----

| UNITED STATES                                                                                           |
|---------------------------------------------------------------------------------------------------------|
| SECURITIES AND EXCHANGE COMMISSION                                                                      |
| Washington, D.C. 20549                                                                                  |
|                                                                                                    |
| FORM 10-K                                                                                               |
| (Mark One)                                                                                              |
| [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                |
| For the fiscal year ended December 31, 2009                                                             |
| OR                                                                                                      |
| [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from                                                                          |   | to |
| Commission File Number: 001-07791                                                                       |
|                                                                                               |
| McMoRan Exploration Co.                                                                                 |
| (Exact name of registrant as specified in its charter)                                                  |

| Delaware                                                      | 72-1424200                        |                                      |
|---------------------------------------------------------------|-----------------------------------|-------------------------------------------|
| (State or other jurisdiction ofincorporation or organization) | (IRS Employer Identification No.) |                                      |
|                                                          |                              |                                      |
| 1615 Poydras Street                                           |                              |                                      |
| New Orleans, Louisiana                                        | 70112                             |                                      |
| (Address of principal executive offices)                      | (Zip Code)                        |                                      |
|                                                          |                              |
| (504) 582-4000                                                |                              |
| (Registrant's telephone number, including area code)          |                              |
|                                                          |                              |
| Securities registered pursuant to Section 12(b) of the Act:   |                              |
| Title of each class                                           |                              | Name of each exchange on which registered |
| Common Stock, par value $0.01 per share                       |                              | New York Stock Exchange                   |
| 6.75% Mandatory Convertible Preferred Stock                   |                              | New York Stock Exchange                   |

| Portions of our Proxy Statement for our 2010 Annual Meeting to be held on May 3, 2010 are incorporated by reference intoPart III (Items 10, 11, 12, 13 and 14) of this report. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| TABLE OF CONTENTS                                                                                                         |
|---------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                      |   |
|                                                                                                                      | Page |
| Part I                                                                                                                    |   |
| Items 1. and 2. Business and Properties                                                                                   | 1 |
| Item 1A.  Risk Factors                                                                                          | 12 |
| Item 1B.  Unresolved Staff Comments                                                                             | 22 |
| Item 3. Legal Proceedings                                                                                                 | 22 |
| Item 4. (Removed and Reserved)                                                                                            | 22 |
| Executive Officers of the Registrant                                                                                      | 22 |
|                                                                                                                      |   |
| Part II                                                                                                                   |   |
| Item 5. Market for Registrant’s Common Equity, Related Stockholder Mattersand Issuer Purchases of Equity Securities | 23 |
| Item 6. Selected Financial Data                                                                                           | 26 |
| Items 7. and 7A. Management’s Discussion and Analysis of Financial Condition and Results                            |   |
| of Operation and Quantitative and Qualitative Disclosures about Market Risk                                               | 27 |
| Item 8. Financial Statements and Supplementary Data                                                                       | 44 |
| Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                              | 89 |
| Item 9A. Controls and Procedures                                                                                          | 89 |
| Item 9B. Other Information                                                                                                | 89 |
|                                                                                                                      |   |
| Part III                                                                                                                  |   |
| Item 10. Directors, Executive Officers and Corporate Governance                                                           | 90 |
| Item 11. Executive Compensation                                                                                           | 90 |
| Item 12. Security Ownership of Certain Beneficial Owners and Management and Related                                       | 90 |
| Stockholders Matters                                                                                                      | 90 |
| Item 13. Certain Relationships and Related Transactions, and Director Independence                                        | 90 |
| Item 14. Principal Accounting Fees and Services                                                                           | 90 |
|                                                                                                                      |   |
| Part IV                                                                                                                   |   |
|                                                                                                                      |   |
| Item 15. Exhibits and Financial Statement Schedules                                                                       | 90 |
|                                                                                                                      |   |
| Glossary                                                                                                                  | 90 |
|                                                                                                                      |   |
| Signatures                                                                                                                | S-1 |
|                                                                                                                      |   |
| Exhibit Index                                                                                                             | E-1 |

----

TABLE OF CONTENTS

PART I

Items 1. and 2.  Business and Properties

|   | • | allocating investment capital based on the potential risk and reward for each exploratory and development opportunity; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------|

|   | • | utilizing advanced seismic applications in combination with traditional analysis; |
|--------|---------|-----------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

|   | • | employing professionals with geophysical, geological and reservoir assessment expertise; |
|--------|---------|------------------------------------------------------------------------------------------|

|   | • | using new technology applications in drilling and completion practices; and |
|--------|---------|-----------------------------------------------------------------------------|

|   | • | increasing the efficiency of our production practices. |
|--------|---------|--------------------------------------------------------|

|   | • | the quality and quantity of available data and the engineering and geological interpretation of that data; |
|--------|---------|------------------------------------------------------------------------------------------------------------|

|   | •    estimates regarding the amount and timing of future operating costs, severance taxes, development costs and workovers, all of which may vary considerably from actual results; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | •    the accuracy of various mandated economic assumptions such as future prices of oil and natural gas; and |
|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | •    the judgment of the persons preparing the estimates. |
|--------|-------------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

|                   | Gas    |    | Oil and condensate |   | Total  |
|------------------------|--------|---------|--------------------|--------|--------|
|                   | (MMcf) |    | (MBbls)            |   | (Bcfe) |
| Proved developed:      |   |    |               |   |   |   |   |   |
| Producing              |   | 47,970  |               |   | 4,842  |   |   | 77.0 |
| Non-producing          |   | 78,969  |               |   | 8,198  |   |   | 128.1 |
| Shut-in                |   | 8,211   |               |   | 443    |   |   | 10.9 |
| Total proved developed |   | 135,150 |               |   | 13,483 |   |   | 216.0 |
| Proved undeveloped     |   | 43,672  |               |   | 2,036  |   |   | 55.9 |
| Total proved reserves  |   | 178,822 |               |   | 15,519 |   |   | 271.9 |

----

TABLE OF CONTENTS

|                                                    | Proved Reserves |
|---------------------------------------------------------|-----------------|
|                                                    | Developed       |   | Undeveloped |   | Total |
| Estimated undiscounted future net cash flows before     |            |   |   |   |   |   |   |   |
| income taxes                                            | $               | 380,147 |   | $ | 105,178 |   | $ | 485,325 |
|                                                    |            |   |   |   |   |   |   |   |
| Present value of estimated future net cash flows before |            |   |   |   |   |   |   |   |
| income taxes (PV-10) a, b                               | $               | 288,405 |   | $ | 61,452 |   | $ | 349,857 |
| Discounted future income taxes                          |            |   |   |   |   |   |   | (1,476) |
| Standardized measure of discounted net cash flows       |            |   |   |   |   |   | $ | 348,381 |

| a.   | Calculated based on the twelve month average prices during 2009 and costs prevailing at December 31, 2009 and using a 10 percent per annum discount rate as required by the SEC.  The weighted average price for all properties with proved reserves was $58.73 per barrel of oil and $4.16 per Mcf of natural gas. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Present value of estimated future net cash flows before income taxes (PV-10) is considered a non-GAAP financial measure as defined by the SEC.  We believe that our PV-10 presentation is relevant and useful to our investors because it presents the discounted future net cash flows attributable to our proved reserves before taking into account the related future income taxes, as such taxes may differ among various companies because of differences in the amounts and timing of deductible basis, net operating loss carryforwards and other factors.  We believe investors and creditors use our PV-10 as a basis for comparison of the relative size and value of our proved reserves to the reserve estimates of other companies.  PV-10 is not a measure of financial or operating performance under GAAP and is not intended to represent the current market value of our estimated oil and natural gas reserves. PV-10 should not be considered in isolation or as a substitute for the standardized measure of discounted future net cash flows as defined under GAAP (Note 18). |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                 |   | Gas     |   | Oil and condensate |   | Total  |   | PV-10          |
|----------------------|--------|---------|--------|--------------------|--------|--------|--------|----------------|
|                 |   | (MMcf)  |   | (MBbls)            |   | (Bcfe) |   | (in millions)a |
| NYMEX price scenario |   | 187,967 |   | 17,074             |   | 290.4  |   | $1,043         |

| a.   | See note b. to the preceding table for discussion of PV-10 as a non-GAAP financial measure. |
|----------------|---------------------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

|                                                        |   | Years Ended December 31, |   |
|-------------------------------------------------------------|--------|--------------------------|--------|
|                                                        |   | 2009                     |   | 2008 |   | 2007 |   |
| Net natural gas production (Mcf)                            |   | 50,081,900               |   | 59,886,900 |   | 38,994,000 |   |
| Net crude oil and condensate production, excluding Main     |   |                     |   |   |   |   |   |
| Pass 299(Bbls)                                              |   | 2,474,400                |   | 3,072,000 |   | 1,821,900 |   |
| Net crude oil production from Main Pass 299 (Bbls)          |   | 495,500                  |   | 561,400 |   | 564,000 |   |
| Net plant product production (per Mcf equivalent)           |   | 5,759,600                |   | 8,004,400 |   | 2,153,000 |   |
| Average sales prices:                                       |   |                     |   |   |   |   |   |
| Natural gas (per Mcf)                                       |   | $  4.22        |   | $   9.96 |   | $ 7.01 |   |
| Crude oil and condensate, excluding Main Pass 299 (per Bbl) |   | 60.19                    |   | 106.28 |   | 80.19 |   |
| Crude oil and condensate, Main Pass 299 (per Bbl)           |   | 60.35                    |   | 91.60 |   | 64.61 |   |
| Production (lifting) costs: a                               |   |                     |   |   |   |   |   |
| Per barrel for Main Pass b                                  |   | $38.15                   |   | $69.29 |   | $44.17 |   |
| Per Mcfe for other properties c                             |   | 2.47                     |   | 2.56 |   | 1.88 |   |

| a.   | Production costs exclude all depletion, depreciation and amortization expense.  The components of production costs may vary substantially among wells depending on the production characteristics of the particular producing formation, method of recovery employed, and other factors.  Production costs include charges under transportation agreements as well as all lease operating expenses including well insurance costs. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Production costs for Main Pass 299 are significantly higher than the production costs for our other properties primarily because of the sour crude oil that is produced at Main Pass 299.  Production costs for Main Pass 299 included workover expenses of approximately $1.0 million or $1.95 per barrel in 2009, $17.0 million or $30.22 per barrel in 2008 and $1.8 million or $3.17 per barrel in 2007. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | Production costs were converted to an Mcf equivalent on the basis of one barrel of oil being equivalent to six Mcf of natural gas.  Production costs included workover expenses totaling $31.2 million or $0.44 per Mcfe in 2009, $45.8 million or $0.53 per Mcfe in 2008 and $19.7 million or $0.38 per Mcfe in 2007. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                        |   | Developed |   | Undeveloped |
|-----------------------------|--------|-----------|--------|-------------|
|                        |   | Gross     |   | Net         |   | Gross |   | Net |
|                        |   | Acres     |   | Acres       |   | Acres |   | Acres |
| Offshore (federal waters)   |   | 547,773   |   | 315,814     |   | 223,678 |   | 106,653 |
| Onshore Louisiana and Texas |   | 35,943    |   | 18,250      |   | 61,775 |   | 24,398 |
| Total at December 31, 2009  |   | 583,716   |   | 334,064     |   | 285,453 |   | 131,051 |

----

TABLE OF CONTENTS

|                           |                                                                             | Net       |        |         |   |   |
|--------------------------------|----------------------------------------------------------------------------------|-----------|-------------|--------------|--------|--------|
|                           |              Working | Revenue   | Water       | Production a |
|                           | Interest                                                                         | Interest  |  Depth | Gross        |   | Net    |
|                           | (%)                                                                              | (%)       | (feet)      | (MMcfe/d)    |
| Deep Shelf:                    |                                                                             |      |        |         |   |   |
| South Marsh Island Block 212   |                                                                             |      |        |         |   |   |
|  ”Flatrock” b | 25.0                                                                             | 17.7-18.8 | 10          | 272          |   | 50     |
| Louisiana State Lease 18090    |                                                                             |      |        |         |   |   |
| “Long Point” b     | 37.5                                                                             | 26.7      | 8           | 29           |   | 8      |
| Eugene Island Block 182 c,d    | 66.9                                                                             | 52.8-63.6 | 91          | 14           |   | 8      |
| “Laphroaig” c      | 37.3                                                                             | 28.5      | <10      | 21           |   | 6      |
|                           |                                                                             |      |        |         |   |   |
| Traditional Shelf:             |                                                                             |      |        |         |   |   |
| Eugene Island Block 346 c      | 50.0                                                                             | 39.2      | 326         | 20           |   | 8      |
| Eugene Island Block 251 c      | 56.9                                                                             | 43.9      | 160         | 18           |   | 8      |
| South Timbalier Block 193 c,d  | 62.8-72.8                                                                        | 46.8-53.0 | 114         | 16           |   | 7      |
| South Timbalier Block 299 c    | 75.0                                                                             | 62.5      | 314         | 11           |   | 7      |
| Main Pass Block 299 c          | 100.0                                                                            | 83.3      | 210         | 9            |   | 7      |
| South Marsh Island Block 146 c | 92.0                                                                             | 76.8      | 240         | 8            |   | 7      |
|                           |                                                                             |      |        |         |   |   |

| a.   | Reflects average daily production rates for the fourth quarter of 2009. |
|----------------|-------------------------------------------------------------------------|

| b.   | We were the operator for drilling exploratory wells at these prospects. We relinquished being operator following successful completion of the related wells. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | We operate these properties. |
|----------------|------------------------------|

| d.   | This property has multiple wells with varying ownership interests. Interests reflected in this table are approximate average working interest and net revenue interest for the field. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

|          |   | 2009   |   | 2008   |   | 2007   |   |
|---------------|--------|--------|--------|--------|--------|--------|--------|
|          |   | Gross  |   | Net    |   | Gross  |   | Net |   | Gross |   | Net |   |
| Exploratory   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Productive    |   | 1      |   | 0.250  |   | 2      |   | 0.500 |   | 4 |   | 1.150 |   |
| Dry           |   | 4      |   | 1.417  |   | 3      |   | 1.095 |   | 1 |   | 0.150 |   |
| In-progress a |   | 6      | b      | 2.013  |   | 7      |   | 2.188 |   | 5 |   | 1.673 |   |
| Total         |   | 11     |   | 3.680  |   | 12     |   | 3.783 |   | 10 |   | 2.973 |   |
|          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Development   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Productive    |   | -      |   | -      |   | 3      |   | 1.000 |   | - |   | - |   |
| Dry           |   | -      |   | -      |   | 1      |   | 0.500 |   | 1 |   | 0.250 |   |
| In-progress c |   | 3      |   | 1.520  |   | 2      |   | 1.091 |   | 2 |   | 1.091 |   |
| Total         |   | 3      |   | 1.520  |   | 6      |   | 2.591 |   | 3 |   | 1.341 |   |

| a.   | Includes our 0.500 net interest in the JB Mountain Deep well and our 0.184 net interest in the Mound Point South well.  These wells have been temporarily abandoned. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Includes our 0.327 net interest in the Davy Jones well which was announced as a discovery in early 2010. |
|----------------|----------------------------------------------------------------------------------------------------------|

| c.   | Includes our 0.541 net interest in the Mound Point Offset No. 2 well and 0.550 net interest in the JB Mountain No. 3, in which we retain reversionary rights.  These wells have been temporarily abandoned. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|     | Gas   |   | Oil  |   |
|----------|-------|--------|------|--------|
|     | Gross |   | Net  |   | Gross |   | Net |   |
| Offshore | 171   |   | 77.3 |   | 112 |   | 62.4 |   |
| Onshore  | 18    |   | 6.4  |   | 3 |   | 1.7 |   |
| Total    | 189   |   | 83.7 |   | 115 |   | 64.1 |   |

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

Item 1A.  Risk Factors

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

|   | • | our cash flow from operations; |
|--------|---------|--------------------------------|

|   | • | entering into exploration arrangements with other third parties; |
|--------|---------|------------------------------------------------------------------|

|   | • | selling oil and gas properties; |
|--------|---------|---------------------------------|

|   | • | borrowing money from banks;  |
|--------|---------|-----------------------------------|

|   | • | selling preferred stock, common stock and securities convertible into common stock. |
|--------|---------|-------------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

|   | • | continued economic uncertainty in light of the current state of the global financial and credit markets; |
|--------|---------|----------------------------------------------------------------------------------------------------------|

|   | • | the market price of oil and natural gas; |
|--------|---------|------------------------------------------|

|   | • | unexpected drilling conditions; |
|--------|---------|---------------------------------|

|   | • | unexpected pressure or irregularities in geologic formations; |
|--------|---------|---------------------------------------------------------------|

|   | • | equipment failures or accidents; |
|--------|---------|----------------------------------|

|   | • | title imperfections; |
|--------|---------|----------------------|

|   | • | tropical storms, hurricanes and other adverse weather conditions, which are common in the Gulf of Mexico during certain times of the year; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | regulatory requirements; and |
|--------|---------|-----------------------------------|

|   | • | equipment and labor shortages resulting in cost overruns. |
|--------|---------|-----------------------------------------------------------|

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

|   | • | historical production from the area compared with production from other producing areas; |
|--------|---------|------------------------------------------------------------------------------------------|

|   | • | assumptions concerning future oil and natural gas prices, future operating and development costs, workover, remediation and abandonment costs and severance and excise taxes; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the effects that hedging contracts may have on our sales of oil and natural gas; and |
|--------|---------|-------------------------------------------------------------------------------------------|

|   | • | the assumed effects of government regulation and taxation. |
|--------|---------|------------------------------------------------------------|

----

TABLE OF CONTENTS

|   | • | the actual amount and timing of production; |
|--------|---------|---------------------------------------------|

|   | • | changes in consumption by oil and gas purchasers; and |
|--------|---------|------------------------------------------------------------|

|   | • | changes in governmental regulations and taxation. |
|--------|---------|---------------------------------------------------|

|   | • | timing and amount of capital expenditures; |
|--------|---------|--------------------------------------------|

|   | • | the operator’s expertise, financial resources, and ability to sustain operations through periods of distressed or adverse economic conditions; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | approval of operators or other participants in drilling wells; and |
|--------|---------|-------------------------------------------------------------------------|

|   | • | selection of technology. |
|--------|---------|--------------------------|

|   | • | production is less than expected; |
|--------|---------|-----------------------------------|

|   | • | the other party to the hedging contract defaults on its obligations; or |
|--------|---------|------------------------------------------------------------------------------|

|   | • | there is a change in the expected differential between the underlying price in the hedging agreement and actual prices received. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

|   | • | require the acquisition of a permit before drilling commences; |
|--------|---------|----------------------------------------------------------------|

|   | • | restrict the types, quantities and concentration of various substances that can be released into the environment from drilling and production activities; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | limit or prohibit drilling activities on certain lands lying within wilderness, wetlands and other protected areas; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------|

|   | • | require remedial measures to address or mitigate pollution from former operations, such as plugging abandoned wells; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------|

|   | • | require bonds or the assumption of other financial responsibility requirements to cover drilling contingencies and well plugging and abandonment costs; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | impose substantial liabilities for pollution resulting from our operations; and |
|--------|---------|--------------------------------------------------------------------------------------|

|   | • | require capital expenditures for pollution control equipment. |
|--------|---------|---------------------------------------------------------------|

|   | • | access capital bearing a lower cost; |
|--------|---------|--------------------------------------|

----

TABLE OF CONTENTS

|   | • | adapt to fluctuations in the credit markets and periods of distressed or adverse economic conditions; |
|--------|---------|-------------------------------------------------------------------------------------------------------|

|   | • | acquire producing properties and proved undeveloped acreage; |
|--------|---------|--------------------------------------------------------------|

|   | • | obtain equipment, supplies and labor on better terms; |
|--------|---------|-------------------------------------------------------|

|   | • | develop, or buy, and implement new technologies; and |
|--------|---------|-----------------------------------------------------------|

|   | • | access more information relating to prospects. |
|--------|---------|------------------------------------------------|

|   | • | fires; |
|--------|---------|--------|

|   | • | natural disasters; |
|--------|---------|--------------------|

|   | • | abnormal pressures in geologic formations; |
|--------|---------|--------------------------------------------|

|   | • | blowouts; |
|--------|---------|-----------|

|   | • | cratering; |
|--------|---------|------------|

|   | • | pipeline ruptures; and |
|--------|---------|-----------------------------|

|   | • | spills. |
|--------|---------|---------|

----

TABLE OF CONTENTS

|   | • | tropical storms and hurricanes, which are common in the Gulf of Mexico during the summer and early fall of each year; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------|

|   | • | extensive governmental regulation (including regulations that may, in certain circumstances, impose strict liability for pollution damage); and |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | interruption or termination of operations by governmental authorities based on environmental, safety or other considerations. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------|

|   | • | evaluating and analyzing drilling prospects and producing oil and gas from proved properties; and |
|--------|---------|--------------------------------------------------------------------------------------------------------|

|   | • | maximizing production from oil and natural gas properties. |
|--------|---------|------------------------------------------------------------|

Item 1B.  Unresolved Staff Comments

Item 3.  Legal Proceedings

Item 4.  (Removed and Reserved).

----

TABLE OF CONTENTS

| Name                |   | Age    |   | Position or Office                             |
|---------------------|--------|--------|--------|------------------------------------------------|
| James R. Moffett    |   | 71     |   | Co-Chairman of the Board                       |
|                |   |   |   |                                           |
| Richard C. Adkerson |   | 63     |   | Co-Chairman of the Board                       |
|                |   |   |   |                                           |
| Glenn A. Kleinert   |   | 67     |   | President and Chief Executive Officer          |
|                |   |   |   |                                           |
| C. Howard Murrish   |   | 69     |   | Executive Vice President                       |
|                |   |   |   |                                           |
| Nancy D. Parmelee   |   | 58     |   | Senior Vice President, Chief Financial Officer |
|                |   |   |   | and Secretary                                  |
|                |   |   |   |                                           |
| Kathleen L. Quirk   |   | 46     |   | Senior Vice President and Treasurer            |
|                |   |   |   |                                           |

PART II

Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

----

TABLE OF CONTENTS

|           |   | 2009   |   | 2008  |   |
|----------------|--------|--------|--------|-------|--------|
|           |   | High   |   | Low   |   | High |   | Low |   |
| First Quarter  |   | $12.35 |   | $3.14 |   | $18.62 |   | $12.50 |   |
| Second Quarter |   | 7.71   |   | 4.26  |   | 35.52 |   | 17.01 |   |
| Third Quarter  |   | 9.35   |   | 4.72  |   | 29.88 |   | 19.55 |   |
| Fourth Quarter |   | 9.78   |   | 6.77  |   | 23.26 |   | 7.39 |   |

----

TABLE OF CONTENTS

|                               | December 31, |
|------------------------------------|--------------|
|                               | 2004         | 2005 | 2006 | 2007 | 2008 | 2009 |
| McMoRan Exploration Co.            | $100.00      | $105.72 | $ 76.04 | $ 70.00 | $ 52.41 | $ 42.89 |
| Independent Oil & Gas Industry |         |   |   |   |   |   |
| Group                              | 100.00       | 157.22 | 175.01 | 253.36 | 152.43 | 231.06 |
| S&P 500 Stock Index            | 100.00       | 104.91 | 121.48 | 128.16 | 80.74 | 102.11 |

----

TABLE OF CONTENTS

Item 6.  Selected Financial Data

|                                     |   | 2009                                                    |      | 2008   |   | 2007a     |   | 2006   |      | 2005   |   |
|------------------------------------------|--------|---------------------------------------------------------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|
| Financial Data                           |   | (Financial Data in Thousands, Except Per Share Amounts) |      |
| Years Ended December 31:                 |   |                                                    |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Revenues b                               |   | $                                                       | 435,435   |   | $      | 1,072,482 |   | $      | 481,167   |   | $      | 209,738 |   | $ | 130,127 |   |
| Depreciation and amortization c          |   |                                                    | 313,980   |   |   | 854,798   |   |   | 256,007   |   |   | 104,724 |   |   | 25,896 |   |
| Exploration expenses                     |   |                                                    | 94,281    |   |   | 79,116    |   |   | 58,954    |   |   | 67,737 |   |   | 63,805 |   |
| Main Pass Energy Hub™ costs d |   |                                                    | 1,615     |   |   | 6,047     |   |   | 9,754     |   |   | 10,714 |   |   | 9,749 |   |
| Exploration expense reimbursement e      |   |                                                    | -         |   |   | -         |   |   | -         |   |   | (10,979 | ) |   | - |   |
| Litigation settlement f                  |   |                                                    | -         |   |   | -         |   |   | -         |   |   | (446 | ) |   | 12,830 |   |
| Insurance recoveries g                   |   |                                                    | (24,592   | )      |   | (3,391    | )      |   | (2,338    | )      |   | (3,306 | ) |   | (8,900 | ) |
| Operating income (loss)                  |   |                                                    | (168,434  | )      |   | (155,234  | )      |   | 3,509     |   |   | (32,567 | ) |   | (22,373 | ) |
| Interest expense, net                    |   |                                                    | (42,943   | )      |   | (50,890   | )      |   | (66,366   | )      |   | (10,203 | ) |   | (15,282 | ) |
| Loss from continuing operations          |   |                                                    | (204,889  | )      |   | (211,198  | )      |   | (63,561   | )      |   | (44,716 | ) |   | (31,470 | ) |
| Income (loss) from discontinued          |   |                                                    |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| operations h                             |   |                                                    | (6,097    | )      |   | (5,496    | )      |   | 3,827     |   |   | (2,938 | ) |   | (8,242 | ) |
| Net loss applicable to common stock      |   |                                                    | (225,318  | )      |   | (238,980  | )      |   | (63,906   | )      |   | (49,269 | ) |   | (41,332 | ) |
|                                     |   |                                                    |      |   |   |      |   |   |      |   |   |   |   |
| Basic and diluted net loss per share     |   |                                                    |      |   |   |      |   |   |      |   |   |   |   |
| of common stock:                         |   |                                                    |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Continuing operations                    |   | $                                                       | (2.79     | )      | $      | (3.79     | )      | $      | (1.97     | )      | $      | (1.66 | ) | $ | (1.35 | ) |
| Discontinued operations                  |   |                                                    | (0.08     | )      |   | (0.09     | )      |   | 0.11      |   |   | (0.10 | ) |   | (0.33 | ) |
| Basic and diluted net loss per share     |   | $                                                       | (2.87     | )      | $      | (3.88     | )      | $      | (1.86     | )      | $      | (1.76 | ) | $ | (1.68 | ) |
|                                     |   |                                                    |      |   |   |      |   |   |      |   |   |   |   |
| Average basic and diluted common         |   |                                                    |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| shares outstanding                       |   |                                                    | 78,625    |   |   | 61,581    |   |   | 34,283    |   |   | 27,930 |   |   | 24,583 |   |
|                                     |   |                                                    |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| At December 31:                          |   |                                                    |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Working capital (deficit)                |   | $                                                       | 148,357   |   | $      | 3,601     |   | $      | (221,302  | )      | $      | (25,906 | ) | $ | 67,135 |   |
| Property, plant and equipment, net       |   |                                                    | 796,223   |   |   | 992,563   |   |   | 1,503,359 |   |   | 282,538 |   |   | 192,397 |   |
| Total assets                             |   |                                                    | 1,248,882 |   |   | 1,330,282 |   |   | 1,715,288 |   |   | 408,677 |   |   | 407,636 |   |
| Oil and gas reclamation obligations      |   |                                                    | 428,711   |   |   | 421,201   |   |   | 294,737   |   |   | 25,876 |   |   | 26,484 |   |
| Long-term debt                           |   |                                                    | 374,720   |   |   | 374,720   |   |   | 689,000   |   |   | 244,620 |   |   | 270,000 |   |
| Stockholders’ equity (deficit)     |   | $                                                       | 265,808   |   | $      | 309,023   |   | $      | 372,229   |   | $      | (68,443 | ) | $ | (86,590 | ) |

| a.   | Includes results from acquired oil and gas properties effective August 6, 2007 (Note 9). |
|----------------|------------------------------------------------------------------------------------------|

| b.   | Includes service revenues totaling $12.5 million in 2009, $13.7 million in 2008, $5.9 million in 2007, $13.0 million in 2006 and $12.0 million in 2005 (Note 1). |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | Includes impairment charges of $75.3 million in 2009, $332.6 million in 2008, $13.6 million in 2007 and $33.2 million in 2006.  We did not record any impairment charges in 2005 (Note 4). |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d.   | Reflects costs associated with pursuit of the licensing, design and financing plans related to the potential establishment of an energy hub, including an LNG terminal, at Main Pass Block 299 (Main Pass) in the Gulf of Mexico (Note 17). |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| e.   | Primarily reflects $19.0 million recognized upon inception of an exploration agreement in fourth quarter of 2006 offset by an $8.0 million payment to a private partner for relinquishing its exploration rights to certain prospects in connection with our entering into the new exploration agreement. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    |   |
|--------------|--------|

|    |   |
|--------------|--------|

|    |   |
|--------------|--------|

----

|    f.   | TABLE OF CONTENTS  Reflects settlement of class action litigation case, net of insurance proceeds. |
|----------------------------------|--------------------------------------------------------------------------------------------------------------|

| g.   | Reflects proceeds received in connection with our oil and gas property hurricane-related insurance claims (Note 4). |
|----------------|---------------------------------------------------------------------------------------------------------------------|

| h.   | Amounts include charges for modification of previously estimated reclamation plans for remaining closed sulphur facilities at Port Sulphur, Louisiana and year-end reductions in the contractual liability associated with postretirement benefit costs relating to certain retired former sulphur employees (Notes 11 and 16). |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                              | 2009   |       | 2008   |   | 2007a      |   | 2006   |       | 2005   |   |
|-----------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|
| Operating Data                    |   |       |   |   |       |   |   |       |   |   |   |   |   |   |   |
| Sales Volumes:                    |   |       |   |   |       |   |   |       |   |   |   |   |   |   |   |
| Gas (thousand cubic feet, or Mcf) |   | 50,081,900 |   |   | 59,886,900 |   |   | 38,994,000 |   |   | 14,545,600 |   |   | 7,938,000 |   |
| Oil (barrels)                     |   | 2,994,100  |   |   | 3,635,200  |   |   | 2,380,500  |   |   | 1,379,300 |   |   | 716,400 |   |
| Plant products (Mcf equivalent)b  |   | 5,759,600  |   |   | 8,004,400  |   |   | 2,153,300  |   |   | 1,072,200 |   |   | 640,200 |   |
| Average realization:              |   |       |   |   |       |   |   |       |   |   |   |   |   |   |   |
| Gas (per Mcf)                     | $      | 4.22       |   | $      | 9.96       |   | $      | 7.01       |   | $      | 7.05 |   | $ | 9.24 |   |
| Oil (per barrel)                  |   | 60.22      |   |   | 104.00     |   |   | 76.55      |   |   | 60.55 |   |   | 53.82 |   |

| a.   | Includes results from acquired oil and gas properties effective August 6, 2007 (Note 9). |
|----------------|------------------------------------------------------------------------------------------|

| b.   | Revenues from plant products (ethane, propane, butane, etc.) totaled $31.3 million in 2009, $83.3 million in 2008, $19.3 million in 2007, $9.6 million in 2006 and $5.0 million in 2005.  One Mcf equivalent is determined using the ratio of six Mcf of natural gas to one barrel of crude oil, condensate or natural gas liquids. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Items 7. and 7A.  Management’s Discussion and Analysis of Financial Condition and Results of Operation and Quantitative and Qualitative Disclosures About Market Risk

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

|                                                   |   | 2009   |      | 2008   |   |
|--------------------------------------------------------|--------|--------|-----------|--------|--------|
| Oil and natural gas revenues – prior year period |   | $      | 1,058,804 |   | $      | 475,250 |   |
| Increase (decrease)                                    |   |   |      |   |   |   |   |
| Price realizations:                                    |   |   |      |   |   |   |   |
| Natural gas                                            |   |   | (287,470  | )      |   | 42,029 |   |
| Oil and condensate                                     |   |   | (131,082  | )      |   | 37,709 |   |
| Sales volumes:                                         |   |   |      |   |   |   |   |
| Natural gas                                            |   |   | (97,658   | )      |   | 41,029 |   |
| Oil and condensate                                     |   |   | (66,674   | )      |   | 7,418 |   |
| Properties acquired in 2007                            |   |   | -         |   |   | 441,418 |   |
| Plant products revenue                                 |   |   | (51,980   | )      |   | 13,850 |   |
| Other                                                  |   |   | (964      | )      |   | 101 |   |
| Oil and natural gas revenues - current year period     |   | $      | 422,976   |   | $      | 1,058,804 |   |

----

TABLE OF CONTENTS

|                                       |   |   | Per   |   |   |   | Per   |   |              |   | Per   |
|--------------------------------------------|--------|--------|-------|--------|--------|--------|-------|--------|-------------------|--------|-------|
|                                       | 2009   |   | Mcfe  |   | 2008   |   | Mcfe  |   | 2007              |   | Mcfe  |
| Lease operating expense                    | $115.9 |   | $1.57 |   | $133.6 |   | $1.49 |   | $  69.8 |   | $1.26 |
| Workover costs                             | 18.0   |   | 0.25  |   | 39.7   |   | 0.44  |   | 19.7              |   | 0.35  |
| Hurricane related repairs                  | 14.1   |   | 0.19  |   | 23.1   |   | 0.26  |   | -                 |   | -     |
| Insurance                                  | 23.9   |   | 0.32  |   | 22.6   |   | 0.25  |   | 23.2              |   | 0.42  |
| Transportation, production taxes and other | 21.1   |   | 0.29  |   | 39.5   |   | 0.44  |   | 9.4               |   | 0.17  |
| Total production and delivery costs        | $193.0 |   | $2.62 |   | $258.5 |   | $2.88 |   | $122.1            |   | $2.20 |

|                               |   |   | Per    |   |   |   | Per    |   |   |   | Per    |
|------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                               | 2009   |   | Mcfe   |   | 2008   |   | Mcfe   |   | 2007   |   | Mcfe   |
| Depletion and depreciation expense | $205.5 |   | $2.78  |   | $357.5 |   | $3.98  |   | $228.5 |   | $4.12  |
| Accretion expense                  | 33.2   |   | 0.45   |   | 164.8  |   | 1.84   |   | 13.9   |   | 0.25   |
| Impairment charges/losses          | 75.3   |   | 1.02   |   | 332.5  |   | 3.71   |   | 13.6   |   | 0.25   |
| Total depletion, depreciation and  |   |   |   |   |   |   |   |   |   |   |   |
| amortization expense               | $314.0 |   | $4.25  |   | $854.8 |   | $9.53  |   | $256.0 |   | $4.62  |

----

TABLE OF CONTENTS

|                              | Years Ended December 31, |   |
|-----------------------------------|--------------------------|--------|
|                              |                     | 2009   |   |   | 2008 |   |   | 2007 |   |
| Geological and geophysical,       |                     |   |   |   |   |   |   |   |   |
| including 3-D seismic purchases a | $                        | 26.8   |   | $ | 31.9 |   | $ | 29.9 | b |
| Dry hole costs                    |                     | 61.5   | c |   | 38.9 | d |   | 22.8 | e |
| Insurance and other               |                     | 6.0    |   |   | 8.3 |   |   | 6.3 |   |
|                              | $                        | 94.3   |   | $ | 79.1 |   | $ | 59.0 |   |

| a.   | Includes compensation costs associated with stock-based awards totaling $6.6 million in 2009, $14.4 million in 2008 and $6.3 million in 2007. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Includes $13.0 million of seismic data purchases primarily associated with the exploration acreage acquired in the 2007 oil and gas property acquisition. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | Includes nonproductive exploratory drilling and related costs primarily associated with the Ammazzo well ($25.4 million), the Tom Sauk well ($11.1 million), the Cordage well ($11.0 million), the Sherwood well ($6.3 million) and the Gladstone East well ($6.2 million). |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d.   | Includes nonproductive exploratory drilling and related costs primarily associated with the Mound Point East well at Louisiana State Lease 340 ($16.0 million), the Northeast Belle Isle well ($9.5 million) and the Gladstone East well ($5.4 million) as well as approximately $8.0 million of nonproductive leasehold costs. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| e.   | Primarily includes nonproductive exploratory drilling and related costs associated with the “Cas” well      |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

|                    | For Year Ended December 31, |   |
|-------------------------|-----------------------------|--------|
|                    | 2009                        |   | 2008 |   | 2007 |   |
| Continuing operations   |                        |   |   |   |   |   |   |   |   |
| Operating               | $                           | 136.9  |   | $ | 629.7 |   | $ | 209.6 |   |
| Investing               |                        | (138.0 | ) |   | (239.2 | ) |   | (1,195.2 | ) |
| Financing               |                        | 154.8  |   |   | (295.5 | ) |   | 974.6 |   |
|                    |                        |   |   |   |   |   |   |   |   |
| Discontinued operations |                        |   |   |   |   |   |   |   |   |
| Operating               | $                           | (5.7   | ) | $ | (6.3 | ) | $ | (2.0 | ) |
| Investing               |                        | -      |   |   | - |   |   | - |   |
| Financing               |                        | -      |   |   | - |   |   | - |   |
|                    |                        |   |   |   |   |   |   |   |   |
| Total cash flow         |                        |   |   |   |   |   |   |   |   |
| Operating               | $                           | 131.2  |   | $ | 623.4 |   | $ | 207.6 |   |
| Investing               |                        | (138.0 | ) |   | (239.2 | ) |   | (1,195.2 | ) |
| Financing               |                        | 154.8  |   |   | (295.5 | ) |   | 974.6 |   |

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

|       | Debt and     |   |      |   |       |   |          |   |      |   |   |
|------------|--------------|--------|-----------|--------|------------|--------|---------------|--------|-----------|--------|--------|
|       | Convertible  |   | Interest  |   | Retirement |   | Oil & Gas |   | Lease     |   |   |
|       | Securities a |   | Paymentsb |   | Benefitsc  |   | Obligationsd  |   | Paymentse |   | Total  |
| 2010       | $            | -      |      | $      | 45.4       |   | $             | 1.3    |      | $      | 174.9  |   | $ | 2.3 |   | $ | 223.9 |
| 2011       |         | 74.7   |      |   | 45.4       |   |          | 1.2    |      |   | 70.7   |   |   | 2.3 |   |   | 194.3 |
| 2012       |         | -      |      |   | 37.9       |   |          | 1.2    |      |   | 18.3   |   |   | 2.3 |   |   | 59.7 |
| 2013       |         | -      |      |   | 35.6       |   |          | 1.2    |      |   | 5.0    |   |   | 2.2 |   |   | 44.0 |
| 2014       |         | 300.0  |      |   | 31.2       |   |          | 1.1    |      |   | 5.0    |   |   | 1.2 |   |   | 338.5 |
| Thereafter |         | -      |      |   | -          |   |          | 4.9    |      |   | 5.0    |   |   | - |   |   | 9.9 |
| Total      | $            | 374.7  |      | $      | 195.5      |   | $             | 10.9   |      | $      | 278.9  |   | $ | 10.3 |   | $ | 870.3 |

| a.   | Amounts due upon maturity subject to change based on future conversions by the holders of the securities. |
|----------------|-----------------------------------------------------------------------------------------------------------|

| b.   | Reflects interest and unused commitment fees on the debt balances as of December 31, 2009.  Because we did not have any amounts outstanding under our credit facility as of December 31, 2009,  we assumed a zero percent effective annual interest rate on our credit facility and a 2.98 percent and 0.50 percent interest rate on outstanding letters of credit ($100 million) and unused commitment fee, respectively.  Interest on the convertible senior notes is fixed. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | Includes anticipated payments under our employee retirement health care plan through 2019 (Note 12) and our future reimbursements associated with the contractual liability covering certain of our former sulphur retirees’ medical costs (Note 16). |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d.   | These oil & gas obligations primarily reflect our net working interest share of authorized exploration and development project costs at December 31, 2009 (see below for total estimated exploration and development expenditures for 2010).  Included in these amounts is $230.1 million of expenditures for drilling rig contract charges, portions of which we expect to share with our partners in our exploration program.  Also includes escrow payments to support the funding requirements related to the 2007 oil and gas acquisition property reclamation obligations (Note 16). |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| e.   | Amount primarily reflects leases for office space in two buildings in Houston, Texas, which terminate in April 2014 and July 2014, respectively, and office space in Lafayette, Louisiana which terminates in November 2012. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

|                        | Oil and Gas |    | Sulphur |
|-----------------------------|-------------|---------|---------|
|                        | 2009        |    | 2008    |   | 2009 |   | 2008 |
| Undiscounted cost estimates | $           | 538,778 |    | $ | 642,155 |   | $ | 43,418 |   | $ | 42,557 |
| Discounted cost estimates   | $           | 428,711 |    | $ | 421,201 |   | $ | 27,452 |   | $ | 23,003 |

|                                   | Inflation Rate |   | Market Risk Premium |   |
|----------------------------------------|----------------|--------|---------------------|--------|
|                                   | +1%            |   | -1%                 |   | +1% |   | -1% |   |
| Oil & Gas reclamation obligations: |           |   |                |   |   |   |   |   |   |   |   |   |
| Undiscounted                           | $              | 19.2   |                | $      | (17.9 | ) | $ | 2.6 |   | $ | (2.6 | ) |
| Discounted                             |           | 6.4    |                |   | (13.2 | ) |   | 1.5 |   |   | (5.3 | ) |
| Sulphur reclamation obligations:       |           |   |                |   |   |   |   |   |   |   |   |   |
| Undiscounted                           |           | 6.2    |                |   | (5.0 | ) |   | 0.3 |   |   | (0.3 | ) |
| Discounted                             |           | 1.2    |                |   | (1.0 | ) |   | - |   |   | - |   |

----

TABLE OF CONTENTS

| 1)   | The determination of our proved oil and natural gas reserves involves inherent uncertainties. The accuracy of any reserve estimate depends on the quality of available data and the application of engineering and geological interpretations and judgments. Different reserve engineers may make different estimates of proved reserve quantities and estimates of cash flows based on varying interpretations of the same available data. Estimates of proved reserves for wells with limited or no production history are less reliable than those based on actual production history. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2)   | The assumptions used in determining whether reserves can be produced economically can vary. The key assumptions used in estimating our proved reserves include: |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| a)   | Estimated future oil and natural gas prices and future operating costs. |
|----------------|-------------------------------------------------------------------------|

| b)   | Projected production levels and the timing and amounts of future development, remedial, and abandonment costs. |
|----------------|----------------------------------------------------------------------------------------------------------------|

| c)   | Assumed effects of government regulations on our operations. |
|----------------|--------------------------------------------------------------|

| d)   | Historical production from the area compared with production in similar producing areas. |
|----------------|------------------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

|   |   |   | +/- $1.00/MMbtu |   |   | +/- $5.00/Bbl |   |   |
|--------|--------|--------|-----------------|--------|--------|---------------|--------|--------|
| Swaps  |   | $      | 2.6             |   | $      | 0.6           |   |   |
| Puts   |   |   | 1.2             |   |   | 0.3           |   |   |

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

Item 8.  Financial Statements and Supplementary Data

| ·   | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Glenn A. Kleinert   | Nancy D. Parmelee           |
|---------------------|-----------------------------|
| President and Chief | Senior Vice President,      |
| Executive Officer   | Chief Financial Officer and |
|                | Secretary                   |

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

|                                                                           |   | December 31,   |      |
|--------------------------------------------------------------------------------|--------|----------------|-----------|
|                                                                           |   | 2009           |      | 2008 |   |
|                                                                           |   | (In Thousands) |      |
| ASSETS                                                                         |   |           |      |   |   |   |   |
| Current assets:                                                                |   |           |      |   |   |   |   |
| Cash and cash equivalents                                                      |   | $              | 241,418   |   | $ | 93,486 |   |
| Accounts receivable                                                            |   |           | 79,681    |   |   | 112,684 |   |
| Inventories                                                                    |   |           | 47,818    |   |   | 31,284 |   |
| Prepaid expenses                                                               |   |           | 14,457    |   |   | 13,819 |   |
| Fair value of oil and gas derivative contracts                                 |   |           | 8,693     |   |   | 31,624 |   |
| Current assets from discontinued operations, including restricted cash of $470 |   |           | 825       |   |   | 516 |   |
| Total current assets                                                           |   |           | 392,892   |   |   | 283,413 |   |
| Property, plant and equipment, net                                             |   |           | 796,223   |   |   | 992,563 |   |
| Restricted cash                                                                |   |           | 41,677    |   |   | 29,789 |   |
| Deferred financing costs and other assets                                      |   |           | 11,931    |   |   | 15,658 |   |
| Fair value of oil and gas derivative contracts                                 |   |           | -         |   |   | 5,847 |   |
| Long-term assets from discontinued operations                                  |   |           | 6,159     |   |   | 3,012 |   |
| Total assets                                                                   |   | $              | 1,248,882 |   | $ | 1,330,282 |   |
|                                                                           |   |           |      |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                     |   |           |      |   |   |   |   |
| Current liabilities:                                                           |   |           |      |   |   |   |   |
| Accounts payable                                                               |   | $              | 66,544    |   | $ | 77,009 |   |
| Accrued liabilities                                                            |   |           | 51,945    |   |   | 89,565 |   |
| Accrued interest and dividends payable                                         |   |           | 8,535     |   |   | 7,586 |   |
| Current portion of accrued oil and gas reclamation costs                       |   |           | 106,791   |   |   | 103,550 |   |
| Fair value of oil and gas derivative contracts                                 |   |           | 1,237     |   |   | - |   |
| Current portion of accrued sulphur reclamation costs (discontinued operations) |   |           | 8,300     |   |   | 785 |   |
| Other current liabilities from discontinued operations                         |   |           | 1,183     |   |   | 1,317 |   |
| Total current liabilities                                                      |   |           | 244,535   |   |   | 279,812 |   |
| 5¼% convertible senior notes                                              |   |           | 74,720    |   |   | 74,720 |   |
| 11.875% senior notes                                                           |   |           | 300,000   |   |   | 300,000 |   |
| Accrued oil and gas reclamation costs                                          |   |           | 321,920   |   |   | 317,651 |   |
| Other long-term liabilities                                                    |   |           | 16,602    |   |   | 20,023 |   |
| Accrued sulphur reclamation costs (discontinued operations)                    |   |           | 19,152    |   |   | 22,218 |   |
| Other long-term liabilities from discontinued operations                       |   |           | 6,145     |   |   | 6,835 |   |
| Total liabilities                                                              |   | $              | 983,074   |   | $ | 1,021,259 |   |
| Commitments and contingencies (Note 16)                                        |   |           |      |   |   |   |   |

----

TABLE OF CONTENTS

|                                                                          |   | December 31,   |      |
|-------------------------------------------------------------------------------|--------|----------------|-----------|
|                                                                          |   | 2009           |      | 2008 |   |
|                                                                          |   | (In Thousands) |      |
| Stockholders' equity:                                                         |   |           |      |   |   |   |   |
| Preferred stock, par value $0.01, 50,000,000 shares authorized, 1,675,590 and |   |           |      |   |   |   |   |
| 1,589,340 shares issued and outstanding (liquidation preference),             |   |           |      |   |   |   |   |
| respectively (Note 8)                                                         |   | $              | 245,184   |   | $ | 158,934 |   |
| Common stock, par value $0.01, 150,000,000 shares authorized, 88,555,685      |   |           |      |   |   |   |   |
| shares and 72,981,734 shares issued and outstanding, respectively             |   |           | 885       |   |   | 730 |   |
| Capital in excess of par value of common stock                                |   |           | 1,053,684 |   |   | 971,977 |   |
| Accumulated deficit                                                           |   |           | (987,139  | ) |   | (776,153 | ) |
| Accumulated other comprehensive loss                                          |   |           | (346      | ) |   | (22 | ) |
| Common stock held in treasury, 2,511,132 shares and 2,508,660 shares,         |   |           |      |   |   |   |   |
| at cost, respectively                                                         |   |           | (46,460   | ) |   | (46,443 | ) |
| Total stockholders’ equity                                              |   |           | 265,808   |   |   | 309,023 |   |
| Total liabilities and stockholders’ equity                              |   | $              | 1,248,882 |   | $ | 1,330,282 |   |

----

TABLE OF CONTENTS

|                                                       | Years Ended December 31,                 |     |
|------------------------------------------------------------|------------------------------------------|----------|
|                                                       | 2009                                     |     | 2008 |   | 2007 |   |
|                                                       | (In Thousands, Except Per Share Amounts) |     |
| Revenues:                                                  |                                     |     |   |   |   |   |   |   |   |
| Oil and natural gas                                        | $                                        | 422,976  |   | $ | 1,058,804 |   | $ | 475,250 |   |
| Service                                                    |                                     | 12,459   |   |   | 13,678 |   |   | 5,917 |   |
| Total revenues                                             |                                     | 435,435  |   |   | 1,072,482 |   |   | 481,167 |   |
|                                                       |                                     |     |   |   |   |   |   |   |   |
| Costs and expenses:                                        |                                     |     |   |   |   |   |   |   |   |
| Production and delivery costs                              |                                     | 193,025  |   |   | 258,450 |   |   | 122,127 |   |
| Depletion, depreciation and amortization expense           |                                     | 313,980  |   |   | 854,798 |   |   | 256,007 |   |
| Exploration expenses                                       |                                     | 94,281   |   |   | 79,116 |   |   | 58,954 |   |
| (Gain) loss on oil and gas derivative contracts            |                                     | (17,394  | ) |   | (16,303 | ) |   | 5,181 |   |
| General and administrative expenses                        |                                     | 42,954   |   |   | 48,999 |   |   | 27,973 |   |
| Main Pass Energy Hub™ costs                          |                                     | 1,615    |   |   | 6,047 |   |   | 9,754 |   |
| Insurance recoveries (Note 4)                              |                                     | (24,592  | ) |   | (3,391 | ) |   | (2,338 | ) |
| Total costs and expenses                                   |                                     | 603,869  |   |   | 1,227,716 |   |   | 477,658 |   |
| Operating income (loss)                                    |                                     | (168,434 | ) |   | (155,234 | ) |   | 3,509 |   |
| Interest expense, net                                      |                                     | (42,943  | ) |   | (50,890 | ) |   | (66,366 | ) |
| Other income (expense), net                                |                                     | 4,043    |   |   | (2,566 | ) |   | (704 | ) |
| Loss from continuing operations before income taxes        |                                     | (207,334 | ) |   | (208,690 | ) |   | (63,561 | ) |
| Income tax benefit (expense)                               |                                     | 2,445    |   |   | (2,508 | ) |   | - |   |
| Loss from continuing operations                            |                                     | (204,889 | ) |   | (211,198 | ) |   | (63,561 | ) |
| Income (loss) from discontinued operations                 |                                     | (6,097   | ) |   | (5,496 | ) |   | 3,827 |   |
| Net loss                                                   |                                     | (210,986 | ) |   | (216,694 | ) |   | (59,734 | ) |
| Preferred dividends, amortization of convertible preferred |                                     |     |   |   |   |   |   |   |   |
| stock issuance costs and inducement payments for           |                                     |     |   |   |   |   |   |   |   |
| early conversion of preferred stock                        |                                     | (14,332  | ) |   | (22,286 | ) |   | (4,172 | ) |
| Net loss applicable to common stock                        | $                                        | (225,318 | ) | $ | (238,980 | ) | $ | (63,906 | ) |
|                                                       |                                     |     |   |   |   |   |   |   |   |
| Basic and diluted net loss per share of common stock:      |                                     |     |   |   |   |   |   |   |   |
| Net loss from continuing operations                        |                                     | $(2.79   | ) |   | $(3.79 | ) |   | $(1.97 | ) |
| Net income (loss) from discontinued operations             |                                     | (0.08    | ) |   | (0.09 | ) |   | 0.11 |   |
| Net loss per share of common stock                         |                                     | $(2.87   | ) |   | $(3.88 | ) |   | $(1.86 | ) |
|                                                       |                                     |     |   |   |   |   |   |   |   |
| Average common shares outstanding:                         |                                     |     |   |   |   |   |   |   |   |
| Basic and diluted                                          |                                     | 78,625   |   |   | 61,581 |   |   | 34,283 |   |

----

TABLE OF CONTENTS
|                                                          |   | Years Ended December 31, |     |
|---------------------------------------------------------------|--------|--------------------------|----------|
|                                                          |   | 2009                     |     | 2008 |   | 2007 |   |
|                                                          |   | (In Thousands)           |     |
| Cash flow from operating activities:                          |   |                     |     |   |   |   |   |   |   |   |
| Net loss                                                      |   | $                        | (210,986 | ) | $ | (216,694 | ) | $ | (59,734 | ) |
| Adjustments to reconcile net loss to net cash                 |   |                     |     |   |   |   |   |   |   |   |
| provided by operating activities:                             |   |                     |     |   |   |   |   |   |   |   |
| (Income) loss from discontinued operations                    |   |                     | 6,097    |   |   | 5,496 |   |   | (3,827 | ) |
| Depletion, depreciation and amortization expense              |   |                     | 313,980  |   |   | 854,798 |   |   | 256,007 |   |
| Exploration drilling and related expenditures, net            |   |                     | 61,504   |   |   | 37,841 |   |   | 22,832 |   |
| Compensation expense associated with stock-based awards       |   |                     | 14,193   |   |   | 30,223 |   |   | 13,107 |   |
| Amortization of deferred financing costs                      |   |                     | 3,725    |   |   | 4,630 |   |   | 14,713 |   |
| Change in fair value of oil and gas derivative contracts      |   |                     | 28,631   |   |   | (40,612 | ) |   | 5,181 |   |
| Loss on induced conversion of convertible senior notes        |   |                     | -        |   |   | 2,663 |   |   | - |   |
| Reclamation expenditures, net of prepayments by third parties |   |                     | (45,885  | ) |   | (29,432 | ) |   | (10,622 | ) |
| Increase in restricted cash                                   |   |                     | (15,049  | ) |   | (15,152 | ) |   | (3,748 | ) |
| Payment to fund terminated pension plan                       |   |                     | -        |   |   | (2,291 | ) |   | - |   |
| Purchase of oil and gas derivative contracts and other        |   |                     | (720     | ) |   | (155 | ) |   | (4,335 | ) |
| (Increase) decrease in working capital:                       |   |                     |     |   |   |   |   |   |   |   |
| Accounts receivable-customers                                 |   |                     | (4,868   | ) |   | 40,900 |   |   | (51,433 | ) |
| Accounts receivable-joint interest partners                   |   |                     | 34,545   |   |   | (25,270 | ) |   | (10,099 | ) |
| Accounts receivable-other                                     |   |                     | 799      |   |   | 1,461 |   |   | (2,228 | ) |
| Accounts payable and accrued liabilities                      |   |                     | (33,281  | ) |   | 8,618 |   |   | 17,781 |   |
| Inventories                                                   |   |                     | (16,535  | ) |   | (19,777 | ) |   | 13,527 |   |
| Prepaid expenses                                              |   |                     | 743      |   |   | (7,588 | ) |   | 12,526 |   |
| Net cash provided by continuing operations                    |   |                     | 136,893  |   |   | 629,659 |   |   | 209,648 |   |
| Net cash used in discontinued operations                      |   |                     | (5,728   | ) |   | (6,262 | ) |   | (2,010 | ) |
| Net cash provided by operating activities                     |   |                     | 131,165  |   |   | 623,397 |   |   | 207,638 |   |
|                                                          |   |                     |     |   |   |   |   |   |   |   |
|                                                          |   |                     |     |   |   |   |   |   |   |   |
| Cash flow from investing activities:                          |   |                     |     |   |   |   |   |   |   |   |
| Exploration, development and other capital expenditures       |   |                     | (138,015 | ) |   | (236,383 | ) |   | (153,210 | ) |
| Acquisition of properties, net                                |   |                     | -        |   |   | (2,826 | ) |   | (1,047,936 | ) |
| Proceeds from restricted investments                          |   |                     | -        |   |   | - |   |   | 6,056 |   |
| Increase in restricted investments                            |   |                     | -        |   |   | - |   |   | (126 | ) |
| Net cash used in continuing activities                        |   |                     | (138,015 | ) |   | (239,209 | ) |   | (1,195,216 | ) |
| Net cash from discontinued operations                         |   |                     | -        |   |   | - |   |   | - |   |
| Net cash used in investing activities                         |   | $                        | (138,015 | ) | $ | (239,209 | ) | $ | (1,195,216 | ) |
|                                                          |   |                     |     |   |   |   |   |   |   |   |

----

TABLE OF CONTENTS
|                                                        |   | Years Ended December 31, |    |
|-------------------------------------------------------------|--------|--------------------------|---------|
|                                                        |   | 2009                     |    | 2008 |   | 2007 |   |
|                                                        |   | (In Thousands)           |    |
| Cash flow from financing activities:                        |   |                     |    |   |   |   |   |   |   |   |
| Net proceeds from sale of common stock                      |   | $                        | 84,976  |   | $ | - |   | $ | 200,189 |   |
| Net proceeds from sale of preferred stock                   |   |                     | 83,275  |   |   | - |   |   | 250,385 |   |
| (Payments) borrowings under senior secured revolving credit |   |                     |    |   |   |   |   |   |   |   |
| facility, net                                               |   |                     | -       |   |   | (274,000 | ) |   | 245,250 |   |
| Proceeds from sale of 11.875% senior notes                  |   |                     | -       |   |   | - |   |   | 300,000 |   |
| Proceeds from bridge loan facility                          |   |                     | -       |   |   | - |   |   | 800,000 |   |
| Repayment of bridge loan facility                           |   |                     | -       |   |   | - |   |   | (800,000 | ) |
| Proceeds from senior term loan                              |   |                     | -       |   |   | - |   |   | 100,000 |   |
| Repayment of senior term loan                               |   |                     | -       |   |   | - |   |   | (100,000 | ) |
| Financing costs                                             |   |                     | -       |   |   | - |   |   | (30,553 | ) |
| Dividends paid and inducement payments on early conversion  |   |                     |    |   |   |   |   |   |   |   |
| of convertible preferred stock                              |   |                     | (13,469 | ) |   | (23,565 | ) |   | (1,121 | ) |
| Payments for induced conversion of convertible senior notes |   |                     | -       |   |   | (2,663 | ) |   | - |   |
| Proceeds from exercise of stock options, warrants and other |   |                     | -       |   |   | 4,696 |   |   | 10,428 |   |
| Net cash provided by (used in) continuing operations        |   |                     | 154,782 |   |   | (295,532 | ) |   | 974,578 |   |
| Net cash activity from discontinued operations              |   |                     | -       |   |   | - |   |   | - |   |
| Net cash provided by (used in) financing activities         |   |                     | 154,782 |   |   | (295,532 | ) |   | 974,578 |   |
| Net increase (decrease) in cash and cash equivalents        |   |                     | 147,932 |   |   | 88,656 |   |   | (13,000 | ) |
| Cash and cash equivalents at beginning of year              |   |                     | 93,486  |   |   | 4,830 |   |   | 17,830 |   |
| Cash and cash equivalents at end of year                    |   | $                        | 241,418 |   | $ | 93,486 |   | $ | 4,830 |   |
|                                                        |   |                     |    |   |   |   |   |   |   |   |
|                                                        |   |                     |    |   |   |   |   |   |   |   |
| Interest paid                                               |   | $                        | 43,059  |   | $ | 55,181 |   | $ | 67,622 |   |
| Income taxes paid                                           |   | $                        | 2,332   |   | $ | 3,370 |   | $ | - |   |
|                                                        |   |                     |    |   |   |   |   |   |   |   |

----

TABLE OF CONTENTS
|                                                          |   | Years Ended December 31,                             |      |
|---------------------------------------------------------------|--------|------------------------------------------------------|-----------|
|                                                          |   | 2009                                                 |      | 2008 |   | 2007 |   |
|                                                          |   | (In Thousands, Except Share & Per Share Amounts) |      |
| 8% Convertible Perpetual Preferred Stock:                     |   |                                                 |      |   |   |   |   |   |   |   |
| Balance at beginning of year                                  |   | $                                                    | -         |   | $ | - |   | $ | - |   |
| Shares sold in equity offering, representing 86,250 shares    |   |                                                 | 86,250    |   |   | - |   |   | - |   |
| Balance at end of year, representing 86,250 shares in         |   |                                                 |      |   |   |   |   |   |   |   |
| 2009 and no shares in 2008 and 2007                           |   |                                                 | 86,250    |   |   | - |   |   | - |   |
|                                                          |   |                                                 |      |   |   |   |   |   |   |   |
| 6 ¾% Mandatorily Convertible Preferred Stock:            |   |                                                 |      |   |   |   |   |   |   |   |
| Balance at beginning of year, representing 1,589,340 shares   |   |                                                 |      |   |   |   |   |   |   |   |
| in 2009, 2,587,500 in 2008 and no shares in 2007              |   |                                                 | 158,934   |   |   | 258,750 |   |   | - |   |
| Shares converted in privately negotiated transaction,         |   |                                                 |      |   |   |   |   |   |   |   |
| representing 998,160 shares                                   |   |                                                 | -         |   |   | (99,816 | ) |   | - |   |
| Shares sold in equity offering, representing 2,587,500 shares |   |                                                 | -         |   |   | - |   |   | 258,750 |   |
| Balance at end of year, representing 1,589,340 shares in      |   |                                                 |      |   |   |   |   |   |   |   |
| 2009 and 2008 and 2,587,500 shares in 2007                    |   |                                                 | 158,934   |   |   | 158,934 |   |   | 258,750 |   |
|                                                          |   |                                                 |      |   |   |   |   |   |   |   |
| Common Stock:                                                 |   |                                                 |      |   |   |   |   |   |   |   |
| Balance at beginning of year representing 72,981,734 shares   |   |                                                 |      |   |   |   |   |   |   |   |
| in 2009, 55,795,251 shares in 2008 and 30,740,275 shares      |   |                                                 |      |   |   |   |   |   |   |   |
| in 2007                                                       |   |                                                 | 730       |   |   | 558 |   |   | 307 |   |
| Shares issued in equity offering representing 15,547,400      |   |                                                 |      |   |   |   |   |   |   |   |
| shares (at $5.75 per share) in 2009 and 16,887,500 shares     |   |                                                 |      |   |   |   |   |   |   |   |
| (at $12.40 per share) in 2007 (Note 8)                        |   |                                                 | 155       |   |   | - |   |   | 169 |   |
| Shares issued in debt conversion transactions representing    |   |                                                 |      |   |   |   |   |   |   |   |
| 9,508,743 shares in 2008                                      |   |                                                 | -         |   |   | 95 |   |   | - |   |
| Exercise of stock warrants representing 636,811 shares        |   |                                                 |      |   |   |   |   |   |   |   |
| in 2008 and 1,742,424 shares in 2007                          |   |                                                 | -         |   |   | 7 |   |   | 17 |   |
| Exercise of stock options and other representing 26,551 in    |   |                                                 |      |   |   |   |   |   |   |   |
| 2009, 332,896 shares in 2008 and 219,633 shares in 2007       |   |                                                 | -         |   |   | 3 |   |   | 3 |   |
| Preferred stock conversions representing 6,708,033 shares     |   |                                                 |      |   |   |   |   |   |   |   |
| in 2008 and 6,205,419 shares in 2007                          |   |                                                 | -         |   |   | 67 |   |   | 62 |   |
| Balance at end of year representing, 88,555,685 shares in     |   |                                                 |      |   |   |   |   |   |   |   |
| 2009, 72,981,734 shares in 2008 and 55,795,251 shares in      |   |                                                 |      |   |   |   |   |   |   |   |
| 2007                                                          |   |                                                 | 885       |   |   | 730 |   |   | 558 |   |
|                                                          |   |                                                 |      |   |   |   |   |   |   |   |
| Capital in Excess of Par Value:                               |   |                                                 |      |   |   |   |   |   |   |   |
| Balance at beginning of year                                  |   |                                                 | 971,977   |   |   | 718,472 |   |   | 477,178 |   |
| Costs associated with preferred stock equity offering         |   |                                                 | (2,975    | ) |   | - |   |   | (8,365 | ) |
| Common stock equity offering, net of offering costs           |   |                                                 | 84,821    |   |   | - |   |   | 200,020 |   |
| Shares issued in debt conversion transactions                 |   |                                                 | -         |   |   | 140,127 |   |   | - |   |
| Preferred stock conversions                                   |   |                                                 | -         |   |   | 99,749 |   |   | 29,786 |   |
| Stock-based compensation expense                              |   |                                                 | 14,193    |   |   | 30,223 |   |   | 13,107 |   |
| Exercise of stock options  and warrants             |   |                                                 | -         |   |   | 5,692 |   |   | 10,917 |   |
| Dividends and inducement payments on preferred stock and      |   |                                                 |      |   |   |   |   |   |   |   |
| amortization of related issuance cost                         |   |                                                 | (14,332   | ) |   | (22,286 | ) |   | (4,171 | ) |
| Balance at end of year                                        |   |                                                 | 1,053,684 |   |   | 971,977 |   |   | 718,472 |   |

----

TABLE OF CONTENTS
|                                                        |   | Years Ended December 31,             |     |
|-------------------------------------------------------------|--------|--------------------------------------|----------|
|                                                        |   | 2009                                 |     | 2008 |   | 2007 |   |
|                                                        |   | (In Thousands, Except Share Amounts) |     |
| Accumulated Deficit:                                        |   |                                 |     |   |   |   |   |   |   |   |
| Balance at beginning of year                                |   | $                                    | (776,153 | ) | $ | (559,459 | ) | $ | (499,725 | ) |
| Net loss                                                    |   |                                 | (210,986 | ) |   | (216,694 | ) |   | (59,734 | ) |
| Balance at end of year                                      |   |                                 | (987,139 | ) |   | (776,153 | ) |   | (559,459 | ) |
|                                                        |   |                                 |     |   |   |   |   |   |   |   |
| Accumulated Other Comprehensive Loss:                       |   |                                 |     |   |   |   |   |   |   |   |
| Balance at beginning of year                                |   |                                 | (22      | ) |   | (653 | ) |   | (1,273 | ) |
| Amortization of previously unrecognized pension             |   |                                 |     |   |   |   |   |   |   |   |
| components, net                                             |   |                                 | (40      | ) |   | (40 | ) |   | 31 |   |
| Change in unrecognized net gains/losses of pension plans    |   |                                 | (284     | ) |   | 671 |   |   | 589 |   |
| Balance at end of year                                      |   |                                 | (346     | ) |   | (22 | ) |   | (653 | ) |
|                                                        |   |                                 |     |   |   |   |   |   |   |   |
| Common Stock Held in Treasury:                              |   |                                 |     |   |   |   |   |   |   |   |
| Balance at beginning of year representing, 2,508,660 shares |   |                                 |     |   |   |   |   |   |   |   |
| in 2009, 2,471,674 shares in 2008 and 2,433,545 in 2007     |   |                                 | (46,443  | ) |   | (45,439 | ) |   | (44,930 | ) |
| Tender of 2,472 shares in 2009, 36,986 shares in 2008 and   |   |                                 |     |   |   |   |   |   |   |   |
| 38,129 shares in 2007 associated with the exercise of stock |   |                                 |     |   |   |   |   |   |   |   |
| options and the vesting of restricted stock                 |   |                                 | (17      | ) |   | (1,004 | ) |   | (509 | ) |
| Balance at end of year representing 2,511,132 shares in     |   |                                 |     |   |   |   |   |   |   |   |
| 2009, 2,508,660 shares in 2008 and 2,471,674 shares         |   |                                 |     |   |   |   |   |   |   |   |
| in 2007                                                     |   |                                 | (46,460  | ) |   | (46,443 | ) |   | (45,439 | ) |
|                                                        |   |                                 |     |   |   |   |   |   |   |   |
| Total stockholders’ equity                            |   | $                                    | 265,808  |   | $ | 309,023 |   | $ | 372,229 |   |

----

TABLE OF CONTENTS

| ·   | labor costs to operate the wells and related equipment and facilities; |
|--------------------|------------------------------------------------------------------------|

| ·   | repair and maintenance costs, including costs associated with re-establishing production from a geological structure that has previously produced; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | material, supplies, and fuel consumed and services utilized in operating the wells and related equipment and facilities, including marketing and transportation costs; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | property taxes and insurance applicable to proved properties and wells and related equipment and facilities. |
|--------------------|--------------------------------------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

| ·   | Geological and geophysical costs and costs of retaining unproved properties and undeveloped properties are charged to expense as incurred and are included as a reduction of operating cash flow in the accompanying consolidated statements of cash flow. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Costs of exploratory wells are capitalized pending determination of whether they have discovered proved reserves. |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

| *   | The costs of exploratory wells that have found oil and natural gas reserves that cannot be classified as proved when drilling is completed continue to be capitalized as long as the well has found a sufficient quantity of reserves to justify its completion as a producing well and sufficient progress is being made in assessing the proved reserves and the economic and operating viability of the project.  Management evaluates progress on such wells on a quarterly basis. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *   | Drilling costs that no longer meet the criteria for continued capitalization under U.S. generally accepted accounting principles, but for which management intends to pursue development activities, are charged to depletion, depreciation and amortization expense. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *   | If proved reserves are not discovered the related drilling costs are charged to exploration expense. |
|---------------|------------------------------------------------------------------------------------------------------|

| ·   | Acquisition costs of leases and development activities are capitalized. |
|--------------------|-------------------------------------------------------------------------|

| ·   | Other exploration costs are charged to expense as incurred. |
|--------------------|-------------------------------------------------------------|

| ·   | Depletion, depreciation and amortization expense is determined on a field-by-field basis using the units-of-production method, with depletion, depreciation and amortization rates for leasehold   |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

| ·   | Gains or losses from dispositions of McMoRan’s interests in oil and gas properties are included in earnings under the following conditions: |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| *   | All or part of an interest owned is sold to an unrelated third party; if only part of an interest is sold, there is no substantial uncertainty about the recoverability of cost applicable to the interest retained; and |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *   | McMoRan has no substantial obligation for future performance (e.g, drilling a well(s) or operating the property without proportional reimbursement of costs relating to the interest sold). |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Interest expense allocable to significant unproved leasehold costs and in progress exploration and development projects is capitalized until the assets are ready for their intended use.  Interest expense capitalized by McMoRan totaled $3.9 million in 2009, $5.0 million in 2008 and $6.3 million in 2007. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

| ·   | allow the use of new technologies to determine proved reserves; |
|--------------------|-----------------------------------------------------------------|

| ·   | permit the optional disclosure of probable and possible reserves; |
|--------------------|-------------------------------------------------------------------|

| ·   | modify the prices used to estimate reserves for SEC disclosure purposes to a 12-month average price instead of a period-end price; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | require that if a third party is primarily responsible for preparing or auditing the reserve estimates, the company make disclosures relating to the independence and qualifications of the third party, including filing as an exhibit any report received from the third party. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The disclosures that an entity should make about events or transactions that occurred after the balance sheet date. |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

|                        |   | (Unaudited) |
|-----------------------------|--------|-------------|
|                        |   | Developed   |   | Undeveloped |
|                        |   | Gross       |   | Net |   | Gross |   | Net |
|                        |   | Acres       |   | Acres |   | Acres |   | Acres |
| Offshore (federal waters)   |   | 547,773     |   | 315,814 |   | 223,678 |   | 106,653 |
| Onshore Louisiana and Texas |   | 35,943      |   | 18,250 |   | 61,775 |   | 24,398 |
| Total at December 31, 2009  |   | 583,716     |   | 334,064 |   | 285,453 |   | 131,051 |

----

TABLE OF CONTENTS

|                      |   | December 31, |   |
|---------------------------|--------|--------------|--------|
|                      |   | 2009         |   | 2008 |   |
| Accounts receivable:      |   |         |   |   |   |   |   |
| Customers                 |   | $            | 55,144 |   | $ | 50,275 |   |
| Joint interest partners   |   |         | 22,966 |   |   | 60,039 |   |
| Other                     |   |         | 1,571  |   |   | 2,370 |   |
| Total accounts receivable |   | $            | 79,681 |   | $ | 112,684 |   |

|                | Year Ended December 31, |   |
|---------------------|-------------------------|--------|
| Individual Customer | 2009                    |   | 2008 |   | 2007 |   |
| A                   |                    | 32     | % |   | 35 | % |   | 27 | % |
| B                   |                    | 15     |   |   | <10 |   |   | <10 |   |
| C                   |                    | 10     |   |   | 18 |   |   | 24 |   |
| D                   |                    | <10 |   |   | 12 |   |   | 13 |   |

|                                                 |   | December 31, |       |
|------------------------------------------------------|--------|--------------|------------|
|                                                 |   | 2009         |       | 2008 |   |
| Oil and gas property, plant and equipment            |   | $            | 2,246,397  |   | $ | 2,163,577 |   |
| Other                                                |   |         | 31         |   |   | 31 |   |
|                                                 |   |         | 2,246,428  |   |   | 2,163,608 |   |
| Accumulated depletion, depreciation and amortization |   |         | (1,450,205 | ) |   | (1,171,045 | ) |
| Property, plant and equipment, net                   |   | $            | 796,223    |   | $ | 992,563 |   |

|                                                   |   | Years Ended December 31, |    |
|--------------------------------------------------------|--------|--------------------------|---------|
|                                                   |   | 2009                     |    | 2008 |   | 2007 |   |
| Depletion and depreciation expense                     |   | $                        | 205,479 |   | $ | 357,458 |   | $ | 228,540 |   |
| Accretion expense                                      |   |                     | 33,186  |   |   | 164,753 |   |   | 13,872 |   |
| Impairment charges/losses                              |   |                     | 75,315  |   |   | 332,587 |   |   | 13,595 |   |
| Total depletion, depreciation and amortization expense |   | $                        | 313,980 |   | $ | 854,798 |   | $ | 256,007 |   |

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

|                        | December 31, 2009 |   | December 31, 2008 |   |
|-----------------------------|-------------------|--------|-------------------|--------|
|                        | Gross             |   |              |   |   |   | Gross |   |   |   |   |   |
|                        | Carrying          |   | Accumulated       |   |   |   | Carrying |   | Accumulated |   |   |   |
|                        | Amount            |   | Amortization      |   | Net |   | Amount |   | Amortization |   | Net |   |
| 11.875% Senior Notes        |              |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (due November 2014)         | $                 | 8,055  |              | $      | (2,451 | ) | $ | 5,604 |   | $ | 8,055 |   | $ | (1,301 | ) | $ | 6,754 |   |
| Revolving Credit Facility   |              |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (matures August 2012)       |              | 11,377 |              |   | (5,820 | ) |   | 5,557 |   |   | 11,377 |   |   | (3,679 | ) |   | 7,698 |   |
| 5¼% Convertible Senior |              |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Notes (due October 2011)    |              | 6,243  |              |   | (5,473 | ) |   | 770 |   |   | 6,243 |   |   | (5,037 | ) |   | 1,206 |   |
|                        | $                 | 25,675 |              | $      | (13,744 | ) | $ | 11,931 |   | $ | 25,675 |   | $ | (10,017 | ) | $ | 15,658 |   |

|                                                |   | December 31, |   |
|-----------------------------------------------------|--------|--------------|--------|
|                                                |   | 2009         |   | 2008 |   |
| Advances from third parties for future abandonment  |   |         |   |   |   |   |   |
|    costs (Note 16)                   |   | $            | 7,767  |   | $ | 7,728 |   |
| Employee postretirement medical liability (Note 12) |   |         | 4,346  |   |   | 4,387 |   |
| Liability for management services (Note 15)         |   |         | 2,734  |   |   | 2,739 |   |
| Nonqualified pension plan liability                 |   |         | 1,395  |   |   | 1,370 |   |
| Accrued workers compensation and group insurance    |   |         | 360    |   |   | 638 |   |
| Sulphur-related environmental liability (Note 16)   |   |         | -      |   |   | 3,161 |   |
|                                                |   | $            | 16,602 |   | $ | 20,023 |   |

|                                         | December 31, |    |
|----------------------------------------------|--------------|---------|
|                                         | 2009         |    | 2008 |   |
| 11.875% senior notes (due 2014)              |         | 300,000 |   |   | 300,000 |   |
| 5¼% convertible senior notes (due 2011) |         | 74,720  |   |   | 74,720 |   |
| Total debt                                   |         | 374,720 |   |   | 374,720 |   |
| Less current maturities                      |         | -       |   |   | - |   |
| Long-term debt                               | $            | 374,720 |   | $ | 374,720 |   |

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

|   | Natural Gas Positions (million MMbtu)                                             |
|--------|-----------------------------------------------------------------------------------|
|   | Open Swap Positions a                                                             |   | Put Options b |   |   |
|   | Annual                                                                            |   | Average |   | Annual |   | Average |   | Total |
|   | Volumes                                                                           |   | Swap Price c |   | Volumes |   | Floor c |   | Volumes |
| 2010   |              2.6 |   | $ |  8.63 |   |              1.2 |   | $ |  6.00 |   | 3.8 |

----

TABLE OF CONTENTS

|   | Oil Positions (thousand bbls)                                               |
|--------|-----------------------------------------------------------------------------|
|   | Open Swap Positions a                                                       |   | Put Options b |   |   |
|   | Annual                                                                      |   | Average |   | Annual |   | Average |   | Total |
|   | Volumes                                                                     |   | Swap Price d |   | Volumes |   | Floor d |   | Volumes |
| 2010   |             118 |   | $ |  70.89 |   |               50 |   | $ |  50.00 |   | 168 |

| a.   | Covering periods January-June and November-December. |
|----------------|------------------------------------------------------|

| b.   | Covering periods July-October. |
|----------------|--------------------------------|

| c.   | Price per Mmbtu of natural gas. |
|----------------|---------------------------------|

| d.   | Price per barrel of oil. |
|----------------|--------------------------|

|                                            |   | Years Ended December 31, |    |
|-------------------------------------------------|--------|--------------------------|---------|
|                                            |   | 2009                     |    | 2008 |   | 2007 |   |
| Realized (gain) loss                            |   |                     |    |   |   |   |   |   |   |   |
| Gas puts                                        |   | $                        | (6,700  | ) | $ | 2,209 |   | $ | - |   |
| Oil puts                                        |   |                     | 238     |   |   | 356 |   |   | - |   |
| Gas swaps                                       |   |                     | (33,818 | ) |   | 4,005 |   |   | - |   |
| Oil swaps                                       |   |                     | (5,745  | ) |   | 17,739 |   |   | - |   |
| Total realized (gain) loss                      |   |                     | (46,025 | ) |   | 24,309 |   |   | - |   |
|                                            |   |                     |    |   |   |   |   |   |   |   |
| Unrealized (gain) loss                          |   |                     |    |   |   |   |   |   |   |   |
| Gas puts                                        |   |                     | 1,167   |   |   | (3,178 | ) |   | 1,433 |   |
| Oil puts                                        |   |                     | 929     |   |   | (1,483 | ) |   | 630 |   |
| Gas swaps                                       |   |                     | 18,002  |   |   | (7,872 | ) |   | (17,665 | ) |
| Oil swaps                                       |   |                     | 8,533   |   |   | (28,079 | ) |   | 20,783 |   |
| Total unrealized (gain) loss                    |   |                     | 28,631  |   |   | (40,612 | ) |   | 5,181 |   |
| (Gain) loss on oil and gas derivative contracts |   | $                        | (17,394 | ) | $ | (16,303 | ) | $ | 5,181 |   |

|                    | December 31, 2009 |   |
|-------------------------|-------------------|--------|
|                    | Puts              |   | Swaps |   |   |   |   |
|                    | Gas               |   | Oil |   | Gas |   | Oil |   | Total |   |
| Current assets          | $                 | 1,113  |   | $ | 45 |   | $ | 7,535 |   | $ | - |   | $ | 8,693 |   |
| Current liabilities     |              | -      |   |   | - |   |   | - |   |   | (1,237 | ) |   | (1,237 | ) |
| Fair value of contracts | $                 | 1,113  |   | $ | 45 |   | $ | 7,535 |   | $ | (1,237 | ) | $ | 7,456 |   |

|                    | December 31, 2008 |   |
|-------------------------|-------------------|--------|
|                    | Puts              |   | Swaps |   |   |   |   |
|                    | Gas               |   | Oil |   | Gas |   | Oil |   | Total |   |
| Current assets          | $                 | 2,659  |   | $ | 915 |   | $ | 21,701 |   | $ | 6,349 |   | $ | 31,624 |   |
| Other assets            |              | 765    |   |   | 297 |   |   | 3,837 |   |   | 948 |   |   | 5,847 |   |
| Fair value of contracts | $                 | 3,424  |   | $ | 1,212 |   | $ | 25,538 |   | $ | 7,297 |   | $ | 37,471 |   |

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

|                                                | (Pro Forma,Unaudited) |    |   |
|-----------------------------------------------------|-----------------------|---------|--------|
|                                                | Year Ended            |    |   |
|                                                | December 31, 2007     |    |   |
| Revenues                                            | $                     | 888,550 |   |   |
| Operating income                                    |                  | 85,163  |   |   |
| Net income (loss)                                   |                  | (55,645 | )      |   |
| Basic net income (loss) per share of common stock   |                  | $(1.62  | )      |   |
| Diluted net income (loss) per share of common stock |                  | (1.62   | )      |   |

----

TABLE OF CONTENTS

|                                                 |   | Years Ended December 31, |   |
|------------------------------------------------------|--------|--------------------------|--------|
|                                                 |   | 2009                     |   | 2008 |   | 2007 |   |
|                                                 |   |                     |   |   |   |   |   |   |   |   |
| In-the-money stock options a, b                      |   |                     | -      |   |   | 1,631 |   |   | 1,727 |   |
| Shares issuable upon exercise of stock warrants a, c |   |                     | -      |   |   | 257 |   |   | 1,467 |   |
| Shares issuable upon assumed conversion of:          |   |                     |   |   |   |   |   |   |   |   |
| 8% preferred stock d                                 |   |                     | 6,631  |   |   | - |   |   | - |   |
| 6¾% preferred stock e                           |   |                     | 12,817 |   |   | 17,705 |   |   | 2,525 |   |
| 5¼% notes f                                     |   |                     | 4,508  |   |   | 5,508 |   |   | 6,938 |   |
| 6% notes g                                           |   |                     | -      |   |   | 2,635 |   |   | 7,079 |   |
| 5% preferred stock h                                 |   |                     | -      |   |   | - |   |   | 3,103 |   |

| a.   | McMoRan uses the treasury stock method to determine the amount of in-the-money stock options and stock warrants to include in its diluted earnings per share calculation. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Represents stock options with an exercise price less than the average market price for McMoRan’s common stock for the periods presented. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | Includes stock warrants issued pursuant to a prior business transaction in December 2002 (1.74 million shares) and September 2003 (0.76 million shares).  On December 12, 2007, the stock warrant for 1.74 million common shares was exercised.  The remaining warrant was exercised in June 2008 for 0.76 million common shares in a cashless transaction and received 0.64 million common shares (Note 4). |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d.   | Amount represents total equivalent common stock shares assuming conversion of 8% preferred stock (Note 8).  The 2009 amount is reduced from the total 12.6 million equivalent shares that would have been issued upon conversion to reflect the number of days the preferred stock was outstanding in 2009.  Preferred dividends totaled $3.6 million in 2009. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| e.   | Amount represents total equivalent common stock shares assuming conversion of 6¾% preferred stock (Note 8).  The 2007 amount is reduced from the total 17.4 million equivalent shares that would have been issued upon conversion to reflect the number of days the preferred stock was outstanding in 2007.  Preferred dividends, amortization of convertible preferred stock issuance costs and inducement payments for the early conversion of preferred stock totaled $10.7 million in 2009, $22.3 million in 2008 and $2.6 million in 2007. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| f.   | Amount represents total equivalent common stock shares assuming conversion of 5¼% notes (Note 6).  Net interest expense on the 5¼% notes totaled $4.0 million in 2009, $4.4 million in 2008 and $6.1 million in 2007. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| g.   | Amount represents total equivalent common stock shares assuming conversion of 6% notes (Note 6). Related net interest expense totaled $1.5 million in 2008 and $6.6 million in 2007. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| h.   | Amount represents total equivalent common stock shares assuming conversion of 5% preferred stock (Note 8).  The remaining shares of the 5% preferred stock were converted into common stock at June 30, 2007.  The amount is reduced from 6.2 million equivalent shares that were issued upon conversion to reflect the six months the preferred stock was outstanding.  Preferred dividends and related costs totaled $1.6 million in 2007. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                               |   | Years Ended December 31, |   |
|------------------------------------|--------|--------------------------|--------|
|                               |   | 2009                     |   |   | 2008 |   |   | 2007 |   |
| Outstanding options (in thousands) |   |                     | 8,271  |   |   |   | 232 |   |   |   | 5,281 |   |
| Average exercise price             |   | $                        | 15.21  |   |   | $ | 23.83 |   |   | $ | 17.36 |   |

----

TABLE OF CONTENTS

|                                            |   | Years Ended December 31, |   |
|-------------------------------------------------|--------|--------------------------|--------|
|                                            |   | 2009                     |   | 2008 |   | 2007 |   |
| Accretion and other – sulphur reclamation |   |                     |   |   |   |   |   |   |   |   |
| and contingency obligations                     |   |                     | 1,863  |   |   | 3,295 |   |   | 1,738 |   |
| Caretaking costs- Port Sulphur                  |   |                     | 2,119  |   |   | 979 |   |   | 901 |   |
| Environmental remediation activities            |   |                     | 2,027  | a |   | - |   |   | - |   |
| Sulphur retiree costs b                         |   |                     | (444   | ) |   | 494 |   |   | (3,155 | ) |
| General and administrative and legal            |   |                     | 324    |   |   | 236 |   |   | 174 |   |
| Insurance                                       |   |                     | 177    |   |   | 432 |   |   | 463 |   |
| Other                                           |   |                     | 31     |   |   | 60 |   |   | (3,948 | )c |
| (Income) loss from discontinued operations      |   | $                        | 6,097  |   |   | 5,496 |   |   | (3,827 | ) |

| a.   | Primarily relates to certain environmental remediation activities at the Port Sulphur, Louisiana and Galveston, Texas facilities. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------|

| b.   | Reflects postretirement benefit costs associated with certain retired former sulphur employees (Note 16).  The amounts during 2009, 2008 and 2007 reflect reductions of the contractual liability resulting from decreased health care claim costs of $1.1 million, $0.7 million and $4.6 million, respectively. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | Includes $4.2 million of finalized insurance recoveries associated with the Port Sulphur property damage claims resulting from the 2005 hurricanes. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

| Plan                                                               |   | Authorized amountof stock-based awards |   | Shares availablefor grant atDecember 31, 2009 |
|--------------------------------------------------------------------|--------|----------------------------------------|--------|-----------------------------------------------|
| 2008 Stock Incentive Plan (2008 Plan)                              |   | 5,500,000                              |   | 2,113,250                                     |
| 2005 Stock Incentive Plan (2005 Plan)                              |   | 3,500,000                              |   | 22,750                                        |
| 2004 Director Compensation Plan (2004 Directors Plan)              |   | 175,000                                |   | 40,905                                        |
| 2003 Stock Incentive Plan (2003 Plan)                              |   | 2,000,000                              |   | 3,750                                         |
| 2001 Stock Incentive Plan (2001 Plan)                              |   | 1,250,000                              |   | 250                                           |
| 2000 Stock Option Plan (2000 Plan)                                 |   | 600,000                                |   | -                                             |
| 1998 Stock Option Plan                                             |   | 775,000                                |   | -                                             |
| 1998 Stock Option Plan for Non-Employee Directors (Directors Plan) |   | 75,000                                 |   | -                                             |

|               |   | 2009       |   | 2008         |   | 2007      |
|--------------------|--------|------------|--------|--------------|--------|-----------|
|               |   | Number of  |   | Average      |   | Number of |   | Average |   | Number of |   | Average |
|               |   | Options    |   | Option Price |   | Options   |   | Option Price |   | Options |   | Option Price |
| Beginning of year  |   | 9,116,750  |   | $14.91       |   |      | 7,754,100 |   | $14.96 |   |   | 7,095,991 |   | $15.50 |   |
| Granted            |   | 1,855,500  |   | 6.46         |   |      | 1,759,500 |   | 15.25 |   |   | 1,353,250 |   | 12.29 |   |
| Exercised          |   | -          |   | -            |   |      | (318,475 | ) | 17.90 |   |   | (213,695 | ) | 8.37 |   |
| Expired/forfeited  |   | (526,000   | )      | 15.83        |   |      | (78,375 | ) | 15.29 |   |   | (481,446 | ) | 18.33 |   |
| End of year        |   | 10,446,250 |   | 13.37        |   |      | 9,116,750 |   | 14.91 |   |   | 7,754,100 |   | 14.96 |   |
| Exercisable at end |   |       |   |         |   |      |   |   |   |   |   |   |   |   |   |
| of year            |   | 7,549,500  |   |         |   |      | 6,565,437 |   |   |   |   | 5,636,100 |   |   |   |

----

TABLE OF CONTENTS

|                                                       | Year Ended December 31, |   |
|------------------------------------------------------------|-------------------------|--------|
|                                                       | 2009                    |   | 2008 |   | 2007 |   |
| Cost of options awarded to employees (including Directors) | $                       | 13,152 | a | $ | 28,725 | a | $ | 12,415 | a |
| Cost of options awarded to non-employees                   |                    | 696    |   |   | 1,251 |   |   | 630 |   |
| Cost of restricted stock units                             |                    | 345    |   |   | 247 |   |   | 62 |   |
| Total stock-based compensation cost                        | $                       | 14,193 |   | $ | 30,223 |   | $ | 13,107 |   |

| a.   | Includes $1.6 million, $10.2 million and $2.8 million of compensation charges associated with immediately vested stock options granted to McMoRan’s Co-Chairmen in lieu of receiving any cash compensation during 2009, 2008 and 2007, respectively.  Also includes $1.1 million, $4.9 million and $1.2 million of compensation charges related to stock options granted to retirement-eligible employees, which resulted in one-year’s compensation expense being immediately recognized at the date of the stock option grant during 2009, 2008 and 2007, respectively. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                | 2009   |   | 2008   |   | 2007   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|
| General and administrative expenses | $      | 7,162  |   | $      | 14,818 |   | $ | 6,334 |   |
| Exploration expenses                |   | 6,633  |   |   | 14,376 |   |   | 6,296 |   |
| Main Pass Energy Hub start-up costs |   | 398    |   |   | 1,029  |   |   | 477 |   |
| Total stock-based compensation cost | $      | 14,193 |   | $      | 30,223 |   | $ | 13,107 |   |

|                                                   | 2009   |   | 2008   |   | 2007  |   |
|--------------------------------------------------------|--------|--------|--------|--------|-------|--------|
| Weighted average fair value of stock options granted a | $      | 3.97   |   | $      | 24.27 |   | $ | 6.94 |   |
| Expected and weighted average volatility               |   | 64.88  | %      |   | 52.3  | %      |   | 52.2 | % |
| Expected life of options (in years) a                  |   | 6.43   |   |   | 6.41  |   |   | 6.29 |   |
| Risk-free interest rate                                |   | 1.87   | %      |   | 3.04  | %      |   | 4.76 | % |

| a.   | Excludes stock options that were granted with immediate vesting (445,000 shares, including 400,000 shares granted to the Co-Chairmen in lieu of cash compensation for 2009, 2008 and 2007).  The expected life and fair value of stock options on the respective grant dates during the years ended December 31, 2009, 2008 and 2007 are as follows: |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                        | 2009   |   | 2008   |   | 2007   |   |
|---------------------------------------------|--------|--------|--------|--------|--------|--------|
| Expected life (in years)                    |   | 6.77   |   |   | 6.86   |   |   | 6.56 |   |
| Fair value of stock option on date of grant |   | $4.04  |   |   | $25.41 |   |   | $7.02 |   |

----

TABLE OF CONTENTS

|                                           | Pension Benefits |   | Other Benefits |   |
|------------------------------------------------|------------------|--------|----------------|--------|
|                                           | 2009             |   | 2008           |   | 2009 |   | 2008 |   |
| Change in benefit obligation:                  |             |   |           |   |   |   |   |   |   |   |   |   |
| Benefit obligation at the beginning of year    | $                | -      |           | $      | (3,779 | ) | $ | (4,873 | ) | $ | (5,844 | ) |
| Service cost                                   |             | -      |           |   | - |   |   | (52 | ) |   | (48 | ) |
| Interest cost                                  |             | -      |           |   | (62 | ) |   | (272 | ) |   | (285 | ) |
| Actuarial (losses) gains                       |             | -      |           |   | - |   |   | (284 | ) |   | 670 |   |
| Participant contributions                      |             | -      |           |   | - |   |   | (186 | ) |   | (223 | ) |
| Benefits paid                                  |             | -      |           |   | 3,841 |   |   | 816 |   |   | 857 |   |
| Benefit obligation at end of year              |             | -      |           |   | - |   |   | (4,851 | ) |   | (4,873 | ) |
|                                           |             |   |           |   |   |   |   |   |   |   |   |   |
| Change in plan assets:                         |             |   |           |   |   |   |   |   |   |   |   |   |
| Fair value of plan assets at beginning of year |             | -      |           |   | 1,524 |   |   | - |   |   | - |   |
| Return on plan assets                          |             | -      |           |   | 21 |   |   | - |   |   | - |   |
| Employer/participant contributions             |             | -      |           |   | 2,296 |   |   | 816 |   |   | 857 |   |
| Benefits paid                                  |             | -      |           |   | (3,841 | ) |   | (816 | ) |   | (857 | ) |
| Fair value of plan assets at end of year       |             | -      |           |   | - |   |   | - |   |   | - |   |
|                                           |             |   |           |   |   |   |   |   |   |   |   |   |
| Funded status                                  | $                | -      |           | $      | - |   | $ | (4,851 | ) | $ | (4,873 | ) |
|                                           |             |   |           |   |   |   |   |   |   |   |   |   |
| Weighted-average assumptions (percent):        |             |   |           |   |   |   |   |   |   |   |   |   |
| Discount rate                                  |             | N/A    |           |   | N/A |   |   | 5.2 | % |   | 6.20 | % |
| Expected return on plan assets                 |             | N/A    |           |   | N/A |   |   | - |   |   | - |   |
| Rate of compensation increase                  |             | N/A    |           |   | N/A |   |   | - |   |   | - |   |

|                                |   | Pension Benefits |   | Other Benefits |   |
|-------------------------------------|--------|------------------|--------|----------------|--------|
|                                |   | 2009             |   | 2008           |   | 2007 |   | 2009 |   | 2008 |   | 2007 |   |
| Service cost                        |   | $                | -      |           | $      | - |   | $ | - |   | $ | 52 |   | $ | 48 |   | $ | 26 |   |
| Interest cost                       |   |             | -      |           |   | 62 |   |   | 214 |   |   | 271 |   |   | 285 |   |   | 330 |   |
| Return on plan assets               |   |             | -      |           |   | (21 | ) |   | (100 | ) |   | - |   |   | - |   |   | - |   |
| Amortization of prior service costs |   |             | -      |           |   | - |   |   | - |   |   | (40 | ) |   | (40 | ) |   | (40 | ) |
| Recognition of net actuarial loss   |   |             | -      |           |   | - |   |   | - |   |   | - |   |   | - |   |   | 71 |   |
| Net periodic benefit cost           |   | $                | -      |           | $      | 41 |   | $ | 114 |   | $ | 283 |   | $ | 293 |   | $ | 387 |   |

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

|                                                           |   | December 31,  |     |
|----------------------------------------------------------------|--------|--------------------|----------|
|                                                           |   | 2009               |     | 2008 |   |
| Federal and state net operating loss carryforwards             |   | $                  | 181,120  |   | $ | 128,109 |   |
| Property, plant and equipment                                  |   |               | 42,000   |   |   | 38,037 |   |
| Reclamation and shutdown reserves                              |   |               | 156,752  |   |   | 155,197 |   |
| Deferred compensation, postretirement and pension benefits and |   |               |     |   |   |   |   |
| accrued liabilities                                            |   |               | 30,158   |   |   | 25,075 |   |
| Tax credits and other, net                                     |   |               | 4,954    |   |   | (3,356 | ) |
| Less: valuation allowance                                      |   |               | (414,984 | ) |   | (343,062 | ) |
| Net deferred tax asset                                         |   | $                  | -        |   | $ | - |   |

|                                       | 2009   |    | 2008   |   | 2007    |   |
|--------------------------------------------|--------|---------|--------|--------|---------|--------|
| Income tax benefit computed at the federal |   |    |   |   |    |   |   |   |   |
| statutory income tax rate                  | $      | 74,701  |   | $      | 74,965  |   | $ | 20,907 |   |
| Change in valuation allowance              |   | (71,922 | )      |   | (78,508 | )      |   | (20,517 | ) |
| Other                                      |   | (334    | )      |   | 1,100   |   |   | (390 | ) |
| Federal income tax benefit (provision)     |   | 2,445   |   |   | (2,443  | )      |   | - |   |
| State income tax benefit (provision)       |   | -       |   |   | (65     | )      |   | - |   |
| Total income tax benefit (provision)       | $      | 2,445   |   | $      | (2,508  | )      | $ | - |   |

|                                                     | 2009   |     | 2008   |   | 2007     |   |
|----------------------------------------------------------|--------|----------|--------|--------|----------|--------|
| Net loss                                                 | $      | (210,986 | )      | $      | (216,694 | )      | $ | (59,734 | ) |
| Other comprehensive loss                                 |   |     |   |   |     |   |   |   |   |
| Amortization of previously unrecognized pension          |   |     |   |   |     |   |   |   |   |
| components, net                                          |   | (40      | )      |   | (40      | )      |   | 31 |   |
| Change in unrecognized net gains/losses of pension plans |   | (284     | )      |   | 671      |   |   | 589 |   |
| Comprehensive loss                                       | $      | (211,310 | )      | $      | (216,063 | )      | $ | (59,114 | ) |

----

TABLE OF CONTENTS

|                                             | Years Ended December 31, |    |
|--------------------------------------------------|--------------------------|---------|
|                                             | 2009                     |    | 2008 |   | 2007 |   |
| Oil and Natural Gas                              |                     |    |   |   |   |   |   |   |   |
| Asset retirement obligation at beginning of year | $                        | 421,201 |   | $ | 294,737 |   | $ | 25,876 |   |
| Liabilities settled                              |                     | (42,212 | ) |   | (43,782 | ) |   | (6,720 | ) |
| Scheduled accretion expense a                    |                     | 30,910  |   |   | 32,933 |   |   | 12,222 |   |
| Reclamation costs assumed from third parties     |                     | 842     |   |   | 2,859 |   |   | - |   |
| Liabilities assumed in 2007 property acquisition |                     | -       |   |   | - |   |   | 267,537 |   |
| Incurred liabilities                             |                     | 1,869   |   |   | 2,476 |   |   | 272 |   |
| Revision for changes in estimates                |                     | 16,101  |   |   | 131,978 | b |   | (4,450 | ) |
| Asset retirement obligations at end of year      | $                        | 428,711 |   | $ | 421,201 |   | $ | 294,737 |   |

----

TABLE OF CONTENTS

|                                               | Years Ended December 31, |   |
|----------------------------------------------------|--------------------------|--------|
|                                               | 2009                     |   | 2008 |   | 2007 |   |
| Sulphur                                            |                     |   |   |   |   |   |   |   |   |
| Asset retirement obligations at beginning of year: | $                        | 23,003 |   | $ | 21,300 |   | $ | 23,094 |   |
| Liabilities settled                                |                     | (481   | ) |   | (1,591 | ) |   | (3,532 | )c |
| Scheduled accretion expense                        |                     | 2,001  |   |   | 866 |   |   | 1,738 |   |
| Revision for changes in estimates                  |                     | 2,929  |   |   | 2,428 |   |   | - |   |
| Asset retirement obligation at end of year         | $                        | 27,452 |   | $ | 23,003 |   | $ | 21,300 |   |
|                                               |                     |   |   |   |   |   |   |   |   |

| a.   | Accretion expense charges are included within depletion, depreciation and amortization expense in the accompanying consolidated statements of operations. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Primarily represents estimated future abandonment costs associated with damaged structures and well abandonment charges related to Hurricane Ike. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | Amount of costs incurred to remove structures at Port Sulphur that were damaged by hurricanes Katrina and Rita in 2005. |
|----------------|-------------------------------------------------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

|                                           |   | Years Ended        |       |
|------------------------------------------------|--------|--------------------|------------|
|                                           |   | December 31,  |       |
|                                           |   | 2009               |       | 2008 |   |
|                                           |   | (In Thousands)     |       |
| Unproved properties a                          |   | $                  | 93,584     |   | $ | 51,684 |   |
| Proved properties                              |   |               | 2,152,813  |   |   | 2,111,893 |   |
| Subtotal                                       |   |               | 2,246,397  |   |   | 2,163,577 |   |
| Less accumulated depreciation and amortization |   |               | (1,450,205 | ) |   | (1,171,045 | ) |
| Net oil and gas properties                     |   | $                  | 796,192    |   | $ | 992,532 |   |

| a.   | Includes costs associated with in-progress wells and wells not fully evaluated, including related leasehold acquisition costs, totaling $62.6 million at December 31, 2009 and $43.8 million at December 31, 2008. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                       |   | Years Ended December 31, |    |
|----------------------------|--------|--------------------------|---------|
|                       |   | 2009                     |    | 2008 |   | 2007 |   |
|                       |   | (In Thousands)           |    |
| Acquisition of properties: |   |                     |    |   |   |   |   |   |   |   |
| Proved                     |   | $                        | 78      |   | $ | 2,230 |   | $ | 1,314,136 | a |
| Unproved                   |   |                     | -       |   |   | 2,808 |   |   | 8,313 | a |
| Exploration costs          |   |                     | 148,465 |   |   | 125,039 |   |   | 140,874 |   |
| Development costs          |   |                     | 16,715  |   |   | 126,199 |   |   | 59,287 |   |
|                       |   | $                        | 165,258 |   | $ | 256,276 |   | $ | 1,522,610 |   |

| a.   | Includes the costs associated with the 2007 oil and gas property acquisition (Note 9), including $7.5 million attributable to unproved properties. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                  | Years Ended December 31, |    |
|-------------------------------------------------------|--------------------------|---------|
|                                                  | 2009                     |    | 2008 |   | 2007 |   |
| Beginning of year                                     | $                        | 43,791  |   | $ | 55,980 |   | $ | 38,456 |   |
| Additions to capitalized exploratory well             |                     |    |   |   |   |   |   |   |   |
| costs pending determination of proved reserves        |                     | 85,356  |   |   | 141,263 |   |   | 157,216 |   |
| Reclassifications to wells, facilities, and equipment |                     |    |   |   |   |   |   |   |   |
| based on determination of proved reserves             |                     | (6,180  | ) |   | (120,182 | ) |   | (117,259 | ) |
| Amounts charged to expense                            |                     | (60,318 | ) |   | (33,270 | ) |   | (22,433 | ) |
| End of year                                           | $                        | 62,649  |   | $ | 43,791 |   | $ | 55,980 |   |

----

TABLE OF CONTENTS

|                            | Oil    |   | Natural Gas |   |
|---------------------------------|--------|--------|-------------|--------|
|                            | 2009   |   | 2008        |   | 2007 |   | 2009 |   | 2008 |   | 2007 |   |
| Proved reserves:                |   |   |        |   |   |   |   |   |   |   |   |   |
| Beginning of year               | 16,989 |   | 19,717      |   | 5,772 |   | 242,897 |   | 245,606 |   | 41,202 |   |
| Revisions of previous estimates | 1,369  |   | (335        | )      | 565 |   | (12,610 | ) | 5,469 |   | (1,039 | ) |
| Discoveries and extensions      | 131    |   | 1,016       |   | 484 |   | 4,377 |   | 45,993 |   | 25,552 |   |
| Production                      | (2,970 | )      | (3,633      | )      | (2,385 | ) | (55,842 | ) | (67,891 | ) | (41,147 | ) |
| Purchase of reserves            | -      |   | 224         |   | 15,281 | a | - |   | 13,720 |   | 221,038 | a |
| End of year                     | 15,519 | b      | 16,989      |   | 19,717 |   | 178,822 | b | 242,897 |   | 245,606 |   |
|                            |   |   |        |   |   |   |   |   |   |   |   |   |

|                       | Oil    |   | Natural Gas |   |
|----------------------------|--------|--------|-------------|--------|
|                       | 2009   |   | 2008        |   | 2007 |   | 2009 |   | 2008 |   | 2007 |   |
| Proved developed reserves: |   |   |        |   |   |   |   |   |   |   |   |   |
| Beginning of year          | 15,039 |   | 17,452      |   | 5,526 |   | 198,610 |   | 203,595 |   | 34,949 |   |
| End of year                | 13,483 |   | 15,039      |   | 17,452 |   | 135,150 |   | 198,610 |   | 203,595 |   |

| a.   | Reflects the estimated proved reserves of the 2007 oil and gas property acquisition (Note 9). |
|----------------|-----------------------------------------------------------------------------------------------|

| b.   | At December 31, 2009, McMoRan had natural gas imbalances of 1.1 Bcfe for under deliveries and 1.0 Bcfe for over deliveries which are not reflected in the above reserve quantities. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

|                                                                  |   | December 31,  |      |
|-----------------------------------------------------------------------|--------|--------------------|-----------|
|                                                                  |   | 2009               |      | 2008 |   |
|                                                                  |   | (In Thousands)     |      |
| Future cash inflows                                                   |   | $                  | 1,655,260 |   | $ | 2,163,814 |   |
| Future costs applicable to future cash flows:                         |   |               |      |   |   |   |   |
| Production costs                                                      |   |               | (519,995  | ) |   | (537,147 | ) |
| Development and abandonment costs                                     |   |               | (649,940  | ) |   | (673,715 | ) |
| Future income taxes                                                   |   |               | (2,348    | ) |   | (1,965 | ) |
| Future net cash flows                                                 |   |               | 482,977   |   |   | 950,987 |   |
| Discount for estimated timing of net cash flows (10% discount rate) a |   |               | (134,596  | ) |   | (245,696 | ) |
|                                                                  |   | $                  | 348,381   |   | $ | 705,291 |   |

| a.   | Amount reflects application of required 10 percent discount rate to both the estimated future income taxes and estimated future net cash flows associated with production of the estimated proved reserves. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                      |   | Years Ended December 31, |     |
|-----------------------------------------------------------|--------|--------------------------|----------|
|                                                      |   | 2009                     |     | 2008 |   | 2007 |   |
|                                                      |   | (In Thousands)           |     |
| Beginning of year                                         |   | $                        | 705,291  |   | $ | 1,638,266 |   | $ | 269,962 |   |
| Revisions:                                                |   |                     |     |   |   |   |   |   |   |   |
| Changes in prices                                         |   |                     | (183,301 | ) |   | (534,921 | ) |   | 494,774 |   |
| Accretion of discount                                     |   |                     | 70,529   |   |   | 163,827 |   |   | 26,996 |   |
| Change in reserve quantities                              |   |                     | 15,459   |   |   | 4,204 |   |   | 196,253 |   |
| Other changes, including revised estimates of development |   |                     |     |   |   |   |   |   |   |   |
| costs and rates of production                             |   |                     | (97,269  | ) |   | (234,425 | )a |   | (186,238 | ) |
| Discoveries and extensions, less related costs            |   |                     | 2,691    |   |   | 211,492 |   |   | 132,808 |   |
| Development costs incurred during the year                |   |                     | 65,256   |   |   | 50,811 |   |   | 8,559 |   |
| Change in future income taxes                             |   |                     | (324     | ) |   | 179,156 |   |   | (179,725 | ) |
| Revenues, less production costs                           |   |                     | (229,951 | ) |   | (800,354 | ) |   | (353,123 | ) |
| Purchase of reserves in place                             |   |                     | -        |   |   | 27,235 |   |   | 1,228,000 | b |
| End of year                                               |   | $                        | 348,381  |   | $ | 705,291 |   | $ | 1,638,266 |   |

| a.   | Includes $107.6 million of revised reclamation cost estimates related to additional costs associated with properties damaged by Hurricane Ike and accelerated timing of when these costs are expected to be incurred. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Reflects the standardized measure of the proved reserves for the 2007 oil and gas property acquisition (Note 9). |
|----------------|------------------------------------------------------------------------------------------------------------------|

----

TABLE OF CONTENTS

|                                                            |   |           |    |   |   | Freeport  |   |         |    | Consolidated |   |
|-----------------------------------------------------------------|--------|----------------|---------|--------|--------|-----------|--------|--------------|---------|--------------|--------|
|                                                            |   | Parent         |    | MOXY   |   | Energy    |   | Eliminations |    | McMoRan      |   |
|                                                            |   | (In Thousands) |    |
| ASSETS                                                          |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Current assets:                                                 |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Cash and cash equivalents                                       |   | $              | 16      |   | $      | 241,400   |   | $            | 2       |         | $      | - |   | $ | 241,418 |   |
| Accounts receivable                                             |   |           | -       |   |   | 79,681    |   |         | -       |         |   | - |   |   | 79,681 |   |
| Inventories                                                     |   |           | -       |   |   | 47,818    |   |         | -       |         |   | - |   |   | 47,818 |   |
| Prepaid expenses                                                |   |           | 2,919   |   |   | 11,538    |   |         | -       |         |   | - |   |   | 14,457 |   |
| Fair value of derivative contracts                              |   |           | -       |   |   | 8,693     |   |         | -       |         |   | - |   |   | 8,693 |   |
| Current assets from discontinued                                |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| operations                                                      |   |           | -       |   |   | -         |   |         | 825     |         |   | - |   |   | 825 |   |
| Total current assets                                            |   |           | 2,935   |   |   | 389,130   |   |         | 827     |         |   | - |   |   | 392,892 |   |
| Property, plant and equipment, net                              |   |           | -       |   |   | 796,192   |   |         | 31      |         |   | - |   |   | 796,223 |   |
| Discontinued sulphur assets                                     |   |           | -       |   |   | -         |   |         | 6,159   |         |   | - |   |   | 6,159 |   |
| Investment in subsidiaries                                      |   |           | 694,820 |   |   | -         |   |         | -       |         |   | (694,820 | ) |   | - |   |
| Amounts due from affiliates                                     |   |           | -       |   |   | 53,173    |   |         | -       |         |   | (53,173 | ) |   | - |   |
| Deferred financing costs and other                              |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| assets                                                          |   |           | 6,374   |   |   | 47,234    |   |         | -       |         |   | - |   |   | 53,608 |   |
| Total assets                                                    |   | $              | 704,129 |   | $      | 1,285,729 |   | $            | 7,017   |         | $      | (747,993 | ) | $ | 1,248,882 |   |
|                                                            |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY  (DEFICIT) |   |           |    |   |   |      |   |         |    |         |
| Currentliabilities:                                             |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Accounts payable                                                |   | $              | 188     |   | $      | 66,209    |   | $            | 147     |         | $      | - |   | $ | 66,544 |   |
| Accrued liabilities                                             |   |           | 728     |   |   | 51,217    |   |         | -       |         |   | - |   |   | 51,945 |   |
| Current portion of oil and gas                                  |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| accrued reclamation costs                                       |   |           | -       |   |   | 106,791   |   |         | -       |         |   | - |   |   | 106,791 |   |
| Other current liabilities                                       |   |           | 7,698   |   |   | 2,074     |   |         | -       |         |   | - |   |   | 9,772 |   |
| Current liabilities from discontinued                           |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| operations                                                      |   |           | -       |   |   | -         |   |         | 9,483   |         |   | - |   |   | 9,483 |   |
| Total current liabilities                                       |   |           | 8,614   |   |   | 226,291   |   |         | 9,630   |         |   | - |   |   | 244,535 |   |
| Long-term debt                                                  |   |           | 374,720 |   |   | -         |   |         | -       |         |   | - |   |   | 374,720 |   |
| Amounts due to affiliates                                       |   |           | 48,977  |   |   | -         |   |         | 4,196   |         |   | (53,173 | ) |   | - |   |
| Accrued oil and gas reclamation costs                           |   |           | -       |   |   | 321,920   |   |         | -       |         |   | - |   |   | 321,920 |   |
| Accrued sulphur reclamation costs                               |   |           | -       |   |   | -         |   |         | 19,152  |         |   | - |   |   | 19,152 |   |
| Other long-term liabilities                                     |   |           | 6,010   |   |   | 8,975     |   |         | 7,762   |         |   | - |   |   | 22,747 |   |
| Total liabilities                                               |   |           | 438,321 |   |   | 557,186   |   |         | 40,740  |         |   | (53,173 | ) |   | 983,074 |   |
| Commitments and contingencies                                   |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Stockholders’ equity (deficit)                            |   |           | 265,808 |   |   | 728,543   |   |         | (33,723 | )            |   | (694,820 | ) |   | 265,808 |   |
| Total liabilities and stockholders’                       |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| equity (deficit)                                                |   | $              | 704,129 |   | $      | 1,285,729 |   | $            | 7,017   |         | $      | (747,993 | ) | $ | 1,248,882 |   |

----

TABLE OF CONTENTS

|                                                            |   |           |    |   |   | Freeport  |   |         |    | Consolidated |   |
|-----------------------------------------------------------------|--------|----------------|---------|--------|--------|-----------|--------|--------------|---------|--------------|--------|
|                                                            |   | Parent         |    | MOXY   |   | Energy    |   | Eliminations |    | McMoRan      |   |
|                                                            |   | (In Thousands) |    |
| ASSETS                                                          |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Current assets:                                                 |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Cash and cash equivalents                                       |   | $              | 35      |   | $      | 93,442    |   | $            | 9       |         | $      | - |   | $ | 93,486 |   |
| Accounts receivable                                             |   |           | -       |   |   | 112,684   |   |         | -       |         |   | - |   |   | 112,684 |   |
| Inventories                                                     |   |           | -       |   |   | 31,284    |   |         | -       |         |   | - |   |   | 31,284 |   |
| Prepaid expenses                                                |   |           | 12,794  |   |   | 1,025     |   |         | -       |         |   | - |   |   | 13,819 |   |
| Fair value of derivative contracts                              |   |           | -       |   |   | 31,624    |   |         | -       |         |   | - |   |   | 31,624 |   |
| Current assets from discontinued                                |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| operations                                                      |   |           | -       |   |   | -         |   |         | 516     |         |   | - |   |   | 516 |   |
| Total current assets                                            |   |           | 12,829  |   |   | 270,059   |   |         | 525     |         |   | - |   |   | 283,413 |   |
| Property, plant and equipment, net                              |   |           | -       |   |   | 992,532   |   |         | 31      |         |   | - |   |   | 992,563 |   |
| Discontinued sulphur assets                                     |   |           | -       |   |   | -         |   |         | 3,012   |         |   | - |   |   | 3,012 |   |
| Investment in subsidiaries                                      |   |           | 841,882 |   |   | -         |   |         | -       |         |   | (841,882 | ) |   | - |   |
| Amounts due from affiliates                                     |   |           |    |   |   | 168,004   |   |         | -       |         |   | (168,004 | ) |   | - |   |
| Deferred financing costs and other                              |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| assets                                                          |   |           | 11,122  |   |   | 40,172    |   |         | -       |         |   | - |   |   | 51,294 |   |
| Total assets                                                    |   | $              | 865,833 |   | $      | 1,470,767 |   | $            | 3,568   |         | $      | (1,009,886 | ) | $ | 1,330,282 |   |
|                                                            |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY  (DEFICIT) |   |           |    |   |   |      |   |         |    |         |
| Currentliabilities:                                             |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Accounts payable                                                |   | $              | 512     |   | $      | 76,491    |   | $            | 6       |         | $      | - |   | $ | 77,009 |   |
| Accrued liabilities                                             |   |           | 705     |   |   | 88,329    |   |         | 531     |         |   | - |   |   | 89,565 |   |
| Current portion of oil and gas                                  |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| accrued reclamation costs                                       |   |           | -       |   |   | 103,550   |   |         | -       |         |   | - |   |   | 103,550 |   |
| Other current liabilities                                       |   |           | 6,835   |   |   | 751       |   |         | -       |         |   | - |   |   | 7,586 |   |
| Current liabilities from discontinued                           |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| operations                                                      |   |           | -       |   |   | -         |   |         | 2,102   |         |   | - |   |   | 2,102 |   |
| Total current liabilities                                       |   |           | 8,052   |   |   | 269,121   |   |         | 2,639   |         |   | - |   |   | 279,812 |   |
| Long-term debt                                                  |   |           | 374,720 |   |   | -         |   |         | -       |         |   | - |   |   | 374,720 |   |
| Amounts due to affiliates                                       |   |           | 165,011 |   |   | -         |   |         | 2,993   |         |   | (168,004 | ) |   | - |   |
| Accrued oil and gas reclamation costs                           |   |           | -       |   |   | 317,651   |   |         | -       |         |   | - |   |   | 317,651 |   |
| Accrued sulphur reclamation costs                               |   |           | -       |   |   | -         |   |         | 22,218  |         |   | - |   |   | 22,218 |   |
| Other long-term liabilities                                     |   |           | 9,027   |   |   | 9,380     |   |         | 8,451   |         |   | - |   |   | 26,858 |   |
| Total liabilities                                               |   |           | 556,810 |   |   | 596,152   |   |         | 36,301  |         |   | (168,004 | ) |   | 1,021,259 |   |
| Commitments and contingencies                                   |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Stockholders’ equity (deficit)                            |   |           | 309,023 |   |   | 874,615   |   |         | (32,733 | )            |   | (841,882 | ) |   | 309,023 |   |
| Total liabilities and stockholders’                       |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| equity (deficit)                                                |   | $              | 865,833 |   | $      | 1,470,767 |   | $            | 3,568   |         | $      | (1,009,886 | ) | $ | 1,330,282 |   |

----

TABLE OF CONTENTS

|                                        |   |           |     |   |   | Freeport |   |         |   | Consolidated |   |
|---------------------------------------------|--------|----------------|----------|--------|--------|----------|--------|--------------|--------|--------------|--------|
|                                        |   | Parent         |     | MOXY   |   | Energy   |   | Eliminations |   | McMoRan      |   |
|                                        |   | (In Thousands) |     |
| Revenues:                                   |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Oil and natural gas                         |   | $              | -        |   | $      | 422,976  |   | $            | -      |         | $      | - |   | $ | 422,976 |   |
| Service                                     |   |           | -        |   |   | 12,459   |   |         | -      |         |   | - |   |   | 12,459 |   |
| Total revenues                              |   |           | -        |   |   | 435,435  |   |         | -      |         |   | - |   |   | 435,435 |   |
| Costs and expenses:                         |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Production and delivery costs               |   |           | -        |   |   | 193,081  |   |         | (56    | )            |   | - |   |   | 193,025 |   |
| Depletion, depreciation and amortization    |   |           | -        |   |   | 313,980  |   |         | -      |         |   | - |   |   | 313,980 |   |
| Exploration expenses                        |   |           | -        |   |   | 94,281   |   |         | -      |         |   | - |   |   | 94,281 |   |
| General and administrative expenses         |   |           | 5,749    |   |   | 37,181   |   |         | 24     |         |   | - |   |   | 42,954 |   |
| Gain on oil and gas derivative contracts    |   |           | -        |   |   | (17,394  | )      |         | -      |         |   | - |   |   | (17,394 | ) |
| Main Pass Energy HubTM costs                |   |           | -        |   |   | -        |   |         | 1,615  |         |   | - |   |   | 1,615 |   |
| Insurance recoveries                        |   |           | -        |   |   | (24,592  | )      |         | -      |         |   | - |   |   | (24,592 | ) |
| Total costs and expenses                    |   |           | 5,749    |   |   | 596,537  |   |         | 1,583  |         |   | - |   |   | 603,869 |   |
| Operating loss                              |   |           | (5,749   | )      |   | (161,102 | )      |         | (1,583 | )            |   | - |   |   | (168,434 | ) |
| Interest expense, net                       |   |           | (41,152  | )      |   | (1,791   | )      |         | -      |         |   | - |   |   | (42,943 | ) |
| Equity in earnings (losses) of              |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
|    consolidated subsidiaries |   |           | (166,501 | )      |   | -        |   |         | -      |         |   | 166,501 |   |   | - |   |
| Other income (expense), net                 |   |           | (29      | )      |   | 4,072    |   |         | -      |         |   | - |   |   | 4,043 |   |
| Loss from continuing operations before      |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| income taxes                                |   |           | (213,431 | )      |   | (158,821 | )      |         | (1,583 | )            |   | 166,501 |   |   | (207,334 | ) |
| Income tax benefit                          |   |           | 2,445    |   |   | -        |   |         | -      |         |   | - |   |   | 2,445 |   |
| Loss from continuing operations             |   |           | (210,986 | )      |   | (158,821 | )      |         | (1,583 | )            |   | 166,501 |   |   | (204,889 | ) |
| Loss from discontinued operations           |   |           | -        |   |   | -        |   |         | (6,097 | )            |   | - |   |   | (6,097 | ) |
| Net loss                                    |   |           | (210,986 | )      |   | (158,821 | )      |         | (7,680 | )            |   | 166,501 |   |   | (210,986 | ) |
| Preferred dividends and amortization        |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| of convertible preferred stock              |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| issuance costs                              |   |           | (14,332  | )      |   | -        |   |         | -      |         |   | - |   |   | (14,332 | ) |
| Net loss applicable to common stock         |   | $              | (225,318 | )      | $      | (158,821 | )      | $            | (7,680 | )            | $      | 166,501 |   | $ | (225,318 | ) |
|                                        |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |

----

TABLE OF CONTENTS
|                                     |   |           |     |   |   | Freeport  |   |         |    | Consolidated |   |
|------------------------------------------|--------|----------------|----------|--------|--------|-----------|--------|--------------|---------|--------------|--------|
|                                     |   | Parent         |     | MOXY   |   | Energy    |   | Eliminations |    | McMoRan      |   |
|                                     |   | (In Thousands) |     |
| Revenues:                                |   |           |     |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Oil and natural gas                      |   | $              | -        |   | $      | 1,058,804 |   | $            | -       |         | $      | - |   | $ | 1,058,804 |   |
| Service                                  |   |           | -        |   |   | 13,678    |   |         | -       |         |   | - |   |   | 13,678 |   |
| Total revenues                           |   |           | -        |   |   | 1,072,482 |   |         | -       |         |   | - |   |   | 1,072,482 |   |
| Costs and expenses:                      |   |           |     |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Production and delivery costs            |   |           | -        |   |   | 258,504   |   |         | (54     | )            |   | - |   |   | 258,450 |   |
| Depletion, depreciation and amortization |   |           | -        |   |   | 854,798   |   |         | -       |         |   | - |   |   | 854,798 |   |
| Exploration expenses                     |   |           | -        |   |   | 79,116    |   |         | -       |         |   | - |   |   | 79,116 |   |
| General and administrative expenses      |   |           | 7,624    |   |   | 41,024    |   |         | 351     |         |   | - |   |   | 48,999 |   |
| Gain on oil and gas derivative contracts |   |           | -        |   |   | (16,303   | )      |         | -       |         |   | - |   |   | (16,303 | ) |
| Main Pass  Energy HubTM costs  |   |           | -        |   |   | -         |   |         | 6,047   |         |   | - |   |   | 6,047 |   |
| Insurance recoveries and other           |   |           | -        |   |   | (3,391    | )      |         | -       |         |   | - |   |   | (3,391 | ) |
| Total costs and expenses                 |   |           | 7,624    |   |   | 1,213,748 |   |         | 6,344   |         |   | - |   |   | 1,227,716 |   |
| Operating loss                           |   |           | (7,624   | )      |   | (141,266  | )      |         | (6,344  | )            |   | - |   |   | (155,234 | ) |
| Interest expense, net                    |   |           | (43,722  | )      |   | (7,168    | )      |         | -       |         |   | - |   |   | (50,890 | ) |
| Equity in losses of consolidated         |   |           |     |   |   |      |   |         |    |         |   |   |   |   |   |   |
|    subsidiaries           |   |           | (160,205 | )      |   | -         |   |         | -       |         |   | 160,205 |   |   | - |   |
| Other income (expense), net              |   |           | (2,635   | )      |   | 69        |   |         | -       |         |   | - |   |   | (2,566 | ) |
| Loss from continuing operations before   |   |           |     |   |   |      |   |         |    |         |   |   |   |   |   |   |
| income taxes                             |   |           | (214,186 | )      |   | (148,365  | )      |         | (6,344  | )            |   | 160,205 |   |   | (208,690 | ) |
| Income tax expense                       |   |           | (2,508   | )      |   | -         |   |         | -       |         |   | - |   |   | (2,508 | ) |
| Loss from continuing operations          |   |           | (216,694 | )      |   | (148,365  | )      |         | (6,344  | )            |   | 160,205 |   |   | (211,198 | ) |
| Loss from discontinued operations        |   |           | -        |   |   | -         |   |         | (5,496  | )            |   | - |   |   | (5,496 | ) |
| Net loss                                 |   |           | (216,694 | )      |   | (148,365  | )      |         | (11,840 | )            |   | 160,205 |   |   | (216,694 | ) |
| Preferred dividends and amortization     |   |           |     |   |   |      |   |         |    |         |   |   |   |   |   |   |
| of convertible preferred stock           |   |           |     |   |   |      |   |         |    |         |   |   |   |   |   |   |
| issuance costs                           |   |           | (22,286  | )      |   | -         |   |         | -       |         |   | - |   |   | (22,286 | ) |
| Net loss applicable to common stock      |   | $              | (238,980 | )      | $      | (148,365  | )      | $            | (11,840 | )            | $      | 160,205 |   | $ | (238,980 | ) |
|                                     |   |           |     |   |   |      |   |         |    |         |   |   |   |   |   |   |

----

TABLE OF CONTENTS
|                                     |   |           |    |   |   | Freeport |   |         |   | Consolidated |   |
|------------------------------------------|--------|----------------|---------|--------|--------|----------|--------|--------------|--------|--------------|--------|
|                                     |   | Parent         |    | MOXY   |   | Energy   |   | Eliminations |   | McMoRan      |   |
|                                     |   | (In Thousands) |    |
| Revenues:                                |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Oil and natural gas                      |   | $              | -       |   | $      | 475,250  |   | $            | -      |         | $      | - |   | $ | 475,250 |   |
| Service                                  |   |           | -       |   |   | 5,917    |   |         | -      |         |   | - |   |   | 5,917 |   |
| Total revenues                           |   |           | -       |   |   | 481,167  |   |         | -      |         |   | - |   |   | 481,167 |   |
| Costs and expenses:                      |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Production and delivery costs            |   |           | -       |   |   | 122,175  |   |         | (48    | )            |   | - |   |   | 122,127 |   |
| Depreciation and amortization            |   |           | -       |   |   | 256,007  |   |         | -      |         |   | - |   |   | 256,007 |   |
| Exploration expenses                     |   |           | -       |   |   | 58,954   |   |         | -      |         |   | - |   |   | 58,954 |   |
| General and administrative expenses      |   |           | 5,264   |   |   | 22,499   |   |         | 210    |         |   | - |   |   | 27,973 |   |
| Loss on oil and gas derivative contracts |   |           | -       |   |   | 5,181    |   |         | -      |         |   | - |   |   | 5,181 |   |
| Main Pass  Energy HubTM costs  |   |           | -       |   |   | -        |   |         | 9,754  |         |   | - |   |   | 9,754 |   |
| Insurance recovery and other             |   |           | -       |   |   | (2,338   | )      |         | -      |         |   | - |   |   | (2,338 | ) |
| Total costs and expenses                 |   |           | 5,264   |   |   | 462,478  |   |         | 9,916  |         |   | - |   |   | 477,658 |   |
| Operating income (loss)                  |   |           | (5,264  | )      |   | 18,689   |   |         | (9,916 | )            |   | - |   |   | 3,509 |   |
| Interest expense                         |   |           | (49,513 | )      |   | (16,853  | )      |         | -      |         |   | - |   |   | (66,366 | ) |
| Equity in losses of consolidated         |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
|    subsidiaries           |   |           | (6,464  | )      |   | -        |   |         | -      |         |   | 6,464 |   |   | - |   |
| Other income (expense), net              |   |           | 1,507   |   |   | (2,211   | )      |         | -      |         |   | - |   |   | (704 | ) |
| Loss from continuing operations before   |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| income taxes                             |   |           | (59,734 | )      |   | (375     | )      |         | (9,916 | )            |   | 6,464 |   |   | (63,561 | ) |
| Income tax benefit (expense)             |   |           | -       |   |   | -        |   |         | -      |         |   | - |   |   | - |   |
| Loss from continuing operations          |   |           | (59,734 | )      |   | (375     | )      |         | (9,916 | )            |   | 6,464 |   |   | (63,561 | ) |
| Income from discontinued operations      |   |           | -       |   |   | 302      |   |         | 3,525  |         |   | - |   |   | 3,827 |   |
| Net loss                                 |   |           | (59,734 | )      |   | (73      | )      |         | (6,391 | )            |   | 6,464 |   |   | (59,734 | ) |
| Preferred dividends and amortization     |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| of convertible preferred stock           |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| issuance costs                           |   |           | (4,172  | )      |   | -        |   |         | -      |         |   | - |   |   | (4,172 | ) |
| Net loss applicable to common stock      |   | $              | (63,906 | )      | $      | (73      | )      | $            | (6,391 | )            | $      | 6,464 |   | $ | (63,906 | ) |
|                                     |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |

----

TABLE OF CONTENTS

|                                      |   |           |     |   |   | Freeport |   | Consolidated |   |
|-------------------------------------------|--------|----------------|----------|--------|--------|----------|--------|--------------|--------|
|                                      |   | Parent         |     | MOXY   |   | Energy   |   | McMoRan      |   |
|                                      |   | (In Thousands) |     |
|                                      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Cash flow from operating activities:      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Net cash provided by continuing           |   |           |     |   |   |     |   |         |   |   |   |   |   |
| operations                                |   | $              | (148,451 | )      | $      | 285,973  |   | $            | (629   | ) | $ | 136,893 |   |
| Net cash used in discontinued             |   |           |     |   |   |     |   |         |   |   |   |   |   |
| operations                                |   |           | -        |   |   | -        |   |         | (5,728 | ) |   | (5,728 | ) |
| Net cash provided by (used in)            |   |           |     |   |   |     |   |         |   |   |   |   |   |
| operating activities                      |   |           | (148,451 | )      |   | 285,973  |   |         | (6,357 | ) |   | 131,165 |   |
|                                      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Cash flow from investing activities:      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Exploration, development and other        |   |           |     |   |   |     |   |         |   |   |   |   |   |
| capital expenditures                      |   |           | -        |   |   | (138,015 | )      |         | -      |   |   | (138,015 | ) |
| Net cash used in investing activities     |   |           | -        |   |   | (138,015 | )      |         | -      |   |   | (138,015 | ) |
|                                      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Cash flow from financing activities:      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Net proceeds from sale of common stock    |   |           | 84,976   |   |   | -        |   |         | -      |   |   | 84,976 |   |
| Net proceeds from sale of preferred stock |   |           | 83,275   |   |   | -        |   |         | -      |   |   | 83,275 |   |
| Dividends and inducements payments        |   |           |     |   |   |     |   |         |   |   |   |   |   |
| on convertible preferred stock            |   |           | (13,469  | )      |   | -        |   |         | -      |   |   | (13,469 | ) |
| Investment from parent                    |   |           | (6,350   | )      |   | -        |   |         | 6,350  |   |   | - |   |
| Net cash provided by financing activities |   |           | 148,432  |   |   | -        |   |         | 6,350  |   |   | 154,782 |   |
|                                      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Net increase (decrease) in cash and       |   |           |     |   |   |     |   |         |   |   |   |   |   |
| cash equivalents                          |   |           | (19      | )      |   | 147,958  |   |         | (7     | ) |   | 147,932 |   |
| Cash and cash equivalents at beginning    |   |           |     |   |   |     |   |         |   |   |   |   |   |
| of year                                   |   |           | 35       |   |   | 93,442   |   |         | 9      |   |   | 93,486 |   |
| Cash and cash equivalents at end of       |   |           |     |   |   |     |   |         |   |   |   |   |   |
| year                                      |   | $              | 16       |   | $      | 241,400  |   | $            | 2      |   | $ | 241,418 |   |
|                                      |   |           |     |   |   |     |   |         |   |   |   |   |   |

----

TABLE OF CONTENTS

|                                   |   |           |    |   |   | Freeport |   | Consolidated |   |
|----------------------------------------|--------|----------------|---------|--------|--------|----------|--------|--------------|--------|
|                                   |   | Parent         |    | MOXY   |   | Energy   |   | McMoRan      |   |
|                                   |   | (In Thousands) |    |
|                                   |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Cash flow from operating activities:   |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Net cash provided by continuing        |   |           |    |   |   |     |   |         |   |   |   |   |   |
| operations                             |   | $              | 23,676  |   | $      | 603,205  |   | $            | 2,778  |   | $ | 629,659 |   |
| Net cash used in discontinued          |   |           |    |   |   |     |   |         |   |   |   |   |   |
| operations                             |   |           | -       |   |   | -        |   |         | (6,262 | ) |   | (6,262 | ) |
| Net cash provided by (used in)         |   |           |    |   |   |     |   |         |   |   |   |   |   |
| operating activities                   |   |           | 23,676  |   |   | 603,205  |   |         | (3,484 | ) |   | 623,397 |   |
|                                   |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Cash flow from investing activities:   |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Exploration, development and other     |   |           |    |   |   |     |   |         |   |   |   |   |   |
| capital expenditures                   |   |           | -       |   |   | (236,383 | )      |         | -      |   |   | (236,383 | ) |
| Acquisition of properties, net         |   |           | -       |   |   | (2,826   | )      |         | -      |   |   | (2,826 | ) |
| Net cash used in investing activities  |   |           | -       |   |   | (239,209 | )      |         | -      |   |   | (239,209 | ) |
|                                   |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Cash flow from financing activities:   |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Net borrowings under revolving credit  |   |           |    |   |   |     |   |         |   |   |   |   |   |
| facility                               |   |           | -       |   |   | (274,000 | )      |         | -      |   |   | (274,000 | ) |
| Dividends and inducements payments     |   |           |    |   |   |     |   |         |   |   |   |   |   |
| on convertible preferred stock         |   |           | (23,565 | )      |   | -        |   |         | -      |   |   | (23,565 | ) |
| Proceeds from exercise of stock        |   |           |    |   |   |     |   |         |   |   |   |   |   |
| options, warrants and other            |   |           | 4,696   |   |   | -        |   |         | -      |   |   | 4,696 |   |
| Payments for induced conversion of     |   |           |    |   |   |     |   |         |   |   |   |   |   |
| convertible senior notes               |   |           | (2,663  | )      |   | -        |   |         | -      |   |   | (2,663 | ) |
| Investment from parent                 |   |           | (2,252  | )      |   | -        |   |         | 2,252  |   |   | - |   |
| Net cash provided by (used in)         |   |           |    |   |   |     |   |         |   |   |   |   |   |
| financing activities                   |   |           | (23,784 | )      |   | (274,000 | )      |         | 2,252  |   |   | (295,532 | ) |
|                                   |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Net increase (decrease) in cash and    |   |           |    |   |   |     |   |         |   |   |   |   |   |
| cash equivalents                       |   |           | (108    | )      |   | 89,996   |   |         | (1,232 | ) |   | 88,656 |   |
| Cash and cash equivalents at beginning |   |           |    |   |   |     |   |         |   |   |   |   |   |
| of year                                |   |           | 143     |   |   | 3,446    |   |         | 1,241  |   |   | 4,830 |   |
| Cash and cash equivalents at end of    |   |           |    |   |   |     |   |         |   |   |   |   |   |
| year                                   |   | $              | 35      |   | $      | 93,442   |   | $            | 9      |   | $ | 93,486 |   |
|                                   |   |           |    |   |   |     |   |         |   |   |   |   |   |

----

TABLE OF CONTENTS
|                                    |   |           |     |   |   | Freeport   |   | Consolidated |    |
|-----------------------------------------|--------|----------------|----------|--------|--------|------------|--------|--------------|---------|
|                                    |   | Parent         |     | MOXY   |   | Energy     |   | McMoRan      |    |
|                                    |   | (In Thousands) |     |
|                                    |   |           |     |   |   |       |   |         |    |   |   |   |   |
| Cash flow from operating activities:    |   |           |     |   |   |       |   |         |    |   |   |   |   |
| Net cash provided by (used in)          |   |           |     |   |   |       |   |         |    |   |   |   |   |
| continuing operations                   |   | $              | 35,897   |   | $      | 189,205    |   | $            | (15,454 | ) | $ | 209,648 |   |
| Net cash provided by (used in)          |   |           |     |   |   |       |   |         |    |   |   |   |   |
| discontinued operations                 |   |           | -        |   |   | 302        |   |         | (2,312  | ) |   | (2,010 | ) |
| Net cash provided by (used in)          |   |           |     |   |   |       |   |         |    |   |   |   |   |
| operating activities                    |   |           | 35,897   |   |   | 189,507    |   |         | (17,766 | ) |   | 207,638 |   |
|                                    |   |           |     |   |   |       |   |         |    |   |   |   |   |
| Cash flow from investing activities:    |   |           |     |   |   |       |   |         |    |   |   |   |   |
| Exploration, development and other      |   |           |     |   |   |       |   |         |    |   |   |   |   |
| capital expenditures                    |   |           | -        |   |   | (153,210   | )      |         | -       |   |   | (153,210 | ) |
| Acquisition of properties, net          |   |           | -        |   |   | (1,047,936 | )      |         | -       |   |   | (1,047,936 | ) |
| Proceeds from restricted investments    |   |           | 6,056    |   |   | -          |   |         | -       |   |   | 6,056 |   |
| Increase in restricted investments      |   |           | (126     | )      |   | -          |   |         | -       |   |   | (126 | ) |
| Net cash provided by (used in)          |   |           |     |   |   |       |   |         |    |   |   |   |   |
| investing activities                    |   |           | 5,930    |   |   | (1,201,146 | )      |         | -       |   |   | (1,195,216 | ) |
|                                    |   |           |     |   |   |       |   |         |    |   |   |   |   |
| Cash flow from financing activities:    |   |           |     |   |   |       |   |         |    |   |   |   |   |
| Net borrowings under revolving credit   |   |           |     |   |   |       |   |         |    |   |   |   |   |
| facility                                |   |           | -        |   |   | 245,250    |   |         | -       |   |   | 245,250 |   |
| Proceeds from sale of 11.875% senior    |   |           |     |   |   |       |   |         |    |   |   |   |   |
| notes                                   |   |           | 300,000  |   |   | -          |   |         | -       |   |   | 300,000 |   |
| Net proceeds from sale of 6.75%         |   |           |     |   |   |       |   |         |    |   |   |   |   |
| mandatory convertible preferred         |   |           |     |   |   |       |   |         |    |   |   |   |   |
| stock                                   |   |           | 250,385  |   |   | -          |   |         | -       |   |   | 250,385 |   |
| Net proceeds from sale of common stock  |   |           | 200,189  |   |   | -          |   |         | -       |   |   | 200,189 |   |
| Proceeds from bridge loan facility      |   |           | 800,000  |   |   | -          |   |         | -       |   |   | 800,000 |   |
| Repayment of bridge loan facility       |   |           | (800,000 | )      |   | -          |   |         | -       |   |   | (800,000 | ) |
| Proceeds from senior term loan          |   |           | -        |   |   | 100,000    |   |         | -       |   |   | 100,000 |   |
| Repayment of senior term loan           |   |           | -        |   |   | (100,000   | )      |         | -       |   |   | (100,000 | ) |
| Financing costs                         |   |           | (17,573  | )      |   | (12,980    | )      |         | -       |   |   | (30,553 | ) |
| Dividends paid on convertible preferred |   |           |     |   |   |       |   |         |    |   |   |   |   |
| stock                                   |   |           | (1,121   | )      |   | -          |   |         | -       |   |   | (1,121 | ) |
| Proceeds from exercise of stock         |   |           |     |   |   |       |   |         |    |   |   |   |   |
| options, warrants and other             |   |           | 10,428   |   |   | -          |   |         | -       |   |   | 10,428 |   |
| Investment from parent                  |   |           | (800,586 | )      |   | 781,786    |   |         | 18,800  |   |   | - |   |
| Net cash provided by (used in)          |   |           |     |   |   |       |   |         |    |   |   |   |   |
| financing activities                    |   |           | (58,278  | )      |   | 1,014,056  |   |         | 18,800  |   |   | 974,578 |   |
|                                    |   |           |     |   |   |       |   |         |    |   |   |   |   |
| Net increase (decrease) in cash and     |   |           |     |   |   |       |   |         |    |   |   |   |   |
| cash equivalents                        |   |           | (16,451  | )      |   | 2,417      |   |         | 1,034   |   |   | (13,000 | ) |
| Cash and cash equivalents at beginning  |   |           |     |   |   |       |   |         |    |   |   |   |   |
| of year                                 |   |           | 16,594   |   |   | 1,029      |   |         | 207     |   |   | 17,830 |   |
| Cash and cash equivalents at end of     |   |           |     |   |   |       |   |         |    |   |   |   |   |
| year                                    |   | $              | 143      |   | $      | 3,446      |   | $            | 1,241   |   | $ | 4,830 |   |
|                                    |   |           |     |   |   |       |   |         |    |   |   |   |   |

----

TABLE OF CONTENTS

|        |   |                                     |    | Operating    |   |     |   | Net Loss  |     |
|-------------|--------|------------------------------------------|---------|--------------|--------|----------|--------|-----------|----------|
|        |   |                                     |    | Income       |   | Net      |   | per Share |     |
|        |   | Revenues                                 |    |  (Loss) |   | Loss a   |   | Basic     |     | Diluted |   |
|        |   | (In Thousands, Except Per Share Amounts) |    |
| 2009        |   |                                     |    |         |   |     |   |      |     |   |   |   |   |   |   |   |
| 1st Quarter |   | $                                        | 97,376  |         | $      | (49,139  | )      | $         | (63,241  | ) | $ | (0.90 | ) | $ | (0.90 | ) |
| 2nd Quarter |   |                                     | 96,552  |         |   | (87,258  | )      |      | (100,612 | ) |   | (1.40 | ) |   | (1.40 | ) |
| 3rd Quarter |   |                                     | 109,535 |         |   | (35,514  | )      |      | (51,932  | ) |   | (0.60 | ) |   | (0.60 | ) |
| 4th Quarter |   |                                     | 131,972 |         |   | 3,477    |   |      | (9,533   | ) |   | (0.11 | ) |   | (0.11 | ) |
|        |   | $                                        | 435,435 |         | $      | (168,434 | )      | $         | (225,318 | ) |   |   |   |   |   |   |

|        |   |                                     |      | Operating    |   | Net      |   | Net Income       |     |
|-------------|--------|------------------------------------------|-----------|--------------|--------|----------|--------|------------------|----------|
|        |   |                                     |      | Income       |   | Income   |   | (Loss) per Share |     |
|        |   | Revenues                                 |      |  (Loss) |   | (Loss) a |   | Basic            |     | Diluted |   |
|        |   | (In Thousands, Except Per Share Amounts) |      |
| 2008        |   |                                     |      |         |   |     |   |             |     |   |   |   |   |   |   |   |
| 1st Quarter |   | $                                        | 295,476   |         | $      | 55,825   |   | $                | 32,009   |   | $ | 0.59 |   | $ | 0.46 |   |
| 2nd Quarter |   |                                     | 375,508   |         |   | 70,256   |   |             | 49,725   |   |   | 0.87 |   |   | 0.63 |   |
| 3rd Quarter |   |                                     | 285,245   |         |   | 18,057   |   |             | (6,132   | ) |   | (0.10 | ) |   | (0.10 | ) |
| 4th Quarter |   |                                     | 116,253   |         |   | (299,372 | )      |             | (314,582 | ) |   | (4.46 | ) |   | (4.46 | ) |
|        |   | $                                        | 1,072,482 |         | $      | (155,234 | )      | $                | (238,980 | ) |   |   |   |   |   |   |
|        |   |                                     |      |         |   |     |   |             |     |   |   |   |   |   |   |   |

| a.   | Reflects net income (loss) attributable to common stock, which includes preferred dividends and amortization of convertible preferred stock issuance costs as a reduction to net income (loss). |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

Item 9A.  Controls and Procedures

Item 9B.  Other Information

----

TABLE OF CONTENTS

PART III

Item 10.  Directors, Executive Officers and Corporate Governance

Item 11.  Executive Compensation

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters

Item 13.  Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accounting Fees and Services

PART IV

Item 15.  Exhibits and Financial Statement Schedules

| (a)(2). | Financial Statement Schedules.  All financial statement schedules are either not required under the related instructions or are not applicable because the information has been included elsewhere herein. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)(3). | Exhibits.  Reference is made to the Exhibit Index beginning on page E-1 hereof. |
|---------|-------------------------------------------------------------------------------------------|

GLOSSARY

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

----

TABLE OF CONTENTS

SIGNATURES

| *                                       | Co-Chairman of the Board                            |
|-----------------------------------------|-----------------------------------------------------|
| James R. Moffett                        |                                                |
|                                    |                                                |
| *                                       | Co-Chairman of the Board                            |
| Richard C. Adkerson                     |                                                |
|                                    |                                                |
| *                                       | Vice Chairman of the Board                          |
| B.M. Rankin, Jr.                        |                                                |
|                                    |                                                |
| *                                       | Executive Vice President                            |
| C. Howard Murrish                       |                                                |
|                                    |                                                |
| /s/ Glenn A. Kleinert                   | President and Chief Executive Officer               |
| Glenn A. Kleinert                       |                                                |
|                                    |                                                |
| /s/ Nancy D. Parmelee                   | Senior Vice President, Chief Financial              |
| Nancy D. Parmelee                       | Officer and Secretary                               |
|                                    | (Principal Financial Officer)                       |
|                                    |                                                |
| *                                       | Vice President and Controller - Financial Reporting |
| C. Donald Whitmire, Jr.                 | (Principal Accounting Officer)                      |
|                                    |                                                |
| *                                       | Director                                            |
| Robert A. Day                           |                                                |
|                                    |                                                |
| *                                       | Director                                            |
| Gerald J. Ford                          |                                                |
|                                    |                                                |
| *                                       | Director                                            |
| H. Devon Graham, Jr.                    |                                                |
|                                    |                                                |
| *                                       | Director                                            |
| Suzanne T. Mestayer                     |                                                |
|                                    |                                                |
| *By:  /s/ Richard C. Adkerson |                                                |
| Richard C. Adkerson                     |                                                |
| Attorney-in-Fact                        |                                                |

----

TABLE OF CONTENTS

Exhibit Index

|    |                                                                                                                                                                                                                                                                                                                            | Filed     |                      |      |       |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|---------------------------|-----------|------------|
| Exhibit |                                                                                                                                                                                                                                                                                                                            | with this | Incorporated by Reference |
| Number  | Exhibit Title                                                                                                                                                                                                                                                                                                                   | Form 10-K | Form                      | File No.  | Date Filed |
| 2.1     | Agreement and Plan of Merger dated as of August 1, 1998                                                                                                                                                                                                                                                                         |      | S-4                       | 333-61171 | 10/06/1998 |
| 3.1     | Composite Certificate of Incorporation of McMoRan                                                                                                                                                                                                                                                                               |      | 10-Q                      | 001-07791 | 08/07/2009 |
| 3.2     | Amended and Restated By-Laws of McMoRan as amended effective through February 1, 2010                                                                                                                                                                                                                                           |      | 8-K                       | 001-07791 | 02/03/2010 |
| 3.3     | Certificate of Elimination of Series A Participating Cumulative preferred Stock of McMoRan                                                                                                                                                                                                                                      |      | 8-K                       | 001-07791 | 11/14/2008 |
| 4.1     | Form of Certificate of McMoRan Common Stock                                                                                                                                                                                                                                                                                     |      | S-4                       | 333-61171 | 10/06/1998 |
| 4.2     | Standstill Agreement dated August 5, 1999 between McMoRan and Alpine Capital, L.P., Robert W. Bruce III, Algenpar, Inc, J. Taylor Crandall, Susan C. Bruce, Keystone, Inc., Robert M. Bass, the Anne T. and Robert M. Bass Foundation, Anne T. Bass and The Robert Bruce Management Company, Inc. Defined Benefit Pension Trust |      | 10-Q                      | 001-07791 | 11/12/1999 |
| 4.3     | Purchase Agreement dated September 30, 2004, by and among McMoRan Exploration Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and J.P. Morgan Securities Inc                                                                                                                              |      | 8-K                       | 001-07791 | 10/07/2004 |
| 4.4     | Indenture dated October 6, 2004 by and among McMoRan and the Bank of New York, as trustee                                                                                                                                                                                                                                       |      | 8-K                       | 001-07791 | 10/07/2004 |
| 4.5     | Collateral Pledge and Security Agreement dated October 6, 2004 by and among McMoRan, as pledgor, The Bank of New York, as trustee and the Bank of New York, as collateral agent                                                                                                                                                 |      | 8-K                       | 001-07791 | 10/07/2004 |
| 4.6     | Registration Rights Agreement dated October 6, 2004 by and among McMoRan, as issuer and Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc. and Jefferies & Company, Inc. as Initial Purchasers                                                                                        |      | 8-K                       | 001-07791 | 10/07/2004 |
| 10.1    | Main Pass 299 Sulphur and Salt Lease, effective May 1, 1988                                                                                                                                                                                                                                                                     |      | 10-K                      | 001-07791 | 04/16/2002 |
| 10.2    | IMC Global/FSC Agreement dated as of March 29, 2002 among IMC Global Inc., IMC Global Phosphate Company, Phosphate Resource Partners Limited Partnership, IMC Global Phosphates MP Inc., MOXY and McMoRan                                                                                                                  |      | 10-Q                      | 001-07791 | 08/14/2002 |
| 10.3    | Amended and Restated Services Agreement dated as of January 1, 2002 between McMoRan and FM Services Company                                                                                                                                                                                                                     |      | 10-Q                      | 001-07791 | 08/14/2003 |
| 10.4    | Letter Agreement dated August 22, 2000 between Devon Energy Corporation and Freeport Sulphur                                                                                                                                                                                                                               |      | 10-Q                      | 001-07791 | 10/25/2000 |
| 10.5    | Asset Purchase Agreement dated effective December 1, 1999 between SOI Finance Inc., Shell Offshore Inc. and MOXY                                                                                                                                                                                                                |      | 10-K                      | 001-07791 | 02/08/2000 |

----

TABLE OF CONTENTS

|    |          | Filed     |                      |     |       |
|---------|---------------|-----------|---------------------------|----------|------------|
| Exhibit |          | with this | Incorporated by Reference |
| Number  | Exhibit Title | Form 10-K | Form                      | File No. | Date Filed |

| 10.6  | Employee Benefits Agreement by and between Freeport-McMoRan Inc. and Freeport Sulphur                                                                                                                                                                                                                                                                   |   | 10-K | 001-07791 | 04/16/2002 |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------|-----------|------------|
| 10.7  | Purchase and Sales agreement dated January 25, 2002 but effective January 1, 2002 by and between MOXY and Halliburton Energy Services, Inc                                                                                                                                                                                                              |   | 8-K  | 001-07791 | 03/11/2002 |
| 10.8  | Purchase and Sale Agreement dated as of March 29, 2002 by and among Freeport Sulphur, McMoRan, MOXY and Gulf Sulphur Services Ltd., LLP                                                                                                                                                                                                                 |   | 10-Q | 001-07791 | 05/10/2002 |
| 10.9  | Purchase and Sale Agreement dated May 9, 2002 by and between MOXY and El Paso Production Company                                                                                                                                                                                                                                                        |   | 10-Q | 001-07791 | 08/14/2002 |
| 10.10 | Amendment to Purchase and Sale Agreement dated May 22, 2002 by and between MOXY and El Paso Production Company                                                                                                                                                                                                                                          |   | 10-Q | 001-07791 | 08/14/2002 |
| 10.11 | Master Agreement dated October 22, 2002 by and among Freeport-McMoRan Sulphur LLC, K-Mc Venture LLC, K1 USA Energy Production Corporation and McMoRan                                                                                                                                                                                                   |   | 10-K | 001-07791 | 03/27/2003 |
| 10.12 | Purchase and Sale Agreement dated June 20, 2007 by and between Newfield Exploration Company as Seller and McMoRan Oil & Gas LLC as Buyer effective July 1, 2007                                                                                                                                                                                     |   | 8-K  | 001-07791 | 06/22/2007 |
| 10.13 | Amended and Restated Credit Agreement dated as of August 6, 2007, among McMoRan Exploration Co., as parent, McMoRan Oil & Gas LLC, as borrower, JPMorgan Chase Bank, N.A. Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services, Inc., as syndication agent, BNP Paribas, as documentation agent, and the lenders party thereto |   | 10-Q | 001-07791 | 11/01/2007 |
| 10.14 | First Amendment to Credit Agreement dated as of June 20, 2008, among McMoRan Exploration Co., as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto                                                                                                                                                                 |   | 10-Q | 001-07791 | 08/07/2008 |

| 10.15 | Second Amendment to Credit Agreement dated as of September 10, 2008, among McMoRan Exploration Co., as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto |   | 10-Q   | 001-07791 | 11/06/2008 |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|------------|
| 10.16 | Third Amendment to Credit Agreement dated as of April 17, 2009, among McMoRan Exploration Co., as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto      |   | 10-Q   | 001-07791 | 05/11/2009 |
| 10.17 | Fourth Amendment to Credit Agreement dated as of February 2, 2010, among McMoRan Exploration Co., as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto   | X      |   |      |       |
| 10.18 | Underwriting Agreement dated June 16, 2009 between McMoRan Exploration Co. and J.P. Morgan Securities Inc., as representative of the several underwriters names in Schedule 1 thereto              |   | 8-K    | 001-07791 | 06/19/2009 |

----

TABLE OF CONTENTS

|    |                                                                                                                                                                                  | Filed     |                      |      |       |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|---------------------------|-----------|------------|
| Exhibit |                                                                                                                                                                                  | with this | Incorporated by Reference |
| Number  | Exhibit Title                                                                                                                                                                         | Form 10-K | Form                      | File No.  | Date Filed |
| 10.19   | Underwriting Agreement dated June 16, 2009 between McMoRan Exploration Co. and J.P. Morgan Securities Inc., as representative of the several underwriters names in Schedule 1 thereto |      | 8-K                       | 001-07791 | 06/19/2009 |
| 10.20*  | McMoRan 1998 Stock Option Plan, as amended and restated                                                                                                                               |      | 10-Q                      | 001-07791 | 05/10/2007 |
| 10.21*  | McMoRan 1998 Stock Option Plan for Non-Employee Directors                                                                                                                             |      | 10-Q                      | 001-07791 | 05/10/2007 |
| 10.22*  | McMoRan Form of Notice of Grant of Nonqualified Stock Options under the 1998 Stock Option Plan                                                                                        |      | 10-Q                      | 001-07791 | 08/04/2005 |
| 10.23*  | McMoRan 2000 Stock Incentive Plan, as amended and restated                                                                                                                            |      | 10-Q                      | 001-07791 | 05/10/2007 |
| 10.24*  | McMoRan Form of Notice of Grant of Nonqualified Stock Options under the 2000 Stock Incentive Plan                                                                                     |      | 10-Q                      | 001-07791 | 08/04/2005 |
| 10.25*  | McMoRan 2001 Stock Incentive Plan, as amended and restated                                                                                                                            |      | 10-Q                      | 001-07791 | 05/10/2007 |
| 10.26*  | McMoRan 2003 Stock Incentive Plan, as amended and restated                                                                                                                            |      | 10-Q                      | 001-07791 | 05/10/2007 |
| 10.27*  | McMoRan’s Performance Incentive Awards Program as amended December 1, 2008                                                                                                      |      | 10-K                      | 001-07791 | 02/27/2009 |
| 10.28*  | McMoRan Form of Notice of Grant of Nonqualified Stock Options under the 2001 Stock Incentive Plan                                                                                     |      | 10-Q                      | 001-07791 | 08/04/2005 |
| 10.29*  | McMoRan Form of Restricted Stock Unit Agreement Under the 2001 Stock Incentive Plan                                                                                                   |      | 10-Q                      | 001-07791 | 08/09/2007 |
| 10.30*  | McMoRan Exploration Co. Executive Services Program, as amended May 4, 2009                                                                                                            | X         |                      |      |       |
| 10.31*  | McMoRan Form of Notice of Grants of Nonqualified Stock Options under the 2003 Stock Incentive Plan                                                                                    |      | 10-Q                      | 001-07791 | 08/04/2005 |
| 10.32*  | McMoRan Form of Restricted Stock Unit Agreement Under the 2003 Stock Incentive Plan                                                                                                   |      | 10-Q                      | 001-07791 | 08/09/2007 |
| 10.33*  | McMoRan 2004 Director Compensation Plan, as amended and restated                                                                                                                      |      | 10-Q                      | 001-07791 | 05/10/2007 |
| 10.34*  | Form of Amendment No. 1 to Notice of Grant of Nonqualified Stock Options under the 2004 Director Compensation Plan                                                                    |      | 8-K                       | 001-07791 | 05/05/2006 |
| 10.35*  | Amended and Restated Agreement for Consulting Services between FM Services Company and B.M. Rankin, Jr. effective as of January 1, 2010                                               | X         | 10-K                      | 001-07791 | 03/25/1999 |
| 10.36*  | McMoRan Director Compensation                                                                                                                                                         |      | 10-Q                      | 001-07791 | 05/11/2009 |
| 10.37*  | McMoRan Exploration Co. 2005 Stock Incentive Plan                                                                                                                                     |      | 10-Q                      | 001-07791 | 05/10/2007 |
| 10.38*  | Form of Notice of Grant of Nonqualified Stock Options under the 2005 Stock Incentive Plan                                                                                             |      | 8-K                       | 001-07791 | 05/06/2005 |
| 10.39*  | Form of Restricted Stock Unit Agreement under the 2005 Stock Incentive Plan                                                                                                           |      | 10-Q                      | 001-07791 | 08/09/2007 |
|      |   |   |   |   |   |
|---------------------|--------|--------|--------|--------|--------|

----

TABLE OF CONTENTS

| Exhibit |                                                                                                                                                                                       | with this | Incorporated by Reference |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|---------------------------|
| Number  | Exhibit Title                                                                                                                                                                              | Form 10-K | Form                      | File No. | Date Filed |
| 10.40*  | McMoRan Exploration Co. Supplemental Executive Capital Accumulation Plan                                                                                                                   |      | 10-Q                      | 001-07791 | 05/08/2008 |
| 10.41*  | McMoRan Exploration Co. Supplemental Executive Capital Accumulation Plan Amendment One                                                                                                     |      | 10-Q                      | 001-07791 | 05/08/2008 |
| 10.42*  | McMoRan Exploration Co. Supplemental Executive Capital Accumulation Plan Amendment Two                                                                                                     |      | 10-K                      | 001-07791 | 02/27/2009 |
| 10.43*  | McMoRan Exploration Co. 2005 Supplemental Executive Capital Accumulation Plan                                                                                                              |      | 10-K                      | 001-07791 | 02/27/2009 |
| 10.44*  | McMoRan Exploration Co. 2008 Stock Incentive Plan.                                                                                                                                         |      | 8-K                       | 001-07791 | 06/11/2008 |
| 10.45*  | Form of Notice of Grant of Nonqualified Stock Options under the 2008 Stock Incentive Plan.                                                                                            |      | 8-K                       | 001-07791 | 06/11/2008 |
| 10.46*  | Form of Restricted Stock Unit Agreement under the 2008 Stock Incentive Plan.                                                                                                               |      | 8-K                       | 001-07791 | 06/11/2008 |
| 10.47*  | Form of Notice of Grant of Nonqualified Stock Options and Restricted Stock Units under the 2008 Stock Incentive Plan (for grants made to non-management directors and advisory directors). |      | 8-K                       | 001-07791 | 06/11/2008 |
| 10.48*  | McMoRan Severance Plan.                                                                                                                                                                    |      | 10-K                      | 001-07791 | 02/27/2009 |
| 10.49*  | Letter Agreement between Nancy Parmelee and FM Services Company (partially allocated to McMoRan Exploration Co.).                                                                          | X         |                      |   |   |
| 12.1    | Computation of Ratio of Earnings to Fixed Charges                                                                                                                                          | X         |                      |   |   |
| 14.1    | Ethics and Business Conduct Policy                                                                                                                                                         |      | 10-K                      | 001-07791 | 03/15/2004 |
| 21.1    | List of subsidiaries                                                                                                                                                                       | X         |                      |   |   |
| 23.1    | Consent of Ernst & Young LLP                                                                                                                                                           | X         |                      |   |   |
| 23.2    | Consent of Ryder Scott Company, L.P.                                                                                                                                                       | X         |                      |   |   |
| 24.1    | Certified Resolution of the Board of Directors of McMoRan authorizing this report to be signed on behalf of any officer or director pursuant to a Power of Attorney.                       | X         |                      |   |   |
| 24.2    | Powers of Attorney pursuant to which this report has been signed on behalf of certain officers and directors of McMoRan.                                                                   | X         |                      |   |   |
| 31.1    | Certification of Principal Executive Officer pursuant to Rule 13a–14(a)/15d-14(a)                                                                                                    | X         |                      |   |   |
| 31.2    | Certification of Principal Financial Officer pursuant to Rule 13a–14(a)/15d-14(a)                                                                                                    | X         |                      |   |   |
| 32.1    | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350                                                                                                            | X         |                      |   |   |
| 32.2    | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350                                                                                                            | X         |                      |   |   |
| 99.1    | Report of Ryder Scott Company, L.P.                                                                                                                                                        | X         |                      |   |   |

----