PARTICIPATION AGREEMENT
                          McMoRan 1997 Exploration Program
                                                                    PAGE

          I.        DEFINITIONS                                       4

          II.       PURPOSE; OPERATIONS                               8
                    2.1  Purpose                                      9
                    2.2  McMoRan's Efforts                            9
                    2.3  Operator                                     9

          III.      INTERESTS OF THE PARTIES                          9
                    3.1 Sharing of Exploration Expenditures           9
                    3.2 Ownership Interests                          10
                    3.3 McMoRan Group Participation                  10

          IV.       EXPLORATION EXPENDITURES                          10
                    4.1  Exploration Expenditures                     10

          V.        ACQUISITION OF LEASEHOLD INTERESTS                14
                    5.1 Acquisition of Additional Leasehold Interests 14
                    5.2 Excluded Areas                                14
                    5.3 Obligation                                    15

          VI.       EXPLORATION FUND                                  15
                    6.1  General                                      15
                    6.2  Limitations on McMoRan's Authority to Commit
                         Exploration Fund                             16
                    6.3  Budget Meetings and Reports                  16

          VII.      SCIENTIFIC STUDIES AND INFORMATION                17

          VIII.     PROSPECTS                                         18
                    8.1  Prospects                                    18
                    8.2  Designation of Prospects After Program Term  20

          IX.       DRILLING OF EXPLORATORY WELLS                     21
                    9.1  During Program Term                          21
                    9.2  After Program Term                           23

          X.        FARMOUT OR PARTICIPATION AGREEMENTS               23
                    10.1 Participation Agreements                     23
                    10.2 Farmout Agreements                           24
                    10.3 Trade Agreements                             24

          XI.       BURDENS                                           25

          XII.      OPERATING AGREEMENT                               26

          XIII.     AREA OF MUTUAL INTEREST                           26
                    13.1 Third Party Area of Mutual Interest
                         Agreements                                   26
                    13.2 Program Area of Mutual Interest Agreement    27

          XIV.      ASSUMPTION OF INTEREST                            30

          XV.       OWNERSHIP OF PRODUCTION; GAS BALANCING AGREEMENT  30
                    15.1 Ownership of Production                      30

          XVI.      RELATIONSHIP OF THE PARTIES                       31
                    16.1 Tax Partnerships                             31

          XVII.     BILLINGS; NOTICES                                 32

          XVIII.    SPECIAL NON-CONSENT ELECTIONS                     32
                    18.1 Casing Point Election - Onshore Prospects    32
                    18.2 Elections Prior to Platform Installation -
                         Offshore Prospects                           33
                    18.3 Time Period                                  33
                    18.4 Completion Attempt by Participant - Onshore  33

          XIX.      PROGRAM TERM                                      34
                    19.1 Program Term                                 34
                    19.2 Unfunded Prospects                           34

          XX.       OPERATIONS AFTER PROGRAM TERM                     35
                    20.1 General                                      35
                    20.2 Exploratory Wells                            35
                    20.3 Development Expenditures                     35
                    20.4 Provisions Which Do Not Survive the End of
                         the Program Term                             35

          XXI.      CONFIDENTIALITY                                   36

          XXII.     INSURANCE                                         37
                    22.1 Insurance for Program                        37

          XXIII.    RECORD TITLE, ASSIGNMENT                          39
                    23.1 Record Title                                 39
                    23.2 Assignment                                   41

          XXIV.     SUBSEQUENT INTERESTS                              41

          XXV.      GENERAL                                           42
                    25.1 Records                                      42
                    25.2 Access                                       43
                    25.3 Claims & Litigation                          43
                    25.4 Good Faith                                   44
                    25.5 Governing Law                                44
                    25.6 Failure to Respond                           44
                    25.7 Conflicts                                    45
                    25.8 Reciprocal Rights                            45
                    25.9 Binding Effect                               45



                                      EXHIBITS

                   I)    PROGRAM OPERATING AGREEMENT (OFFSHORE)
                  II)    PROGRAM OPERATING AGREEMENT (ONSHORE)
                 III)    CERTAIN EXCLUDED AREAS
                  IV)    PROVISIONS CONCERNING TAXATION
                   V)    INITIAL LEASEHOLD INVENTORY



                                 PARTICIPATION AGREEMENT
                             McMoRan 1997 Exploration Program



                    This Participation Agreement ("the Agreement") is  made
               as of the 15th  day of December, 1997 between McMoRan Oil  &
               Gas Co. ("McMoRan") and Gerald J. Ford ("Participant").


                                       WITNESSETH:


                                            I.

                                       Definitions


                    As used in  this Agreement, the  following terms  shall
               have the meanings set forth below:

          1.1  Affiliate means, with  respect to any person, a person  that
               directly or  indirectly through one or more  intermediaries,
               controls  or is controlled  by, or is  under common  control
               with  the  person specified.    With respect  to  a  natural
               person,  the  term  "Affiliate"  shall  also  include   that
               person's spouse  or anyone related to  such person by  first
               or second degree of consanguinity or affinity and any  trust
               or partnership beneficially owned by such persons.

          1.2  Area of  Mutual Interest or AMI means, with respect to  any
               Prospect,  the geographic area  more particularly  described
               in Article XIII.

          1.3  Casing Point means the point at which determination is  made
               either  to run  production string  of casing  and attempt  a
               completion, or to abandon the well.

          1.4  Committed List means the list  described in Paragraph  19.1
               hereof.

          1.5  Development Expenditures means those charges applicable  to
               each  Prospect  which  are  not  Exploration   Expenditures.

          1.6  Development Well means any well which is not an  Exploratory
               Well.

          1.7  Excluded Area means any of the areas described in  Paragraph
               5.2 hereof.

          1.8  Exploration  Expenditures means those  charges described  in
               Article IV.

          1.9  Exploration  Fund means  the  fund  created  by   McMoRan,
               Participant and the  other members of the McMoRan Group  for
               the acquisition  and exploration of Leasehold Interests  and
               the other purposes of the Exploration Program as more  fully
               described   in   Article  VI,   together   with   any   cash
               contributions received by the Program from third parties.

          1.10 Exploration  Program or Program  means the McMoRan  operated
               program  pursuant to  which the  McMoRan Group  has or  will
               acquire  and explore Prospects  in the  Program Area  during
               the  Program  Term  pursuant  to  this  Agreement  and   the
               agreement  between  McMoRan and  the  other members  of  the
               McMoRan Group.

          1.11 Exploratory Well means any well drilled  by the Program  on
               an Onshore Prospect  prior to the completion thereon by  the
               Exploration  Program  of a  well  capable of  production  in
               Paying Quantities or, as to an Offshore Prospect, means  the
               first  and/or  second well  drilled  on a  Prospect  by  the
               Program  prior  to the  first  installation thereon  by  the
               Program of a drilling and/or production platform.

          1.12 Initial Leasehold Inventory means those Leasehold  Interests
               described in Paragraph 2.1 hereof.

          1.13 Leasehold  Interests  means any  right,  title  or  interest
               acquired in, to and under any oil or gas lease or any  other
               interest  in  oil or  gas,  including,  without  limitation,
               contractual rights,  which confer on the holder thereof  the
               right  to share,  or  acquire the  right  to share,  in  the
               production  or the  proceeds of  production of  oil or  gas.

          1.14 Leasehold   Interests  Costs means,   with  respect  to   a
               particular Leasehold Interests, the actual cost incurred  by
               the   Program  for   acquisition  thereof,   in  each   case
               including, without  limitation, all bonuses, delay  rentals,
               brokerage fees, and outside attorney's fees.

          1.15 McMoRan  Group means  McMoRan, Participant  and those  other
               parties  participating through  McMoRan  on a  program  type
               basis  in a  significant  portion of  McMoRan's  exploration
               activities in all or part of the Program Area.

          1.16 Non-Operator  means,  as  to  any  Leasehold  Interests   or
               Prospect,  a  working interest  owner  therein  who  is  not
               designated to act as Operator.

          1.17 OCS means the outer continental shelf of the Gulf of  Mexico
               under Federal leasing jurisdiction.

          1.18 Offshore  Prospect means any  Prospect located  in the  OCS,
               and/or  in that  portion of  the Gulf  of Mexico  under  the
               leasing jurisdiction of the adjacent states.

          1.19 Onshore  Prospect means a  Prospect located  in the  Program
               Area which is not an Offshore Prospect.

          1.20 Operator means,  as to any Leasehold Interests or  Prospect,
               the  party hereto  designated to  manage and  supervise  the
               drilling  and/or  completion and  operation  of oil  or  gas
               wells thereon.

          1.21 Participant means Gerald J. Ford.

          1.22 Paying  Quantities means  production of  oil and/or  gas  in
               quantities  sufficient  to  yield  a  return  in  excess  of
               operating cost.

          1.23 Program Area means the OCS, and that portion of the Gulf  of
               Mexico under the leasing jurisdiction of the adjacent
               states  and  the balance  of  the  lower 48  states  of  the
               continental United States, except the Excluded Areas.

          1.24 Program  Operating  Agreement means  the  Joint   Operating
               Agreement  (Offshore)  or  the  Joint  Operating   Agreement
               (Onshore)   attached   hereto   as   Exhibits   I   and   II
               respectively, depending upon whether the relevant  operation
               is  with  respect to  an  Offshore Prospect  or  an  Onshore
               Prospect.

          1.25 Program Term means  the period beginning on the date  hereof
               and ending  at the end of the Program  Term as set forth  in
               Article XIX.

          1.26 Prospect  means  an area  designated  as  such  pursuant  to
               Paragragh 8.1.

          1.27 Technical   Consultants means   those   geologists    and
               geophysicists  and related personnel  working therewith  who
               are hired or retained by McMoRan as independent  consultants
               some  portion of whose  efforts are to  develop or  evaluate
               Prospects hereunder.


                                         II.

                                 Purpose; Operations


                    2.1  Purpose. This Agreement has  been entered into  to
          provide Participant along with other members of the McMoRan Group
          a means  of  acquiring,  exploring and  developing  oil  and  gas
          Prospects in the Program Area, including  but not limited to  the
          acquisition  of  the  Initial  Leasehold  Inventory,  during  the
          Program Term.

               Effective April 1, 1997, Freeport-McMoRan Resource Partners,
          Limited Partnership ("FRP") and McMoRan established the McMoRan
          1997 Exploration Program pursuant to the Participation Agreement,
          a copy of which has been furnished to Participant.  Prior to the
          effective date hereof, McMoRan and FRP evaluated by drilling
          certain of the prospects subject to the Exploration Program and,
          effective as of the date hereof, McMoRan and FRP have agreed to
          expand the Exploration Program for the remaining term of the
          Program by increasing the budget for the Exploration Program and
          adding additional participants.

               Participant will participate in the properties and rights of
          the Program, excluding only those properties and assets
          associated with the properties which are located in the Excluded
          Areas which exclusions include but are not limited to the
          prospects that were evaluated prior to the effective date hereof
          ("Excluded Properties").  The Leasehold Interests of the Program
          as of the effective date hereof, excluding those which are
          Excluded Properties, shall be the Initial Leasehold Inventory
          hereunder, which are identified on Exhibit V hereto.  The Initial
          Leasehold Inventory shall be deemed to have an actual incurred
          cost of $9,272,380, $556,343 of which will be reimbursed by
          Participant.  The cost of the Initial Leasehold Inventory set out
          above is intended to encompass all of the McMoRan and FRP
          expenditures associated with such Leasehold Interests and for
          cost of leads and other evaluation activities which have not
          materialized into a Leasehold Interests but which are not part of
          the cost of an Excluded Property, all of which costs shall be
          adjusted upon final accounting of such costs.  None of the cost
          of drilling the OCS-G 3128 Well #2 on Vermilion Block 159 shall
          be charged to the Participant.

               2.2  McMoRan Efforts. McMoRan agrees to devote a substantial
          portion of its oil  and gas exploration  effort to the  operation
          and management of the Program, which shall include all prospects,
          except those in the Excluded Areas,  acquired and to be  acquired
          by McMoRan  during  the Program  Term  within the  Program  Area,
          including but  not limited  to the  Initial Leasehold  Inventory.
          McMoRan will  at  all times  have  a staff  adequate  in  number,
          experience and competence  to perform  its obligations  hereunder
          and accomplish the purposes of the Exploration Program.

               2.3  Operator. McMoRan shall  be the overall  manager of  the
          Program.


                                        III.

                         Sharing of Exploration Expenditures
                             and Interest of the Parties


               3.1  Sharing of Exploration  Expenditures. Except as  other-
          wise provided in this  Agreement, Exploration Expenditures  shall
          be shared as follows:

                 Participant                 McMoRan & All Other Members
                                             of McMoRan Group excluding
                                                     Participant
                     6%                                  94%



          If more  than one  Exploratory Well  is drilled  on a  particular
          Onshore Prospect, Exploration Expenditures in connection with the
          drilling of any  second and subsequent  Exploratory Well on  such
          particular  onshore  Prospect   shall  not  be   shared  in   the
          percentages set forth in this Paragraph 3.1  but shall be  shared
          in the percentages set forth  in Paragraph 3.2 hereof;  provided,
          however, if the first Exploratory Well in such particular Onshore
          Prospect fails  to reach  objective depth  because it  encounters
          impenetrable substances,  heaving  shale, domal  material,  salt,
          excessive salt water  flow or  other formation  or conditions  or
          develops  mechanical  difficulty   which  would  render   further
          drilling impractical and McMoRan elects to drill a substitute for
          such well, the cost involved in  the drilling of such  substitute
          well shall  be  shared  in the  percentages  set  forth  in  this
          Paragraph 3.1 in the same manner as if such substitute well  were
          the first  Exploratory Well  on the  particular Onshore  Prospect
          involved.

               3.2  Ownership Interests.  Except as  otherwise provided  in
          this Agreement,  the ownership  of  all Leasehold  Interests  and
          other properties and production acquired by the Program shall  be
          shared as follows:

                    Participant         McMoRan & All Other Members
                                        of McMoRan Group excluding
                                                Participant
                          5%                         95%


               3.3  McMoRan Group Participation. Percentages are based upon
          the total McMoRan Group, which in many cases is less than the
          entire working interest.


                                         IV.

                              Exploration Expenditures



               4.1  Exploration Expenditures.  Subject to  the  limitations
          provided in this Agreement, McMoRan  shall be entitled to  expend
          monies for Exploration Expenditures of  the Program on behalf  of
          itself and Participant without the prior approval of Participant.
          The term  "Exploration  Expenditures" means  all  actual  charges
          allocable to each Prospect  established prior to  the end of  the
          Program Term, determined  in accordance  with generally  accepted
          industry standards,  which charges  are incurred  by the  Program
          prior to (i) the completion of the first Exploratory Well drilled
          by the Program on an Onshore Prospect that is completed as a well
          capable of production in Paying Quantities or (ii) the  plugging,
          or the temporary  abandonment if not  plugged, of  the first  two
          Exploratory Wells drilled by the Program on an Offshore Prospect,
          as applicable,  and such  other costs  applicable to  exploration
          activities in the  Program Area prior  to the  expiration of  the
          Program Term or  with respect to  Prospects established prior  to
          the end of the Program Term,  which charges, among others,  shall
          include the following:

               (a)  The cost of acquisition  of all Leasehold Interests  in
          the Program  Area,  including  but not  limited  to  the  Initial
          Leasehold Inventory  and any  Leasehold Interests  Costs paid  by
          McMoRan to third party program operators in connection therewith;

               (b)  The  cost  of  any  geological,  geophysical  or  other
          scientific, exploration or engineering work, services or data  on
          the Prospect;

               (c)  The cost of copies  of all seismic records,  geological
          and geophysical maps and  other exploration data and  information
          furnished to Participant;

               (d)  Rental and  other  lease maintenance  payments  on  the
          Leasehold Interests;

               (e)  All necessary independent legal  expenses and costs  of
          title searches and title  investigation whether or not  Leasehold
          Interests are  acquired, together  with the  costs of  copies  of
          title opinions and other title reports furnished to Participant;

               (f)  The cost of drilling  Exploratory Wells in a  Prospect,
          including the cost of plugging and abandoning or capping same, if
          no completion attempt is made;

               (g)  Any   other   expenditures   properly   chargeable   as
          Exploration Expenditures  under  this  Agreement, or  as  may  be
          specified in the accounting procedure attached to the  applicable
          Program  Operating  Agreement  and  which  are  attributable   to
          exploration activities, but excluding  all overhead provided  for
          in such  Program  Operating  Agreement until  such  time  as  the
          Exploration Fund has been fully committed;

               (h)  Notwithstanding the foregoing,  the cost of  completing
          an Exploratory  Well  shall  not  be  considered  an  Exploration
          Expenditure; and

               (i)  In addition to the foregoing, McMoRan shall be entitled
          to charge  as Exploration  Expenditures those  expenditures  that
          McMoRan incurs annually for salaries of employees, including  but
          not limited to costs of  benefits programs related thereto,  cost
          of  retained  consultants,  including  but  not  limited  to  its
          Technical Consultants,  office rent,  office supplies,  insurance
          and other general  and  administrative costs that McMoRan  incurs
          in the conduct of  its activities, including  but not limited  to
          costs  allocated  to  MOXY  from  FM  Services  Company  or   its
          Affiliates, less a reasonable portion of such costs that McMoRan
          allocates to  the  Excluded Areas.    Prior to  committing  to  a
          material increase  in the  aggregate costs  contemplated by  this
          subparagraph (i)  McMoRan shall  confer with  Participant and  in
          good faith consider any comments or suggestions that  Participant
          may  offer  in  regard  to  such  contemplated  material  change.
          McMoRan shall not  be permitted to  charge any  items under  this
          subparagraph (i) after the expenditure of the Program Budget, but
          will thereafter be  entitled to receive  such amounts  as may  be
          provided in the applicable Program Operating Agreement.

               The term Exploration Expenditures shall also include any  of
          the foregoing  costs incurred  by the  Program in  attempting  to
          locate or  acquire  Leasehold  Interests  in  Prospects  for  the
          Program in the Program  Area whether or not  the Program owns  or
          acquires  Leasehold  Interests  in  such  area  or   subsequently
          designates a Prospect under Paragraph 8.1 for such area.

               Except as may be expressly provided to the contrary in  this
          Agreement, all  Exploration Expenditures  shall be  invoiced  and
          accounted  for  in  accordance  with  the  accounting   procedure
          attached to the Program Operating Agreement, including the period
          of time set forth for joint interest auditing and adjustment.

               McMoRan shall  further be  entitled to  reimbursement as  an
          Exploration Expenditure prior to the end of the Program Term,  or
          as a proper  expenditure under the  applicable Program  Operating
          Agreement, as  appropriate, from  Participant  for its  share  of
          reasonable inventories  of  pipe  and  equipment  (it  being  the
          intention of the parties  to keep such  inventories at a  minimum
          level consistent with the needs of the Program).

               McMoRan shall not have an  obligation to spend a  particular
          portion of the Program  Fund during any  Program Year but  rather
          McMoRan shall  commit Exploration  Expenditures as  the  occasion
          arises  to  secure  Prospects   which  McMoRan  deems  would   be
          appropriate  for  the   Exploration  Program,   subject  to   the
          provisions of Paragraph 6.1 hereof.

               McMoRan agrees to make  available its entire geological  and
          geophysical data base for use in operations under the Program  at
          no cost to the Participant, except to the extent setforth in  the
          immediately  following  sentence.     The  amounts  expended   in
          acquiring seismic data from  Western Geophysical pursuant to  the
          Licensing Agreement between McMoRan and Western Geophysical dated
          November 20, 1996 shall constitute proper charges to  Exploration
          Expenditures, notwithstanding the   fact that  some of the  costs
          incurred pursuant to  such agreement were  incurred prior to  the
          beginning of the Program Term, except  to the extent that any  of
          such seismic data so acquired relates to Excluded Areas.

               Participant agrees  to bear  its proportionate  part of  all
          Exploration  Expenditures  of   the  Program,   subject  to   the
          limitations hereinafter set forth under Article VI.


                                         V.

                         Acquisition of Leasehold Interests


               5.1  Acquisition of Leasehold  Interests. On  behalf of  the
          Program and subject to the limitations and guidelines herein  set
          forth, McMoRan shall evaluate and acquire Leasehold Interests  in
          the Program Area during the Program Term which it believes to  be
          potentially productive of oil or gas.

               5.2  Excluded Areas. McMoRan and Participant agree that  the
          following areas ("Excluded  Areas") shall not  be subject to  the
          terms of this Agreement unless any such area, or portion thereof,
          has been recommended for inclusion  herein by McMoRan in  writing
          and Participant has concurred in writing in that recommendation:

               (a)  Any Leasehold Interests or  prospect lying outside  the
          Program Area;

               (b)  Any Leasehold Interests or  Prospect which at the  time
          of acquisition  contains  proven  reserves unless  (i)  the  then
          proven reserves do not constitute a material consideration in the
          acquisition, and (ii) the primary objective of the acquisition is
          to explore for oil and gas other than the then proven reserves;

               (c)  Those areas  identified on  attached Exhibit  III;  and

               (d)  Any Leasehold  Interests or  prospect acquired  through
          merger, acquisition,  corporate reorganization  or  consolidation
          with or  purchase  of  substantially all  of  the  assets  of  an
          individual, a  corporation or  a partnership,  provided that  the
          primary purpose  of  such  merger,  acquisition,  reorganization,
          consolidation or purchase is not  to acquire a specific  Prospect
          or Leasehold Interests which otherwise  would be subject to  this
          Agreement; provided, however, if  in such an acquisition  McMoRan
          acquires an  inventory of  exploratory prospects  not  associated
          with any proven production acquired in such acquisition,  McMoRan
          shall meet with Participant and, in  good faith, attempt to  have
          the exploratory prospects transferred to the Exploration Program.

               5.3  Obligation.  Subject  to   the  limitations   otherwise
          provided in this Agreement, Participant agrees to participate for
          its proportionate  share of  Exploration Expenditures  as to  all
          Leasehold Interests acquired  or committed to  by McMoRan in  the
          Program Area  during  the  Program Term.    Without  limiting  or
          altering the effect of the AMI provisions of Article XIII hereof,
          from and after the end of the Program Term, McMoRan shall not  be
          obligated to search for and offer to Participant any interest  in
          Leasehold Interests within the Program Area.


                                         VI.

                                  Exploration Fund


               6.1  General.  The   Program   shall  have   a   budget   of
          $165,000,000 for  Exploration  Expenditures  to  be  incurred  or
          committed during  the  Program  Term  (the  "Exploration  Fund").
          Notwithstanding that  the  Exploration  Fund is  for  the  entire
          Program Term, unless McMoRan  and Participant agree otherwise  in
          writing, McMoRan will schedule its activities so that Exploration
          Expenditures are not likely to exceed  on a cumulative basis  one
          hundred fifty  percent (150%)  of $40,000,000  per twelve  months
          period times  the  number  of twelve  months  periods  that  have
          elapsed since the Program Term commenced.

               6.2  Limitations   on   McMoRan's   Authority   to    Commit
          Exploration Fund. In  addition to the  other limitations  imposed
          upon McMoRan's authority  to commit  Participant hereunder,  once
          the actual  and  committed  Exploration  Expenditures  reach  the
          budgeted total, it is understood and agreed that McMoRan (i) will
          not undertake any  additional drilling commitments  on behalf  of
          the Exploration Program, and (ii) will not acquire any additional
          Leasehold  Interests  on  behalf  of  the  Exploration   Program.
          Additionally, McMoRan shall not make any commitment on behalf  of
          the Program for the drilling of any well which is anticipated  to
          commence more than six  (6) months after the  end of the  Program
          Term.

               6.3  Budget Meetings and Reports.

               (a)  On a quarterly basis, McMoRan  shall hold a meeting  in
          McMoRan's offices with  Participant to  discuss the  contemplated
          activities of  the Program  for the  following period.   In  such
          meetings, McMoRan shall advise Participant of the amounts of  the
          Exploration Fund which have been committed to Prospects on  which
          an Exploratory Well  has not yet  commenced.   Such advise  shall
          include the name of the Prospect,  the amount of the  Exploration
          Fund  anticipated  to  be  spent  thereon  and  the   anticipated
          commencement date of the Exploratory Well to be drilled  thereon.
          On a monthly  basis, McMoRan  shall provide  Participant with  an
          accounting of the Exploration Expenditures of the prior month and
          Program Term  to  date  reconciling prior  billings  and  advance
          billings  with  expenditures.    McMoRan  will  promptly   advise
          Participant in  writing  when McMoRan  reasonably  believes  that
          actual and  committed  Exploration Expenditures  of  the  Program
          equal the  Exploration  Fund  and will  furnish  reasonable  data
          supporting such  conclusion.    In  addition  to  the  foregoing,
          McMoRan will furnish Participant on request and at  Participant's
          expense any other  data or information  needed by Participant  to
          comply  with  any  governmental  laws,  rules  and   regulations,
          including  those  promulgated  by  the  Securities  and  Exchange
          Commission.


                                        VII.

                         Scientific Studies and Information


               7.1  Scientific Studies and Information. During the  Program
          Term, McMoRan shall conduct geological, geophysical,  engineering
          and other  scientific studies  with  respect to  the  acquisition
          and/or exploration of Leasehold Interests ("Scientific  Studies")
          in the Program  Area and the  cost thereof  shall be  Exploration
          Expenditures.

               It is agreed that any seismic records, and other exploration
          data (not including any interpretation thereof by McMoRan or  its
          Technical Consultants prior to the time a Prospect based  thereon
          has been designated by McMoRan hereunder) that may be acquired by
          McMoRan under the terms of this Agreement shall become and remain
          the joint property of McMoRan,  Participant and other members  of
          the McMoRan  Group.    If McMoRan  designates  a  Prospect  under
          Paragraph 8.1 hereof affecting such acquired data, McMoRan  shall
          at such  time  furnish copies  of  all such  data,  upon  written
          request of  Participant,  including  geological  and  geophysical
          maps, to Participant unless McMoRan is prohibited from furnishing
          a copy or  disclosing it to  Participant under  the agreement  by
          which McMoRan acquired such data.   Except as otherwise  provided
          in this Agreement, Participant shall be permitted full access  to
          such data in  McMoRan's offices unless  prohibited from doing  so
          under the agreement by which McMoRan acquires such data.  McMoRan
          shall  not  be  precluded   from  entering  into  data   exchange
          agreements which McMoRan in good faith believes will benefit  the
          Program and  all  data acquired  pursuant  to any  such  exchange
          agreement shall be the joint property of McMoRan, Participant and
          other members of the McMoRan Group.  During and after the Program
          Term, McMoRan shall  have the exclusive  right to  sell any  such
          data which McMoRan in good faith believes no longer must be  kept
          confidential for the purposes of the Program and the proceeds  of
          such sale shall  be shared by  the Participant,  McMoRan and  the
          other members of the McMoRan Group on the same basis as the  said
          parties own such data.  At  the end of the Program Term,  McMoRan
          shall identify seismic records and other pertinent acquired  data
          (not including  any  interpretation  thereof by  McMoRan  or  its
          Technical Consultants)  as  to  which  Prospects  have  not  been
          designated during  the  Program  Term  and  McMoRan  shall,  upon
          written request by Participant, provide it  copies of all or  any
          part of  such data,  unless prohibited  from doing  so under  the
          agreement by which McMoRan  acquired such data.   Notwithstanding
          anything herein to  the contrary, Participant  shall not have  or
          acquire any property interest  in any interpretations by  McMoRan
          or its Technical Consultants of any seismic or other  exploration
          data  unless  and  until  a  Prospect  based  thereon  has   been
          designated by McMoRan hereunder.


                                        VIII.

                                      Prospects


               8.1  Prospects.  From  time  to  time  McMoRan  will  obtain
          information upon which it can  determine and define a  particular
          portion of the Program Area with sufficient specificity as to  be
          identified as a Prospect.  The term "Prospect" means a contiguous
          area which can reasonably  be interpreted from geological  and/or
          geophysical  data   as  encompassing   a  geological   structure,
          stratigraphic trap or other  common geologic feature which  makes
          its treatment as  a single Prospect  for oil  and gas  production
          purposes reasonable  and  some  portion of  which  is  considered
          prospective  for  commercial  oil   or  gas  production  and   is
          designated as such pursuant to this Article VIII.  Based on  such
          information, McMoRan shall from time to time designate an area as
          a Prospect  of the  Program.   The size  and configuration  of  a
          Prospect, as  well  as all  details  incident thereto,  shall  be
          determined by McMoRan.   During the  Program Term, McMoRan  alone
          shall determine  the  time  when  an  area  is  designated  as  a
          Prospect, whether or not Leasehold Interests have previously been
          acquired therein.  After the Program Term and in accordance  with
          Paragraph 8.2 hereof, any member of the McMoRan Group shall  have
          the right  to  designate  a  Prospect  which  includes  Leasehold
          Interests theretofore acquired through the Program.  Without  the
          prior consent of  Participant, McMoRan  shall not  commit to  the
          Program any  Prospects  which  (1)  McMoRan's  economic  analysis
          indicates will not have at least a before taxes rate of return of
          twenty-five (25) percent, or  (2) the water  depth for the  first
          expected platform location is greater than 1,000 feet.

               At the  time that  McMoRan designates  a Prospect  it  shall
          furnish to  Participant  a  land  plat  showing  the  approximate
          outline of the Prospect and the  proposed AMI therefor.   Subject
          to Paragraph 5.2, McMoRan shall  as soon as possible  thereafter,
          upon written request of Participant, furnish Participant (to  the
          extent not  previously furnished)  with all  pertinent data  then
          available with respect to the evaluation of such Prospect for oil
          or gas  development  excluding  only  such  data  as  McMoRan  is
          prohibited  from   disclosing   by  reason   of   confidentiality
          agreements with third  parties respecting such  data.  Such  data
          shall include a land and geophysical or geological report on such
          Prospect, including with respect to  the drillsite for the  first
          Exploratory Well proposed  to be  drilled thereon,  a land  plat,
          farmin, farmout  and other  trade agreements,  copies of  leases,
          drilling   title   opinions,   assignments,   unit    designation
          agreements, operating  agreements and  other documents  necessary
          for Participant  to maintain  adequate records  relative to  such
          Prospect and  operations  thereon,  together  with  such  of  the
          following, as and  when available, which  are applicable to  each
          such Prospect:

               (a)  An  itemized  list  of  all  Exploration   Expenditures
          charged to such Prospect;

               (b)  An itemized estimate of probable additional costs which
          may have  to  be  incurred  in  connection  with  such  Prospect;

               (c)  Any other information in McMoRan's possession  relevant
          to an  evaluation of  such Prospect,  including geological  data,
          including but not limited to cross-sections, maps, key logs,  and
          geophysical data,  including  copies of  proprietary  reprocessed
          data, sepias of lines; and

               (d)  A description  of the  primary geologic  objective  and
          prospective zone(s) for which the Prospect was acquired.

               At the time each such  Prospect is designated, McMoRan  will
          separately allocate to it  all Exploration Expenditures  thereto-
          fore  incurred  and  properly  attributable  to  such   Prospect,
          including but not limited to those expenditures made pursuant  to
          Paragraph 4.1 above.

               8.2  Designation of  Prospects After  Program Term.  To  the
          extent any Leasehold Interests acquired by the Program are not
          included in Prospects designated  by McMoRan on  or prior to  the
          end of the Program Term, then  after such date any member of  the
          McMoRan Group or  their respective successors  in interest  shall
          have the right to propose a Prospect at the time that it proposes
          an Exploratory  Well  thereon.   The  geographic limits  of  such
          Prospect so  designated  shall meet  the  criteria set  forth  in
          Paragraph 8.1  and  the AMI  therefor  shall be  subject  to  the
          provisions of Article XIII hereof.


                                         IX.

                            Drilling of Exploratory Wells


               9.1  During Program Term.  During the Program  Term, at  the
          same time as  McMoRan designates a  Prospect under Paragraph  8.1
          above or thereafter when it commits  the Exploration Fund to  the
          drilling of an Exploratory  Well thereon or  as soon as  possible
          after McMoRan  has  received  notice from  a  third  party  joint
          interest owner that it proposes the  drilling of a well  thereon,
          McMoRan shall provide to Participant (if not previously furnished
          and  requested   in  writing   by  Participant)   the   following
          information:

               (a)  An AFE  for such  well both  as  a dry  hole and  as  a
          completed well;

               (b)  A land plat  depicting the Prospect,  the proposed  AMI
          for such Prospect  and the Program's  Leasehold Interests  within
          the AMI for such prospect;

               (c)  A schedule of the Program's Leasehold Interests in  the
          Prospect AMI;

               (d)  Maps depicting  McMoRan's  geological  and  geophysical
          interpretations of the Prospect;

               (e)  McMoRan's economic analysis of the Prospect's potential
          and timing and estimated costs to develop, including  description
          of facilities to be used, if then known;

               (f)  Information as to whether  any other third party  joint
          interest owner has elected to join or not to join in the drilling
          of such well;

               (g)  The surface  location, proposed  bottom hole  location,
          proposed depth and well  prognosis including casing program,  mud
          program  and  logging  program  for  such  well  (to  the  extent
          available in those cases where a  third party is the operator  of
          the well)  and  any  other information  in  McMoRan's  possession
          relevant to an evaluation of such well; and

               (h)  Any acreage or cash contribution pledged in support  of
          the proposed operation.

               Beginning with the  permitting process  for any  Exploratory
          Well drilled hereunder, and  continuing through the drilling  and
          completion, temporary abandonment or plugging and abandonment for
          such well,  McMoRan shall  provide the  following information  if
          requested in writing by Participant  (to the extent available  to
          McMoRan and not previously furnished):

               (a)  name of  well,  name of  Prospect,  and  identification
          number;

               (b)  drilling permits, plugging and abandonment permits  and
          permission to produce;

               (c)  all daily drilling  reports, State completion  reports,
          well  completion  schematic  diagram,  stimulation  reports   and
          workover reports;

               (d)  all core analyses, fluid analyses, PVT. analyses, water
          sample analyses;

               (e)  all pressure survey, DST reports, and pressure  buildup
          or drawdown data;

               (f)  all well logs.

               9.2  After Program Term. Subject  to Paragraph 19.2  hereof,
          after the Program  Term, McMoRan  or Participant  shall have  the
          right to  propose  the  drilling of  an  Exploratory  Well  or  a
          Development Well on any  Prospect.  The  terms and provisions  of
          the applicable Program Operating Agreement shall govern any  such
          proposal.


                                         X.

                         Farmout or Participation Agreements


               10.1 Participation Agreements. During  the Program Term,  if
          in  the  process  of  evaluation  of  a  Prospect  the  data  and
          information lead  McMoRan to  the good  faith determination  that
          because of  the large  expenditures required,  the  extraordinary
          risk involved  or  other facts  deemed  relevant by  McMoRan,  an
          outside venturer  should be  obtained in  such Prospect,  McMoRan
          shall have the right to undertake to negotiate an agreement  with
          a third party to join in the drilling of the Exploratory Well  on
          the Prospect and  thereby acquire  a portion  of the  Exploration
          Program's interest in such  Prospect; provided, however, that  if
          any such agreement would reduce  the interest of the  Exploration
          Program by more than fifty percent (50%), McMoRan must obtain the
          prior approval  of Participant.   McMoRan  shall give  notice  to
          Participant of its  intention to negotiate  an agreement with  an
          outside  venturer  which  would   reduce  the  interest  of   the
          Exploration Program by more than fifty percent (50%), stating the
          time within  which the  circumstances  require an  expression  of
          approval  or  disapproval  by   the  Participant.    Failure   of
          Participant to  disapprove the  proposed negotiation  within  the
          stated period of time may be deemed by McMoRan to be approval  by
          Participant.  Any agreement with an outside venturer shall be  on
          the basis of  the outside venturer  paying and  bearing not  less
          than the proportionate part of all drilling costs and expenses of
          the Exploratory  Well  attributable  to  the  undivided  interest
          transferred to such  outside venturer,  and the  interest in  the
          Prospect transferred to or earned by such outside venturer  shall
          reduce  the  respective  interests  of  McMoRan  and  Participant
          proportionately.  Any promotion  or other consideration  received
          by McMoRan incident  to such agreement  with an outside  venturer
          shall be held for the benefit of the Exploration Program and  the
          members of the  McMoRan Group  shall be  entitled to  participate
          therein in proportion  to their interest  in the  Prospect.   The
          foregoing  provision  shall  not   be  applicable  to   McMoRan's
          transaction with other members  of the McMoRan  Group so long  as
          the  interest  of  Participant  set  forth  in  Article  III   is
          maintained.

               10.2 Farmout Agreements.  During  the Program  Term  McMoRan
          shall have  the  right  to enter  into  farmout  agreements  with
          unrelated third parties  on such  terms as  it deems  appropriate
          respecting Leasehold Interests or portions thereof which are  not
          anticipated to  be drilled  or committed  to  be drilled  by  the
          Exploration Program during the  Program Term; provided,  however,
          McMoRan shall keep  Participant advised  as to  any such  farmout
          proposals or plans  and shall  honor the  request of  Participant
          that its interest in such Leasehold Interests or Prospect not  be
          farmed out if Participant advises  McMoRan within ten (10)  days,
          or forty-eight (48) hours if a  drilling rig is on location  with
          stand-by  rig  charges  accumulating,  of  McMoRan's  notice   of
          intention to farmout that it will participate as to its ownership
          interest in the drilling of the anticipated farmout well.

               McMoRan shall not farmout any of Participant's Interest in a
          Prospect on which the  Program has a  producing well without  the
          prior consent of Participant.

               10.3 Trade  Agreements.   During   the  Program   Term,   in
          connection  with  the  drilling  of  an  Exploratory  Well  on  a
          Prospect, McMoRan  shall have  complete authority  to enter  into
          unit agreements,  acreage swap  agreements, bottom  hole and  dry
          hole contribution  agreements  and any  similar  agreements  with
          unrelated third parties.   The  cost or  proceeds of  any of  the
          forgoing agreements shall be credited  or charged to the  members
          of the  McMoRan Group  (1) in  the proportion  that such  parties
          participated in the drilling of the affected Exploratory Well, or
          (2) if the costs relate to the payment by the Exploratory Program
          of a dry hole  or bottom hole contribution  to a third party,  in
          the proportion that  such parties  bear Exploration  Expenditures
          hereunder, and any interest in leases or oil or gas thus acquired
          by exchange shall constitute  Leasehold Interests subject  hereto
          and be owned by the members of the McMoRan Group in proportion to
          their ownership interest in such Prospect.


                                         XI.

                                       Burdens


               11.1 Burdens. The Leasehold Interests to be acquired by  the
          Program shall  be subject  to and  McMoRan and  Participant  each
          shall bear its proportionate part  of all third party  overriding
          royalties and  other burdens  on Leasehold  Interests  (including
          subsequently acquired Leasehold  Interests in  the Prospect  AMI)
          which McMoRan  contracts for  incidental  to the  acquisition  or
          evaluation of such Leasehold Interests.  Participant acknowledges
          that McMoRan  has heretofore  entered into  a retainer  agreement
          with a Technical Consultant and may enter into similar agreements
          with others  during the  Program Term.   Without  the consent  of
          Participant,  McMoRan  agrees  not   to  subject  any   Leasehold
          Interests  to  overriding  royalty   burdens  to  its   Technical
          Consultants which exceed the  amounts deliverable to its  current
          Technical  Consultant,  CLK   Company,  L.L.C.(CLK),under   their
          existing agreement  as described  in  the letter  to  Participant
          dated the date hereof.  McMoRan  has provided Participant with  a
          copy  of  its  current  consulting   agreement  with  CLK     and
          Participant agrees that  it will bear  its proportionate part  of
          the overriding royalties to which CLK is entitled pursuant to the
          terms of said consulting agreement as to any Leasehold  Interests
          acquired hereunder as  well as  to any  Leasehold Interests  that
          Participant may  acquire pursuant  to  an AMI  agreement  subject
          hereto.


                                        XII.

                                 Operating Agreement


               12.1 Operating Agreement.  Except as  otherwise provided  in
          this Agreement, all operations on  each Prospect will be  carried
          out in accordance  with the provisions  of the Program  Operating
          Agreement, Offshore or  Onshore as applicable,  with charges  and
          credits to the join account to  be made in accordance  therewith,
          including all overhead as to  the drilling of Development  Wells.
          In the  event  of  conflict between  the  terms  of  the  Program
          Operating  Agreement  and  the  terms  of  this  Agreement,  this
          Agreement shall  control.   A particular  Leasehold Interests  or
          Prospect  may  be  subject  to  a  different  form  of  operating
          agreement (third  party)  with  one or  more  third  parties  not
          related to McMoRan, which operating agreement (third party) shall
          apply and control at the time  it becomes effective in the  event
          of conflict therewith  and the Program  Operating Agreement.   In
          the event  of conflict  between such  operating agreement  (third
          party)   and this  Agreement (other  than the  Program  Operating
          Agreement), this Agreement shall  control as between McMoRan  and
          Participant.


                                        XIII.

                               Area of Mutual Interest



               13.1 Third Party Area of Mutual Interest Agreements. McMoRan
          may be  obligated to  enter into  third party  AMI agreements  in
          connection with the acquisition  of additional Prospects for  the
          Program.  Participant  agrees to be  bound by  the provisions  of
          such AMI agreements.

               13.2 Program Area of Mutual Interest Agreement. At the  time
          a Prospect is  identified by  McMoRan pursuant  to Paragraph  8.1
          hereof, there shall be created an  Area of Mutual Interest  among
          McMoRan, Participant and the other members of the McMoRan  Group.
          The lands within such Area of  Mutual Interest shall include  the
          involved Prospect  and  shall  be fixed  and  determined  in  the
          following manner:

               (a)  McMoRan shall  submit  to  Participant  and  the  other
          members of the McMoRan Group a plat delineating the area which it
          determines on a  sound geological basis  should be considered  as
          the area  which,  even  though  outside  the  boundaries  of  the
          Prospect, should  be considered  an area  of mutual  interest  in
          connection with the Prospect.

               (b)  In the  event  that  Participant does  not  accept  the
          proposed area  of  mutual  interest, consultation  shall  be  had
          between McMoRan  and Participant  and the  other members  of  the
          McMoRan Group  in an  effort to  fix and  determine the  area  to
          constitute the area of mutual interest.

               (c)  If McMoRan and the other  members of the McMoRan  Group
          are able  to agree  on  such area,  the  area agreed  upon  shall
          constitute the Area of Mutual Interest, or if agreement cannot be
          reached, the area of the Leasehold Interests as to a Prospect all
          of which  is under  Federal leasing  jurisdiction, or  as to  any
          other Prospect the  area within one-half  (1/2) mile  surrounding
          the outer perimeter of the Prospect, shall constitute the Area of
          Mutual Interest; provided however, any such AMI shall not include
          any portion of an Excluded Area.

               The  AMI  shall  be  effective  so  long  as  any  Leasehold
          Interests in  such AMI  is owned  by  any of  the parties  or  is
          subject to  this  Agreement, but  in  no event  longer  than  the
          earlier of (i) December 31, 2006  or (ii) one (1) year after  the
          plugging and  abandoning of  an Exploratory  Well thereon  unless
          another Exploratory Well  has been commenced  thereon or  McMoRan
          and/or another  member(s) of  the McMoRan  Group have  agreed  to
          install a  drilling  and  production platform  on  such  Prospect
          within such one (1) year period.

               Any acquisition of Leasehold Interests within such AMI after
          the establishment thereof by McMoRan or Participant or any  other
          member of the McMoRan Group shall be made available to be  shared
          by McMoRan,  Participant and  the other  members of  the  McMoRan
          Group.  Subject  to the  rights of  any third  party under  third
          party AMI agreements as described  in Paragraph 13.1, each  party
          shall have the option to participate  in any such acquisition  in
          the proportion as such party's then interest in such Prospect  as
          compared to the total interest of the McMoRan Group, which option
          is to be exercised in the  following manner: the acquiring  party
          shall notify  each  of the  other  parties of  such  acquisition,
          furnish  a  copy  thereof  and  such  title  information  as  the
          acquiring party has, stating the cost of such acquisition  and/or
          obligations that must be assumed  in connection therewith.   Each
          of the other  parties shall have  a period of  fifteen (15)  days
          with respect to the interests not related to a drilling well, and
          forty-eight (48) hours (or such lesser period as required by  the
          circumstances and stated in the notice) with respect to interests
          related to a drilling well, after  receipt of such notice  within
          which to elect and notify the acquiring party whether or not such
          party desires to  participate in  such acquisition.   Failure  to
          respond shall be deemed an election on the part of such party not
          to participate in such acquisition.  Upon election and payment to
          the acquiring party of  such other party's share  of the cost  of
          such acquisition and assumption of its share of such obligations,
          such other party shall  be entitled to an  assignment of its  pro
          rata share of  such party's interest  in such  acquisition.   The
          foregoing provision of this paragraph shall not apply nor shall
          they alter Participant's obligation to purchase its proportionate
          part of any Leasehold Interests acquired by McMoRan hereunder  in
          those cases  where  the costs  of  acquiring such  interests  are
          Exploration Expenditures.

               In the event any party does  not elect to participate in  an
          interest  tendered   to  it   under  this   Paragraph  13.2   the
          participating parties may,  within twenty-four  (24) hours  after
          notice thereof, elect to take  their proportionate shares of  the
          non-participating party's interest.   Time  periods expressed  in
          this Paragraph 13.2 are inclusive of Saturdays, Sundays and legal
          holidays.

               The  provisions  of  this   Paragraph  13.2  shall  not   be
          applicable to acquisitions  by any  party hereto  of an  interest
          acquired from any other  member of the  McMoRan Group or  through
          merger,  corporate  reorganization   or  consolidation  with   or
          purchase  of  all  or  substantially  all  of  the  assets  of  a
          corporation, an individual or  a partnership; provided,  however,
          that   the   primary   purpose   of   such   merger,    corporate
          reorganization, consolidation  or  purchase  is  not  to  acquire
          Leasehold Interests in a specific Prospect which otherwise  would
          be subject to this Agreement.

               McMoRan agrees to furnish Participant with a list of  names,
          addresses,  persons  designated  to   receive  notices  and   the
          proportional interest of each of the other members of the McMoRan
          Group who have  a right to  participate in  acquisitions made  by
          Participant within  an  AMI.   Additionally,  McMoRan  agrees  to
          secure reciprocal obligations in  favor of Participant from  each
          of the other members of the McMoRan Group.


                                        XIV.

                               Assumption of Interest


               14.1 Assumption of Interest.  If any member  of the  McMoRan
          Group exercises its right (where it has such right) to decline to
          participate in an acquisition of Leasehold Interests, the members
          of the McMoRan Group participating  therein may, within five  (5)
          days after  notice thereof,  elect  to take  their  proportionate
          share (i.e. in  the proportion  which the  ownership interest  of
          each such participating party bears to the ownership interest  of
          all such participating parties) of the non-participating  party's
          interest.  If the participating party(s)  do not agree to  assume
          all of the  interest which would  have been assumed  by the  non-
          participating party(s), then the acquisition shall not be carried
          out.



                                         XV.

                               Ownership of Production


               15.1 Ownership  of  Production.   All  the   oil,  gas   and
          casinghead  gas  produced  for  the  account  of  the   Leasehold
          Interests from any  well shall be  owned by McMoRan,  Participant
          and by  the other  members of  the  McMoRan Group  severally,  in
          proportion to the  respective interests  of each  therein as  set
          forth in Paragraph  3.2. above, except  as otherwise provided  in
          this Agreement, and subject to the right, if any, that others may
          have under the terms of this Agreement or any operating agreement
          relating  to  such  well.    Anything  to  the  contrary   herein
          notwithstanding, each party shall at all times have the right  to
          take in kind or separately dispose  of such party's share of  the
          production from any such well, subject  to the provisions of  the
          applicable Program Operating Agreement.  McMoRan shall,  however,
          attempt to  give  Participant at  least  seven (7)  days  advance
          written notice of the anticipated date of first deliveries of any
          production from a Prospect.


                                        XVI.

                             Relationship of the Parties


               16.1 Tax Partnership.  This Agreement  is not  intended  and
          shall not  be  considered  to create  a  partnership  within  the
          meaning of the federal common law or under the applicable laws of
          any state  or under  the laws  of the  state in  which any  party
          hereto is incorporated,  organized or conducting  business or  to
          create a relationship whereby  any of the  parties shall be  held
          liable for the  acts, either of  omission or  commission, of  any
          other party thereto; provided, however, that in the event a party
          should suffer a  loss by  reason of  an unauthorized  act of  the
          other party hereto, the latter shall indemnify and save  harmless
          the former.

               The parties expressly  agree that no  party hereto shall  be
          responsible for the  obligations of any  other party, each  party
          being severally  responsible  only for  its  obligations  arising
          hereunder and liable only  for its allocated  share of the  costs
          and expenses  incurred  hereunder.   It  is not  the  purpose  or
          intention of this Agreement to create, and this Agreement  should
          never be construed as creating, a relationship whereby any of the
          parties shall  be held  liable for  acts, either  of omission  or
          commission, of  any  other  party hereto.    Notwithstanding  the
          foregoing, each party hereto agrees that this Agreement creates a
          partnership for Federal and  State income tax reporting  purposes
          only,  which  tax  partnership   shall  function  and  exist   in
          accordance with the terms and  provisions of Exhibit IV  attached
          hereto.  McMoRan agrees to provide  to the Participant on a  best
          efforts basis,  by  April  30th of  each  year,  any  information
          available to it relating to operations conducted pursuant to  the
          Program that is necessary for Participant to prepare Schedule K-1
          of its federal income tax return.


                                        XVII.

                                  Billings; Notices


               17.1 Billings;  Notices. All  billings and notices shall  be
          as provided in the applicable Program Operating Agreement.


                                       XVIII.


                            Special Non-Consent Elections



               18.1 Casing Point Election - Onshore Prospects. At such time
          as an Exploratory Well has been drilled to the final total  depth
          on an Onshore Prospect, McMoRan shall notify Participant that the
          Casing Point has been  reached on such well,  and whether or  not
          McMoRan recommends that an attempt be made to complete such well.
          McMoRan  shall  also   furnish,  if  requested   in  writing   by
          Participant, the estimated costs of completing and equipping  the
          well and  plugging  and  abandoning same  if  the  completion  is
          unsuccessful,  and  all  well  logs,  core  analyses  and   other
          information in its possession not theretofore furnished  relevant
          to evaluation of a completion  attempt.  Within forty-eight  (48)
          hours (inclusive  of  Saturday,  Sunday and  legal  holidays)  of
          receipt of such recommendation, Participant shall advise  McMoRan
          whether or  not  it desires  to  participate in  the  recommended
          completion attempt. If McMoRan  and Participant agree to  attempt
          completion, McMoRan shall thereupon be authorized to proceed with
          the completion  attempt  and to  charge  the cost  thereof  as  a
          Development Expenditure; provided, however, the cost of  plugging
          and abandoning  the  well  shall be  charged  as  an  Exploration
          Expenditure if  the  completion  attempt  is  unsuccessful.    If
          Participant does  not elect  to  participate in  such  completion
          attempt, it  shall have  no further  rights hereunder  as to  the
          Prospect involved.  If  McMoRan recommends abandonment without  a
          completion attempt,  McMoRan  shall  have the  well  plugged  and
          abandoned,  charging   the  cost   thereof  as   an   Exploration
          Expenditure.   Additionally, if  Participant  does not  elect  to
          participate in  a  second or  subsequent  Exploratory Well  in  a
          particular Prospect,  Participant shall  have no  further  rights
          hereunder as to the Prospect involved.

               18.2 Elections Prior  to  Platform Installation  -  Offshore
          Prospects. If Participant  does not elect  to participate in  (a)
          the drilling of any well on an Offshore Prospect proposed by
          McMoRan to be  drilled after the  drilling of the  first two  (2)
          Exploratory Wells thereon  and prior to  the installation of  the
          first drilling and/or production platform on such Prospect or (b)
          Participant does not elect to participate in the installation  of
          the first drilling and/or  production platform on such  Prospect,
          the Participant shall have no further rights hereunder as to  the
          Prospect involved.

               18.3 Time Periods. Whenever an election right is provided in
          the body of  this Agreement and  no time period  for response  is
          stipulated then  the  applicable  time periods  provided  in  the
          applicable Program Operating Agreement shall apply.

               18.4 Completion Attempt by Participant - Onshore. If McMoRan
          does not recommend the completion of an Onshore Exploratory  Well
          and Participant  advises McMoRan  within forty-eight  (48)  hours
          (inclusive of Saturday, Sunday and legal holidays) of the receipt
          by  Participant  of   such  recommendation   from  McMoRan   that
          Participant elects  to attempt  to  complete such  well,  McMoRan
          shall  undertake  the  completion  thereof,  and  any  subsequent
          plugging and abandoning thereof,  for the account of  Participant
          and Participant shall bear all costs, risks and expenses of  such
          completion attempt and abandonment thereof and Participant agrees
          to indemnify  and  hold  McMoRan harmless  therefrom.    If  such
          completion attempt is successful McMoRan will assign  Participant
          all of  its  interest  in  the borehole  of  such  well  and  any
          production therefrom, but  such assignment shall  not confer  any
          additional interest  to the  Participant in  the balance  of  the
          particular Prospect involved.


                                        XIX.

                                    Program Term


               19.1 Program  Term .  The  Program  Term  shall  commence  on
          December 15, 1997 and shall  terminate, except for completion  of
          operations which were theretofore commenced or committed, on  the
          earlier  of  March  31,  2002,  or  the  date  that  all  of  the
          Exploration Fund has been spent or committed.  At the end of  the
          Program Term, McMoRan shall provide Participant with a list  (the
          _Committed List_) of the  undrilled wells, Prospects and  farmout
          agreements as to  which it  has committed  the Exploration  Fund.
          Once such Committed  List has  been provided  to Participant,  no
          substitution shall  be made  by McMoRan  without the  consent  of
          Participant.

               19.2 Unfunded Prospects. At the same time as McMoRan submits
          the Committed List, McMoRan  shall also submit  a listing of  all
          Prospects which  would have  been  committed to  the  Exploration
          Program except for the  fact that the  Exploration Fund had  been
          fully expended and/or  committed.   Within fifteen  (15) days  of
          receipt of such listing from  McMoRan, Participant will have  the
          option to commit additional funds to the Exploration Fund for the
          drilling of the first  Exploratory Well on  any such Prospect  or
          Prospects or to advise MOXY that  it does not elect to so  commit
          any such additional funds.   If the  Participant does so  commit,
          the drilling of such first Exploratory  Well on a Prospect  where
          Participant commits  such additional  funds shall  be charged  as
          Exploration Expenditures  and shall  be  deemed included  in  the
          Committed List.  If  the Participant does  not commit such  addi-
          tional funds for a Prospect on such listing, MOXY shall have  the
          right to acquire Participant's interest in such Prospect, free of
          any liens, burdens, or overriding  royalties not provided for  by
          Article XI  hereof, by  reimbursing  Participant for  any  direct
          costs incurred by Participant in acquiring Leasehold Interests in
          such Prospect; if MOXY  so reimburses Participant, such  Prospect
          shall be excluded from this Agreement and Participant shall  have
          no further right hereunder as to such Prospect.


                                         XX.

                            Operations After Program Term


               20.1 General.  After   the  Program   Term,  all   Leasehold
          Interests of the Program will be subject to the provisions of the
          applicable Program Operating Agreement and the provisions of this
          Agreement except as set forth in Paragraph 19.2 and this  Article
          XX.  Any Leasehold Interests which  is included in a Prospect  on
          which an  Exploratory Well  has been  committed as  shown on  the
          Committed List shall become subject to this Article XX after  the
          drilling of such committed well.

               20.2 Exploratory Wells.  After  the  Program  Term,  McMoRan
          and/or Participant shall have the  right to propose the  drilling
          of an Exploratory Well on a Prospect in accordance with Paragraph
          9.2 hereof.

               20.3 Development Expenditures. All Development  Expenditures
          shall be borne  by the parties  according to  their interest  and
          subject to  the provisions  of the  applicable Program  Operating
          Agreement, whether incurred before or after the Program Term.

               20.4 Provisions Which Do Not Survive the End of the  Program
          Term. From and after the end  of the Program Term, McMoRan  shall
          have no right to commit Participant to any expenditures except in
          accordance with the  applicable Program  Operating Agreement  and
          with respect  to the  conclusion of  then drilling  or  committed
          operations.  McMoRan shall have no obligation thereafter to offer
          Participant the right to  acquire any Leasehold Interests  unless
          such acquisition is subject to an AMI agreement with Participant.
          Further,  McMoRan   shall  have   no   further  right   to   bind
          Participant's interest to  any trade agreement  except as may  be
          expressly authorized by Participant.


                                        XXI.

                                  Confidentiality.


               21.1 Confidentiality. Except to the  extent provided to  the
          contrary hereunder  and  subject  to any  agreements  with  third
          parties entered into pursuant to  the Program, each party  agrees
          that at all times prior to, but not after, December 31, 2007,  it
          will take all  reasonable steps to  keep secret and  confidential
          and not disclose  to any third  party, geological or  geophysical
          data, progress reports or other information which it may  receive
          as a  result  of operations  carried  out under  this  Agreement;
          provided, however,  that these  restrictions shall  not apply  to
          information which  (i) is  in, or  has entered  into, the  public
          domain without breach of the  provisions of this Paragraph  21.1;
          (ii) is in the possession of  a party receiving same as a  result
          of prior receipt thereof from another party (not a party to  this
          Agreement)  prior  to  the  time  of  such  receipt  under   this
          Agreement, (iii) may lawfully be obtained as a matter of right by
          the party receiving same from another source, (iv) is required to
          be disclosed by law or the rules of any governmental agency or an
          applicable stock exchange, by McMoRan  or Participant, or (v)  is
          furnished to Affiliates, or to bona fide prospective  purchasers,
          mortgagees, prospective mortgagees, lenders, prospective lenders,
          prospective  joint  program  participants  and  consultants   for
          evaluation  purposes   provided   that   any   person   furnished
          information pursuant to this clause (v) agrees not to communicate
          such information to any  other party or to  use it for their  own
          benefit in  a manner  adverse to  the  interests of  the  McMoRan
          Group.  Notwithstanding the foregoing, the parties recognize that
          from time to time information (such  as logs) may be acquired  by
          the Program which should  not be disclosed  to anyone other  than
          those persons who must have such  information.  Each party  shall
          take  all  reasonable   steps  to  require   its  employees   and
          consultants to be bound  by the provisions  of this paragraph  in
          the same  manner  as  it  is  bound  hereunder.    News  releases
          concerning discoveries or operations of the Program shall only be
          made in  accordance with  guidelines attached  to the  applicable
          Program Operating  Agreement,  subject  to  the  requirements  of
          applicable laws and  regulations and  requirements of  applicable
          stock exchanges.


                                        XXII.

                                      Insurance


               22.1 Insurance for Program. McMoRan shall, at the expense of
          the Exploration Program,  procure and  maintain with  responsible
          companies insurance in  the amounts  and covering  the risks  set
          forth below:

               (a)  Worker's Compensation:
                    Such insurance shall be in full compliance with the law
                    in the state where the work is to take place and shall
                    contain a voluntary compensation endorsement and a
                    waiver of subrogation as to Participant.  Where
                    applicable, coverage shall also be provided to comply
                    with the:

                    (i)  U.S. Longshoremen's and Harbor Worker's
                         Compensation Act, and the
                    (ii) Outer Continental Shelf Lands Act.

               (b)  Employer's Liability:

                    Such insurance shall have a limit of liability of
                    $500,000 per accident and shall be endorsed, where
                    applicable, to provide:

                    (i)  Maritime (Amendment to Coverage B), to include
                         transportation, wages, maintenance and cure.
                    (ii) A claim "in rem" will be treated as a claim "in
                         personam".
                    (iii)A waiver of subrogation as to Participant.

               (c)  Comprehensive General Liability Insurance:

                    Such insurance shall have a limit of $1,000,000 per
                    occurrence and shall be endorsed, where applicable, to
                    provide:

                    (i)  Deletion of the watercraft exclusion.
                    (ii) Contractual liability coverage.
                    (iii)That Participant be named as an additional
                    insured.

               (d)  Control of Well Insurance in the minimum amount of
                    $50,000,000 for the total loss, endorsed to name
                    Participant as an additional insured.

               (e)  All vessels owned or chartered by McMoRan shall be
                    adequately covered by Hull and Protection and Indemnity
                    Insurance.

               (f)  No insurance other than as specified above shall be
                    provided by McMoRan.

               (g)  McMoRan shall require contractors and subcontractors
                    performing work for the Program to provide such
                    insurance as deemed reasonable by McMoRan in relation
                    to the work to be performed by said contractors or
                    subcontractors.

               (h)  Upon request, certificates of insurance evidencing the
                    insurance obtained by McMoRan hereunder shall be
                    furnished to Participant.

               (i)  McMoRan shall also carry policies of the following
                    insurance which will name Participant as an additional
                    insured:

                    (i)  Where applicable, Blanket Charters' Legal
                         Liability and Cargo Legal Liability with a limit
                         of liability of $500,000.
                    (ii) Umbrella liability Insurance in the amount of
                         $25,000,000 excess of all primary limits.

                    Participant shall be billed seperately for its pro rata
                    share of such insurance.


                                       XXIII.

                              Record Title, Assignment


            23.1 Record Title. For convenience, McMoRan shall initially
          hold record title to the Leasehold Interests acquired  hereunder;
          provided however, upon  written request  by Participant,  McMoRan
          will, within 120 days following the completion by the Program  on
          an Onshore  Prospect of  a well  capable of  producing in  paying
          quantities, or within 120 days following the installation of  the
          first drilling and/or production platform on an Offshore Prospect
          by the Program, as applicable, execute and deliver to Participant
          a  recordable  assignment  of   Participant's  interest  in   all
          Leasehold Interests in such  Prospect, unless Participant has  no
          further rights  hereunder  as to  a  particular Prospect  as  the
          result of a  decision not  to participate  pursuant to  Paragraph
          18.1,  Paragraph   18.2  or   Paragraph  19.2,   as   applicable.
          Notwithstanding  the  foregoing,  if  a  Prospect  involves   the
          acquisition of  a Leasehold  Interests from  a third  party,  the
          period hereinabove provided for the delivery of assignments shall
          be extended, if required, until 60 days following the receipt  of
          an assignment  of  interest by  McMoRan  from such  third  party;
          provided however, in the event  that such an assignment  requires
          the approval of a governmental authority then such period will be
          extended for  60 days  following the  receipt by  McMoRan of  the
          required approval from the governmental authority.  In  addition,
          at the end of Program Term  McMoRan shall execute and deliver  to
          Participant a recordable assignment of Participant's interest  in
          any  other  Leasehold  Interests   not  previously  conveyed   to
          Participant during the Program Term pursuant to any provision  of
          this Agreement.  Such assignment shall warrant title against  all
          parties claiming by, through or under McMoRan, but not otherwise;
          but McMoRan  shall  assign to  Participant,  with full  right  of
          subrogation, to the  extent so transferable,  the benefit of  and
          the right to enforce the covenants and warranties, if any,  which
          McMoRan is  entitled  to enforce  with  respect to  the  interest
          assigned or any part thereof.   Each assignment shall be  subject
          to this Agreement and shall be  charged with and burdened by  the
          proportionate part of  the royalties provided  for in each  lease
          covered thereby, any overriding royalty or similar interest  with
          which such  Leasehold Interests  are  burdened as  authorized  by
          Paragraph 11.1 hereof and any other contracts or agreements  with
          which  such  Leasehold  Interests  are  burdened  by  McMoRan  as
          expressly authorized by  other provisions of  this Agreement  and
          which continue to burden such Leasehold Interests at the time  of
          such  assignment.    If,  however,  there  are  restrictions   on
          assignability with respect to  a Prospect or Leasehold  Interests
          prohibiting McMoRan as nominee for the Program from  transferring
          interests in such Prospect or Leasehold Interests, McMoRan  shall
          continue to  hold record  title  in its  name  on behalf  of  the
          parties owning interests therein rather than for the Program, and
          at the request of such parties will execute a mutually acceptable
          nominee agreement.


               23.2 Assignment. Except  as  permitted  below,  without  the
          prior written consent  of the  other party,  neither McMoRan  nor
          Participant shall assign any rights in this Agreement.  Until the
          Program has  completed a  well capable  of production  in  Paying
          Quantities on  an  Onshore  Prospect or  prior  to  the  election
          provided in Paragraph XVIII hereof as to an Offshore Prospect, or
          the end of  the Program Term,  whichever first  occurs, no  party
          hereto may assign its interest in the Leasehold Interests  within
          said Prospect  acquired pursuant  to  the Program  without  first
          obtaining the consent of the  other party hereto (which  approval
          will not be unreasonable withheld);  provided that granting of  a
          lien or security  interest by any  party shall  not require  such
          consent.   The  assignees  of any  Leasehold  Interests  acquired
          pursuant to the Program shall be  bound by all of the  assignor's
          obligations with respect  to such Leasehold  Interests as to  the
          interest  assigned.     Notwithstanding  the  foregoing,   either
          Participant or McMoRan without the necessity of obtaining consent
          may transfer all or any part of its interests and rights in  this
          Agreement or in any Prospect to  any Affiliate provided that  the
          assigning party shall remain liable hereunder.


                                        XXIV.

                                Subsequent Interests



               24.1 Subsequent Interest .  Except  with respect  to  burdens
          described in Paragraph  11.1, or  as otherwise  provided in  this
          Agreement, a party  who creates any  burden against such  party's
          interest in any Leasehold  Interests shall be solely  responsible
          for such  burden;  and  in the  event  such  party  is  required,
          pursuant to  other provisions  of  this Agreement  including  the
          applicable Program Operating Agreement or a third party operating
          agreement, to assign its interest  in any Leasehold Interests  to
          any other party, such assignment shall  convey and vest title  to
          such interest in such assignee free and clear of any such burden.


                                        XXV.

                                       General



               25.1 Records. McMoRan shall  maintain complete and  accurate
          records of all Leasehold  Interests acquired and held  hereunder,
          the acquisition and disposition  of all equipment hereunder,  and
          of all expenditures made  hereunder in accordance with  generally
          accepted industry standards.  McMoRan will maintain complete  and
          accurate records of all correspondence with any operator who  may
          be operating  properties  in which  the  parties hereto  have  an
          interest under  this Agreement,  and will  retain a  copy of  all
          statements, bills  and other  instruments furnished  by any  such
          operator  in   accordance   with  generally   accepted   industry
          standards.  Such  records, together with  receipts, vouchers  and
          other supporting  evidence thereof  in McMoRan's  possession  and
          control, will be available for  inspection, copying and audit  by
          Participant or its duly authorized representatives on  reasonable
          notice at McMoRan's office during regular business hours then  in
          effect.  Participant's right to  audit McMoRan's records for  the
          purpose of  challenging the  correctness of  any charge  made  by
          McMoRan hereunder shall terminate  as provided in the  accounting
          procedure  attached   to   the   Program   Operating   Agreement.
          Participant shall be entitled to join  McMoRan in any audit  made
          by McMoRan of the records of third party operators of  properties
          in which Participant acquired  an interest under this  Agreement.
          At the request of Participant, McMoRan shall conduct or cause  to
          be conducted an  audit of  the records  of any  such third  party
          operator hereunder, said audit right to  be as specified in  such
          third  party  agreement  including  the  polling  of  other  non-
          operators to determine  if they desire  to participate, at  which
          time McMoRan may  decline to participate  and therefore not  bear
          any cost related to such audit.   In addition, Participant  shall
          have the same audit rights as  held by McMoRan under third  party
          agreements including  the right  to  elect participation  in  any
          audit performed by another non-operator if McMoRan elects not  to
          participate in such audit and Participant shall receive copies of
          all reports of joint venture audits which are conducted.

               25.2 Access. Participant  or its  duly authorized  represen-
          tative shall have access at all reasonable times, at its  expense
          and risk,  to  the  derrick  floor  of  any  well  being  drilled
          hereunder in which Participant is participating; and  Participant
          shall have the  right to inspect  all materials on  hand for  the
          account of  the  Program  and  to  observe  any  such  operations
          conducted hereunder.

               25.3 Claims and  Litigation. Except  as to  matters  arising
          with respect to a particular Prospect after the Program Operating
          Agreement has  become applicable  as  to all  further  operations
          thereon under the provisions of this  Agreement (as to which  the
          provisions of such Program Operating Agreement will govern),  all
          investigation, litigation  and  settlements  in  connection  with
          titles, claims  and causes  of action  of  every kind  and  joint
          rights and interests of the members  of the McMoRan Group in  the
          Program Area in connection with the Program shall be carried  on,
          conducted and defended for  and on behalf of  all members of  the
          McMoRan Group involved.   Each party shall  notify the others  of
          any process served upon it  in any such suit  or claim.  Where  a
          claim has been made or a  suit has been filed against McMoRan  or
          Participant or any other member of the McMoRan Group for  damages
          caused by or arising  out of operations the  expense of which  is
          charged to  the Exploration  Fund as  authorized herein,  McMoRan
          shall retain legal counsel to handle the defense of such suit  or
          claim and notify  Participant and  other members  of the  McMoRan
          Group involved of the retention of such legal counsel.  The  cost
          of such legal  services shall be  charged in the  same manner  as
          Exploration Expenditures are charged.  Participant may, if it  so
          chooses, elect to retain its own legal counsel (at  Participant's
          expense) to defend its interests in  any such suit or claim;  and
          in such event the claim or suit shall be defended by a  committee
          of attorneys selected by and representing the separate  interests
          of the respective members of the McMoRan Group (with each  member
          of the McMoRan Group being responsible for the fees and  expenses
          of its own counsel), with McMoRan's counsel as chairperson.   All
          settlements of suits and claims shall be subject to the  approval
          of Participant; except  that McMoRan may  settle any claim  under
          $100,000 without first receiving Participant's approval, provided
          the payment is in  complete settlement.   The costs and  expenses
          involved in those matters which are subject to the provisions  of
          this Paragraph  25.3 shall  be shared  and  borne solely  by  the
          parties who participated in such operation or Leasehold Interests
          in proportion to their respective participation in the applicable
          operation  or  Leasehold  Interests.    McMoRan  agrees  to  keep
          Participant advised as  to claims  for which  Participant may  be
          partly responsible hereunder.

               25.4 Good Faith.  McMoRan and  Participant agree  to act  in
          good faith with respect to their respective activities under this
          Agreement.

               25.5 Governing  Law.  This   Agreement  and  the   documents
          provided for  herein  shall be  deemed  to be  governed  by,  and
          construed in accordance with, the laws of the State of Louisiana.

               25.6 Failure to  Respond. Except  as provided  in  Paragraph
          10.1 hereof,  whenever under  this  Agreement (exclusive  of  the
          applicable Program Operating Agreement) Participant is given  the
          right to  approve  or disapprove  or  participate or  decline  to
          participate in a  proposed operation or  acquisition, failure  to
          respond shall be deemed  a response to  disapprove or decline  to
          participate in  the  proposed  operation  or  acquisition  unless
          McMoRan is recommending and electing to plug and abandon a  well,
          in which event failure  to respond shall be  an election to  plug
          and abandon.

               25.7 Conflicts. Should  there be  any conflict  between  the
          body of this  Agreement and  any Exhibit  hereto, the  provisions
          contained in the body of this Agreement shall control.

               25.8 Reciprocal Rights. All rights granted by Participant in
          this Agreement to the other members of the McMoRan Group who  are
          not parties to this Agreement shall be reciprocal and McMoRan has
          entered or shall  enter into  agreements which  shall cause  such
          other members  of  the McMoRan  Group  to grant  such  reciprocal
          rights to Participant.  To  the extent necessary for  Participant
          and such  other  members of  the  McMoRan Group  to  enforce  the
          aforesaid reciprocal rights, Participant shall be designated as a
          third party beneficiary in such  other agreements and such  other
          members of the McMoRan Group are hereby designated as third party
          beneficiaries of this Agreement.


               25.9 Binding Effect. This Agreement shall be binding upon
          and inure  to  the  benefit  of  the  parties  hereto  and  their
          respective successors  and  assigns; provided,  however,  nothing
          herein contained shall be  construed as permitting an  assignment
          contrary to the terms and provisions of this Agreement.



               IN WITNESS WHEREOF, this  Agreement is executed in  multiple

          copies each  of  which shall  be  deemed  to be  an  original  on

          December 22,  1997  but effective  as  of the  date  first  above

          written.


                                             McMoRan Oil & Gas Co.


                                             By:_/s/ Glenn A. Kleinert
                                                    -----------------
                                                Glenn A. Kleinert
                                                Senior Vice President




                                                /s/ Gerald J. Ford
                                                    --------------
                                                  Gerald J. Ford




               The remainder  of  the  Exhibits to  the  Amendment  to
          Participation Agreement McMoRan Exploration 1997 Exploration
          Program between McMoRan  Oil & Gas  Co. and  Gerald J.  Ford
          dated as  of  December  15,  1997  have  been  intentionally
          omitted and will be provided upon request.