockholder Matters......................17

               Item 6.  Selected Financial and Operating Data............18

               Items 7. and  7A.  Management's Discussion and Analysis of
                    Financial Condition and Results of Operations, and
                    Quantitative and Qualitative Disclosures About Market
                    Risk.................................................19

               Item 8.  Financial Statements and Supplementary Data......23

               Item 9.   Changes in and  Disagreements with Accountants 
                         on Accounting and Financial Disclosure..........37

          PART III.......................................................37

               Item 10.  Directors and Executive Officers of the
                         Registrant......................................37

               Item 11.  Executive Compensation..........................37

               Item 12.   Security Ownership of  Certain Beneficial
                          Owner and Management...........................37

               Item 13.  Certain Relationships and Related Transactions..37


          PART IV........................................................37

               Item  14.    Exhibits,  Financial  Statement  Schedules 
                            and Reports on Form 8-K......................37


          SIGNATURES....................................................S-1

          EXHIBIT INDEX.................................................E-1

[PAGE]  i

                                       PART I

          Items 1. and 2. Business and Properties.

          General

               Freeport-McMoRan Sulphur Inc. ("Freeport Sulphur," "FSC"  or
          the "Company") is a Delaware corporation formed in August 1997 to
          succeed to  the sulphur  and certain  oil and  gas operations  of
          Freeport-McMoRan  Resource  Partners,   Limited  Partnership,   a
          Delaware Limited Partnership  ("FRP"), of which  Freeport-McMoRan
          Inc. ("FTX") served  as administrative  managing general  partner
          and was  the  owner of  a  51.6 percent  partnership  interest.  
          Effective December 22, 1997, FTX  merged (the "Merger") into  IMC
          Global Inc. ("IGL"), and FRP contributed to Freeport Sulphur  all
          of its  sulphur  operations,  and certain  of  its  oil  and  gas
          operations,  including  FRP's  58.3  percent  interest  in  those
          businesses commonly referred  to as the  "Main Pass"  operations,
          and its sulphur mine in Culberson County, Texas. In addition,  in
          connection with the Merger, IGL transferred to FRP, which in turn
          contributed to Freeport Sulphur, IGL's 25 percent interest in the
          Main  Pass  operations.     Following   the  contributions,   FRP
          distributed all of the  shares of the  Company's Common Stock  to
          FTX and the other holders of  its units of partnership  interest,
          and, as part of the Merger Consideration, FTX distributed to  its
          stockholders the shares  of the  Company's Common  Stock that  it
          received (the "Spin-Off").  Following the Merger, FRP's name  was
          changed  to  Phosphate  Resource  Partners  Limited   Partnership
          ("PLP").  PLP, managed by IGL,  is engaged in the production  and
          sale of phosphate crop nutrients  and animal feed ingredients  as
          well as the exploration and development and production of oil and
          gas reserves.

               Unless otherwise noted  or the  context requires  otherwise,
          references herein to the historical operations and performance of
          the "Company" or "Freeport Sulphur" refer to the businesses  that
          FRP contributed to  the Company; provided  that IGL's 25  percent
          interest  in  Main  Pass  is  only  included  in  the   Company's
          operations after December 22, 1997.

               Freeport Sulphur's operations include the mining,  purchase,
          transportation, terminaling  and  marketing of  sulphur  and  the
          production and sale of oil and gas from its Main Pass facilities.
          Management believes that Freeport Sulphur is the world's  largest
          producer of mined, or "Frasch," sulphur and the largest  supplier
          of elemental sulphur in the United States. The Company now has an
          83.3 percent interest in the Main Pass operations, and  Homestake
          Sulphur Company  ("Homestake") owns  the remaining  16.7  percent
          interest. The Company also continues to serve as the operator  of
          the Main Pass operations.

               Sulphur, both  in its  elemental form  and  in the  form  of
          sulphuric acid, is essential to agriculture and industry. Sulphur
          is a base element primarily used  in the production of  sulphuric
          acid, which is used in  the manufacture of phosphate  fertilizers
          and other  agricultural chemicals,  and has  numerous  industrial
          applications, including  ore and  metal leaching,  petroleum  and
          mineral refining, and  chemical manufacturing.  While sulphur  is
          essential in almost every segment of the economy, it is generally
          used as a processing  agent and is seldom  apparent in the  final
          product.

               Freeport Sulphur is the successor to a line of business that
          had been conducted by FRP and its predecessors since 1912, making
          it the  longest continuously  operating  sulphur company  in  the
          United States.  Since its  founding, the  Company has  introduced
          numerous innovations  in  the production  and  transportation  of
          sulphur, including the  development of  a mine  in marsh  terrain
          near the mouth of the Mississippi  River, the use of  directional
          drilling (a critical  technique for  exploiting offshore  sulphur
          deposits), and  the development  of technology  for  transporting
          molten sulphur, which has earned  the acceptance of U.S.  sulphur
          consumers as an environmentally and economically superior method.
          Freeport Sulphur was the first, and remains the only, company  to
          superheat seawater for  sulphur mining, and  in 1960  constructed
          the first offshore  sulphur mine, followed  by a second  offshore
          mine constructed  in 1968,  and a  third offshore  mine with  the
          construction of  the Main  Pass mine  in 1992.  Freeport  Sulphur
          remains the only company to successfully operate offshore sulphur
          mines. Over  its history,  the Company  has mined  more than  160
          million long tons of sulphur, and in 1988 discovered the  largest
          sulphur deposit in  North America  at Main  Pass in  the Gulf  of
          Mexico. Through its 1995 acquisition of substantially all of  the
          sulphur assets of Pennzoil Company ("Pennzoil"), Freeport Sulphur
          became the  world's  largest  producer of  mined  sulphur  and  a
          leading supplier  of sulphur  to the  United States  market,  and
          positioned itself as having the industry's largest molten sulphur
          handling system.

[PAGE]  1

               The Main Pass sulphur deposit  is the largest known  sulphur
          reserve in North America. The Company's Main Pass offshore mining
          complex is  the largest  structure of  its type  in the  Gulf  of
          Mexico and one of the largest  in the world, and was designed  to
          produce an average of 5,500 long tons per day over its life.  The
          Company  began  operating  the  Culberson  mine  in  January 1995
          following its  acquisition  of substantially  all  of  Pennzoil's
          domestic sulphur assets. As of  December 31, 1997, the Main  Pass
          and Culberson  mines were  estimated  to contain  proved  sulphur
          reserves totaling 61.2 million long tons  net to the Company.  In
          addition to the  Culberson mine, the  Company also acquired  from
          Pennzoil sulphur terminals and handling facilities in  Galveston,
          Texas  and  Tampa,  Florida,   land  and  marine   transportation
          equipment, and sales and  other related commercial contracts  and
          obligations.

               The Company's principal business is the sale of sulphur  and
          the marketing of  its terminaling and  transportation assets  for
          use by recovered  sulphur producers and  industrial consumers  of
          sulphur. The phosphate fertilizer industry generally accounts for
          approximately 90  percent of  the  Company's sulphur  sales.  The
          Company's 1997 sulphur sales were approximately 2.9 million  long
          tons, representing 24.8 percent  of domestic consumption (or  3.4
          million  long  tons,  representing   29.1  percent  of   domestic
          consumption, on a pro forma basis after the contribution of IGL's
          Main Pass interest). Sales to IMC-Agrico Company, a joint venture
          partnership between  IGL  and  PLP  that  is  a  manufacturer  of
          phosphate fertilizers  and  the largest  purchaser  of  elemental
          sulphur in the world ("IMC-Agrico"), represented approximately 65
          percent of the Company's  sulphur sales (or 72  percent on a  pro
          forma basis after the contribution of IGL's Main Pass  interest).
          Pursuant to a Sulphur Supply Agreement, the Company has agreed to
          supply and  IMC-Agrico has  agreed to  purchase approximately  75
          percent of IMC-Agrico's annual sulphur consumption for as long as
          IMC-Agrico has an operational need for sulphur. The price per ton
          for all sulphur delivered under the  agreement is based upon  the
          weighted average  market price  for  sulphur delivered  by  other
          sources to  IMC-Agrico's New  Wales production  plant in  central
          Florida, except that the  Company is entitled  to a premium  with
          respect to  approximately  40  percent of  the  sulphur  that  it
          delivers under the agreement. IMC-Agrico  also pays a portion  of
          the freight costs associated with  the delivery of sulphur  under
          the agreement. Although this contract was entered into at a  time
          when IMC-Agrico  was  an  affiliate of  the  Company,  management
          believes that the terms  of the Sulphur  Supply Agreement are  no
          less favorable to  the Company than  those that  could have  been
          negotiated with an unaffiliated party.

               The Company  operates the  largest molten  sulphur  handling
          system in North  America and has  the capacity  to transport  and
          terminal over five million long tons of molten sulphur  annually.
          The Company uses this system to support both the movement of  its
          own mined and purchased sulphur and as a service that it  markets
          to recovered sulphur producers and industrial consumers.

               Freeport Sulphur is a major purchaser of recovered  sulphur,
          which is sulphur recovered from the refining of sour natural  gas
          and sour crude oil, purchasing almost one million tons per  year.
          Approximately 32.5 percent  of the Company's  1997 sulphur  sales
          were supplied from its recovered sulphur purchases. Substantially
          all of  the sulphur  purchased by  the  Company, along  with  the
          sulphur produced at the Main Pass and Culberson mines, is sold by
          the Company to industrial companies for use in the manufacture of
          sulphuric acid.

               The Main Pass  operations also contain  proved oil  reserves
          from which the Company produces and  sells oil for the Main  Pass
          joint  venture.  Oil  production  averaged  approximately   9,030
          barrels per  day (4,400  barrels net  to  the Company,  or  6,300
          barrels net  to  the Company  on  a  pro forma  basis  after  the
          contribution of IGL's Main Pass  interest) during the year  ended
          December 31,  1997.  As  of  December 31,  1997,  Main  Pass  was
          estimated to contain 8.7 million barrels (5.3 million barrels net
          to the Company)  of proved oil  reserves, which  are expected  to
          decline  substantially  in  subsequent  years  and  to  be  fully
          depleted by 2002.

          Strategy

               The  Company's  strategy   is  to   utilize  its   extensive
          production facilities and its transportation and other logistical
          assets and capabilities  to maintain its  leadership position  in
          the U.S.  sulphur  market  and to  capitalize  on  new  marketing
          opportunities  that  are  expected  to  develop  from   projected
          increases in global phosphate fertilizer demand and other uses of
          sulphur. In  addition, the  Company may  expand its  third  party
          transportation  and  terminaling   services  business  and   seek
          opportunities  to  increase   its  recovered  sulphur   marketing
          activities.

               The   Company   is   also   evaluating   related    business
          opportunities including the  possible construction and  operation
          of sulphur recovery and sulphuric acid plants for third  parties.
          The Company believes it can market its operational, technological
          and marketing expertise to  other industrial concerns, and  enter
          into strategic  alliances

[PAGE]  2

          with  enterprises having  complementary
          expertise and shared growth objectives. The Company also plans to
          seek opportunities to expand its business in technologies related
          to its current Main  Pass oil operations such  as sour crude  oil
          processing for  others in  the Gulf  of  Mexico region,  and  the
          application of its  seawater heating technology  to such uses  as
          secondary oil recovery.

               Freeport  Sulphur's   future  sulphur   sales  volumes   and
          realizations will continue to depend on the level of demand  from
          the  phosphate  fertilizer  industry  and  the  availability   of
          competing supplies from recovered sulphur producers. Accordingly,
          the Company continually evaluates  its sulphur business  strategy
          in light of competitive factors and  the dynamics of the  sulphur
          market, including the possibility of adjusting overall production
          levels to match changes in market fundamentals.

               With respect to the Company's oil business, the Company does
          not currently  intend  to  pursue oil  operations  that  are  not
          related to Main Pass.

          Sulphur Business

               Sources and Uses of Sulphur

               Sulphur is  present  in many  areas  of the  world  and  its
          production  is  generally   classified  into  three   categories:
          elemental, pyrites and sulphur in other forms ("SOF").  Elemental
          sulphur represents  over  two-thirds  of  worldwide  supplies  of
          sulphur in all forms.  Its sources include  sulphur mined by  the
          Frasch process from underground  deposits and recovered  sulphur.
          The remaining one-third of  worldwide sulphur is  in the form  of
          pyrites (metal  sulphides) and  SOF,  with the  most  significant
          source being sulphuric  acid recovered as  a by-product from  the
          smelting of  non-ferrous  metals.  In the  United  States,  mined
          elemental sulphur is principally found in the caprock that covers
          salt domes in  the coastal  areas of the  Gulf of  Mexico and  in
          strata-bound deposits in West Texas. Recovered elemental  sulphur
          is produced  from the  processing of  natural gas  that  contains
          hydrogen sulfide  and from  the refining  of sour  (high  sulphur
          content) crude oil.  Recovered sulphur is  the largest source  of
          sulphur in the  world, representing approximately  85 percent  of
          global production of elemental sulphur.

               Worldwide, over 56 million long tons of sulphur in all forms
          are consumed annually, of which over  90 percent is converted  to
          sulphuric acid.  The  remainder  is used  in  elemental  form  in
          fertilizer  applications,   chemical  manufacturing   and   other
          applications. While sulphur is essential in almost every  segment
          of the economy, it is generally used as a processing agent and is
          seldom apparent in the final product.

               Sulphur is used  primarily in the  manufacture of  phosphate
          fertilizer, with over 60 percent of worldwide sulphur consumption
          being used for this purpose. Sulphur is burned to form  sulphuric
          acid, which is then used to convert phosphate rock to  phosphoric
          acid,  the  base  material  for  the  manufacture  of   phosphate
          fertilizer. Approximately  0.4  of  a  long  ton  of  sulphur  is
          required  to  produce  one  short  ton  of  diammonium  phosphate
          fertilizer, the principal form of phosphate fertilizer.  Although
          the Company  is  highly  dependent on  the  phosphate  fertilizer
          market, management  believes that  the  overall strength  of  the
          phosphate  fertilizer  market  and   the  resulting  demand   for
          sulphuric acid should  support production at  current levels  for
          the immediate future. Industry studies indicate that world demand
          for  phosphate  fertilizer,  driven  by  anticipated   population
          growth, increases  in  levels  of  grain  consumption  and  other
          factors, will exceed  production capacities in  the next  several
          years. This  has  led to  plans  to construct  new  capacity  and
          feasibility studies evaluating the expansion of existing capacity
          and the addition of new capacity for the manufacture of phosphate
          fertilizer.

               Sulphur is itself  an important plant  nutrient, along  with
          nitrogen, phosphorous and potassium. In 1996, 9.0 million tons of
          sulphur  were  applied  to  soils  worldwide  through  fertilizer
          application.  Sulphur  is  also  a   key  raw  material  in   the
          manufacture of many fungicides and other agricultural  chemicals.
          The Sulphur  Institute  estimates the  current  annual  worldwide
          plant nutrient  sulphur  deficit  at  8.2 million  tons  and  the
          outlook is for  increasing deficiencies, thus  making the use  of
          sulphur as a fertilizer a developing and growing market.

               In  addition  to  its  agricultural  applications,   sulphur
          (usually in  the form  of sulphuric  acid)  is essential  to  the
          manufacturing processes  of  pharmaceuticals,  paper,  chemicals,
          paint, steel,  petroleum and  other products.  Sulphuric acid  is
          also used in the manufacture of detergents and animal feed. There
          is a growing demand for sulphur in the form of sulphuric acid for
          ore leaching by  the non-ferrous  metals industry  mainly due  to
          advancements  in  solvent  extraction-electrowinning   technology
          (SX/EW). This advancement  has allowed the  development of  oxide
          ore bodies  that  previously  were  not  considered  commercially
          exploitable.

[PAGE]  3

               Sulphur Mine Operations

               Overview.   Although  sulphur  is one  of  the  most  common
          elements in the earth's  crust, discoveries of elemental  sulphur
          in quantities  that  can  be mined  economically  are  rare.  The
          Company is currently mining two such deposits, the Main Pass mine
          offshore Louisiana in the Gulf of  Mexico and the Culberson  mine
          in West Texas. The  Company's sulphur discovery  at Main Pass  in
          1988 was the first  major sulphur discovery  in North America  in
          over 25  years. The  Main Pass  and Culberson  mines utilize  the
          Frasch  mining  process,  which   involves  drilling  wells   and
          injecting superheated water into the underground sulphur  deposit
          to melt solid sulphur,  which is then  recovered in liquid  form.
          The Company has used the Frasch  process for more than 80  years,
          and has developed  technology using superheated  seawater in  the
          Frasch process, thereby enhancing offshore mining.

               The Frasch Process.  The  sulphur deposits at the  Company's
          Culberson and Main Pass mines  are located approximately 400  and
          2,000 feet  underground, respectively.  Sulphur production  wells
          are drilled into  sulphur bearing formations  by rotary  drilling
          rigs employing  a  directional drilling  technique  that  permits
          drilling from  the well  platform at  angles of  up to  85.  from
          vertical, allowing sulphur  within a  radius of  more than  3,700
          feet  to  be  mined  from  a  single  platform.  In  addition  to
          production wells, pressure control wells must also be drilled  to
          recover excess  water  from  the  underground  formation  and  to
          facilitate water flow.  The Frasch  process used  by the  Company
          permits  cost  efficient   extraction  of   sulphur  from   these
          underground deposits. Superheated  water and  compressed air  are
          forced separately through  concentric pipes  towards the  sulphur
          deposit where  the heated  water liquefies  the sulphur  and  the
          compressed air helps lift the molten sulphur to the surface.  The
          Frasch process was  developed in the  1890s and Freeport  Sulphur
          was only the second company to  use this technology. The  Company
          has also developed proprietary technology that enables it to  use
          seawater in the Frasch process without experiencing the corrosion
          and scaling that otherwise would  affect the heat exchangers  and
          pipelines. Frasch mining of  sulphur deposits at locations  where
          large quantities of  fresh water  are unavailable,  such as  Main
          Pass, would not be commercially viable without these techniques.

               Natural gas and water are the two resources essential to the
          Frasch process. Natural  gas fired  boilers are  used to  produce
          steam to  heat the  water in  heat exchanges  to the  superheated
          state necessary  for  sulphur liquefaction.  The  Company's  mine
          operations currently  consume  approximately nine  billion  cubic
          feet of natural gas annually. The Company is dependent on  others
          for  the  supply  of  natural  gas,  but  has  never  experienced
          difficulty in  obtaining  the  required  supply  of  natural  gas
          because it has long-term supply  agreements in place with  prices
          tied to market indices. At Main Pass, where the Company  consumes
          the majority of its natural gas requirements, gas is supplied  by
          a single  supplier,  but  the  Company  has  access  to  a  large
          multiple-supplier  pipeline  should  its  primary  supplier  have
          difficulties in  delivering its  requirements. At  the  Culberson
          mine, natural gas is provided by multiple suppliers. In its  Main
          Pass operations  the Company  also  supplements its  natural  gas
          needs with the gas that is produced in conjunction with its  Main
          Pass oil  operations, which  is provided  to the  sulphur  mining
          operations  in  exchange   for  electricity  used   by  the   oil
          operations. In the event of a  national shortage of natural  gas,
          curtailment  may  be  imposed  by  federal  authorities  and  may
          interfere with the mining process, but the Company believes  that
          the risk of such curtailment during  the anticipated life of  the
          mines is remote.  Moreover, if  necessary, the  boilers can  also
          operate on fuel oil. The availability of water for the Main  Pass
          mine is not a  factor for the Company  because of its ability  to
          use seawater.

               The Mines.   The  Main Pass  deposit was  discovered by  the
          Company in 1988.  The mine currently  has the highest  production
          rate of any sulphur  mine in the world  and contains the  largest
          known Frasch sulphur reserve in  North America. The free  sulphur
          in the Main Pass deposit exists  in the porous limestone that  is
          part of the caprock covering a salt dome. The Main Pass  offshore
          complex, which  is more  than a  mile in  length, is  one of  the
          largest structures of its type in the world and is the largest in
          the Gulf of Mexico. The Main Pass mine was designed to produce an
          average of 5,500  long tons  per day over  its life  and has  two
          sulphur storage tanks  with a  combined capacity  of 24,000  long
          tons. The facility, which has  housing capacity for 240  persons,
          is located in  210 feet  of water  and is  designed to  withstand
          hurricane force conditions. In the event of a major storm in  the
          Gulf, personnel would be evacuated, but  the mine is designed  to
          remain in  operation through  a communications  link to  Freeport
          Sulphur's corporate office in New Orleans. During the year  ended
          December 31, 1997,  sulphur  production  at  Main  Pass  averaged
          approximately 5,200 long tons per day.  All Main Pass sulphur  is
          transported to the Company's terminal in Port Sulphur,  Louisiana
          in 7,500-ton self-propelled tankers.  The Company receives a  fee
          from  Homestake  for  operating  the  Main  Pass  mine  and   for
          processing, transporting and marketing  Homestake's share of  the
          Main Pass sulphur.  At December 31, 1997,  the Main Pass  deposit
          was estimated to  contain proved sulphur  reserves totaling  64.3
          million long tons (53.6  million long tons  net to the  Company).
          Production from the  Main Pass

[PAGE]  4

          mine  is subject to  a royalty  of
          12.5 percent of  net mine revenues  that is payable  to the  U.S.
          Department of Interior-Minerals Management Services (the "MMS").

               The Company  began operating  the Culberson  mine, which  is
          located in  West  Texas  south  of  the  New  Mexico  border,  in
          January 1995  after  acquiring  the   mine  from  Pennzoil.   The
          Culberson mine's free sulphur is part of a strata-bound ore  body
          located in the Upper Permian and Salado formations. For the  year
          ended  December 31,  1997,  production  at  the  Culberson   mine
          averaged approximately 2,400 long tons per day. A unique  feature
          of the Culberson mine is a continuous water re-injection  system,
          through which  water recovered  from  pressure control  wells  is
          reheated  and  re-injected  into   the  production  wells.   This
          recycling system results in significant cost savings. Once mined,
          the liquid sulphur  is stored in  on-site tanks  with a  combined
          capacity of 45,000 long tons until it is shipped to the Company's
          Galveston terminal by Company-owned  railcars that average  8,400
          long tons of liquid sulphur per  trip. At December 31, 1997,  the
          Culberson mine was estimated  to contain proved sulphur  reserves
          totaling 7.6  million long  tons. Production  from the  Culberson
          mine is subject to  a royalty of 9  percent of net mine  revenues
          that is payable to  the State of Texas  and several private  land
          owners through a unitization agreement.

               The agreement  pursuant to  which the  Company obtained  the
          Culberson mine requires the Company to make quarterly payments to
          Pennzoil, based on a unit volume payment multiplied by an assumed
          volume of sulphur, both  of which are  determined by the  average
          market price  of  sulphur  during the  quarter.  The  Company  is
          obligated to  make these  payments  irrespective of  whether  the
          Culberson mine is  operational. The payments  terminate upon  the
          earlier of January 2015  or the quarter  in which the  cumulative
          assumed volume  of production  exceeds  18.6 million  long  tons.
          Under this arrangement,  the Company  paid Pennzoil  $2.0 million
          and $2.1 million for fiscal 1996 and 1997, respectively.

               The Company has  the right, exercisable  on January 1,  1999
          (the "First Option Date")  and each subsequent third  anniversary
          of the First  Option Date, to  terminate its  obligation to  make
          further quarterly installment payments in exchange for a lump sum
          payment of $65 million less a cumulative inflation adjustment  on
          the date such right is exercised,  but in no event less than  $10
          million. If the Company does not exercise its right on any option
          date, Pennzoil  may,  within a  defined  time period  after  each
          option date,  require the  Company to  make a  single payment  of
          $10 million in exchange for  relinquishing its rights to  receive
          any further payments under the agreement.

               The Company is currently operating its sulphur mines at less
          than  designed  capacity.    See  "Management's  Discussion   and
          Analysis of Financial Condition and Results of Operations."

               The Company  also  has rights  to  sulphur deposits  at  its
          Caminada Mine, located eight miles from Grand Isle in the Gulf of
          Mexico, which the Company is not currently mining. The Company is
          maintaining its lease  rights to the  remaining sulphur  resource
          under a "suspension of production" issued by the MMS. The Company
          estimates that the  Caminada mine  has approximately  1.8 million
          long tons of recoverable proved sulphur remaining.

               Sulphur Reserves.  The table below sets forth the  Company's
          portion of the  proved developed reserves  for the Company's  two
          producing sulphur mines.

                                                          Long Tons at
                                                           December 31,
            Proved Developed Reserves(1)                     1997(2)
            ----------------------------                  ------------
            Main Pass                                        53.6 million

            Culberson                                         7.6 million

           __________
          (1)  All sulphur reserves  are considered proved  because of  the
               Company's extensive drilling and production experience.
          (2)  Reserves represent long  tons (2,240 lbs.)  of sulphur  that
               are expected to be recovered  from the host formation.  Long
               tons of  sulphur  are calculated  in  place and  a  recovery
               factor, based on the percentage of residual sulphur expected
               to be  left  behind,  is  applied  to  calculate  the  total
               estimated recoverable tons.

               Sulphur Purchases

               The Company is a major purchaser of recovered sulphur in the
          United States  and  management  expects  its  sulphur  purchasing
          program, which  is currently  averaging almost  one million  long
          tons  per  year,  to  increase  and  become  a  more  significant
          component  of  the  Company's  business.  The  Company  purchases
          recovered sulphur principally from  oil refineries located  along
          the lower Mississippi River and in  the Louisiana and Texas  Gulf
          Coast regions, and from gas processing plants in Mississippi  and
          Texas.

[PAGE]  5

               The Company's recovered sulphur purchase program provides it
          with a source of sulphur that  is as important as the  production
          from its mines in enabling the Company to meet its sales contract
          commitments. Approximately  32.5 percent  of the  Company's  1997
          sulphur sales  volume  was  supplied  through  recovered  sulphur
          purchases. The Company  believes that its  position as a  leading
          sulphur  supplier  in  the  domestic  market,  coupled  with  its
          extensive  sulphur  handling  capabilities,  would  allow  it  to
          replace any curtailed  mine production  with purchased  recovered
          sulphur  at  price  levels  that  would  maintain  the  Company's
          profitability; however there can be no assurance that it will  be
          able to do so.

               Sulphur Handling Operations

               Overview.  The Company  operates the largest molten  sulphur
          handling  system  in  North  America  and  has  the  capacity  to
          transport and  terminal over  five million  long tons  of  molten
          sulphur annually. The  Company uses this  system both to  support
          the movement of  its own mined  and purchased sulphur,  and as  a
          service that  it  markets  to  recovered  sulphur  producers  and
          industrial consumers. The Company  believes that the  integration
          of the sulphur handling business with its production,  purchasing
          and  marketing  operations  gives   the  Company  a   synergistic
          competitive advantage over other suppliers of similar services.

               Marine Transportation.    The Company  operates  two  molten
          sulphur tankers, each having  a capacity of approximately  25,000
          tons. The two  tankers have  the combined  capacity to  transport
          3.5 million long  tons of  sulphur per  year across  the Gulf  of
          Mexico, which  are loaded  at the  Company's Galveston  and  Port
          Sulphur terminals  and  delivered  to its  Tampa  terminals.  The
          Company's inland  barge system  is capable  of transporting  over
          one million tons annually.  Each of  the Company's  barges has  a
          capacity of approximately 2,500 long  tons and serves the  Texas,
          Louisiana and  Mississippi  Gulf  Coast  regions  and  the  lower
          Mississippi River. Two  7,500-ton tankers are  used to  transport
          sulphur from the  Main Pass mine's  offshore production  platform
          and can also be used in  Gulf Coast service to transport  sulphur
          from the Company's terminals to its customers.

               Land Transportation.  The Company operates a rail car  fleet
          that transports sulphur from the Culberson mine to the  Galveston
          terminal for loading onto the  Company's tankers for shipment  to
          its Tampa terminals. The Company also makes other rail  movements
          in connection with  transporting sulphur  directly to  customers'
          plants. The Company also transports approximately 500,000 tons of
          molten sulphur per  year through a  third party trucking  service
          used primarily to serve  the Galveston, Texas, lower  Mississippi
          River and Pensacola, Florida areas.

               Terminals.   The  Company  owns and  operates  five  sulphur
          terminals in the United States, the  largest of which is  located
          at Port  Sulphur,  Louisiana.  The Port  Sulphur  facility  is  a
          combined liquid storage  tank farm and  stockpile area for  solid
          sulphur. Liquid  sulphur  is stored  in  steam-heated,  insulated
          tanks having an aggregate capacity of approximately 110,000  long
          tons. The solid storage  area can hold approximately  1.3 million
          long tons  of solid  sulphur. Because  substantially all  of  the
          Company's domestic customers consume sulphur in liquid form,  the
          Company delivers  all  of its  production  in liquid  form.  This
          reduces the  need to  remelt the  sulphur, conserves  energy  and
          reduces  costs,  and  is  an  environmentally  superior  handling
          method. Sulphur  can  be  solidified  for  long-term  storage  to
          maintain inventory  reserves. The  Company owns  a high  capacity
          sulphur melter that permits the conversion of solid sulphur  into
          liquid sulphur to  supplement mine production  during periods  of
          high demand  and to  cover shortfalls  in mine  production or  in
          recovered sulphur  purchases. Sulphur  is transported  from  Port
          Sulphur by barge to customers' plants  in Louisiana on the  lower
          Mississippi  River  or  along  the   Gulf  Coast  of  Texas   and
          Mississippi, or by tanker to the Company's terminals in Tampa.

               The Company's  other  terminals  are located  in  Tampa  and
          Pensacola, Florida  and Galveston,  Texas.  There are  two  Tampa
          terminals, each of which has a liquid storage capacity of  90,000
          long tons  and is  supplied with  sulphur from  Port Sulphur  and
          Galveston by the  Company's sulphur  tankers. Each  of the  Tampa
          facilities ships molten sulphur to phosphate fertilizer producers
          in central Florida by  tank truck. The  Pensacola terminal has  a
          storage capacity of 10,000 long tons and is used for the storage,
          handling  and  shipping   of  recovered   sulphur  purchases   or
          transporting recovered sulphur for third parties. Molten  sulphur
          is shipped by  barge from the  Pensacola terminal  to either  the
          Port Sulphur  terminal or  directly  to lower  Mississippi  River
          customers.

               The Galveston terminal  was acquired from  Pennzoil in  1995
          and has  75,000  long tons  of  liquid storage  tanks  and  solid
          storage capacity of one million long tons. This terminal receives
          sulphur from  the Company's  Culberson mine  by unit  train,  and
          recovered sulphur purchases  by truck,  barge or  rail, and  then
          ships sulphur to  local customers  by truck  or barge  or to  the
          Tampa terminals by  tanker. The Galveston  terminal also has  the
          ability to

[PAGE]  6

          load  solid sulphur aboard  large oceangoing  vessels,
          giving the Company access to international markets should  market
          conditions favor sulphur exports.

               Sulphur Sales

               Substantially all of  the Company's sulphur  is sold to  the
          phosphate fertilizer industry  for the  manufacture of  sulphuric
          acid, which is used to produce  phosphoric acid, a base  chemical
          used in the production  of phosphate fertilizers. Typically,  the
          phosphate  fertilizer  industry  accounts  for  approximately  90
          percent of the Company's total sulphur sales. Freeport  Sulphur's
          domestic shipments to its  five largest customers represented  88
          percent of total shipments  in 1997, 91 percent  in 1996 and   89
          percent in 1995.  The majority  of the  Company's sulphur  supply
          contracts, with  the exception  of its  contract with  IMC-Agrico
          discussed below,  are  for a  term  of  one year  or  longer  and
          generally call for  the repricing of  sulphur on  a quarterly  or
          six-month basis.

               The  Company   also  processes,   transports,  and   markets
          Homestake's share of production at the Main Pass mine for a  fee.
          In  addition  to  supplying  the  domestic  sulphur  market   and
          providing transportation  and  terminaling services  for  others,
          Freeport Sulphur maintains  the capability  of marketing  sulphur
          internationally should market conditions favor export sales.

               Sales to IMC-Agrico, a manufacturer of phosphate fertilizers
          and the  largest purchaser  of elemental  sulphur in  the  world,
          represented approximately  65 percent  of the  Company's  sulphur
          sales (or 72 percent on a pro forma basis after the  contribution
          of IGL's Main Pass interest) and 55 percent of its total revenues
          (or 60 percent  on a pro  forma basis after  the contribution  of
          IGL's Main  Pass interest)  during 1997.  Pursuant to  a  Sulphur
          Supply Agreement, the Company has agreed to supply and IMC-Agrico
          has agreed to purchase  approximately 75 percent of  IMC-Agrico's
          annual sulphur  consumption  for as  long  as IMC-Agrico  has  an
          operational need for sulphur. The price  per ton for all  sulphur
          delivered under the agreement is based upon the weighted  average
          market  price  for   sulphur  delivered  by   other  sources   to
          IMC-Agrico's New  Wales  production  plant  in  central  Florida,
          except that the Company is entitled to a premium with respect  to
          approximately 40 percent  of the sulphur  that it delivers  under
          the agreement.  IMC-Agrico also  pays a  portion of  the  freight
          costs  associated  with  the   delivery  of  sulphur  under   the
          agreement.  Although  this contract was  entered into  at a  time
          when IMC-Agrico  was  an  affiliate of  the  Company,  management
          believes that the terms  of the Sulphur  Supply Agreement are  no
          less favorable to  the Company than  those that  could have  been
          negotiated with an unaffiliated party.

               Revenues   from   the   Company's   sulphur   sales   depend
          significantly on production levels  of phosphate fertilizer,  the
          availability of sulphur that  is recovered from high-sulphur  oil
          and natural gas refining and the rate at which stored  surpluses,
          particularly  in  Canada,  are  released  into  the  market   and
          depleted. Current prices are  substantially weaker than the  high
          levels of the  early 1990's,  primarily because  of economic  and
          political changes in Eastern Europe and the former Soviet  Union,
          which led  to  the  closure of  plants  consuming  in  excess  of
          seven million tons  of  sulphur  per year.    Improved  phosphate
          consumption rates,  coupled with  reduced imports  and  curtailed
          mine production,  stabilized  sulphur prices  beginning  mid-year
          1996 and continued into 1997.  To the extent that current  United
          States phosphate fertilizer production remains strong,  sustained
          sulphur demand  is expected  to  continue; however,  the  current
          level of Canadian  sulphur inventories limits  the potential  for
          significant price increases. See "Competition."

          Oil and Gas Business

               Overview

               The Main  Pass  site  also  contains  oil  and  natural  gas
          reserves located within the same caprock reservoir that  contains
          the  sulphur   reserves.  The   Company's  estimate   of   proved
          recoverable oil reserves  at Main Pass  at December 31, 1997  was
          8.7 million barrels,  (5.3 million barrels  net to the  Company).
          The Main Pass oil reserves are expected to decline  substantially
          in subsequent years  and to be  fully depleted by  2002, and  the
          Company does  not  intend  to  pursue  oil  and  gas  exploration
          operations that are not related to Main Pass.

               Reserves and Acreage

               For information relating to  estimates of the Company's  net
          interests in proved oil reserves as of December 31, 1997, and for
          supplementary information  relating  to estimates  of  discounted
          future net cash flows  from proved oil  reserves, and changes  in
          such estimates,  reference is  made  to the  Company's  financial
          statements

[PAGE]  7

          included elsewhere herein.

               At  various  times,  the  Company  is  required  to   report
          estimates of oil  reserves to  various governmental  authorities.
          The  basis  for   reporting  estimates  of   reserves  to   these
          authorities may  not  be  comparable to  the  reserves  presented
          herein  because  of  differences  in  the  times  at  which  such
          estimates are made and variances in reserve and other definitions
          of the particular governmental authority. Generally, however, the
          reserves data  used for  these governmental  reports is  computed
          from the same reserve information base as reported herein.

               The Company's interest  in Main  Pass, which  is located  in
          federal waters offshore Louisiana,  constitutes the only oil  and
          gas producing property  owned by Freeport  Sulphur. The  property
          consists of 1,125 gross acres and  is fully developed within  the
          meaning of governmental reporting requirements.

               The Company possesses a leasehold interest in its Main  Pass
          oil property that is maintained by production and will remain  in
          effect until production and  drilling and development  operations
          cease. The Company believes that  the lease terms are  sufficient
          to allow for reasonable development of  the reserves and that  it
          has satisfactory title to such property.

               Production

               Recoverable hydrocarbons  at Main  Pass are  located in  the
          upper portion of the same caprock that hosts the sulphur reserves
          and  in  an  overlying  layer  of  sand.  The  limestone  caprock
          reservoir and the overlying sand are  in fluid contact with  each
          other, share a common oil and  gas composition and have the  same
          pressure characteristics. Oil production commenced in the  fourth
          quarter  of  1991   with  cumulative  total   production  as   of
          December 31, 1997 totaling  34.8 million barrels. Oil  production
          has been enhanced by  the injection of  superheated water in  the
          sulphur mining  operations,  which  both  lowers  oil  viscosity,
          allowing  it  to  flow  more  freely,  and  maintains   reservoir
          pressure, thereby enhancing recovery. Any associated gas that  is
          produced with the oil is provided to the sulphur mining operation
          in exchange  for  electricity used  in  the oil  operations.  The
          co-development of  the  sulphur  and  oil  reserves  has  yielded
          significant operating synergies and efficiencies.

               The  purchase  agreement  pursuant  to  which  the   Company
          obtained the  rights to  the Main  Pass oil  lease obligates  the
          Company under certain circumstances to make an annual  production
          payment to Chevron U.S.A. Inc. The payment amount is based on the
          amount of annual  oil production at  the Main Pass  site and  the
          amount by which the average annual  price of oil exceeds  certain
          specified prices during the term of the contract. If the  average
          annual price  of oil  does not  exceed the  specified prices,  no
          payment is due. No payments were made for 1997 in connection with
          this obligation.  This  payment  obligation  will  convert  to  a
          royalty right on behalf of Chevron upon the occurrence of certain
          events that the Company anticipates will occur in the first  half
          of 1998. Under this  royalty right, Chevron  will be entitled  to
          receive 25 percent of revenues (less transportation costs) of oil
          and gas production after the first to occur of (i) cumulative oil
          production at the Main Pass site in excess of 36 million  barrels
          or (ii) 20 years from the date of first oil production  (November
          6, 1991); provided  that this  25 percent  overriding royalty  is
          limited to 50 percent of net profit realized on oil production.

               Oil Sales

               Oil prices have historically exhibited, and can be  expected
          to continue to exhibit, volatility as a result of such factors as
          conflicts in  the Middle  East, actions  by the  Organization  of
          Petroleum Exporting Countries and  changes in worldwide  economic
          and political conditions. The oil produced at Main Pass  contains
          sulphur and  is generally  heavier than  other Gulf  Coast  crude
          oils. As a result, it sells at a discount relative to Gulf  Coast
          crude oils containing  less sulphur  and to  lighter grade  crude
          oils.

               Oil produced at the Main Pass mine is sold to two Gulf Coast
          refiners with sales volumes split 71 percent and 29 percent. Both
          sales contracts are for  a term of six  months and are priced  at
          market for  the  oil's grade.  AMOCO  Production Company  is  the
          Company's largest oil customer, accounting for 71 percent of  oil
          revenues and 9 percent of the Company's total revenues for 1997.

[PAGE]  8

          Competition

               Sulphur

               In the United  States, there  are two  principal sources  of
          elemental sulphur: (i) mined sulphur produced by Freeport Sulphur
          and (ii) recovered sulphur produced by more than 50 companies  at
          more than 130 refineries and gas treatment plants. There are four
          producers  of  mined  sulphur  worldwide,  of  which   management
          believes Freeport  Sulphur  is the  largest  and the  only  mined
          sulphur producer  serving the  United  States market.  For  1997,
          Freeport Sulphur estimates  that sulphur production  at its  Main
          Pass and Culberson mines  accounted for approximately 27  percent
          of  domestic,  and   7  percent  of   world,  elemental   sulphur
          production.

               The  Company   estimates   that   total   domestic   sulphur
          consumption in  1997 was  11.7 million  tons, of  which  domestic
          Frasch sulphur accounted for  approximately 23 percent,  domestic
          recovered sulphur  accounted for  approximately 60  percent,  and
          imported sulphur, primarily from Canada and Mexico, accounted for
          approximately 17 percent.

               The following table sets  forth for each  of the years  1995
          through 1997 the total estimated domestic sulphur consumption  in
          tons, together with the percentage supplied by Frasch  suppliers,
          domestic recovered sulphur and imported sulphur:
                            Domestic Sulphur Consumption


                     Year        Total      Frasch   Domestic  Percentage
                               Consumption Suppliers Recovered  Imported
                               (Millions                       
                                of tons)
                     -----     ----------  --------  --------- ----------
                     1997         11.7       23%        60%       17%
                     1996         11.5       25%        60%       14%
                     1995         11.7       27%        55%       17%


               Recovered sulphur from domestic  and foreign sources is  the
          major source of competition  for Freeport Sulphur.  Approximately
          90  percent  of  the  Western  Hemisphere's  sulphur  inventories
          currently consist of  sulphur recovered from  natural gas in  the
          province of Alberta in  western Canada, primarily because  United
          States recovered sulphur  suppliers do  not have  the ability  to
          store large  inventories  of  sulphur.  During  the  1990s  world
          sulphur supply has  been in surplus  resulting in a  build up  of
          Canadian sulphur inventories.  Canadian sulphur inventories  were
          estimated to  be 10.6  million  tons at  year  end 1997  and  are
          expected to increase.

               Production of  recovered sulphur  in the  United States  has
          increased at an  average rate of  approximately 180,000 tons  per
          year  for  the  last  three  years,  and  totaled   approximately
          7.8 million tons in 1997. High-sulphur gas processing capacity in
          the U.S. is not  expected to increase  above current levels,  but
          the  sulphur  content  of  crude  oil  feedstocks  to  U.S.   oil
          refineries is expected to  continue to increase. Although  growth
          in U.S. recovered sulphur production is expected to continue, the
          rate of growth is expected to  slow, as the refining industry  is
          consolidating into a smaller number  of large refineries, and  it
          is  estimated  that  total  U.S.  refinery  processing  will  not
          increase substantially. Technology for  recovery of sulphur  from
          coal and oil-burning utility plants is well advanced and this and
          other sources of sulphur  resulting from air pollution  abatement
          efforts will  have  some  impact on  sulphur  supplies.  Industry
          studies vary in their forecast of the worldwide elemental sulphur
          balance; however it is widely  accepted that a surplus  currently
          exists and will continue into the foreseeable future.

               Recovered sulphur provides a major and lower cost source  of
          supply for most sulphur customers.  The supply of U.S.  recovered
          sulphur alone, however, cannot satisfy total domestic demand, and
          mined sulphur,  along with  imported recovered  sulphur  obtained
          principally from Canada  and Mexico  are required  to supply  the
          balance. The principal competitive risk to the Company's  ability
          to  mine  sulphur  profitably  is  the  potential  for  decreased
          domestic demand for sulphur,  increased production from  domestic
          recovered sulphur  producers,  increases  in  imported  recovered
          sulphur, and the  rate at which  stored sulphur, particularly  in
          Canada, is released into the market.

               Oil

               A large number of companies  and individuals are engaged  in
          the development and  production of oil.  A substantial number  of
          the companies engaged  in the development  and production of  oil
          possess financial resources  considerably greater  than those  of
          the Company.

[PAGE]  9

          Customers

               IMC-Agrico is the Company's single largest sulphur customer,
          accounting for approximately 65 percent  of sulphur sales and  55
          percent of total sales  for 1997 (or 72  percent and 60  percent,
          respectively, on  a pro  forma basis  after the  contribution  of
          IGL's Main  Pass  interest).  The  Company's  next  four  largest
          customers represent approximately  23 percent  of sulphur  sales.
          These companies  represent  a  mix of  industrial  companies  and
          phosphate fertilizer manufacturers.

               The oil produced from  Main Pass is sold  to two Gulf  Coast
          refiners with  sales volumes  split 71  percent and  29  percent.
          AMOCO Production Company is the largest customer, accounting  for
          9 percent of the Company's total revenues for 1997.

          Engineering, Research and Development

               Crescent  Technology, Inc.  ("Crescent")  furnishes  certain
          engineering consulting, research  and development,  environmental
          and safety services to the Company. Many of Crescent's  employees
          are former employees  of the Company  and other formerly  related
          companies who  formed  Crescent  in  1993  to  provide  technical
          services to such  companies and  others on  an outsourced  basis.
          Crescent owns and operates laboratory and pilot plant  facilities
          at   Belle   Chasse,   Louisiana,   where   minerals    analysis,
          metallurgical work and other research and testing are  conducted,
          which contributes  to  the  Company's  technical  operations  and
          commercial   activities.    Additionally,   Crescent    maintains
          engineering  consulting  and  mine  development  groups  in   New
          Orleans, Louisiana,  which  provide the  engineering  consulting,
          environmental services  and design  and construction  supervision
          activities  required  to   implement  new   ventures  and   apply
          improvements to the Company's existing operations.

          Regulatory Matters

               The Company's mining, production and exploration  activities
          are subject to  various federal, state  and local laws  governing
          exploration,  development,  production,  exports,  taxes,   labor
          standards, occupational health and  safety, toxic substances  and
          other matters. Regulations pertaining to the environment mandate,
          among other  things, the  maintenance of  air and  water  quality
          standards, solid  and hazardous  waste standards,  protection  of
          underground  sources  of  drinking  water,  and  protection   and
          regulation of  wetland  areas.   The  Company  succeeded  to  all
          licenses, permits or other authorizations obtained or held by FRP
          or any of its  affiliates insofar as they  relate to the  sulphur
          and Main Pass  oil and gas  businesses.   All material  licenses,
          permits and  other  authorizations  currently  required  of  each
          existing operation have been obtained or timely applied for.

               To comply with these federal, state and local laws, material
          capital and  operating  expenditures on  environmental  projects,
          both  with  respect   to  maintaining   current  operations   and
          initiating new operations,  may be  required in  the future.  The
          amount of such expenditures cannot be estimated at this time, but
          such  costs  could  have  an  adverse  effect  on  the  Company's
          financial condition and  results of operations.  There is also  a
          risk that more stringent laws  affecting the operation of  mining
          companies could be enacted,  and although such regulations  would
          affect  the  industry  as  a  whole,  compliance  with  such  new
          regulations could be costly.

               Domestic oil operations are  subject to extensive state  and
          federal regulation. Compliance is  often burdensome, and  failure
          to comply carries substantial penalties. The heavy and increasing
          regulatory burden on the oil industry increases the cost of doing
          business and consequently affects profitability.

          Environmental Matters

               Federal laws and regulations have expanded greatly in recent
          years with respect  to environmental  considerations. The  United
          States Department of Interior, the U.S. Environmental  Protection
          Agency (the  "EPA")  and  the Coast  Guard  administer  laws  and
          regulations that impose liability upon the lessee under a federal
          lease for the  cost of cleanup  of pollution  damages. A  serious
          incident of  pollution  may  also result  in  any  one  of  these
          agencies requiring  lessees under  federal leases  to suspend  or
          cease operations  in the  particular  area. The  Company  carries
          insurance against some, but not all, of these risks.

               The Company,  through its  predecessors,  has a  history  of
          commitment to environmental responsibility. Since the 1940s, long
          before  the   general  public   recognized  the   importance   of
          maintaining environmental  quality,  the

[PAGE] 10 

          Company  has  conducted
          pre-operational,   bioassay,   marine   ecological   and    other
          environmental surveys to  ensure the environmental  compatibility
          of its operations. The Company's environmental policy commits its
          operations to compliance  with applicable  laws and  regulations.
          The Company has implemented corporate-wide environmental programs
          and  continues  to  study   methods  to  reduce  discharges   and
          emissions.

               The largest effluent from  sulphur mining operations is  the
          pressure  control  water   recovered  from  the   sulphur-bearing
          formation. At Main Pass, pressure control wells remove water from
          the formation  and  discharge the  water  under the  terms  of  a
          National Pollutant Discharge Elimination System permit issued  by
          the EPA. At  the Culberson mine,  the pressure  control water  is
          removed from  the  formation  and reused  in  the  Frasch  mining
          process. The injection of mine  water at Culberson is  authorized
          by an Underground  Injection Control  permit issued  by the  EPA.
          Other water discharges at  the two mines  and five terminals  are
          made under permits issued by  the EPA, state regulatory  agencies
          in the States of Texas, Louisiana or Florida, or local regulatory
          authorities. All  of  these  discharges are  in  compliance  with
          applicable regulations in all material respects.

               The Company has  various other permits  with respect to  air
          emissions, solid  waste  production  and  disposal,  dredging  of
          bottom  sediment  and  the  operation  of  port  facilities  that
          facilitate its business activities.  Agencies that provide  these
          permits and authorizations include the MMS, the U.S. Coast Guard,
          the Louisiana Department of Environmental Quality, the  Louisiana
          Department of  Natural  Resources, the  Texas  Natural  Resources
          Conservation  Commission,   and   the   Florida   Department   of
          Environmental  Protection.  The   Company  believes   it  is   in
          compliance in all material respects with the terms and conditions
          of these  permits and  does not  anticipate any  significant  new
          costs to  obtain  new  permits or  to  maintain  compliance  with
          existing permits.

               The  Company   assumed  responsibility   for   environmental
          liabilities associated with the  prior conduct of the  businesses
          that  FRP  contributed  to  the  Company,  including  reclamation
          responsibilities at  three  previously producing  sulphur  mines.
          Sulphur  production  was  suspended  at  the  Company's  Caminada
          offshore sulphur mine in 1994, and  the Company will be  required
          to salvage the mining facilities once the remaining reserves  are
          produced or it  becomes certain that  such reserves  will not  be
          economically recoverable. The Company's  salvage expense will  be
          shared on a 50/50 basis with Exxon Corporation, and the estimated
          expense has been accrued.

               The Company's  Grande Ecaille  mine, which  was depleted  in
          1978, was salvaged in  accordance with applicable regulations  at
          the time of closure. Although the Company has no legal obligation
          to do  so,  it has  undertaken  to reclaim  wellheads  and  other
          materials, none of  which are classified  as hazardous, that  are
          being exposed through coastal erosion, and it is anticipated that
          these reclamation  activities  will  continue  for  several  more
          years. Additional expenditures may be required from time to  time
          if erosion continues, although the  Company does not expect  such
          expenditures to  be  material.  Additional  expenditures  may  be
          necessary in the future to remove building foundations should the
          Company decide it is  in the best interest  of the Company to  do
          so.

               Reclamation of the  Company's two  producing sulphur  mines,
          Main Pass and  Culberson, will be  required upon  the closure  of
          those facilities, and the related future costs are being accrued.
          The Company  has also  closed nine  other sulphur  mines, all  of
          which  have  been   reclaimed  in   accordance  with   applicable
          regulations and customary industry practices.

               In September 1997 the Company  completed the salvage of  its
          Grand Isle mine  in the  Gulf of  Mexico, which  was depleted  in
          1991,  by  converting  it  into   an  artificial  reef  for   the
          enhancement of  marine  life. The  reef  was constructed  at  the
          request of the State of Louisiana as part of its  "Rigs-to-Reefs"
          program  through  which  the  State  and  private  industry   are
          cooperating to  provide  useful marine  habitats  using  offshore
          structures that are no  longer needed for commercial  activities.
          The Grand Isle  reef is  the first in  shallow water  and is  the
          largest in the  Gulf of  Mexico. The reef  is in  the process  of
          being donated to  the State of  Louisiana, after  which time  the
          State will assume all responsibility for its upkeep, although the
          Company  will   retain  responsibility   for  any   environmental
          liabilities that may arise  from previous mining activities  with
          respect to this site.

               Although the  Company believes  that its  prior  reclamation
          activities were carried  out in compliance  with then  applicable
          laws and regulations and that it is accruing adequate reserves to
          cover future reclamation  costs, no assurance  can be given  that
          the Company will not  incur materially greater reclamation  costs
          than those anticipated.

[PAGE] 11

          Employees


               As of  December 31, 1997,  Freeport Sulphur  had 402  active
          employees. There are 382 employees working at the Company's  mine
          sites and terminals, and 20 employees located at its New  Orleans
          headquarters. None  of  the  employees  of  Freeport  Sulphur  is
          represented by any union or covered by any collective  bargaining
          agreement.  The  Company  believes  its  employee  relations  are
          satisfactory.

               The Company also uses contract personnel to perform many  of
          the technical tasks customarily conducted by Company employees at
          its Main Pass mine, which minimizes development costs and  allows
          the Company to use its management staff to direct the efforts  of
          both the sulphur mine and  oil operations. Freeport Sulphur  also
          receives executive, financial, legal and administrative and other
          related services through  a services agreement  with FM  Services
          Company ("FMS"),  a  company that  is  25 percent  owned  by  the
          Company.

                                CAUTIONARY STATEMENTS

               This report includes "forward-looking statements" within the
          meaning of Section 27A of the Securities Act of 1933 and  Section
          21E of  the Securities  Exchange Act  of 1934.    Forward-looking
          statements  are  all     statements  other  than  statements   of
          historical fact  included  in  this  report,  including,  without
          limitation, the  statements  under  the  headings  "Business  and
          Properties," "Market for Registrant's  Common Equity and  Related
          Stockholder Matters," and  "Management's Discussion and  Analysis
          of Financial Condition and  Results of Operations" regarding  the
          Company's financial position and liquidity, payment of dividends,
          the  Company's  strategic  alternatives,  future  capital  needs,
          development and capital  expenditures (including  the amount  and
          nature  thereof),  reserve  estimates  and  future  net  revenues
          attributable thereto, business  strategies, and  other plans  and
          objectives of management of the Company for future operations and
          activities.

               Forward-looking statements are based on certain  assumptions
          and analyses made by the Company  in light of its experience  and
          its perception of historical trends, current conditions, expected
          future developments and other factors it believes are appropriate
          under the  circumstances.   These  statements  are subject  to  a
          number of  assumptions, risks  and uncertainties,  including  the
          risk factors discussed below and  in the Company's other  filings
          with the Securities and  Exchange Commission (the  "Commission"),
          general  economic   and   business   conditions,   the   business
          opportunities that  may  be  presented  to  and  pursued  by  the
          Company, changes in law or regulations and other factors, many of
          which are  beyond  the  control of  the  Company.    Readers  are
          cautioned that  these statements  are  not guarantees  of  future
          performance, and the  actual results or  developments may  differ
          materially  from   those   projected   in   the   forward-looking
          statements.   All  subsequent written  and  oral  forward-looking
          statements attributable to the Company  or persons acting on  its
          behalf  are  expressly  qualified  in  their  entirety  by  these
          cautionary statements.  Important factors that could cause actual
          results to  differ  materially from  the  Company's  expectations
          include, among others, the following.

          Competition

               There  are  two  principal  sources  of  elemental  sulphur:
          (i) mined  sulphur  and  (ii) recovered  sulphur  produced  as  a
          by-product by oil refineries and gas treatment plants.  Recovered
          sulphur from domestic and  foreign sources is  a major and  lower
          cost source of supply for most sulphur customers and is the major
          source of competition  for the Company.  As a  by-product of  the
          producer's refining operations, the principal cost recognized  by
          such producers  is the  cost of  handling and  transportation  to
          customers.

               Production  of  recovered  sulphur  from  high-sulphur   gas
          processing plants and  oil refineries  in the  United States  has
          increased at an  average rate of  approximately 180,000 tons  per
          year for the  last three  years. Because  U.S. recovered  sulphur
          producers do not have the ability  to store large inventories  of
          sulphur, they  must  move it  to  market and,  depending  on  the
          proximity of  their plants  to the  principal sulphur  market  of
          central Florida,  such producers  may  enjoy a  significant  cost
          advantage over the Company.

               Because the supply  of U.S. recovered  sulphur alone  cannot
          meet total domestic  demand, mined sulphur,  along with  imported
          recovered sulphur obtained  principally from  Canada and  Mexico,
          are required to  supply the balance.  Canadian recovered  sulphur
          producers have facilities for  storing excess sulphur  production
          in solid  form,  and  approximately 90  percent  of  the  Western
          Hemisphere's sulphur  inventories  currently consist  of  sulphur
          recovered from natural gas in the province of Alberta in  western
          Canada. At certain price levels in the U.S. sulphur

[PAGE] 12

          markets,  and
          depending on prices in the foreign markets they supply,  Canadian
          producers can  be expected  to increase  sulphur sales  to U.  S.
          buyers in competition with the Company.

               The principal competitive risk  to the Company's ability  to
          mine sulphur profitably is  the potential for decreased  domestic
          demand for sulphur, increased production from domestic  recovered
          sulphur producers, increases  in imported  recovered sulphur  and
          the rate  at which  stored sulphur,  particularly in  Canada,  is
          released into  the  market. In  addition,  the current  level  of
          Canadian sulphur inventories limits the potential of the  Company
          to realize  significant  price  increases for  its  sulphur.  See
          "Business-Competition."

          Reliance on IMC-Agrico as Continuing Customer

               Approximately 65 percent of the Company's 1997 sulphur sales
          (72 percent on a  pro forma basis after  the contribution of  the
          IGL's Main Pass interest) were made to IMC-Agrico, and IMC-Agrico
          will continue  to account  for a  substantial percentage  of  the
          Company's sulphur  sales.  Sales  of sulphur  to  IMC-Agrico  are
          generally made at  market prices, with  a portion  of such  sales
          receiving additional  price consideration.  Although the  Company
          has a  long-term supply  contract with  IMC-Agrico that  requires
          IMC-Agrico to  purchase  sulphur  from the  Company  as  long  as
          IMC-Agrico's phosphate fertilizer operations  require the use  of
          sulphur, the loss  of or a  significant decline in  its sales  of
          sulphur to IMC-Agrico could have a material adverse effect on the
          Company's business and operating results.

          Effect of Prices on Sulphur Mining Operations

               Although  current  sulphur  prices  allow  the  Company   to
          generate positive  cash flows  from  its mining  operations,  any
          significant  decline  in  the  market  price  of  sulphur  for  a
          sustained period  would  require  the  Company  to  consider  the
          suspension or curtailment of mining operations at either or  both
          of its operating  mines. In  such event,  it is  likely that  the
          Culberson mine  would  be closed  first,  because of  the  higher
          transportation costs associated  with that site.  Because of  the
          costs associated with closing and re-opening mine sites, as  well
          as the potential loss of mining or mineral development rights  if
          mining operations  were suspended,  the Company  could decide  to
          operate its mines for some period  even if they did not  generate
          positive cash flow, and if operations were suspended, it could be
          difficult and expensive for the Company to subsequently re-open a
          mine.

          Seasonality and Volatility of Sulphur Markets

               Because the principal use of  sulphur is in the  manufacture
          of phosphate fertilizers, the  Company's ability to  successfully
          market  its  sulphur  is   materially  dependent  on   prevailing
          agricultural conditions and the worldwide demand for fertilizers.
          Although  phosphate   fertilizer   sales  are   fairly   constant
          month-to-month, seasonal increases occur  in the domestic  market
          prior to the fall and spring planting season. Generally, domestic
          phosphate fertilizer sales are at reduced levels after the spring
          planting season, although the decline in domestic sales generally
          coincides with the  time when major  commercial and  governmental
          buyers in China, India and Pakistan purchase product for mid-year
          delivery. Sales  are also  influenced  by current  and  projected
          grain inventories and prices, quantities of fertilizers  imported
          to  and  exported   from  North   America,  domestic   fertilizer
          consumption and  the  agricultural policies  of  certain  foreign
          governments.

               Like other commodities,  the market and  prices for  sulphur
          have  been  and  may  continue  to  be  volatile.  The  Company's
          operating margins  and  cash  flow  are  subject  to  substantial
          fluctuations in  response to  changes in  supply and  demand  for
          sulphur, conditions  in  the  domestic  and  foreign  agriculture
          industry, market  uncertainties  and  other  factors  beyond  its
          control.

          Depletion of Oil and Gas Reserves

               Approximately 14 percent of the Company's 1997 revenues were
          generated from  the sale  of oil  recovered from  Main Pass.  Oil
          revenues are  expected  to  decline  substantially  in  1998  and
          subsequent years, and the Company currently estimates that proved
          oil reserves at the Main Pass  site will be depleted by the  year
          2002. The  Main Pass  site  is the  Company's  only oil  and  gas
          property, and the Company currently does not intend to pursue oil
          and gas exploration activities after  the Main Pass reserves  are
          depleted.

[PAGE] 13

          Absence of Independent Operating History

               In recent years the Company's operations have been conducted
          by FRP,  FTX and  their predecessors  as  part of  a  diversified
          business that  was partly  integrated with  FRP's other  business
          activities and not as a stand-alone business. Following the Spin-
          Off, the  Company  has been  operated  as an  independent  entity
          engaged, except for  the production of  oil and gas  at the  Main
          Pass operations, exclusively in the sulphur business, and neither
          FRP (now PLP) nor FTX has any obligation to provide financial  or
          operational support to the Company.

          Limited Relevance of Historical Financial Information

               Because the Company has not been operated in recent years as
          an  independent  entity,  the  historical  financial  information
          included herein was derived from the audited financial statements
          of FRP  and  is not  necessarily  indicative of  the  results  of
          operations, financial  position and  cash flows  that would  have
          been achieved  if  the Company  had  been an  independent  entity
          during the  periods presented  or that  will be  achieved in  the
          future. The Company's operations were  an integral part of  FRP's
          operations during the periods covered by the historical financial
          statements included herein, and certain historical financial data
          included herein has been extracted  from FRP's books and  records
          based on allocations between FRP's sulphur and oil operations and
          FRP's other businesses, and based on other assumptions  necessary
          to reflect the Company's operations as if they had been  operated
          as  an  independent  enterprise.  Additionally,  the   historical
          financial information included herein does not give effect to the
          contribution of  IGL's  Main  Pass  interest.  See  "Management's
          Discussion and  Analysis of  Financial Condition  and Results  of
          Operations."

          Reserve Estimates and Future Net Cash Flows

               The Company's reporting  of proved sulphur  and oil and  gas
          reserves is based upon engineering estimates. Reserve engineering
          is  a  subjective  process   of  estimating  the  recovery   from
          underground accumulations of  sulphur, oil and  natural gas  that
          are not susceptible to exact measurement, and the accuracy of any
          reserve estimate is a function of  the quality of available  data
          and of engineering  and geological  interpretation and  judgment.
          Estimates of  economically recoverable  sulphur and  oil and  gas
          reserves and of future net cash  flows necessarily depend upon  a
          number of variable  factors and assumptions,  such as  historical
          production from  the area  compared  with production  from  other
          producing areas, the assumed effects of governmental  regulations
          and assumptions concerning future sulphur and oil and gas prices,
          future operating costs, severance  and excise taxes,  development
          costs and  workover and  remedial costs,  all of  which may  vary
          considerably from actual results.  Because all reserve  estimates
          are to some degree speculative, the quantities of sulphur and oil
          and natural  gas that  are ultimately  recovered, production  and
          operating costs, the amount and timing of future development  and
          reclamation expenditures, and future sulphur and oil and  natural
          gas sales prices may  all vary materially  from those assumed  in
          these estimates.  In addition,  different reserve  engineers  may
          make different  estimates of  reserve quantities  and cash  flows
          based on the same data. All of the Company's sulphur reserves are
          considered proved because  of extensive  drilling and  production
          experience; nevertheless, reserves are  estimates and the  amount
          of sulphur actually  produced may  vary from  the estimates,  and
          such variances could be material.

               The present  values  of  estimated  future  net  cash  flows
          referred to in  this Prospectus should  not be  construed as  the
          current market value  of the Company's  estimated proved oil  and
          gas reserves. In accordance  with applicable requirements of  the
          Commission, the estimated discounted  future net cash flows  from
          proved reserves are generally based on prices and costs as of the
          date of the estimate, while actual future prices and costs may be
          materially higher or lower.  Actual net cash  flows also will  be
          affected by factors such as the amount and timing of  production,
          supply and demand for oil and  gas, curtailments or increases  in
          consumption  by  gas  purchasers  and  changes  in   governmental
          regulations and taxation.  The timing  of future  net cash  flows
          from proved reserves, and thus  their actual present value,  will
          be affected by  the timing of  production and  the incurrence  of
          expenses in  the  development  and  production  of  oil  and  gas
          properties. In addition, the 10 percent discount factor  required
          by the Commission to be used  to calculate discounted future  net
          cash flows for  reporting purposes  is not  necessarily the  most
          appropriate discount  factor based  on interest  rates in  effect
          from time  to time  and risks  associated with  the oil  and  gas
          reserves owned by  the Company  or the  oil and  gas industry  in
          general.

[PAGE] 14

          Environmental Matters

               The  Company's  operations   include  exploration,   mining,
          development  and  production  of   natural  resources,  and   the
          extraction, handling,  production,  storage,  transportation  and
          disposal of materials  and waste products  that may  be toxic  or
          hazardous. Consequently,  the  Company  is  subject  to  numerous
          environmental laws and regulations. The Company has incurred, and
          expects to continue  to incur,  significant capital  expenditures
          and operating  expenses  based  on these  laws  and  regulations.
          Continued  governmental  and  public  emphasis  on  environmental
          issues may result in increased capital and operating costs in the
          future, although the  impact of  future laws  and regulations  or
          future  changes  to  existing  laws  and  regulations  cannot  be
          predicted or quantified.

               Federal legislation  (sometimes referred  to as  "Superfund"
          legislation) imposes  liability,  without regard  to  fault,  for
          clean-up of  certain waste  sites, even  though waste  management
          activities at the site may have been performed in compliance with
          regulations  applicable  at   the  time.   Under  the   Superfund
          legislation, one responsible party may  be required to bear  more
          than its proportional share of clean-up costs if payments  cannot
          be obtained from other responsible parties. In addition,  federal
          and state regulatory programs and legislation mandate clean-up of
          certain wastes at operating sites. Governmental authorities  have
          the power  to  enforce  compliance  with  these  regulations  and
          permits,  and  violators  are  subject  to  civil  and   criminal
          penalties, including fines,  injunctions or  both. Third  parties
          also  have  the  right  to   pursue  legal  actions  to   enforce
          compliance. Liability  under these  laws can  be significant  and
          unpredictable.

               The  Company  may  receive   in  the  future  notices   from
          governmental  agencies  that  it  is  one  of  many   potentially
          responsible parties at certain  sites under relevant federal  and
          state  environmental  laws.  Some  of  these  sites  may  involve
          significant clean-up costs. The ultimate settlement of  liability
          for the clean- up of such  sites usually occurs many years  after
          the  receipt  of  notices  identifying  potentially   responsible
          parties because  of the  many  complex, technical  and  financial
          issues associated with site clean-up. The Company cannot  predict
          its potential liability for clean-up costs  that it may incur  in
          the future.

               The recent trend toward stricter standards in  environmental
          legislation and regulation is  likely to continue. For  instance,
          legislation has been proposed in Congress from time to time  that
          would reclassify certain  crude oil and  natural gas  exploration
          and production wastes as "hazardous wastes," which would make the
          wastes subject to significantly more stringent handling, disposal
          and  clean-up  requirements.  If  such  legislation  were  to  be
          enacted, it  could have  a significant  impact on  the  Company's
          operating costs, as well as the oil and gas industry in  general.
          Initiatives to further  regulate the  disposal of  crude oil  and
          natural gas wastes are also pending  in certain states and  could
          have  a  similar  impact.   In  addition  to  compliance   costs,
          government  entities   and  other   third  parties   may   assert
          substantial liabilities against owners  and operators of oil  and
          gas properties for oil spills, discharges of hazardous materials,
          remediation and clean-up costs  and other environmental  damages,
          including  damages  caused  by  previous  property  owners.   The
          imposition of any such  liabilities on the  Company could have  a
          material adverse effect on the Company's financial condition  and
          results of operations.

               The  Oil  Pollution  Act  of  1990  imposes  a  variety   of
          regulations on "responsible parties" related to the prevention of
          oil spills. The  implementation of  new, or  the modification  of
          existing,   environmental   laws   or   regulations,    including
          regulations promulgated  pursuant to  the  Oil Pollution  Act  of
          1990, could have a material adverse impact on the Company.

               In  connection  with  the  Spin-Off,  the  Company   assumed
          responsibility for potential liabilities, including environmental
          liabilities, associated with the prior conduct of the  businesses
          contributed by  FRP to  the Company.  Among these  are  potential
          liabilities arising  from sulphur  mines that  were depleted  and
          closed  in   the  past   in  accordance   with  reclamation   and
          environmental laws in effect at the time, particularly in coastal
          or marshland areas that  have experienced subsidence or  erosion.
          The Company believes that it is in compliance with existing  laws
          regarding such closed operations, and has implemented controls in
          some areas that  it believes exceed  its legal  responsibilities.
          Nevertheless,  it  is  possible  that  new  laws  or  actions  by
          governmental agencies could  result in significant  unanticipated
          additional  reclamation   costs.   For   additional   information
          regarding  certain   reclamation  obligations,   see   "Business-
          Environmental Matters."

               The Company could also be subject to potential liability for
          personal injury  or property  damage  relating to  wellheads  and
          other materials at closed mines in coastal areas that have become
          exposed  through  coastal  erosion.  Although  the  Company   has
          insurance in  place  to  protect  it  against  certain  of  these
          liabilities, there  can  be  no  assurance  that  such  insurance
          coverage would be sufficient. There can also be no assurance that
          the Company's current  or future accruals  for reclamation  costs
          will be sufficient to fully cover such costs.

[PAGE] 15

          Operating Hazards

               The Company's offshore  sulphur mining,  oil production  and
          marine transportation operations  are subject  to marine  perils,
          including  collisions,  hurricanes  and  other  adverse   weather
          conditions. All  of  the  Company's oil  and  sulphur  production
          activities are subject  to blowouts, cratering,  fires and  other
          risks, any of which  could result in  serious personal injury  or
          death and substantial damage to property and the environment. The
          Company's operations may be subject to significant  interruption,
          and the Company may be subject  to significant liability, due  to
          industrial accidents, severe weather  or other natural  disasters
          occurring at one or more of its mining operations.

               The Company  has in  place, through  FMS certain  liability,
          property  damage,  business  interruption  and  other   insurance
          coverages in types and amounts  that it considers reasonable  and
          believes  to  be  customary  in  the  Company's  business.   This
          insurance provides  protection against  loss from  some, but  not
          all, potential liabilities  incident to the  ordinary conduct  of
          the Company's business, including  coverage for certain types  of
          damages associated with environmental and other liabilities  that
          arise from sudden,  unexpected and unforeseen  events, with  such
          coverage limits, retentions,  deductibles and  other features  as
          management deems appropriate. The occurrence of an event that  is
          not fully  covered by  insurance could  have a  material  adverse
          effect on  the  Company's  financial  condition  and  results  of
          operations.

          Item 3.  Legal Proceedings.

               The Company is involved from time  to time in various  legal
          proceedings of a character  normally incident to its  businesses.
          The Company believes  that its  potential liability  in any  such
          pending or  threatened  proceedings  will  not  have  a  material
          adverse  effect  on  the   financial  condition  or  results   of
          operations of the  Company. The Company,  through FMS,  maintains
          liability  insurance  to  cover  some,  but  not  all,  potential
          liabilities normally  incident  to  the ordinary  course  of  its
          businesses with such coverage limits as management deems prudent.

          Item 4.  Submission of Matters to a Vote of Security Holders.

               None

          Item 4(a).  Executive officers.

               The following  table sets  forth certain  information as  of
          March 2, 1998 with respect to the Company's executive officers.


                   Name            Age               Position

         James R. Moffett ........  59        Co-Chairman of the Board

         Rene L. Latiolais .......  55        Co-Chairman of the Board

         Richard C. Adkerson .....  51        Vice Chairman of the Board

         Robert M. Wohleber ......  47        President and Chief Executive
                                              Officer

         John G. Amato ...........  54        General Counsel


               James R. Moffett has served as  Co-Chairman of the Board  of
          FSC since November 1997.  He  also serves as the Chairman of  the
          Board and Chief  Executive Officer of  Freeport-McMoRan Copper  &
          Gold Inc. ("FCX"), and as Co-Chairman of the Board of McMoRan Oil
          & Gas Co.  ("MOXY").  Mr.  Moffett also serves  as a director  of
          IGL.  Mr. Moffett served as Chairman of the Board of FTX from May
          1992 to December 1997  and as President of  FTX from May 1992  to
          April 1993.  

               Rene L. Latiolais has served as Co-Chairman of the Board  of
          FSC since November 1997.  He also serves as Vice Chairman of  the
          Board of FCX and as a director of  IGL.  He served as a  director
          of FTX from  August 1993 to  December 1997,  President and  Chief
          Executive Officer of FTX from August  1995 until December 1997,  
          President of FTX from  May 1993 until  August 1995 and  Executive
          Vice President of FTX from May 1992 until May 1993.

               Richard C. Adkerson has served as Vice Chairman of the Board
          of FSC  since  November  1997.    He  is  also  President,  Chief
          Operating Officer and Chief Financial Officer of FCX, Co-Chairman
          of the Board and Chief Executive Officer of MOXY and Chairman  of
          the Board  and  Chief Executive  Officer  of FM  Properties  Inc.
          ("FMPO").  Mr. Adkerson served as Executive Vice President of FCX
          from July 1995 to April 1997 and as Senior Vice President of  FCX
          from February 1994 to July 1995.   He served as Vice Chairman  of
          the Board of  FTX from

[PAGE] 16

          August 1995  until December  1997 and  as
          Senior Vice President of FTX from May 1992 to August 1995.

               Robert M. Wohleber has served as President, Chief  Executive
          Officer and director of the Company  since November 1997.  He  is
          also Senior Vice President of FCX.  He served as a Vice President
          of FCX from  July 1994 to  November 1997, as  Vice President  and
          Treasurer of FCX from July 1993 to May 1994 and as Treasurer from
          August 1990 to  May 1993.   Mr.  Wohleber served  as Senior  Vice
          President and Chief Financial Officer  of FTX from November  1996
          to December 1997.  He was Vice President of FTX from June 1994 to
          November 1996 and Vice  President and Treasurer  of FTX from  May
          1992 and June 1994.

               John G. Amato has served as  General Counsel of the  Company
          since November 1997.  Mr. Amato also serves as General Counsel of
          MOXY and FMPO.  Prior to August 1995, Mr. Amato served as General
          Counsel of FTX and FCX.   Mr. Amato currently provides legal  and
          business advisory services to FCX under a consulting arrangement.

                                       PART II

          Item 5.    Market  for Registrant's  Common  Equity  and  Related
          Stockholder Matters.

               Since the  Spin-Off  on  December 23,  1997,  the  Company's
          Common Stock has been traded on the New York Stock Exchange under
          the symbol FSC.  Prior to  December 23, 1997 there was no  public
          market for the Company's Common Stock.  The following table  sets
          forth, for the period indicated, the range of high and low  sales
          prices, as reported by the New York Stock Exchange:



                                                              High   Low
                                                            ------- ------
           1997
                Fourth Quarter (from December 23, 1997      $13-1/6 $11-5/8
                through December 1997.....................


               The Company currently intends to retain its earnings to meet
          its  working  capital  requirements  and  finance  its   business
          operations and  does  not  plan to  pay  cash  dividends  to  its
          stockholders  for   the   foreseeable   future.      Any   future
          determination to pay cash dividends will be made by the Board  of
          Directors  in  light  of  the  Company's  earnings,  cash   flow,
          financial position, capital  requirements, credit agreements  and
          such other factors as  the Board of  Directors deems relevant  at
          that time.  The Company's ability to pay dividends is  restricted
          by the terms of its credit agreement.

               As of March 2, 1998, there were approximately 13,733 record
          holders of Company's Common Stock. 

[PAGE] 17
            Item 6.   Selected Financial and Operating Data.

            The following table presents selected audited historical and
            unaudited pro forma financial information, as well as,
            unaudited operating data for FSC for each of the five years
            in the period ended December 31, 1997.  FSC was spun-off
            from PLP on December 22, 1997.  The information presented
            below reflects periods during which FSC did not operate as
            an independent company, and, therefore, may not necessarily
            reflect the consolidated results of operations or financial
            position that would have existed if FSC had been an
            independent company during the periods shown or the future
            performance of FSC as an independent company. Additionally,
            the results of operations shown below only include IGL's
            25.0 percent interest in Main Pass since December 22, 1997.
            The financial information below should be read in
            conjunction with "Management's Discussion and Analysis of
            Financial Condition and Results of Operations" and the
            Company's financial statements and notes thereto contained
            elsewhere in this Form 10-K.
<TABLE>
<CAPTION>

                               1997      1996      1995     1994     1993
                            ---------  --------  -------- -------- ---------
                                     (In Thousands,Expect per Share
                                        and Realized Price Amounts)
            <S>             <C>        <C>       <C>      <C>      <C>
            FINANCIAL DATA
            Years Ended December 31:
            Revenues        $ 211,945  $221,426  $255,949 $151,795 $ 131,732
            Operating income
                (loss)       (439,316)a  12,392    25,020b   7,353  (122,253)c
            Net income
                (loss) d     (374,199)a  12,392    25,020b   7,353  (122,253)c
            Net income
            (loss)per share    (36.16)a    1.20      2.42b     .71    (11.82)c

            Unaudited pro forma data:  d
            Net income (loss)
            before income
            taxes           $(439,304)  $12,392   $25,020   $7,353 $(122,253)
            Pro forma benefit
            (provision) for
            income taxes      151,999    (4,659)   (6,845)  (2,691)   44,745 
                            ---------   -------   -------   ------ ---------
            Pro forma net
            income (loss)   $(287,305)  $ 7,733   $18,175   $4,662 $ (77,508) 
                            =========   =======   =======   ====== =========

            Pro forma net
            income (loss)
            per share         $(27.77)     $.75     $1.76     $.45    $(7.49)

            Pro forma
            average shares     10,347    10,347    10,347   10,347    10,347 

            At December 31:
              Working capital$ 65,604  $ 25,794  $ 42,059 $ 41,590  $ 25,105 
              Property, plant
              and equipment,
              net             109,833a  535,653   575,029  551,916   577,491
              Total assets    273,033   633,620   680,467  637,902   668,274
              Stockholders'
               equity         114,397a, 484,360   521,782  556,060   573,303
                                     d
            OPERATING DATA
            Sulphur 
              Sales
              (long tons)       2,900     2,900     3,050    2,088     1,403 
              Average realized
              price            $61.04    $61.78    $70.44   $53.07    $57.28
            Oil 
              Sales (barrels)   1,625     1,896     2,218    2,534     3,443
              Average realized
              price            $18.15    $19.49    $15.82   $13.74    $14.43

</TABLE>

            a.   Includes charges totaling $425.4 million ($41.11 per share)
            for an impairment assessment of sulpher assets and $9.9 million
            ($0.96 per share) for an increase in estimated reclamation costs
            for sulpher properties, for drilling costs of an additional brine
            well and a reduction of sulpher inventory book value to market 
            value.
            b.   Includes charges totaling $7.0 million ($0.68 per
            share) allocated to FSC to reflect a compensation charge
            pursuant to a management services agreement.
            c.   Includes charges totaling $86.6 million ($8.37 per
            share) for a loss on valuation and sale of assets, and $11.6
            million ($1.12 per share) for restructuring and other
            related charges.
            d.   As a partnership, PLP paid no federal or state income
            taxes and historically has not provided for income taxes on
            the results of operations of FSC.  Upon the formation of FSC
            as a wholly owned taxable subsidiary of PLP prior to being
            spun-off to PLP unitholders, a deferred tax asset of $63.8
            million was recognized in 1997 income to reflect the excess
            of tax over book basis in the related assets.  Pro forma net
            income includes an estimated tax provision for the
            applicable periods as if FSC operated as a stand-alone
            taxable entity.


[Page] 18

            Items 7. and 7A. Management's Discussion and Analysis of Financial
            Condition and Results of Operations, and Quantitative and 
            Qualitative Disclosures About Market Risk.

            Overview

                 FSC became an independent, publicly held company
            as of December 22, 1997, when PLP distributed to its
            unitholders its sulphur business, including its 58.3 percent
            interest in Main Pass sulphur and oil operations, together
            with the 25.0 percent interest in Main Pass previously owned
            by IGL (Note 8), a joint venture partner with PLP (the
            Distribution).  The results of operations discussed below
            only include IGL's 25.0 percent interest in Main Pass since
            December 22, 1997.  FSC operated as an integral part of PLP
            prior to the Distribution. FSC's financial statements have
            been prepared from the books and records of PLP. Certain
            data have been extracted from PLP records, or in certain
            cases derived on the basis of allocations between FSC and
            PLP's other businesses.  The results of operations described
            below are not necessarily indicative of the operating
            results that FSC would have achieved on an independent basis
            or of future operating results.

                 FSC's sulphur business consists of the sale of sulphur,
            the marketing of logistics services, the operation of two
            sulphur mines and a logistics system consisting of sulphur
            transportation and terminaling assets.  FSC's operations
            include the Main Pass mine located offshore Louisiana in the
            Gulf of Mexico, the Culberson mine located in West Texas,
            five sulphur terminals located across the Gulf Coast, and
            marine and rail transportation assets.  The oil operations
            consist of FSC's interest in the Main Pass operations.

            Impairment Assessment of Sulphur Assets

                 In 1995 the Financial Accounting Standards Board issued
            Statement of Financial Accounting Standards No. 121 which
            requires an assessment of the carrying value of long-lived
            assets and a reduction of such carrying value to fair value
            when events or changes in circumstances indicate that the
            carrying amount of such assets may not be recoverable.  In
            September 1997 FSC concluded that the carrying value of the
            Main Pass sulphur assets exceeded the undiscounted estimated
            future net cashflows, such that an impairment writedown of
            $416.4 million was required.  A similar analysis of the
            Culberson mine sulphur assets, based on a reassessment of
            recoverable reserves utilizing recent production history,
            also indicated that a writedown of $9.0 million was
            required.  Fair values were estimated using discounted
            estimated future net cash flows related to these assets.
            The writedowns to fair value were recorded in the third
            quarter of 1997 and are reflected in the financial
            statements as additional depreciation and amortization
            charges.  Future operating results of FSC will reflect lower
            depreciation and amortization expense as a result of these
            writedowns.
<TABLE>
            Results of Operations
<CAPTION>
                                         Years Ended December 31,
                                   -----------------------------------
                                      1997        1996          1995
                                   ---------    ---------    ---------
                                          (Dollars in millions,
                                          except realized prices)
            <S>                    <C>          <C>          <C>
            Revenues                  $211.9       $221.4       $255.9
            Operating income
            (loss)                    (439.3)        12.4         25.0
            Sulphur sales
            (long tons)            2,907,500    2,900,000    3,049,700
            Sulphur average
            realized price per ton    $61.04       $61.78       $70.44
            Oil sales (barrels)    1,625,200    1,895,500    2,217,600
            Oil average realized
            price per barrel          $18.15       $19.49       $15.82
</TABLE>

            1997 Compared With 1996

                 Sulphur operations reported an operating loss of $441.2
            million in 1997 compared with operating income of $3.3
            million for 1996, primarily because of the asset impairment
            charges.  The 1997 period also includes charges totaling
            $9.9 million for an increase in estimated reclamation costs
            for sulphur properties, for drilling costs of an additional
            brine well and a reduction of sulphur inventory book value
            to market value.  Sulphur average realized prices for the
            1997 period were only slightly lower than the 1996 period
            while sulphur sales volumes rose slightly, primarily because
            of  increased sales to the IMC-Agrico.  FSC has a long-term
            supply contract with IMC-Agrico that extends for as long as
            IMC-Agrico's operations have a requirement for sulphur.  As
            a percentage of total FSC revenues, sales to IMC-Agrico
            totaled 55 percent in 1997 and 54 percent in 1996 and 1995.
            Production levels at the Main Pass and Culberson sulphur
            mines were reduced in early 1996 in response to lower
            domestic demand for

[Page] 19

            sulphur.  Combined production from the
            two mines averaged 7,600 tons per day for 1997 compared with
            7,800 tons per day for 1996.  Unit production and delivery
            costs for 1997, excluding the charges discussed above, were
            12 percent higher than for 1996 because of higher
            maintenance costs, and natural gas usage and prices.

                 Main Pass operating  income from oil operations totaled
            $1.9 million in 1997 and $9.1 million in 1996 reflecting
            lower average realizations and reduced production levels.
            Current estimates are that the proved oil reserves at the
            Main Pass site will be fully depleted by the year 2002.

                 Total production and delivery costs were higher in the
            1997 period because of higher maintenance costs, energy
            costs and the charges discussed above.  Depreciation and
            amortization in 1997 includes the asset impairment charges.
            Excluding these charges and the additional reclamation
            charge, depreciation expense was lower compared with 1996
            because of the lower production rates.  General and
            administrative expenses were lower in 1997 compared with
            1996 primarily because of lower incentive compensation costs
            and a reimbursement in 1997 for certain costs expensed by
            FSC in 1996.

            1996 Compared With 1995 

                 Sulphur operating income totaled $3.3 million for 1996
            compared with $23.0 million for 1995 primarily because of
            lower prices and volumes and slightly higher unit costs.
            Sulphur sales volumes for 1996 were 5 percent lower than the
            1995 level.  Production levels at the Main Pass and
            Culberson mines were reduced in early 1996 in response to
            lower domestic sulphur sales to U.S. phosphate fertilizer
            producers. Combined production averaged 7,800 tons per day
            for 1996 compared with 8,500 tons per day in 1995. Sulphur
            realizations were 12 percent lower than the 1995 period,
            reflecting lower demand from the phosphate fertilizer
            industry and higher recovered sulphur supplies.  Unit
            production costs for 1996 rose slightly from 1995 levels
            because of the reduced production levels and increased
            energy costs.

                 Main Pass oil operating income for 1996 totaled $9.1
            million compared with $2.0 million for 1995. Despite lower
            sales volumes, net income benefited in 1996 from a
            significant increase in average realizations caused by the
            overall rise in world oil prices which occurred in mid-1996
            and again in late 1996.  Lower production for 1996 reflected
            declining reservoir production levels.

                 Total production and delivery, and depreciation and
            amortization costs were lower in 1996 because of the reduced
            production levels.  General and administrative expenses were
            lower in 1996 primarily because of a $7.0 million charge
            ($5.2 million to sulphur operations and $1.8 million to oil
            operations) that was allocated to FSC in 1995 to reflect
            compensation costs related to FTX stock appreciation rights.
            Pursuant to a management services agreement with FTX, these
            costs were allocated to PLP, and thus to FSC, based on
            relative payroll costs.

            Outlook

                 In early 1998 FSC announced its decision to reduce
            annual sulphur production by approximately 400,000 long tons
            in response to a developing near-term imbalance in U.S.
            sulphur supply.  This reduction is being achieved primarily
            by curtailing production at FSC's Culberson, Texas mine,
            with overall production continually being reassessed to
            ensure customer requirements are met while still being
            responsive to market conditions. Management believes
            phosphate fertilizer market fundamentals remain strong, with
            the long-range outlook for sulphur consumption equally
            positive.

            Disclosures About Market Risks

                 FSC's revenues are derived from the sale of sulphur and
            crude oil.  In addition, natural gas purchases comprise a
            significant portion of FSC's production costs.  FSC's net 
            income can vary significantly with fluctuations in the
            market prices of these commodities. Based on projected 1998
            annual sales volumes, each $5 per ton change in the average
            price realized on sulphur sales would have an approximate
            $17 million impact on revenues and an approximate $6 million
            impact on net income.  Each $2 per barrel change in the
            average price realized on annual crude oil sales would have
            an approximate $3 million impact on revenues and an
            approximate $2 million impact on net income.  A $0.50 per
            mmbtu change in the average cost of annual natural gas
            purchases would have an approximate $4 million impact on
            production costs and an approximate $3 million impact on net
            income.

[Page] 20

                 At the present time FSC does not hedge or
            otherwise enter into price protection contracts for its
            principal products, although FSC has entered into a price
            protection program for its anticipated natural gas purchase
            requirements for the first quarter of 1998 which provides
            for a cost of no more than $2.65 per million british thermal
            unit (mmbtu) and no less than $2.33 per mmbtu on 1,350,000
            mmbtu's.  The fair value of these contracts was $(0.1)
            million at December 31, 1997.

                 As FSC has no outstanding debt, conducts all its
            operations within the U.S. in U.S. dollars and has no
            investments in equity securities, it is currently not
            subject to interest rate risk, foreign currency exchange
            risk or equity price risk.

            Capital Resources and Liquidity

                 Net cash provided by operating activities totaled $16.7
            million for 1997, $51.8 million for 1996 and $65.4 million
            for 1995.  Lower net income and an increase in reclamation
            and mine shutdown expenditures related to a Rigs-to-Reefs
            program resulted in lower net cash provided by operating
            activities in 1997 compared with 1996, while lower net
            income was the primary reason for the decline in  1996
            compared with 1995.

                 Capital expenditures, which primarily relate to
            maintaining current levels of production, totaled $3.5
            million for 1997, $3.8 million for 1996 and $3.7 million for
            1995.  Proceeds from asset sales included certain
            warehousing and supply assets totaling $0.9 million in 1997,
            and totaled $2.1 million in 1996, mostly from the sale of
            certain marine assets.  Capital expenditures for 1998 are
            expected to be slightly higher compared with 1997 because of
            additional drilling activities scheduled in 1998 to maintain
            required levels of water treatment capacity for sulphur
            operations plus the addition of IGL's 25.0 percent interest. 

                 Based on current projections, management believes that
            FSC will generate sufficient cash flow from operations to
            fund its ongoing working capital requirements, reclamation
            costs and projected capital expenditures for the foreseeable
            future.  Additionally, in December 1997 FSC established a
            $100 million revolving credit facility to further enhance
            its liquidity and financial flexibility (Note 7).  FSC also
            announced an open market share purchase program for up to
            1.0 million shares of its common stock, representing
            approximately 10 percent of the shares outstanding.  The
            timing of the purchases is dependent upon many factors,
            including the price of the common shares; FSC's operating
            results, cash flows and financial position; and general
            economic and market conditions. FSC has purchased 351,900
            shares, all in 1998, for $4.8 million (an average of $13.53
            per share) through March 2, 1998.

                 FSC has assessed its year 2000 information systems cost
            issues and believes its current plans for system upgrades
            will adequately address these issues internally at no
            material cost.

            Environmental

                 FSC, through its predecessors, has a history of
            commitment to environmental responsibility. Since the
            1940's, long before public attention focused on the
            importance of maintaining environmental quality, FSC has
            conducted pre-operational, bioassay, marine ecological and
            other environmental surveys to ensure the environmental
            compatibility of its operations.  FSC's environmental policy
            commits its operations to compliance with local, state and
            federal laws and regulations, and prescribes the use of
            periodic environmental audits of all facilities to evaluate
            compliance status and communicate that information to
            management.  FSC believes that its operations are being
            conducted pursuant to necessary permits and are in
            compliance in all material respects with applicable laws,
            rules and regulations.  FSC has access to environmental
            specialists who have developed and implemented corporate-
            wide environmental programs.  FSC continues to study methods
            to reduce discharges and emissions.

                 Federal legislation (sometimes referred to as
            "Superfund" legislation) requires payments for cleanup of
            certain waste sites, even though waste management activities
            were performed in compliance with regulations applicable at
            the time.  Under the Superfund legislation, one party may,
            under certain circumstances, be required to bear more than
            its proportional share of cleanup costs at a site where it
            has responsibility pursuant to the legislation, if payments
            cannot be obtained from other responsible parties. Other
            legislation mandates cleanup of certain wastes at operating
            sites.  States also have regulatory programs that can 
            mandate waste cleanup.  Liability under these laws involves
            inherent uncertainties.  FSC has, at this time, no known
            significant liability under these laws.

[Page] 21

                 Estimated future expenditures to restore properties and
            related facilities to a condition that complies with
            environmental and other regulations are accrued over the
            life of the properties.  The future expenditures are
            estimated based on current costs, laws and regulations.  As
            of December 31, 1997, FSC has accrued $36.5 million ($10.8
            million of which will be reimbursed by third parties) for
            abandonment and restoration of its non-operating sulphur
            assets.  Total estimated abandonment cost for Main Pass oil
            operations is $9.7 million and was fully accrued at December
            31, 1997.  FSC's share of abandonment and restoration costs
            for its two operating sulphur mines is estimated to total
            approximately $78 million, $26.0 million of which had been
            accrued at December 31, 1997, with essentially all such
            costs expected to  be incurred after mine closure.  These
            estimates are by their nature imprecise and can be expected
            to be revised over time because of changes in government
            regulations, operations, technology and inflation.

                 FSC has made, and will continue to make, expenditures
            at its operations for protection of the environment.
            Continued government and public emphasis on environmental
            issues can be expected to result in increased future
            investments for environmental controls, which will be
            charged against income from future operations.  Present and
            future environmental laws and regulations applicable to
            current opperations may require substantial capital
            expenditures and may affect its operations in other ways
            that cannot now be accurately predicted.

                 FSC maintains insurance coverage in amounts deemed
            prudent for certain types of damages associated with
            environmental liabilities that arise from sudden, unexpected
            and unforeseen events.

            Cautionary Statement

                 Management's discussion and analysis of financial
            condition and results of operations contains forward-looking
            statements, including without limitation, FSC's reserve
            expectations, demand for sulphur, the availability of
            financing, the ability to satisfy future cash obligations
            and environmental costs.  Important factors that might cause
            future results to differ from these projections include the
            reliance on IMC-Agrico as a continuing customer, the
            seasonality and volatility of sulphur markets, competition
            and environmental issues as described in more detail
            elsewhere in this Form 10-K under "Cautionary Statements." 

[Page] 22

            Item 8.  Financial Statements and Supplementary Data.

                                REPORT OF MANAGEMENT

                 Freeport-McMoRan Sulphur Inc. (the Company) is
                 responsible for the preparation of the financial
                 statements and all other information contained in this
                 Annual Report.  The financial statements have been
                 prepared in conformity with generally accepted
                 accounting principles and include amounts that are
                 based on management's informed judgments and estimates.

                 The Company maintains a system of internal accounting
                 controls designed to provide reasonable assurance at
                 reasonable costs that assets are safeguarded against
                 loss or unauthorized use, that transactions are
                 executed in accordance with management's authorization
                 and that transactions are recorded and summarized
                 properly.  The system is tested and evaluated on a
                 regular basis by the Company's internal auditors, Price
                 Waterhouse LLP.  In accordance with generally accepted
                 auditing standards, the Company's independent public
                 accountants, Arthur Andersen LLP, have developed an
                 overall understanding of our accounting and financial
                 controls and have conducted other tests as they
                 consider necessary to support their opinion on the
                 financial statements.

                 The Board of Directors, through its Audit Committee
                 composed solely of non-employee directors, is
                 responsible for overseeing the integrity and
                 reliability of the Company's accounting and financial
                 reporting practices and the effectiveness of its system
                 of internal controls.  Arthur Andersen LLP and Price 
                 Waterhouse LLP meet regularly with, and have access to,
                 this committee, with and without management present, to
                 discuss the results of their audit work.

                                                   Robert M. Wohleber
                                                   President and 
                                                   Chief Executive Officer 


                      REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

            TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF
            FREEPORT-McMoRan SULPHUR INC.:

                 We have audited the accompanying balance sheets of
            Freeport-McMoRan Sulphur Inc. (the Company), a Delaware
            Corporation, and its predecessors as of December 31, 1997
            and 1996, and the related statements of operations, cash 
            flow and changes in stockholders' equity for each of the
            years in the three-year period ended December 31, 1997.
            These financial statements are the responsibility of the
            Company's management.  Our responsibility is to express an
            opinion on these financial statements based on our audits.

                 We conducted our audits in accordance with generally
            accepted auditing standards.  Those standards require that
            we plan and perform the audit to obtain reasonable assurance
            about whether the financial statements are free of material
            misstatement.  An audit includes examining, on a test basis,
            evidence supporting the amounts and disclosures in the
            financial statements.  An audit also includes assessing the
            accounting principles used and significant estimates made by
            management, as well as evaluating the overall financial
            statement presentation.  We believe that our audits provide
            a reasonable basis for our opinion.

                 In our opinion, the financial statements referred to
            above present fairly, in all material respects, the
            financial position of the Company and its predecessors as of
            December 31, 1997 and 1996 and the results of its operations
            and its cash flow for each of the three years in the period
            ended December 31, 1997 in conformity with generally accepted
            accounting principles.

                                                    Arthur Andersen LLP
           
            New Orleans, Louisiana
             January 20, 1998

[Page] 23



<TABLE>
                   FREEPORT-McMoRan SULPHUR INC.
                           BALANCE SHEETS
<CAPTION>
                                                December 31,
                                          ------------------------
                                             1997          1996
                                          ----------    ----------
                                                (In Thousands)
<S>                                       <C>           <C>
ASSETS
Current assets:
Cash and cash equivalents                 $   21,293    $    3,116
Accounts receivable:
  Customers                                   27,266        27,402
  Other                                        6,473        15,849
Inventories:
  Products                                    24,841        21,859
  Materials and supplies                       9,580         8,214
Deferred tax asset                             4,768             -
Prepaid expenses and other                     1,214         6,764
                                          ----------    ----------
  Total current assets                        95,435        83,204
                                          ----------    ----------
Property, plant and equipment                841,222       916,858
Less accumulated depreciation
and amortization                            (731,389)     (381,205)
                                          ----------    ----------
  Net property, plant and equipment          109,833       535,653
                                          ----------    ----------
Deferred tax asset                            56,757             -
Other assets                                  11,008        14,763
                                          ----------    ----------
Total assets                              $  273,033    $  633,620
                                          ==========    ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable  and accrued
liabilities                               $   25,175     $  32,149
Current portion of reclamation
and mine shutdown reserves                     4,656        25,261
                                          ----------     ---------
  Total current liabilities                   29,831        57,410
Reclamation and mine shutdown reserves        67,518        56,848
Accrued postretirement and pension benefits   15,594          -
Other liabilities                             45,693        35,002
Stockholders' equity:
  Net assets from PLP                           -          484,360
  Preferred stock, par value $0.01 per
  share, 50,000,000 authorized                  -             -
  Common stock, par value $0.01 per
  share, 100,000,000 shares
  authorized, 10,346,578 shares
  issued and outstanding                         103          -
  Capital in excess of par value of
  common stock                               116,780          -
  Accumulated deficit                         (2,486)         -
                                          ----------     ---------
                                             114,397       484,360
                                          ----------     ---------
Liabilities and stockholders' equity      $  273,033     $ 633,620
                                          ==========     =========
</TABLE>

The accompanying notes are an integral part of these financial
statements.


[Page] 24
<TABLE>
                     FREEPORT-McMoRan SULPHUR INC.
                       STATEMENTS OF OPERATIONS
<CAPTION>
                                             Years Ended December 31,
                                        --------------------------------
                                           1997        1996       1995
                                        ---------    --------   --------
                                                   (In Thousands)
<S>                                     <C>          <C>        <C>
Revenues                                $ 211,945    $221,429   $255,949
Cost of sales:
Production and delivery                   183,227     160,982    168,504
Depreciation and amortization             461,084      37,800     43,700
                                        ---------    --------   --------
  Total cost of sales                     644,311     198,782    212,204
General and administrative expenses         6,950      10,252     18,725
                                        ---------    --------   --------
  Total costs and expenses                651,261     209,034    230,929
                                        ---------    --------   --------
Operating income (loss)                  (439,316)     12,392     25,020
Other income, net                              12        -          -
                                        ---------    --------   --------
Net income (loss) before income taxes    (439,304)     12,392     25,020
Income tax benefit                         65,105        -           -
                                        ---------    --------   --------
Net income (loss)                       $(374,199)   $ 12,392   $ 25,020  
                                        =========    ========   ========

Net income (loss) per share               $(36.16)      $1.20      $2.42
                                          =======       =====      =====

UNAUDITED PRO FORMA DATA (NOTE 1)
  Net income (loss) before income taxes
  reported above                        $(439,304)    $12,392    $25,020
Pro forma benefit (provision) for
income taxes                              151,999      (4,659)    (6,845)
                                        ---------     -------    -------
Pro forma net income (loss)             $(287,305)    $ 7,733    $18,175
                                        =========     =======    =======

Pro forma net income (loss) per share     $(27.77)       $.75      $1.76
                                          =======        ====      =====

Pro forma average shares outstanding       10,347      10,347     10,347
                                           ======      ======     ======
</TABLE>

The accompanying notes are an integral part of these financial
statements.

[Page] 25

<TABLE>
                   FREEPORT-McMoRan SULPHUR INC.
                      STATEMENTS OF CASH FLOW
<CAPTION>
                                            Years Ended December 31,
                                          ------------------------------
                                             1997       1996      1995
                                          ---------    -------   -------
                                                     (In Thousands)
<S>                                       <C>          <C>       <C> 
Cash flow from operating activities:
Net income (loss)                         $(374,199)   $12,392   $25,020
Adjustments to reconcile net income
 (loss) to net cash provided by
  operating activities:
  Depreciation and amortization             461,084     37,800    43,700
  Reclamation and mine shutdown
  expenditures                              (20,562)    (7,504)   (2,476)
  Deferred income taxes                     (65,105)      -         -
  Other                                       3,653      6,421     4,642
  (Increase) decrease in working
   capital net of effect of
   acquisitions:
    Accounts receivable                      18,946     (3,234)  (17,504)
    Inventories                                 399      1,690     5,465
    Prepaid expenses and other                4,816        166    (1,605)
    Accounts payable and accrued
    liabilities                             (12,304)     4,113     8,165
                                          ---------    -------   -------
Net cash provided by operating activities    16,728     51,844    65,407
                                          ---------    -------   -------

Cash flow from investing activities:
Capital expenditures                         (3,513)    (3,834)   (3,710)
Sale of assets and other                        890      2,146       375
                                          ---------    -------   -------
Net cash used in investing activities        (2,623)    (1,688)   (3,335)
                                          ---------    -------   -------

Cash flow from financing activities:
Net distributions from (to) PLP               4,072    (49,814)  (59,298)
                                          ---------    -------   -------
Net cash provided by (used in) financing
activities                                    4,072    (49,814)  (59,298)
                                          ---------    -------   -------
Net increase in cash and cash equivalents    18,177        342     2,774
Cash and cash equivalents at beginning
of year                                       3,116      2,774      -
                                          ---------    -------   -------
Cash and cash equivalents at end of year  $  21,293    $ 3,116   $ 2,774
                                          =========    =======   =======
</TABLE>

The accompanying notes, which include information in Notes 1, 2 and
8 regarding non-cash transactions, are an integral part of these
financial statements.

[Page] 26

<TABLE>
                   FREEPORT-McMoRan SULPHUR INC.
                 STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
                                                 Years Ended December 31,
                                            --------------------------------
                                              1997        1996        1995
                                            --------    --------    --------
                                                      (In Thousands)
<S>                                         <C>         <C>         <C>    
Net assets from PLP:
Balance at beginning of year                $484,360    $521,782    $556,060
Net income (loss) before distribution to
PLP unitholders                             (371,713)     12,392      25,020
Contribution of IGL Main Pass interest        18,458        -           -
Net PLP liabilities allocated to FSC         (18,294)       -           -
Net distributions from (to) PLP                4,072     (49,814)    (59,298)
Distribution of shares to PLP unitholders   (116,883)       -           -
                                            --------    --------    --------
  Balance at end of year                        -        484,360     521,782
                                            --------    --------    --------

Preferred stock:
                                            --------    --------    --------
Balance at beginning and end of year            -           -           -
                                            --------    --------    --------

Common stock:
Balance at beginning of year                    -           -           -
Shares issued to PLP unitholders                 103        -           -
                                            --------    --------    --------
  Balance at end of year                         103        -           -
                                            --------    --------    --------

Capital in excess of par value of common stock:
Balance at beginning of year                    -           -           -
Shares issued to PLP unitholders             116,780        -           -
                                            --------    --------    --------
  Balance at end of year                     116,780        -           -
                                            --------    --------    --------

Accumulated deficit:
Balance at beginning of year                    -           -           -
Net loss subsequent to December 22,1997       (2,486)       -           -
                                            --------    --------    --------
  Balance at end of year                      (2,486)       -           -
                                            --------    --------    --------
       Total stockholders' equity           $114,397    $484,360    $521,782
                                            ========    ========    ========
</TABLE>

The accompanying notes are an integral part of these financial
statements.

[Page] 27


                   FREEPORT-McMoRan SULPHUR INC.
                   NOTES TO FINANCIAL STATEMENTS


1.   BACKGROUND AND BASIS OF PRESENTATION

Background.  Freeport-McMoRan Sulphur Inc. (FSC) became an
independent, publicly held company as of December 22, 1997, when
Phosphate Resource Partners Limited Partnership (PLP), formerly
Freeport-McMoRan Resource Partners, Limited Partnership, distributed
to its unitholders its sulphur business, including its 58.3 percent
interest in Main Pass sulphur and oil operations, together with the
25.0 percent interest in Main Pass previously owned by IMC Global
Inc. (IGL) (Note 8), a joint venture partner with PLP (the
Distribution).  PLP distributed 10,346,578 shares of FSC common
stock pro rata to its unitholders in connection with the merger of
Freeport-McMoRan Inc. (FTX), the former administrative general
partner and majority owner of PLP, with and into IGL (the Merger).
FTX distributed the shares of FSC common stock that it received from
PLP to FTX stockholders on a pro rata basis in connection with the
Merger.

Basis of Presentation.  FSC operated as an integral part of PLP
prior to the Distribution.  FSC's financial statements have been
prepared from the books and records of PLP.  Certain data has been
extracted from PLP records, or in certain cases derived on the basis
of allocations between FSC and PLP's other businesses, for purposes
of presentation in the accompanying financial statements.  FSC's
investment in the Main Pass joint venture is reflected using the
proportionate consolidation method in accordance with standard
industry practice.  No interest expense has been allocated to FSC as
no interest costs have been incurred in the past by FSC and no debt
previously recorded by PLP was assumed by FSC. Intercompany balances
between PLP and FSC have related to various general and
administrative and similar charges and have been settled monthly.
PLP is not a taxable entity and historically has not provided income
taxes on the results of operations of FSC.  Upon formation of FSC as
a wholly owned taxable subsidiary of PLP prior to being spun-off to
PLP unitholders, a deferred tax asset of $63.8 million was
recognized in 1997 income to reflect the excess of tax over book
basis in the related assets.  Unaudited pro forma income taxes are
included in the statements of operations as if FSC had been a
separate taxable entity for the periods presented. FTX provided
benefit plans for certain employees that became FSC employees upon
completion of the Merger.  FTX  transferred certain liabilities
related to these plans to FSC and paid cash to FSC for the
assumption of certain of these liabilities as discussed further in
Note 6.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates.  The preparation of FSC's financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in these financial statements and accompanying notes. The
more significant areas requiring the use of management estimates
include valuation allowances for deferred tax assets, reclamation
and environmental obligations, postretirement and other employee
benefits, future cash flows associated with assets and useful lives
for depreciation and amortization.  Actual results could differ from
those estimates.

Cash and Cash Equivalents.  Highly liquid investments purchased with
a maturity of three months or less are considered cash equivalents.

Inventories.  Inventories are stated at the lower of average cost or
market.

Property, Plant and Equipment.  Property, plant and equipment are
carried at cost, including interest capitalized during the
construction and development period. Expenditures for replacements
and improvements are capitalized. Depreciation for mining and
production assets, including mineral interests, is determined using
the unit-of-production method based on estimated recoverable
reserves. Other assets are depreciated on a straight-line basis over
estimated useful lives of 15 to 20 years for buildings and 5 to 15
years for machinery and equipment.

     In 1995 the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 121 (SFAS 121) which
requires an assessment of the carrying value of long-lived assets
and a reduction of such carrying value to fair value when events or
changes in circumstances indicate that the carrying amount may not
be recoverable.  In September 1997 FSC concluded that the carrying
value of the Main Pass sulphur assets exceeded the undiscounted
estimated future net cash flows, such that an impairment writedown
of $416.4 million was required.  A similar analysis of the Culberson
sulphur assets, based on a reassessment of recoverable reserves
utilizing recent production history, also indicated an impairment
writedown of $9.0 million was required. Fair values were estimated
using discounted estimated future net cash flows related to these
assets. The writedowns to fair value were recorded as additional
depreciation and amortization charges. Future operating results of
FSC will reflect lower depreciation and amortization expense as a
result of these writedowns.

[Page] 28

Oil Capitalized Costs.  Oil producing operations are reflected using
the successful efforts method of accounting. Costs of leases,
productive exploratory wells and development activities are
capitalized. Other exploration costs are expensed.  Depreciation and
amortization is determined on a field-by-field basis using the unit-
of-production method. Gain or loss is included in income when
properties are sold.

Financial Instruments and Contracts.  FSC had outstanding contracts
at December 31, 1997 to purchase 1,350,000 million british thermal
units (mmbtu) of natural gas in the first quarter of 1998 at no more
than $2.65 per mmbtu and no less than $2.33 per mmbtu.  These
contracts had a fair value of $(0.1) million at December 31, 1997.

Environmental Remediation and Compliance.  FSC incurs significant
costs for environmental programs and projects.  Expenditures
pertaining to future revenues from operations are capitalized.
Expenditures resulting from the remediation of conditions caused by
past operations which do not contribute to future revenue generation
are expensed.  Liabilities are recognized for remedial activities
when the efforts are probable and the cost can be reasonably
estimated.

     Estimated future expenditures to restore properties and related
facilities to a condition that complies with environmental and other
regulations are accrued over the life of the properties.  The future
expenditures are estimated based on current costs, laws and
regulations.  As of December 31, 1997, FSC had a $36.5 million
accrual for abandonment and restoration of non-operating sulphur
assets, offset by $10.8 million in Other Assets which will be
reimbursed by third parties.  Total estimated abandonment cost for
Main Pass oil operations is $9.7 million and was fully accrued at
December 31, 1997.  FSC's share of abandonment and restoration costs
for its two operating sulphur mines is estimated to total
approximately $78 million, $26.0 million of which had been accrued
at December 31, 1997, with essentially all costs being incurred
after mine closure.  These estimates are by their nature imprecise
and can be expected to be revised over time because of changes in
government regulations, operations, technology and inflation.

Earnings Per Share.  In February  1997 the FASB issued  SFAS 128, 
"Earnings Per Share," which simplifies the  computation of earnings 
per share  (EPS).  FSC adopted  SFAS 128 in  the fourth quarter of 
1997.    Net income  (loss) per share  and pro forma  net  income
(loss) per  share  for  all  periods presented was  calculated 
by dividing  the  applicable  net income (loss)  amount by  the number 
of shares  outstanding (10,346,578 shares) as of December 22, 1997,
the date of the spin off from  PLP. Options  to purchase  790,517 
shares  of common stock at a weighted average price of $10.93 per 
share were outstanding for the last nine days of 1997, but  were 
excluded from  the  calculation of EPS  as they  are  anti-dilutive 
considering the loss reported in 1997. No options were outstanding 
prior to 1997.

     In December 1997, FSC announced an open market share purchase
program for up to 1.0 million shares of its common stock,
representing approximately 10 percent of the shares outstanding.
The timing of the purchases is dependent upon many factors,
including the price of the common shares; FSC's operating results,
cash flows and financial position; and general economic and market
conditions.  FSC has purchased 49,800 shares, all in 1998, for $0.5
million (an average of $10.77 per share) through January 20, 1998.

3.   PROPERTY,PLANT AND EQUIPMENT,NET

The components of net property, plant and equipment  follow (in
thousands):
<TABLE>
<CAPTION>
                                                December 31,
                                          ------------------------
                                             1997          1996
                                          ----------    ----------
<S>                                       <C>           <C>
Buildings and facilities                  $  555,616    $  613,412
Capitalized oil exploration  and
development costs                            203,946       201,517
Transportation, terminaling and
other assets                                  81,660       101,929
                                          ----------    ----------
  Property, plant and equipment              841,222       916,858
Accumulated depreciation and amortization,
including $203.9  million and $192.5 million
at December 31, 1997 and 1996, respectively,
for capitalized oil exploration and
development costs                            731,389       381,205
                                          ----------    ----------
Property, plant and equipment, net        $  109,833    $  535,653
                                          ==========    ==========
</TABLE>

[Page] 29

4.  MANAGEMENT SERVICES

FTX provided certain management and administrative  services to PLP (and
thus FSC), including technical,  administrative, accounting,  financial,
tax  and  other  services  under  a management services agreement. The  costs
of such  services, which include related overhead, were allocated to FSC based
on time  spent by  FTX employees  in  the conduct  of  FSC's business
activities.  Such  costs were non-interest  bearing and reimbursed monthly.
The total  amount charged by FTX  to FSC for such  services was $2.0  million
in  1996 and  $15.9 million  in   1995  (including   $7.0  million for stock
appreciation rights costs resulting  from the rise in  FTX's common stock
price during the year).  Beginning in 1996,  FM Services Company (FMS), 
an entity now  owned 25 percent  by FSC,  began  providing  most of the 
services previously provided by  FTX  on  a  similar  cost-reimbursement
basis, totaling $5.1  million in  1997 and  $6.7 million  in  1996.
Management believes  the  costs  for such  services  do  not differ
materially  from  the  costs  that  would  have  been incurred had the
relevant personnel providing these services been employed directly by FSC.

     Prior to 1997, FTX operated the Main Pass oil facilities and
charged FSC $1.3 million in 1996 and $1.0 million in 1995 for
specified overhead and other costs.  Beginning in 1997, PLP operated
the facilities and charged FSC $1.0 million.  Subsequent to
consummation of the Merger, FSC operates the Main Pass oil
facilities.

5.   INCOME TAXES

Because PLP is not a taxable entity, historically it has not
provided for income taxes.  FSC recorded a deferred income tax asset
pursuant to SFAS 109 immediately upon the transfer of assets and
liabilities from PLP (Note 1). The financial statements reflect an
unaudited pro forma tax provision as if FSC had been a taxable
entity as FSC believes this is a more meaningful presentation.  The
components of deferred taxes based upon temporary differences
existing at December 31, 1997 and the estimated amounts as of
December 31, 1996 follow (in thousands):

<TABLE>
<CAPTION>
                                                December 31,
                                          ------------------------
                                             1997          1996
                                          ----------    ----------
<S>                                       <C>           <C>
Deferred tax asset:
  Property, plant and equipment           $   23,189    $     -
  Reclamation and shutdown reserve            21,158        22,656
  Deferred compensation, postretirement
  and pension benefits                        11,571        11,752
  Other                                        5,607         4,538
                                          ----------    ----------
    Total deferred tax asset                  61,525        38,946
Deferred tax liability:
  Property, plant and equipment                 -         (121,668)
                                          ----------    ----------
Net deferred tax asset (liability)            61,525       (82,722)
Current portion                               (4,768)       (8,889)
                                          ----------    ----------
Deferred tax asset (liability)            $   56,757    $  (91,611)
                                          ==========    ==========
</TABLE>

     FSC believes it will generate sufficient income to realize its
deferred tax assets such that no valuation reserve is required.
Unaudited pro forma income taxes consist of the following (in
thousands):
<TABLE>
<CAPTION>
                                    1997       1996      1995
                                 ---------   -------    -------
<S>                              <C>         <C>        <C>
Current                          $  (7,752)  $(6,201)   $ 4,942
Deferred                          (144,247)   10,860      1,903
                                 ---------   -------    -------
                                 $(151,999)  $ 4,659    $ 6,845
                                 =========   =======    =======
</TABLE>

     Unaudited reconciliations of the differences between pro forma
income taxes computed at the federal statutory tax rate and pro
forma income taxes recorded follow (dollars in thousands):

<TABLE>
<CAPTION>
                              1997               1996               1995
                     --------------------   ---------------    ---------------
                       Amount    Percent    Amount  Percent    Amount  Percent
                     ---------   -------    ------  -------    ------  -------
<S>                  <C>           <C>      <C>      <C>       <C>      <C>
Pro forma income
taxes computed at
the federal statutory
tax rate             $(153,756)     35%     $4,337    35%      $8,757    35%
Increase (decrease)
attributable to:
  Statutory depletion      -         -         -       -       (2,385)  (10)
  State taxes and
  other                  1,757       -         322     3          473     2
                     ---------     ---      ------   ---       ------   ---
Pro forma income
taxes                $(151,999)     35%     $4,659    38%      $6,845    27%
                     =========     ===      ======   ===       ======   ===
</TABLE>

[Page] 30

6.   PENSION AND OTHER EMPLOYEE BENEFITS

Pensions.  Substantially all employees have been covered by FTX's or
FMS's defined benefit plans. Additionally, unfunded non-qualified
plans are sponsored for those participants in the qualified defined
benefit plans whose benefits are limited under federal income tax
laws.  The accumulated benefits and plan assets were not separately
determined  and amounts allocated to FSC under these plans have not
been material.  In connection with the Merger, FSC formed its own
defined benefit plans and FTX transferred to the new FSC plan (for
the qualified plan), or to FSC (for the non-qualified plan), assets
and liabilities pertaining to those FTX employees who became FSC
employees.  The FSC plans have substantially the same provisions as
the FTX plans and provide credit for prior FTX service. The
estimated actuarial liability related to the FSC plans as of January
1, 1998 follows (in thousands):

<TABLE>
<S>                                                 <C>
Accumulated Benefit Obligation                      $  (10,159)
                                                    ==========

Projected Benefit Obligation (PBO)                  $  (12,694)
Less Plan assets                                        14,116
                                                    ----------
  Overfunded PBO                                         1,422
Unrecognized amounts:
  Transition asset                                        (145)
  Prior service credit                                  (7,829)
  Gains                                                 (4,464)
                                                    ----------
Accrued pension liability                           $  (11,016)
                                                    ==========
</TABLE>

     In determining the present value of benefit obligations, FSC
used a discount rate of 7.25 percent in 1997, a 5 percent annual
increase in future compensation levels and a 9 percent average
expected rate of return on assets.

Other Postretirement Benefits.  FTX and FMS provided certain health
care and life insurance benefits for retired employees.  The related
expense allocated to FSC from FTX totaled $2.7 million in 1997
(including $0.7 million for service cost and $2.0 million in
interest for prior period services), $2.5 million in 1996 ($0.2
million and $2.3 million, respectively) and $4.7 million in 1995
($0.2 million and $4.5 million, respectively).  FSC's share of the
FMS plan was not significant for 1997 and 1996.

     In connection with the Merger, FSC assumed the liability for
the portion of FTX's postretirement benefit liability related to
active employees transferred to FSC and FTX paid FSC cash for the
amount of the liability.  The estimated actuarial information as of
January 1, 1998 follows (in thousands):

<TABLE>
<S>                                                 <C>
Accumulated postretirement benefits                 $   (2,730)
Unrecognized prior service credits                        (662)
Unrecognized gains                                      (1,186)
                                                    ----------
Accrued postretirement liability                    $   (4,578)
                                                    ==========
</TABLE>

     The initial health care cost trend rate used was 8 percent for
1998, decreasing 0.5 percent per year until reaching 5 percent.  A
one percent increase in the trend rate would increase the amounts by
approximately 10 percent.  The discount rate used was 7.25 percent.
FSC has the right to modify or terminate these benefits.

Stock Options.   In December  1997 FSC  adopted an  Adjusted Stock Award Plan
to provide for the issuance of fixed  stock options to holders of FTX fixed
stock options and FTX  stock appreciation rights  (SARs).    FSC  granted
425,517  fully vested fixed  stock  options  on  December 22, 1997  at  a
weighted average option price  of $10.38 under the  Adjusted Stock Award Plan
to reflect the FTX option holder's economic position under the  FTX stock
options as  adjusted for  the proportionate market value of FSC shares at the
time of  the Merger. The number of fixed options issued by FSC was  based
upon the number of  FTX options and  SARs outstanding as  of the date of
consummation of  the Merger,  adjusted for  the distribution  ratio of FSC
shares   to   FTX   shares.  Compensation expense for  the aggregate 
intrinsic value  of the FTX SARs has already  been recorded in the 
accompanying FSC financial statements through allocations of general  and
administrative costs from FTX.  As these SARs were converted to fixed options
under the FSC  Adjusted Stock Award  Plan, the related accrued SAR liability
was recorded as additional paid-in capital in the FSC balance sheets.

     FSC also adopted the 1997 Stock Option Plan (the 1997 Plan) in
December 1997 to provide for the issuance of stock options at no
less than market value at the time of grant.  Under this plan, FSC
can grant options to eligible

[Page] 31

participants to purchase up to 1.0
million common shares.  FSC also adopted the 1997 Stock Option Plan
for Non-Employee Directors (the Director Plan) authorizing FSC to
grant options to purchase up to 75,000 shares.  Options granted
under the 1997 Plan and the Director Plan generally are exercisable
in 25 percent annual increments beginning one year from the date of
grant and expire 10 years after the date of grant.  Options for
650,000 shares under the 1997 Plan and 60,000 shares under the
Director Plan were available for new grants as of December 31, 1997.
A summary of FSC stock options outstanding follows:

<TABLE>
<CAPTION>
                                                   Weighted
                                   Number          Average
                                     of             Option
                                   Options          Price
                                   -------         --------
  <S>                              <C>               <C>
  Balance at January 1, 1997          -              $  -
    Granted upon PLP spin off      425,517            10.38
    Granted                        365,000            11.56
    Exercised                         -                 -
    Expired/Forfeited                 -                 -
                                   -------
  Balance at December 31, 1997     790,517            10.93
                                   =======
</TABLE>

     Summary information of stock options outstanding at December
31, 1997 follows:

<TABLE>
<CAPTION>
                                                                  Options
                                    Options Outstanding         Exercisable
                               -----------------------------  ----------------
                                          Weighted  Weighted          Weighted
                                Number    Average   Average   Number   Average
                                 of       Remaining  Option     of     Option
Range of Exercise Prices       Options      Life     Price    Options   Price
------------------------       -------    --------- --------  ------- --------
<S>                            <C>        <C>         <C>     <C>       <C>
$4.89 to $7.23                  60,552    3.3 years   $6.56    60,552   $6.56
$7.43 to $11.06                162,019    5.5 years    8.3    162,019    8.30
$11.56 to $13.84               567,946    9.4 years   12.14   202,946   13.19
                               -------                        -------
                               790,517                        425,517
                               =======                        =======
</TABLE>

     FSC has adopted the disclosure only provisions of SFAS 123 and
applies APB Opinion No. 25 and related interpretations in accounting
for its stock based compensation plans.  Had compensation cost for
FTX's fixed stock option grants been determined in accordance with
SFAS 123, FSC would have been allocated additional charges totaling
$1.5 million ($1.0 million to pro forma net loss or $0.09 per share)
in 1997, $1.2 million ($0.7 million to pro forma net income or $0.07
per share) in 1996 and none in 1995. FSC recognized a $7.0 million
charge in 1995 for the cost of FTX SARs as discussed earlier.  Had
compensation cost for FSC's December 23, 1997 stock option grants
been determined based on the fair value at the grant date for awards
under those plans consistent with SFAS 123, FSC's stock-based
compensation costs would have increased by $12,600 in 1997. For the
pro forma computations, the fair values of the option grants were
estimated on the date of grant using the Black-Scholes option-
pricing model.  The weighted average fair value for stock option
grants was $5.62 per option.  The weighted average assumptions used
include a risk-free interest rate of 5.83 percent, expected
volatility of 21 percent, expected lives of 10 years and no annual
dividend. The pro forma effects on net income for 1997 are not
representative of future years because FSC first adopted its stock
option plans in 1997. No other discounts or restrictions related to
vesting or the likelihood of vesting of fixed stock options were
applied.

     FSC has adopted other benefit plans, certain of which are
related to its performance, which costs are recognized in general
and administrative expense.  Upon consummation of the Merger, FSC
also assumed certain FTX liabilities totaling approximately $0.4
million under its plans related to those employees transferred from
FTX to FSC in exchange for an equal cash payment.

7. COMMITMENTS AND CONTINGENCIES

Credit Facility.  In December 1997 FSC established a $100 million
variable rate revolving credit facility with a group of banks.  The
variable rate facility matures in December 2002, provides specified
cash flow to interest coverage and maximum allowable debt to cash
flow levels. The facility is subject to a negative pledge on FSC's
assets.  Facility fees on the unused amount are variable at a
minimum 0.2 percent annually.  No amounts were outstanding under the
facility as of December 31, 1997.


[Page] 32

Long-Term Contracts and Operating Leases.  FSC's minimum annual
contractual charges under non-cancelable long-term contracts and
operating leases total $194.9 million, with $19.7 million in 1998,
$16.1 million in 1999, $13.5 million in 2000, $13.5 million in 2001
and $13.5 million in 2002.

Other Liabilities.  In connection with the Merger, FSC assumed a
liability to IGL for a portion of IGL's postretirement benefit costs
relating to certain retired employees of FSC.  At December 31, 1997
the liability was estimated to total $13.7 million, including $2.0
million in current liabilities.  Future changes to this estimate
because of changes in assumptions or actual results varying from
projected results will be recorded in earnings.

Environmental.  FSC has made, and will continue to make,
expenditures for protection of the environment.  FSC is subject to
contingencies as a result of environmental laws and regulations.
The related future cost is indeterminable because of such factors as
the unknown timing and extent of the corrective actions that may be
required and the application of joint and several liability.

8.   ACQUISITIONS

Pennzoil Company.  In 1995 PLP acquired essentially all of the
domestic assets of Pennzoil Company's sulphur division, including
the Culberson sulphur mine in West Texas. FSC assumed the terms of
the purchase agreement with Pennzoil.  Under the terms of the
purchase agreement, Pennzoil will receive quarterly payments from
FSC over 20 years based on the prevailing price of sulphur. The
estimated future installment payments, based on the prevailing
sulphur price at the time of acquisition, are included in accrued
long-term liabilities. These payments totaled $2.1 million in 1997,
$2.0 million in 1996 and $5.2 million in 1995.  The installment
payments may be terminated earlier either by FSC through the
exercise of a $65 million call option or by Pennzoil through the
exercise of a $10 million put option.  Neither option may be
exercised prior to 1999. The purchase price allocation follows (in
thousands):

<TABLE>
        <S>                                      <C>
        Current assets                           $  5,635
        Property, plant and equipment              48,837
        Current liabilities                        (7,499)
        Reclamation and mine shutdown reserves    (15,200)
        Accrued long-term liabilities             (31,773)
                                                 --------
           Net cash investment                   $   -
                                                 ========
</TABLE>

  IGL Interest in Main Pass.  Immediately prior to and as part of
the Merger, IGL transferred its 25.0 percent interest in the Main
Pass Joint Venture to PLP for no consideration.  The transfer was
accounted for using purchase accounting and recorded at fair value.
The allocation of fair value follows (in thousands):

<TABLE>
             <S>                                        <C>
             Current assets                             $  8,020
             Property, plant and equipment                22,500
             Current liabilities                          (3,863)
             Reclamation and mine shutdown reserves       (5,492) 
             Other, net                                   (2,707)
             Net assets from PLP                         (18,458)
                                                        --------
                Net cash investment                     $   -
                                                        ========

</TABLE>

     The following selected unaudited pro forma information assumes
that the acquisition of the 25.0 percent interest in Main Pass and
the Distribution occurred on January 1, 1996.  The  pro forma
information is presented for illustrative purposes only and is not
necessarily indicative of results that would have been realized had
the acquisition occurred on January 1, 1996, nor are they indicative
of future results.

<TABLE>
<CAPTION>
                               Years Ended December 31,
                              -------------------------
                                 1997           1996
                              -----------    ----------
                              (In Thousands, Except per
                                    Share Amounts)
  <S>                         <C>            <C>
  Revenues                    $   253,523    $  268,919
  Operating income (loss)        (436,452)       25,576
  Net income (loss)              (285,440)       15,959
  Net income (loss) per share      (27.59)         1.53

</TABLE>

[Page] 33

9.   BUSINESS SEGMENTS

FSC has adopted SFAS 131, "Disclosures About Segments of an
Enterprise and Related Information" which requires that companies
disclose segment data based on how management makes decisions about
allocating resources to segments and measuring their performance.
FSC has two business segments, sulphur and oil.  Frasch sulphur is
produced through the offshore Louisiana Main Pass mine and the
Culberson mine in West Texas.  The sulphur business segment also
includes an extensive logistics network, including sulphur
terminaling and transportation assets, and purchases of recovered
sulphur.  Oil is produced at Main Pass from the same geologic
formation that holds the deposit's sulphur. The segment data
presented below was prepared on the same basis as FSC's financial
statements.

     A significant portion of the sulphur production is sold to the
IMC-Agrico Joint Venture (IMC-Agrico), a chemical fertilizer
producer jointly owned by IGL and PLP, under a long-term supply
contract that extends for as long as IMC-Agrico's operations have a
requirement for sulphur.  As a percentage of total FSC's revenues,
sales to IMC-Agrico totaled 55 percent in 1997 and 54 percent in
1996 and 1995.  As a percentage of total customer accounts
receivable, receivables from IMC-Agrico totaled 39 percent at
December 31, 1997 and 47 percent at December 31, 1996.  Oil produced
from Main Pass is sold to two major Gulf Coast refining companies.
As a percentage of total FSC revenues, oil sales to one of these
refining companies, Amoco, totaled 9 percent in 1997, 12 percent in
1996 and 11 percent in 1995.  No other single customer accounted for
greater than 10 percent of total revenues in 1995 through 1997.  All
of FSC's customers are located in the United States.

<TABLE>
<CAPTION>
                           Sulphur         Oil          Total
                          ----------    ----------    ----------
                                         (In Thousands)
<S>                       <C>           <C>           <C>       
1997
Revenues                  $  182,380    $   29,565    $  211,945
Production and delivery      167,050        16,177       183,227
Depreciation and
amortization                 449,870        11,214       461,084
General and administrative
expense                        6,667           283         6,950
                          ----------    ----------    ----------
Operating income (loss)   $ (441,207)   $    1,891    $ (439,316)
                          ==========    ==========    ==========
Capital expenditures      $    1,406    $    2,107    $    3,513
                          ==========    ==========    ==========
Total assets              $  246,794    $   26,239    $  273,033
                          ==========    ==========    ==========

1996
Revenues                  $  184,425    $   37,001    $  221,426
Production and delivery      150,086        10,896       160,982
Depreciation and
amortization                  23,006        14,794        37,800
General and administrative
expense                        8,040         2,212        10,252
                          ----------    ----------    ----------
Operating income          $    3,293    $    9,099    $   12,392
                          ==========    ==========    ==========
Capital expenditures      $    2,777    $    1,057    $    3,834
                          ==========    ==========    ==========
Total assets              $  612,051    $   21,569    $  633,620
                          ==========    ==========    ==========

1995
Revenues                  $  220,796    $   35,153    $  255,949
Production and delivery      158,703         9,801       168,504
Depreciation and
amortization                  24,564        19,136        43,700
General and administrative
expense                       14,489         4,236        18,725
                          ----------    ----------    ----------
Operating income          $   23,040    $    1,980    $   25,020
                          ==========    ==========    ==========
Capital expenditures      $    2,148    $    1,562    $    3,710
                          ==========    ==========    ==========
Total assets              $  647,650    $   32,817    $  680,467
                          ==========    ==========    ==========
</TABLE>

[Page] 34

10.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
                                                            Pro forma
                               Operating       Pro forma    Net Income
                                Income         Net Income   (Loss) per
                Revenues        (Loss)          (Loss)       share  a
                --------       ---------       ---------    ----------
                         (In Thousands, Except per Share Amounts)
<S>             <C>            <C>             <C>            <C>
1997
  1ST Quarter   $ 53,395       $     549       $     359       $0.03
  2nd Quarter     54,355             711             465        0.04
  3rd Quarter     50,554        (426,431)b      (278,886)     (26.95)b
  4th Quarter     53,641         (14,145)c        (9,243       (0.89)c
                --------       ---------       ---------     
                $211,945       $(439,316)      $(287,305)     (27.77)
                ========       =========       =========      

1996
  1ST Quarter   $ 60,133       $   5,286       $   3,298       $0.32
  2nd Quarter     54,447           2,450           1,529        0.15
  3rd Quarter     52,799           3,884           2,424        0.23
  4th Quarter     54,047             772             482        0.05
                --------       ----------      ---------         
                $221,426       $  12,392       $   7,733        0.75
                ========       ==========      =========        
</TABLE>

a. Pro forma per share amounts shown were calculated using the number
of shares outstanding (10,346,578 shares) as of December 22, 1997, the
date of the Merger (Note 1).
b. Includes charges totaling $425.4 million ($278.2 million to pro
forma net loss or $26.89 per share) for an impairment assessment of
sulphur assets.
c. Includes charges totaling $9.9 million ($6.5 million to pro
forma net loss or $0.63 per share) for an increase in estimated
reclamation costs for sulphur properties, for drilling costs of an
additional brine well and a reduction of sulphur inventory book
value to market value.


11.       SUPPLEMENTARY MINERAL RESERVE INFORMATION (UNAUDITED)

Proved and probable mineral reserves follow (in thousands):

<TABLE>
<CAPTION>
                                           December 31, 
                          ----------------------------------------------
                           1997       1996       1995     1994     1993 
                          ------     ------     ------   ------   ------
<S>                       <C>        <C>        <C>      <C>      <C>
Sulphur-long tons         61,184     53,149     55,185   41,018   38,637

</TABLE>

a.   Main Pass reserves are subject to a 12.5 percent royalty based
on net mine revenues.  Culberson reserves totaled 7.6 million tons
at December 31, 1997, 14.5 million tons at December 31, 1996 and
15.4 million tons at December 31, 1995 and are subject to a 9.0
percent royalty based on net mine revenues.

12.  SUPPLEMENTARY OIL INFORMATION

The supplementary information presented below is prepared in
accordance with requirements prescribed by SFAS 69.  Note 3 includes
information regarding capitalized oil exploration and development
costs.

Costs Incurred in Oil Property Acquisition, Exploration and
Development Activities.  Costs incurred (all of which were
development costs) totaled $2.1 million in 1997, $1.1 million in
1996 and $1.6 million in 1995.

Proved Oil Reserves (Unaudited).   Proved oil  reserves at December 31, 1997
have been estimated by independent petroleum  engineers in accordance with
guidelines established by the  Securities and Exchange Commission (SEC).
There  are  numerous uncertainties  inherent  in estimating  quantities
of proved  reserves and in projecting the future rates of production and
timing of development expenditures. Thus,  the following  reserve
estimates, which  relate  to reserves  attributable  to FSC, are based upon
existing economic  and  operating conditions; they are only  estimates and
should not  be construed as being exact.  The reserves related to  FSC
are located  in offshore  United States  waters.   Oil, including condensate
and plant  products, is stated  in thousands of barrels.

[Page] 35

<TABLE>
<CAPTION>
                                             1997      1996      1995
                                            ------    ------    ------
<S>                                         <C>       <C>       <C>
Proved reserves:
  Beginning of year                          5,188     6,638     7,279
  Revisions of previous estimates               85       446     1,577
  Production                                (1,597)   (1,896)   (2,218)
  Reserves transferred from IGL              1,578      -         -
                                            ------    ------    ------
  End of year                                5,254     5,188     6,638
                                            ======    ======    ======
Proved developed reserves:
  Beginning of year                          4,108     5,155     5,383
                                            ======    ======    ======
  End of year                                5,254     4,108     5,155
                                            ======    ======    ======
</TABLE>

Standardized Measure of Discounted Future Net Cash Flows From Proved
Oil Reserves (Unaudited).  The standardized measure of discounted
future net cash flows and changes therein relating to the proved oil
reserves of FSC were computed using reserve valuations based on
regulations prescribed by the SEC.  These regulations provide for
the use of year-end realized oil prices (escalated only when known
and determinable price changes are provided by contract and law) in
the projection of future net cash flows.

<TABLE>
<CAPTION>
                                                      December 31, 
                                             ------------------------------
                                              1997        1996       1995
                                             -------    --------   --------
                                                     (In Thousands)
<S>                                          <C>        <C>        <C>
Future cash flows                            $79,209    $107,118   $113,231
Future costs applicable to future cash flows:
  Production costs                            61,640      50,590     39,720
  Development and abandonment costs           14,252      15,251     17,971
                                             -------     -------   --------
Future net cash flows before income taxes      3,317      41,277     55,540
Future income taxes                             -           -          -
                                             -------     -------   --------
Future net cash flows                          3,317      41,277     55,540
Discount for estimated timing of net cash
 flows (10 percent discount rate)             (3,704)a     2,323      6,787
                                             -------    --------   --------
                                             $ 7,021    $ 38,954   $ 48,753
                                             =======    ========   ========

</TABLE>

a.   Amount is negative due to the effect of discounting to present
value abandonment costs to be incurred in future periods once
production ceases.

     Because FSC will have sufficient tax deductions to utilize
against estimated future taxable income, in accordance with SFAS 69
no deductions for future income taxes arising subsequent to the
Merger have been made above.  Main Pass oil prices used in the above
disclosures declined approximately $1.25 per barrel through January
20, 1998.  Additionally, subsequent to year-end FSC has signed a
letter of intent with an oil producing company to treat their oil
production at the Main Pass Facility for a fee.  This company would
also assume a portion of the total estimated future abandonment
costs shown above.  This arrangement, which is not reflected in the
above future cash flows, is subject to completion of a definitive
agreement.

Changes in Standardized Measure of Discounted Future Net Cash Flows
From Proved Oil Reserves (Unaudited).

<TABLE>
<CAPTION>
                                             Years Ended December 31,
                                          -------------------------------
                                             1997       1996       1995
                                          --------    --------   --------
                                                    (In Thousands)
<S>                                       <C>         <C>        <C>
Beginning of year                         $ 38,954    $ 48,753   $ 45,650
Revisions:
  Changes in prices                        (21,111)      7,316      8,841
  Accretion of discount                      3,895       4,875      4,565
  Other changes (primarily revised
  estimates of quantities in 1995)          (5,554)      3,058     13,487
Development costs incurred during
the year                                     2,107       1,057      1,562
Reserves transferred from IGL                2,118        -          -
Revenues, less production costs            (13,388)    (26,105)   (25,352)
                                          --------    --------   --------
End of year                               $  7,021    $ 38,954   $ 48,753     
                                          ========    ========   ========

</TABLE>

[Page] 36

Item 9.  Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure.

         None.

                               PART III

Item 10.  Directors and Executive Officers of the Registrant.

          The information regarding executive officers required by Item 10 may
be found under item 4(a) of this report.

          The information regarding directors required by Item 10 is
incorporated by reference from the registrant's definitive Proxy Statement
for its 1998 Annual Meeting of Stockholders.

Item 11.  Executive Compensation.

          Incorporated by reference from the registrant's definitive Proxy
Statement for its 1998 Annual Meeting of Stockholders.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

          Incorporated by reference from the registrant's definitive Proxy
Statement for its 1998 Annual Meeting of Stockholders.

Item 13.  Certain Relationships and Related Transactions.

          Incorporated by reference from the registrant's definitive Proxy
Statement for its 1998 Annual Meeting of Stockholders.

                               PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

          (a)(1)    Financial Statements

                    Reference is made to Item 8 hereof.

          (a)(2)    Financial Statement Schedules

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

     We have audited, in accordance with generally accepted auditing
standards, the financial statements as of December 31, 1997 and 1996
for each of the three years in the period ended December 31, 1997
included in Freeport-McMoRan Sulphur Inc.'s annual report to
shareholders included elsewhere in this Form 10-K, and have issued
our report thereon dated January 20, 1998.  Our audits were made for
the purpose of forming an opinion on those statements taken as a
whole.  The schedule below is the responsibility of the Company's 
management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the
basic financial statements.  This schedule has been subjected to the
auditing procedures applied in the audits of the basic financial
statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

                                      Arthur Andersen LLP

New Orleans, Louisiana,
  January 20, 1998

[Page] 37

<TABLE>
Schedule VIII - Valuation and Qualifying Accounts
<CAPTION>

                            Additions
                    --------------------------
      Balance at    Charged to     Charged to     Other-         Balance at
      Beginning of  Costs and        Other          Add            End of
       of Period     Expenses      Accounts       (Deduct)         Period
      ------------  ---------      -----------    ---------      -----------
                              (In Thousands)
<S>     <C>             <C>            <C>       <C>                 <C>
Reclamation and mine
shutdown reserves:
1997
Sulphur $ 75,918        $9,349         $-        $(22,762)  a,b      $62,505
Oil        6,191          (248)         -           3,726   a          9,669
        $ 82,109        $9,101         $-        $(19,036)           $72,174
1996
Sulphur $ 83,145        $3,920         $-        $(11,147)  b,c      $75,918
Oil        4,903         1,288          -              -               6,191
        $ 88,048        $5,208         $-        $(11,147)           $82,109
1995
Sulphur $ 59,446        $2,643         $-         $21,056   b,c      $83,145
Oil        3,657         1,257          -             (11)             4,903
        $ 63,103        $3,900         $-         $21,045            $88,048

</TABLE>

a.   Includes $5.5 million of liabilities assumed ($1.8 million for
sulphur and $3.7 million for oil) in connection with the acquisition
of IGL's 25.0 percent interest in Main Pass.
b.   Includes expenditures of $20.6 million in 1997, $7.5 million in
1996 and $2.5 million in 1995.
c.   Includes $23.5 million of liabilities assumed in 1995 in
connection with the acquisition of the sulphur assets of Pennzoil
which was subsequently reduced by $8.3 million in 1996.
                       ____________________

      No other schedules have been included because they are not required,
not applicable or the information has been included elsewhere
herein. 



      (a)(3)    Exhibits

          Reference is made to the Exhibit Index beginning on page E-1 hereof.

      (b)  Reports on Form 8-K

           The registrant filed a Current Report on Form 8-K dated December
 16,1997 to report under Item 5 the adoption by the registrant's Board of
 Directors of a Stockholder Protection Rights Agreement.


[Page] 38

                                SIGNATURES

       Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on March 24, 1998.

                                               FREEPORT-McMoRan SULPHUR INC.

                                               By:  /s/ Robert M. Wohleber
                                                    ----------------------
                                                         Robert M. Wohleber,
                                                            President and
                                                       Chief Executive Officer

       Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 24, 1998.

Signature                         Title
-----------------------       -------------
/s/ James R. Moffett          
James R. Moffett              Co-Chairman of the
                              Board of Directors
  *  Rene L. Latiolais        Co-Chairman of the Board of Directors
  *  Richard C. Adkerson      Vice Chairman of the Board of 
                              Directors
  *  Robert M. Wohleber       President, Chief Executive Officer and
                              a Director (Principal Executive and 
                              Financial Officer)
  *  C. Donald Whitmire, Jr.  Vice President and Controller -
                              Financial Reporting (Principal 
                              Accounting Officer)
  *  J. Terrell Brown         Director
  *  Thomas D. Clark, Jr.     Director
  *  B. M. Rankin, Jr.        Director

*By:/s/ James R. Moffett                   
    --------------------
      James R. Moffett 
      Attorney-in-Fact


[Page] S-1

                               EXHIBIT INDEX

Exhibit
Number                   Description of Exhibits
--------    -----------------------------------------------

2.1         Contribution and Distribution Agreement by and among the
            Company, FTX and FRP, dated as of August26, 1997(1)

2.2         Assignment and Assumption Agreement by and between IGL 
            and FRP dated as of December 22, 1997

3.1         Certificate of Incorporation of the Company(1)

3.2         By-laws of the Company(1)

4.1         Form of the Company's Common Stock certificate(1)

4.2         Stockholder Protection Rights Agreement between 
            Freeport-McMoRan Sulphur Inc. and Mellon Securities 
            Trust Company, as Rights Agent(2)

10.1        Employee Benefits Agreement by and between FTX and the 
            Company

10.2        Asset Sale Agreement for Main Pass Block 299 between FRP
            and Chevron USA, Inc. dated as of May2, 1990(1)

10.3        Main Pass 299 Sulphur and Salt Lease, effective May1, 
            1988(1)

10.4        Joint Operating Agreement by and between FRP, 
            IMC-Fertilizer, Inc. and Felmont Oil Corporation, dated 
            June5, 1990(1)

10.5        Joint Operating Agreement by and between FRP, 
            IMC-Fertilizer, Inc. and Felmont Oil Corporation, dated 
            May1, 1988(1)

10.6        Agreement to Coordinate Operating Agreements by and 

            between FRP, IMC-Fertilizer and Felmont Oil Corporation,
            dated May1, 1988(1)

10.7        Asset Purchase Agreement between FRP and Pennzoil 
            Company dated as of October22, 1994 (the "Asset Purchase
            Agreement")(1)

10.8        Amendment No. 1 to the Asset Purchase Agreement dated as
            of January3, 1995(1)

10.9        Agreement for Sulphur Supply, as amended, dated as of 
            July1, 1993 among FRP, IMC Fertilizer and IMC-Agrico 
            Company (the "Sulphur Supply Agreement")(1)(3)

10.10       Side letter with IGL regarding the Sulphur Supply 
            Agreement(1)

10.11       Processing and Marketing Agreement between the Freeport 
            Sulphur Company (a division of FRP) and Felmont Oil 
            Corporation dated June19, 1990 (the "Processing 
            Agreement")(1)

10.12       Amendment Number 1 to the Processing Agreement(1)

10.13       Amendment Number 2 to the Processing Agreement(1)

10.14       Services Agreement dated as of December 23, 1997 between
            the Company and FMS

10.15       Credit Agreement dated as of December 12, 1997 among the
            Company, as borrower, the financial institutions party 
            thereto, the Chase Manhattan Bank, as administrative 
            agent and documentary agent, and Hibernia National Bank,
            as co-agent

            Executive Compensation Plans and Arrangements (Exhibits 
            10.16 through 10.19)

10.16       1997 Stock Option Plan for Non-Employee Directors(1)

10.17       Company Adjusted Stock Award Plan(1)

10.18       Freeport Sulphur 1997 Stock Option Plan(1)

10.19       Letter Agreement dated December 22, 1997 between FMS and
            Rene L. Latiolais

23.1        Consent of Arthur Andersen LLP

23.2        Consent of Ryder Scott Company

24.1        Certified resolution adopted by the Company's Board of 
            Directors authorizing this report to be signed on behalf
            of any officer or director pursuant to a Power of 
            Attorney

24.2        Powers of Attorney

27.1        Financial Data Schedule

----------------------
(1)  Incorporated by reference from the Company's Registration
Statement on Form S-1 (Registration No. 333-40375) filed with the
Commission on November 17, 1997.
(2)  Incorporated by reference from the Company's Current Report on
Form 8-K dated December 16, 1997.
(3)  Portions of this Exhibit have been omitted pursuant to a
confidentiality request filed with the Commission in connection with
the filing of the Registration Statement on Form S-1. 

[Page] E-1