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| 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, 2010                                                             |
| 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                   |

| Portions of our Proxy Statement for our 2011 Annual Meeting to be held on June 15, 2011 are incorporated by reference intoPart III (Items 10, 11, 12, 13 and 14) of this report. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| TABLE OF CONTENTS                                                                                                         |
|---------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                      |   |
|                                                                                                                      | Page |
| Part I                                                                                                                    |   |
| Items 1. and 2. Business and Properties                                                                                   | 1 |
| Item 1A.  Risk Factor                                                                                           | 13 |
| Item 1B.  Unresolved Staff Comments                                                                             | 26 |
| Item 3. Legal Proceedings                                                                                                 | 26 |
| Item 4. (Removed and Reserved)                                                                                            | 26 |
| Executive Officers of the Registrant                                                                                      | 26 |
|                                                                                                                      |   |
| Part II                                                                                                                   |   |
| Item 5. Market for Registrant’s Common Equity, Related Stockholder Mattersand Issuer Purchases of Equity Securities | 27 |
| Item 6. Selected Financial Data                                                                                           | 29 |
| Items 7. and 7A. Management’s Discussion and Analysis of Financial Condition and Results                            |   |
| of Operations and Quantitative and Qualitative Disclosures about Market Risk                                              | 30 |
| Item 8. Financial Statements and Supplementary Data                                                                       | 47 |
| Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                              | 90 |
| Item 9A. Controls and Procedures                                                                                          | 90 |
| Item 9B. Other Information                                                                                                | 90 |
|                                                                                                                      |   |
| Part III                                                                                                                  |   |
| Item 10. Directors, Executive Officers and Corporate Governance                                                           | 91 |
| Item 11. Executive Compensation                                                                                           | 91 |
| Item 12. Security Ownership of Certain Beneficial Owners and Management and Related                                       |   |
| Stockholders Matters                                                                                                      | 91 |
| Item 13. Certain Relationships and Related Transactions, and Director Independence                                        | 91 |
| Item 14. Principal Accounting Fees and Services                                                                           | 91 |
|                                                                                                                      |   |
| Part IV                                                                                                                   |   |
| Item 15. Exhibits and Financial Statement Schedules                                                                       | 92 |
|                                                                                                                      |   |
| Glossary                                                                                                                  | 92 |
|                                                                                                                      |   |
| Signatures                                                                                                                | S-1 |
|                                                                                                                      |   |
| Exhibit Index                                                                                                             | E-1 |

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PART I

Items 1. and 2.  Business and Properties

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

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

|   | • | employing professionals with special geophysical, geological and reservoir assessment expertise in our regions of focus; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------|

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

|   | • | acquiring additional lease acreage, when available, to complement and/or enhance our investment opportunities and better align them with our overall business strategy; and |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

|                   | Gas    |    | Oil and condensate |   | Total  |
|------------------------|--------|---------|--------------------|--------|--------|
|                   | (MMcf) |    | (MBbls)            |   | (Bcfe) |
| Proved developed:      |   |    |               |   |   |   |   |   |
| Producing              |   | 45,810  |               |   | 4,278  |   |   | 71.5 |
| Non-producing          |   | 93,473  |               |   | 8,812  |   |   | 146.3 |
| Shut-in                |   | 5,699   |               |   | 227    |   |   | 7.1 |
| Total proved developed |   | 144,982 |               |   | 13,317 |   |   | 224.9 |
| Proved undeveloped     |   | 47,513  |               |   | 1,240  |   |   | 54.9 |
| Total proved reserves  |   | 192,495 |               |   | 14,557 |   |   | 279.8 |

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|                                                           | Gas    |   | Oil and condensate |   | Total  |   |
|----------------------------------------------------------------|--------|--------|--------------------|--------|--------|--------|
| Proved undeveloped:                                            | (MMcf) |   | (MBbls)            |   | (Bcfe) |   |
| Beginning of year                                              |   | 43,672 |               |   | 2,036  |   |   | 55,883 |   |
| Transferred to “proved developed” through drilling |   | (1,169 | )                  |   | (684   | )      |   | (5,276 | ) |
| Increase (decrease) due to evaluation reassessments            |   | (3,685 | )                  |   | (198   | )      |   | (4,867 | ) |
| and drilling results, net                                      |   |   |               |   |   |   |   |   |   |
| Acquisition of reserves                                        |   | 8,695  |               |   | 86     |   |   | 9,212 |   |
| Reductions of proved developed reserves aged five or           |   |   |               |   |   |   |   |   |   |
| more years                                                     |   | -      |               |   | -      |   |   | - |   |
| End of year                                                    |   | 47,513 |               |   | 1,240  |   |   | 54,952 |   |

|                                                    | Proved Reserves |
|---------------------------------------------------------|-----------------|
|                                                    | Developed       |   | Undeveloped |   | Total |
| Estimated undiscounted future net cash flows before     |            |   |   |   |   |   |   |   |
| income taxes                                            | $               | 769,265 |   | $ | 148,917 |   | $ | 918,182 |
|                                                    |            |   |   |   |   |   |   |   |
| Present value of estimated future net cash flows before |            |   |   |   |   |   |   |   |
| income taxes (PV-10) a, b                               | $               | 567,042 |   | $ | 83,878 |   | $ | 650,920 |
| Discounted future income taxes                          |            |   |   |   |   |   |   | - |
| Standardized measure of discounted net cash flows       |            |   |   |   |   |   | $ | 650,920 |

| a.   | Calculated based on the twelve month average prices during 2010 and costs prevailing at December 31, 2010 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 $76.97 per barrel of oil and $4.70 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 17). |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                 |   | Gas     |   | Oil and condensate |   | Total  |   | PV-10          |
|----------------------|--------|---------|--------|--------------------|--------|--------|--------|----------------|
|                 |   | (MMcf)  |   | (MBbls)            |   | (Bcfe) |   | (in millions)a |
| NYMEX price scenario |   | 195,837 |   | 15,246             |   | 287.3  |   | $              | 922 |

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

|                                                              |   | Years Ended December 31, |   |
|-------------------------------------------------------------------|--------|--------------------------|--------|
|                                                              |   | 2010                     |   | 2009 |   | 2008 |   |
| Net natural gas production (Mcf)                                  |   | 38,019,100               |   | 50,081,900 |   | 59,886,900 |   |
| Net crude oil and condensate production, excluding Main           |   |                     |   |   |   |   |   |
| Pass Block 299 (Bbls)                                             |   | 2,122,100                |   | 2,474,400 |   | 3,072,000 |   |
| Net crude oil production from Main Pass Block 299 (Bbls)          |   | 375,600                  |   | 495,500 |   | 561,400 |   |
| Net plant product production (per Mcf equivalent)                 |   | 5,956,700                |   | 5,759,600 |   | 8,004,400 |   |
| Average sales prices:                                             |   |                     |   |   |   |   |   |
| Natural gas (per Mcf)                                             |   | $  4.77        |   | $  4.22 |   | $   9.96 |   |
| Crude oil and condensate, excluding Main Pass Block 299 (per Bbl) |   | 78.70                    |   | 60.19 |   | 106.28 |   |
| Crude oil and condensate, Main Pass Block 299 (per Bbl)           |   | 73.41                    |   | 60.35 |   | 91.60 |   |
| Production (lifting) costs: a                                     |   |                     |   |   |   |   |   |
| Per barrel for Main Pass Block 299 b                              |   | $51.94                   |   | $38.15 |   | $69.29 |   |
| Per Mcfe for other properties c                                   |   | 2.89                     |   | 2.47 |   | 2.56 |   |

| 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 Block 299 are higher than the production costs for our other properties primarily because of the sour crude oil that is produced at Main Pass Block 299.  Production costs for Main Pass Block 299 included workover expenses of approximately $1.9 million or $5.18 per barrel in 2010, $1.0 million or $1.95 per barrel in 2009 and $17.0 million or $30.22 per barrel in 2008. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 $27.9 million or $0.49 per Mcfe in 2010, $31.2 million or $0.44 per Mcfe in 2009 and $45.8 million or $0.53 per Mcfe in 2008. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                        |   | Developed |   | Undeveloped |
|-----------------------------|--------|-----------|--------|-------------|
|                        |   | Gross     |   | Net         |   | Gross |   | Net |
|                        |   | Acres     |   | Acres       |   | Acres |   | Acres |
| Offshore (federal waters)   |   | 495,673   |   | 291,854     |   | 268,411 |   | 181,252 |
| Onshore Louisiana and Texas |   | 44,975    |   | 23,567      |   | 61,790 |   | 41,896 |
| Total at December 31, 2010  |   | 540,648   |   | 315,421     |   | 330,201 |   | 223,148 |

|                           |      | Net       |        |         |   |   |
|--------------------------------|-----------|-----------|-------------|--------------|--------|--------|
|                           | Working   | Revenue   | Water       | Production a |
|                           | Interest  | Interest  |  Depth | Gross        |   | Net    |
|                           | (%)       | (%)       | (feet)      | (MMcfe/d)    |
| Deep Shelf:                    |      |      |        |         |   |   |
| South Marsh Island Block 212   |      |      |        |         |   |   |
|  ”Flatrock” b | 55.0      | 38.8-41.3 | 10          | 165          |   | 31     |
| Louisiana State Lease 18090    |      |      |        |         |   |   |
| “Long Point”       | 37.5      | 26.7      | 8           | 18           |   | 5      |
| Eugene Island Block 182 c, d   | 66.9      | 52.8      | 91          | 8            |   | 4      |
|                           |      |      |        |         |   |   |
| Traditional Shelf: c           |      |      |        |         |   |   |
| High Island 537                | 60.9-74.9 | 51.0-62.7 | 200         | 14           |   | 8      |
| Eugene Island Block 251        | 56.9      | 43.9      | 160         | 14           |   | 6      |
| Vermillion 215                 | 92.0      | 76.8      | 122         | 6            |   | 5      |
| Main Pass Block 299            | 100.0     | 77.1-83.3 | 210         | 6            |   | 5      |
| South Pelto 9                  | 33.3      | 28.8      | 35          | 14           |   | 4      |
| West Delta 27 e                | 62.0      | 50.1      | 23          | 8            |   | 4      |
| High Island 474                | 65.8-84.6 | 55.0-70.7 | 173-180     | 5            |   | 3      |
|                           |      |      |        |         |   |   |

| a.   | Reflects average daily production rates for the fourth quarter of 2010. |
|----------------|-------------------------------------------------------------------------|

| b.   | Working interest and net revenue interest reflected above includes additional interests acquired in the PXP Acquisition on December 30, 2010 (30.0% working interest and 21.2-22.5% net revenue interest). In the first quarter of 2011, the operator successfully recompleted the Flatrock #229 well and production recommenced. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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| e.   | This property has utilized production and multiple non-unit wells with varying ownership interests of 50.0-75.0% working interest and 41.2-62.0% net revenue interest. The unitized interest is reflected in this table. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|        |   | 2010a  |   | 2009   |   | 2008   |   |
|-------------|--------|--------|--------|--------|--------|--------|--------|
|        |   | Gross  |   | Net    |   | Gross  |   | Net |   | Gross |   | Net |   |
| Exploratory |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Productive  |   | -      |   | -      |   | 1      |   | 0.3 |   | 2 |   | 0.5 |   |
| Dry         |   | 1      |   | 0.5    |   | 4      |   | 1.4 |   | 3 |   | 1.1 |   |
| Total       |   | 1      |   | 0.5    |   | 5      |   | 1.7 |   | 5 |   | 1.6 |   |
|        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Development |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Productive  |   | 2      |   | 1.7    |   | -      |   | - |   | 3 |   | 1.0 |   |
| Dry         |   | -      |   | -      |   | -      |   | - |   | 1 |   | 0.5 |   |
| Total       |   | 2      |   | 1.7    |   | -      |   | - |   | 4 |   | 1.5 |   |

| a.   | Excludes 7 gross (4.2 net) in-progress wells at December 31, 2010. |
|----------------|--------------------------------------------------------------------|

|     | Gas   |   | Oil  |   |
|----------|-------|--------|------|--------|
|     | Gross |   | Net  |   | Gross |   | Net |   |
| Offshore | 132   |   | 56.5 |   | 82 |   | 45.7 |   |
| Onshore  | 28    |   | 9.9  |   | 4 |   | 1.4 |   |
| Total    | 160   |   | 66.4 |   | 86 |   | 47.1 |   |

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Item 1A.  Risk Factors

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|   | • |   | supply and demand for oil and gas and expectations regarding supply and demand; |
|--------|---------|--------|---------------------------------------------------------------------------------|

|   | • |   | weather; |
|--------|---------|--------|----------|

|   | • |   | actions by OPEC and other major producing companies; |
|--------|---------|--------|------------------------------------------------------|

|   | • |   | political conditions in other oil-producing and gas-producing countries, including the possibility of insurgency, terrorism or war in such areas; |
|--------|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | the prices of foreign exports and the availability of alternate fuel sources; |
|--------|---------|--------|-------------------------------------------------------------------------------|

|   | • |   | general economic conditions in the United States and worldwide, including the value of the U.S. dollar relative to other major currencies; and |
|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | governmental regulations. |
|--------|---------|--------|---------------------------|

|   | • |   | our revenues, cash flows, profitability and earnings; |
|--------|---------|--------|-------------------------------------------------------|

|   | • |   | our ability to attract capital to finance our operations and the cost of such capital; |
|--------|---------|--------|----------------------------------------------------------------------------------------|

|   | • |   | the amount that we are allowed to borrow; and |
|--------|---------|--------|-----------------------------------------------|

|   | • |   | the value of our oil and gas properties and our oil and gas reserve volumes. |
|--------|---------|--------|------------------------------------------------------------------------------|

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

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

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

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

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

|   | • | continued economic uncertainty 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. |
|--------|---------|-----------------------------------------------------------|

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

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|   | • | 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 delayed or less than expected; |
|--------|---------|----------------------------------------------|

|   | • | the counterparty to the hedging contract is unable to satisfy its obligations; or |
|--------|---------|----------------------------------------------------------------------------------------|

|   | • | there is an adverse change in the expected differential between the underlying price in the hedging agreement and actual prices received for our production. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

|   | • | adapt to an increasingly burdensome regulatory environment, particularly with respect to bearing increased compliance costs, in response to the Deepwater Horizon or other catastrophic events and uncertainties; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | define, evaluate, bid for and purchase properties and prospects; |
|--------|---------|------------------------------------------------------------------|

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

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

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

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

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

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

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

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

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

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

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

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|   | • | 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).

| Name                |   | Age    |   | Position or Office                             |
|---------------------|--------|--------|--------|------------------------------------------------|
| James R. Moffett    |   | 72     |   | Co-Chairman of the Board, President            |
|                |   |   |   | and Chief Executive Officer                    |
|                |   |   |   |                                           |
| Richard C. Adkerson |   | 64     |   | Co-Chairman of the Board                       |
|                |   |   |   |                                           |
| C. Howard Murrish   |   | 70     |   | Executive Vice President                       |
|                |   |   |   |                                           |
| Nancy D. Parmelee   |   | 59     |   | Senior Vice President, Chief Financial Officer |
|                |   |   |   | and Secretary                                  |
|                |   |   |   |                                           |
| Kathleen L. Quirk   |   | 47     |   | Senior Vice President and Treasurer            |
|                |   |   |   |                                           |

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PART II

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

|           |   | 2010   |   | 2009  |   |
|----------------|--------|--------|--------|-------|--------|
|           |   | High   |   | Low   |   | High |   | Low |   |
| First Quarter  |   | $18.80 |   | $8.18 |   | $12.35 |   | $3.14 |   |
| Second Quarter |   | 17.10  |   | 8.63  |   | 7.71 |   | 4.26 |   |
| Third Quarter  |   | 18.04  |   | 9.91  |   | 9.35 |   | 4.72 |   |
| Fourth Quarter |   | 19.80  |   | 14.18 |   | 9.78 |   | 6.77 |   |

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|                               | December 31, |
|------------------------------------|--------------|
|                               | 2005         | 2006 | 2007 | 2008 | 2009 | 2010 |
| McMoRan Exploration Co.            | $100.00      | $71.93 | $66.21 | $49.57 | $40.57 | $86.70 |
| S&P 500 Stock Index            | 100.00       | 115.80 | 122.16 | 76.96 | 97.33 | 111.99 |
| Independent Oil & Gas Industry |         |   |   |   |   |   |
| Group                              | 100.00       | 112.45 | 162.43 | 95.30 | 146.66 | 188.65 |

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Item 6.  Selected Financial Data

|                                          |   | 2010                                                    |      | 2009   |   | 2008                                  |   | 2007a  |      | 2006   |   |
|-----------------------------------------------|--------|---------------------------------------------------------|-----------|--------|--------|---------------------------------------|--------|--------|-----------|--------|--------|
| Financial Data                                |   | (Financial data in thousands, except per share amounts) |      |
| Years Ended December 31:                      |   |                                                    |      |   |   |                                  |   |   |      |   |   |   |   |   |   |   |
| Revenues b                                    |   | $                                                       | 434,376   |   | $      | 435,435                               |   | $      | 1,072,482 |   | $      | 481,167 |   | $ | 209,738 |   |
| Depreciation and amortization                 |   |                                                    | 282,062   | c      |   | 313,980                               | c      |   | 854,798   | c      |   | 256,007 | c |   | 104,724 |   |
| Exploration expenses                          |   |                                                    | 42,608    |   |   | 94,281                                |   |   | 79,116    |   |   | 58,954 |   |   | 67,737 |   |
| Main Pass Energy Hub™ costs d      |   |                                                    | 1,011     |   |   | 1,615                                 |   |   | 6,047     |   |   | 9,754 |   |   | 10,714 |   |
| Exploration expense reimbursement             |   |                                                    | -         |   |   | -                                     |   |   | -         |   |   | - |   |   | (10,979 | )e |
| Insurance recoveries f                        |   |                                                    | (38,944   | )      |   | (24,592                               | )      |   | (3,391    | )      |   | (2,338 | ) |   | (3,306 | ) |
| Operating income (loss)                       |   |                                                    | (78,985   | )      |   | (168,434                              | )      |   | (155,234  | )      |   | 3,509 |   |   | (32,567 | ) |
| Interest expense, net                         |   |                                                    | (38,216   | )      |   | (42,943                               | )      |   | (50,890   | )      |   | (66,366 | ) |   | (10,203 | ) |
| Loss from continuing operations               |   |                                                    | (116,976  | )      |   | (204,889                              | )      |   | (211,198  | )      |   | (63,561 | ) |   | (44,716 | ) |
| Income (loss) from discontinued               |   |                                                    |      |   |   |                                  |   |   |      |   |   |   |   |   |   |   |
| operations                                    |   |                                                    | (3,366    | )      |   | (6,097                                | )      |   | (5,496    | )      |   | 3,827 |   |   | (2,938 | ) |
| Net loss applicable to common stock           |   |                                                    | (197,443  | )      |   | (225,318                              | )      |   | (238,980  | )      |   | (63,906 | ) |   | (49,269 | ) |
|                                          |   |                                                    |      |   |   |                                  |   |   |      |   |   |   |   |
| Basic and diluted net income (loss) per share |   |                                                    |      |   |   |                                  |   |   |      |   |   |   |   |
| of common stock:                              |   |                                                    |      |   |   |                                  |   |   |      |   |   |   |   |   |   |   |
| Continuing operations                         |   | $                                                       | (2.04     | )      | $      | (2.79                                 | )      | $      | (3.79     | )      | $      | (1.97 | ) | $ | (1.66 | ) |
| Discontinued operations                       |   |                                                    | (0.04     | )      |   | (0.08                                 | )      |   | (0.09     | )      |   | 0.11 |   |   | (0.10 | ) |
| Basic and diluted net loss per share          |   | $                                                       | (2.08     | )      | $      | (2.87                                 | )      | $      | (3.88     | )      | $      | (1.86 | ) | $ | (1.76 | ) |
|                                          |   |                                                    |      |   |   |                                  |   |   |      |   |   |   |   |   |   |   |
| Average basic and diluted common              |   |                                                    |      |   |   |                                  |   |   |      |   |   |   |   |   |   |   |
| shares outstanding                            |   |                                                    | 95,125    | g      |   | 78,625                                | g      |   | 61,581    | g      |   | 34,283 |   |   | 27,930 |   |
|                                          |   |                                                    |      |   |   |                                  |   |   |      |   |   |   |   |   |   |   |
| At December 31:                               |   |                                                    |      |   |   |                                  |   |   |      |   |   |   |   |   |   |   |
| Working capital (deficit)                     |   | $                                                       | 628,597   |   | $      | 148,357                               |   | $      | 3,601     |   | $      | (221,302 | ) | $ | (25,906 | ) |
| Property, plant and equipment, net            |   |                                                    | 1,785,607 | h      |   | 796,223                               |   |   | 992,563   |   |   | 1,503,359 |   |   | 282,538 |   |
| Total assets                                  |   |                                                    | 2,899,364 |   |   | 1,248,882                             |   |   | 1,330,282 |   |   | 1,715,288 |   |   | 408,677 |   |
| Oil and gas reclamation obligations           |   |                                                    | 358,624   |   |   | 428,711                               |   |   | 421,201   |   |   | 294,737 |   |   | 25,876 |   |
| Long-term debt, including current portion     |   |                                                    | 559,976   | g      |   | 374,720                               |   |   | 374,720   |   |   | 689,000 |   |   | 244,620 |   |
| Stockholders’ equity (deficit)          |   | $                                                       | 1,724,337 | g,h    | $      |      265,808 |   | $      | 309,023   |   | $      | 372,229 |   | $ | (68,443 | ) |

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

| b.   | Includes service revenues totaling $15.6 million in 2010, $12.5 million in 2009, $13.7 million in 2008, $5.9 million in 2007 and $13.0 million in 2006 (Note 1). |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | Includes impairment charges of $107.2 million in 2010, $75.3 million in 2009, $332.6 million in 2008, $13.6 million in 2007 and $33.2 million in 2006 (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 liquefied natural gas (LNG) terminal, at Main Pass Block 299 in the Gulf of Mexico (Note 16). |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| g.   | Reflects the applicable impact of common and preferred stock and convertible debt transactions during the periods from 2007 through 2010 (Notes 2, 6, 8 and 9). |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| h.   | Includes the impact of the approximate $1 billion acquisition of Gulf of Mexico shallow water properties from Plains Exploration & Production Company (PXP Acquisition), including the issuance of 51 million shares of McMoRan common stock (Note 2). |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                              | 2010   |       | 2009   |   | 2008       |   | 2007 a |       | 2006   |   |
|-----------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|
| Operating Data                    |   |       |   |   |       |   |   |       |   |   |   |   |   |   |   |
| Years Ended December 31:          |   |       |   |   |       |   |   |       |   |   |   |   |   |   |   |
| Sales Volumes:                    |   |       |   |   |       |   |   |       |   |   |   |   |   |   |   |
| Gas (thousand cubic feet, or Mcf) |   | 38,019,100 |   |   | 50,081,900 |   |   | 59,886,900 |   |   | 38,994,000 |   |   | 14,545,600 |   |
| Oil (barrels)                     |   | 2,480,900  |   |   | 2,994,100  |   |   | 3,635,200  |   |   | 2,380,500 |   |   | 1,379,300 |   |
| Plant products (Mcf equivalent)b  |   | 5,956,700  |   |   | 5,759,600  |   |   | 8,004,400  |   |   | 2,153,300 |   |   | 1,072,200 |   |
| Average realization:              |   |       |   |   |       |   |   |       |   |   |   |   |   |   |   |
| Gas (per Mcf)                     | $      | 4.77       |   | $      | 4.22       |   | $      | 9.96       |   | $      | 7.01 |   | $ | 7.05 |   |
| Oil (per barrel)                  |   | 77.93      |   |   | 60.22      |   |   | 104.00     |   |   | 76.55 |   |   | 60.55 |   |

| a.   | Includes results from acquired oil and gas properties effective August 6, 2007 (Note 2). |
|----------------|------------------------------------------------------------------------------------------|

| b.   | Revenues from plant products (ethane, propane, butane, etc.) totaled $43.6 million in 2010, $31.3 million in 2009, $83.3 million in 2008, $19.3 million in 2007 and $9.6 million in 2006.  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 Operations and Quantitative and Qualitative Disclosures About Market Risk

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|                                                   |   | 2010   |    | 2009   |   |
|--------------------------------------------------------|--------|--------|---------|--------|--------|
| Oil and natural gas revenues – prior year period |   | $      | 422,976 |   | $      | 1,058,804 |   |
| Increase (decrease)                                    |   |   |    |   |   |   |   |
| Price realizations:                                    |   |   |    |   |   |   |   |
| Natural gas                                            |   |   | 20,911  |   |   | (287,470 | ) |
| Oil and condensate                                     |   |   | 43,937  |   |   | (131,082 | ) |
| Sales volumes:                                         |   |   |    |   |   |   |   |
| Natural gas                                            |   |   | (50,905 | )      |   | (97,658 | ) |
| Oil and condensate                                     |   |   | (30,905 | )      |   | (66,674 | ) |
| Plant products revenue                                 |   |   | 12,325  |   |   | (51,980 | ) |
| Other                                                  |   |   | 477     |   |   | (964 | ) |
| Oil and natural gas revenues - current year period     |   | $      | 418,816 |   | $      | 422,976 |   |

|                                       |   |   | Per   |   |   |   | Per   |   |   |   | Per   |
|--------------------------------------------|--------|--------|-------|--------|--------|--------|-------|--------|--------|--------|-------|
|                                       | 2010   |   | Mcfe  |   | 2009   |   | Mcfe  |   | 2008   |   | Mcfe  |
| Lease operating expense                    | $105.4 |   | $1.79 |   | $115.9 |   | $1.57 |   | $133.6 |   | $1.49 |
| Workover costs                             | 22.9   |   | 0.39  |   | 18.0   |   | 0.25  |   | 39.7   |   | 0.44  |
| Hurricane related repairs                  | 6.9    |   | 0.12  |   | 14.1   |   | 0.19  |   | 23.1   |   | 0.26  |
| Insurance                                  | 26.5   |   | 0.45  |   | 23.9   |   | 0.32  |   | 22.6   |   | 0.25  |
| Transportation, production taxes and other | 21.1   |   | 0.36  |   | 21.1   |   | 0.29  |   | 39.5   |   | 0.44  |
| Total production and delivery costs        | $182.8 |   | $3.11 |   | $193.0 |   | $2.62 |   | $258.5 |   | $2.88 |

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|                               |   |   | Per    |   |   |   | Per    |   |   |   | Per    |
|------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                               | 2010   |   | Mcfe   |   | 2009   |   | Mcfe   |   | 2008   |   | Mcfe   |
| Depletion and depreciation expense | $148.4 |   | $2.52  |   | $205.5 |   | $2.78  |   | $357.5 |   | $3.98  |
| Accretion expense                  | 26.5   |   | 0.45   |   | 33.2   |   | 0.45   |   | 164.8  |   | 1.84   |
| Impairment charges/losses          | 107.2  |   | 1.82   |   | 75.3   |   | 1.02   |   | 332.5  |   | 3.71   |
| Total depletion, depreciation and  |   |   |   |   |   |   |   |   |   |   |   |
| amortization expense               | $282.1 |   | $4.79  |   | $314.0 |   | $4.25  |   | $854.8 |   | $9.53  |

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|                             | Years Ended December 31, |   |
|----------------------------------|--------------------------|--------|
|                             |                     | 2010   |   |   | 2009 |   |   | 2008 |   |
| Geological and geophysical,      |                     |   |   |   |   |   |   |   |   |
| including 3-D seismic purchasesa | $                        | 19.3   |   | $ | 26.8 |   | $ | 31.9 |   |
| Dry hole costs                   |                     | 14.5   | b |   | 61.5 |  c |   | 38.9 | d |
| Insurance and other              |                     | 8.8    |   |   | 6.0 |   |   | 8.3 |   |
|                             | $                        | 42.6   |   | $ | 94.3 |   | $ | 79.1 |   |

| a.   | Includes compensation costs associated with stock-based awards totaling $8.6 million in 2010, $6.6 million in 2009 and $14.4 million in 2008. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Includes $7.2 million nonproductive exploratory drilling and related costs primarily associated with the Blueberry Hill offset appraisal well incurred below 19,000 feet which was determined to be non-commercial, net of other miscellaneous dry hole adjustments.  Also includes $7.3 million of nonproductive exploratory drilling costs incurred through December 31, 2010 related to the Platte well (see below). |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                    | For Year Ended December 31, |   |
|-------------------------|-----------------------------|--------|
|                    | 2010                        |   | 2009 |   | 2008 |   |
| Continuing operations   |                        |   |   |   |   |   |   |   |   |
| Operating a             | $                           | 100.4  |   | $ | 136.9 |   | $ | 629.7 |   |
| Investing               |                        | (300.5 | ) |   | (138.0 | ) |   | (239.2 | ) |
| Financing               |                        | 866.5  |   |   | 154.8 |   |   | (295.5 | ) |
|                    |                        |   |   |   |   |   |   |   |   |
| Discontinued operations |                        |   |   |   |   |   |   |   |   |
| Operating               | $                           | (2.2   | ) | $ | (5.7 | ) | $ | (6.3 | ) |
| Investing               |                        | -      |   |   | - |   |   | - |   |
| Financing               |                        | -      |   |   | - |   |   | - |   |
|                    |                        |   |   |   |   |   |   |   |   |
| Total cash flow         |                        |   |   |   |   |   |   |   |   |
| Operating               | $                           | 98.2   |   | $ | 131.2 |   | $ | 623.4 |   |
| Investing               |                        | (300.5 | ) |   | (138.0 | ) |   | (239.2 | ) |
| Financing               |                        | 866.5  |   |   | 154.8 |   |   | (295.5 | ) |

| a.   | Net of reclamation spending of $115.1 million, $45.9 million and $29.4 million in 2010, 2009 and 2008, respectively. |
|----------------|----------------------------------------------------------------------------------------------------------------------|

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|                                                          |   |   |   |   |
|---------------------------------------------------------------|--------|--------|--------|--------|
|                                                          | Amount |   |   |
| 11.875% senior notes (due 2014)                               | $      | 300.0  |   |   |
| 5¼% convertible senior notes (due 2011)                  |   | 74.7   |   |   |
| 4% convertible senior notes, net of $14.7 discount (due 2017) |   | 185.3  |   |   |
| Credit facility                                               |   | -      |   |   |
| Total debt                                                    | $      | 560.0  |   |   |

|                                     |   |    |   |   | 2012 to |   | 2014 to |   |       |
|------------------------------------------|--------|---------|--------|--------|---------|--------|---------|--------|------------|
|                                     | Total  |    | 2011   |   | 2013    |   | 2015    |   | Thereafter |
| Debt maturities a                        | $      | 574.7   |   | $      | 74.7    |   | $       | -      |       | $ | 300.0 |   | $ | 200.0 |
| Scheduled interest payment obligations b |   | 237.3   |   |   | 53.4    |   |    | 89.5   |       |   | 78.4 |   |   | 16.0 |
| Retirement benefits c                    |   | 7.2     |   |   | 1.1     |   |    | 1.9    |       |   | 1.6 |   |   | 2.6 |
| Oil and gas obligations d                |   | 385.1   |   |   | 355.4   |   |    | 29.7   |       |   | - |   |   | - |
| Operating lease obligations e            |   | 8.3     |   |   | 2.4     |   |    | 4.7    |       |   | 1.2 |   |   | - |
|                                     |   |    |   |   |    |   |    |   |       |   |   |   |   |   |
| Total contractual cash obligations       | $      | 1,212.6 |   | $      | 487.0   |   | $       | 125.8  |       | $ | 381.2 |   | $ | 218.6 |

| a.   | Includes $274.7 million of convertible debt, which can be converted to common stock prior to contractual maturity at the discretion of the holders of the securities. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Reflects interest and unused commitment fees on the debt balances as of December 31, 2010.  Because we did not have any amounts outstanding under our credit facility as of December 31, 2010,  we assumed a zero percent effective annual interest rate on our credit facility and a 2.98 percent and |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| c.   | Includes anticipated payments under our employee retirement health care plan through 2020 (Note 11) and our future reimbursements associated with the contractual liability covering certain of our former sulphur retirees’ medical costs (Note 15). |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d.   | These oil and gas obligations include our net working interest share of authorized exploration and development project costs at December 31, 2010 (i.e. project costs for which spending has been formally approved by us and our partners through executed AFE’s).  Also, included in these amounts is $176.7 million of anticipated expenditures for drilling rig contract charges, portions of which we expect to share with our partners in our exploration program.  In addition, includes escrow payments of $5 million per year through 2013 to support the funding requirements related to the 2007 oil and gas acquisition property reclamation obligations (Note 15). |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                        | Oil and Gas |    | Sulphur |
|-----------------------------|-------------|---------|---------|
|                        | 2010        |    | 2009    |   | 2010 |   | 2009 |
| Undiscounted cost estimates | $           | 467,912 |    | $ | 538,778 |   | $ | 39,817 |   | $ | 43,418 |
| Discounted cost estimates   | $           | 358,624 |    | $ | 428,711 |   | $ | 25,266 |   | $ | 27,452 |

|                                   | Inflation Rate |   | Market Risk Premium |   |
|----------------------------------------|----------------|--------|---------------------|--------|
|                                   | +1%            |   | -1%                 |   | +5% |   | -5% |   |
| Oil & Gas reclamation obligations: |           |   |                |   |   |   |   |   |   |   |   |   |
| Undiscounted                           | $              | 23.0   |                | $      | (21.1) |   | $ | 21.7 |   | $ | (9.1) |   |
| Discounted                             |           | 10.8   |                |   | (10.1) |   |   | 16.3 |   |   | (4.6) |   |
| Sulphur reclamation obligations:       |           |   |                |   |   |   |   |   |   |   |   |   |
| Undiscounted                           |           | 5.7    |                |   | (5.0) |   |   | 1.4 |   |   | (1.4) |   |
| Discounted                             |           | 1.1    |                |   | (1.0) |   |   | - |   |   | - |   |

| 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. |
|----------------|------------------------------------------------------------------------------------------|

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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. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| James R. Moffett                      | Nancy D. Parmelee           |
|---------------------------------------|-----------------------------|
| Co-Chairman of the Board,             | Senior Vice President,      |
| President and Chief Executive Officer | Chief Financial Officer and |
|                                  | Secretary                   |

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|                                                                           |   | December 31,                                 |      |
|--------------------------------------------------------------------------------|--------|----------------------------------------------|-----------|
|                                                                           |   | 2010                                         |      | 2009 |   |
|                                                                           |   | (In thousands, except share related amounts) |      |
| ASSETS                                                                         |   |                                         |      |   |   |   |   |
| Current assets:                                                                |   |                                         |      |   |   |   |   |
| Cash and cash equivalents                                                      |   | $                                            | 905,684   |   | $ | 241,418 |   |
| Accounts receivable                                                            |   |                                         | 86,516    |   |   | 79,681 |   |
| Inventories                                                                    |   |                                         | 38,461    |   |   | 47,818 |   |
| Prepaid expenses                                                               |   |                                         | 15,478    |   |   | 14,457 |   |
| Fair value of oil and gas derivative contracts                                 |   |                                         | -         |   |   | 8,693 |   |
| Current assets from discontinued operations, including restricted cash of $473 |   |                                         | 702       |   |   | 825 |   |
| Total current assets                                                           |   |                                         | 1,046,841 |   |   | 392,892 |   |
| Property, plant and equipment, net                                             |   |                                         | 1,785,607 |   |   | 796,223 |   |
| Restricted cash                                                                |   |                                         | 53,975    |   |   | 41,677 |   |
| Deferred financing costs and other assets                                      |   |                                         | 9,952     |   |   | 11,931 |   |
| Long-term assets from discontinued operations                                  |   |                                         | 2,989     |   |   | 6,159 |   |
| Total assets                                                                   |   | $                                            | 2,899,364 |   | $ | 1,248,882 |   |
|                                                                           |   |                                         |      |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                     |   |                                         |      |   |   |   |   |
| Current liabilities:                                                           |   |                                         |      |   |   |   |   |
| Accounts payable                                                               |   | $                                            | 102,658   |   | $ | 66,544 |   |
| Accrued liabilities                                                            |   |                                         | 99,363    |   |   | 51,945 |   |
| Accrued interest and dividends payable                                         |   |                                         | 6,768     |   |   | 8,535 |   |
| Current portion of accrued oil and gas reclamation costs                       |   |                                         | 120,970   |   |   | 106,791 |   |
| 5¼% convertible senior notes                                              |   |                                         | 74,720    |   |   | - |   |
| Fair value of oil and gas derivative contracts                                 |   |                                         | -         |   |   | 1,237 |   |
| Current portion of accrued sulphur reclamation costs (discontinued operations) |   |                                         | 11,772    |   |   | 8,300 |   |
| Current liabilities from discontinued operations                               |   |                                         | 1,993     |   |   | 1,183 |   |
| Total current liabilities                                                      |   |                                         | 418,244   |   |   | 244,535 |   |
| 11.875% senior notes                                                           |   |                                         | 300,000   |   |   | 300,000 |   |
| 4% convertible senior notes                                                    |   |                                         | 185,256   |   |   | - |   |
| 5¼% convertible senior notes                                              |   |                                         | -         |   |   | 74,720 |   |
| Accrued oil and gas reclamation costs                                          |   |                                         | 237,654   |   |   | 321,920 |   |
| Other long-term liabilities                                                    |   |                                         | 16,596    |   |   | 16,602 |   |
| Accrued sulphur reclamation costs (discontinued operations)                    |   |                                         | 13,494    |   |   | 19,152 |   |
| Other long-term liabilities from discontinued operations                       |   |                                         | 3,783     |   |   | 6,145 |   |
| Total liabilities                                                              |   | $                                            | 1,175,027 |   | $ | 983,074 |   |
| Commitments and contingencies (Note 15)                                        |   |                                         |      |   |   |   |   |

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TABLE OF CONTENTS

|                                                                        |   | December 31,                                 |       |
|-----------------------------------------------------------------------------|--------|----------------------------------------------|------------|
|                                                                        |   | 2010                                         |       | 2009 |   |
|                                                                        |   | (In thousands, except share related amounts) |       |
| Stockholders' equity:                                                       |   |                                         |       |   |   |   |   |
| Preferred stock, par value $0.01, 50,000,000 shares authorized, 722,063 and |   |                                         |       |   |   |   |   |
| 1,675,590 shares issued and outstanding (liquidation preference),           |   |                                         |       |   |   |   |   |
| respectively (Note 8)                                                       |   | $                                            | 722,063    |   | $ | 245,184 |   |
| Common stock, par value $0.01, 300,000,000 shares authorized, 159,797,352   |   |                                         |       |   |   |   |   |
| shares and 88,555,685 shares issued and outstanding, respectively           |   |                                         | 1,598      |   |   | 885 |   |
| Capital in excess of par value of common stock                              |   |                                         | 2,156,430  |   |   | 1,053,684 |   |
| Accumulated deficit                                                         |   |                                         | (1,107,481 | ) |   | (987,139 | ) |
| Accumulated other comprehensive loss                                        |   |                                         | (97        | ) |   | (346 | ) |
| Common stock held in treasury, 2,609,427 shares and 2,511,132 shares,       |   |                                         |       |   |   |   |   |
| at cost, respectively                                                       |   |                                         | (48,176    | ) |   | (46,460 | ) |
| Total stockholders’ equity                                            |   |                                         | 1,724,337  |   |   | 265,808 |   |
| Total liabilities and stockholders’ equity                            |   | $                                            | 2,899,364  |   | $ | 1,248,882 |   |

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TABLE OF CONTENTS

|                                                  | Years Ended December 31,                 |     |
|-------------------------------------------------------|------------------------------------------|----------|
|                                                  | 2010                                     |     | 2009 |   | 2008 |   |
|                                                  | (In thousands, except per share amounts) |     |
| Revenues:                                             |                                     |     |   |   |   |   |   |   |   |
| Oil and natural gas                                   | $                                        | 418,816  |   | $ | 422,976 |   | $ | 1,058,804 |   |
| Service                                               |                                     | 15,560   |   |   | 12,459 |   |   | 13,678 |   |
| Total revenues                                        |                                     | 434,376  |   |   | 435,435 |   |   | 1,072,482 |   |
|                                                  |                                     |     |   |   |   |   |   |   |   |
| Costs and expenses:                                   |                                     |     |   |   |   |   |   |   |   |
| Production and delivery costs                         |                                     | 182,790  |   |   | 193,025 |   |   | 258,450 |   |
| Depletion, depreciation and amortization expense      |                                     | 282,062  |   |   | 313,980 |   |   | 854,798 |   |
| Exploration expenses                                  |                                     | 42,608   |   |   | 94,281 |   |   | 79,116 |   |
| Gain on oil and gas derivative contracts              |                                     | (4,240   | ) |   | (17,394 | ) |   | (16,303 | ) |
| General and administrative expenses                   |                                     | 51,529   |   |   | 42,954 |   |   | 48,999 |   |
| Main Pass Energy Hub™ costs                     |                                     | 1,011    |   |   | 1,615 |   |   | 6,047 |   |
| Insurance recoveries (Note 4)                         |                                     | (38,944  | ) |   | (24,592 | ) |   | (3,391 | ) |
| Gain on sale of oil and gas property                  |                                     | (3,455   | ) |   | - |   |   | - |   |
| Total costs and expenses                              |                                     | 513,361  |   |   | 603,869 |   |   | 1,227,716 |   |
| Operating loss                                        |                                     | (78,985  | ) |   | (168,434 | ) |   | (155,234 | ) |
| Interest expense, net                                 |                                     | (38,216  | ) |   | (42,943 | ) |   | (50,890 | ) |
| Other income (expense), net                           |                                     | 225      |   |   | 4,043 |   |   | (2,566 | ) |
| Loss from continuing operations before income taxes   |                                     | (116,976 | ) |   | (207,334 | ) |   | (208,690 | ) |
| Income tax benefit (expense)                          |                                     | -        |   |   | 2,445 |   |   | (2,508 | ) |
| Loss from continuing operations                       |                                     | (116,976 | ) |   | (204,889 | ) |   | (211,198 | ) |
| Loss from discontinued operations                     |                                     | (3,366   | ) |   | (6,097 | ) |   | (5,496 | ) |
| Net loss                                              |                                     | (120,342 | ) |   | (210,986 | ) |   | (216,694 | ) |
| Preferred dividends and inducement payments for       |                                     |     |   |   |   |   |   |   |   |
| early conversion of preferred stock (Note 8)          |                                     | (77,101  | )  |   | (14,332 | )  |   | (22,286 | )  |
| Net loss applicable to common stock                   | $                                        | (197,443 | ) | $ | (225,318 | ) | $ | (238,980 | ) |
|                                                  |                                     |     |   |   |   |   |   |   |   |
| Basic and diluted net loss per share of common stock: |                                     |     |   |   |   |   |   |   |   |
| Net loss from continuing operations                   |                                     | $(2.04   | ) |   | $(2.79 | ) |   | $(3.79 | ) |
| Net loss from discontinued operations                 |                                     | (0.04    | ) |   | (0.08 | ) |   | (0.09 | ) |
| Net loss per share of common stock                    |                                     | $(2.08   | ) |   | $(2.87 | ) |   | $(3.88 | ) |
|                                                  |                                     |     |   |   |   |   |   |   |   |
| Average common shares outstanding:                    |                                     |     |   |   |   |   |   |   |   |
| Basic and diluted                                     |                                     | 95,125   |   |   | 78,625 |   |   | 61,581 |   |

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TABLE OF CONTENTS

|                                                          |   | Years Ended December 31, |     |
|---------------------------------------------------------------|--------|--------------------------|----------|
|                                                          |   | 2010                     |     | 2009 |   | 2008 |   |
|                                                          |   | (In thousands)           |     |
| Cash flow from operating activities:                          |   |                     |     |   |   |   |   |   |   |   |
| Net loss                                                      |   | $                        | (120,342 | ) | $ | (210,986 | ) | $ | (216,694 | ) |
| Adjustments to reconcile net loss to net cash                 |   |                     |     |   |   |   |   |   |   |   |
| provided by operating activities:                             |   |                     |     |   |   |   |   |   |   |   |
| Loss from discontinued operations                             |   |                     | 3,366    |   |   | 6,097 |   |   | 5,496 |   |
| Depletion, depreciation and amortization expense              |   |                     | 282,062  |   |   | 313,980 |   |   | 854,798 |   |
| Exploration drilling and related expenditures                 |   |                     | 14,526   |   |   | 61,504 |   |   | 37,841 |   |
| Compensation expense associated with stock-based awards       |   |                     | 18,707   |   |   | 14,193 |   |   | 30,223 |   |
| Amortization of deferred financing costs                      |   |                     | 3,729    |   |   | 3,725 |   |   | 4,630 |   |
| Change in fair value of oil and gas derivative contracts      |   |                     | 6,800    |   |   | 28,631 |   |   | (40,612 | ) |
| Loss on induced conversion of convertible senior notes        |   |                     | -        |   |   | - |   |   | 2,663 |   |
| Reclamation expenditures, net of prepayments by third parties |   |                     | (115,133 | ) |   | (45,885 | ) |   | (29,432 | ) |
| Increase in restricted cash                                   |   |                     | (12,298  | ) |   | (15,049 | ) |   | (15,152 | ) |
| Gain on sale of oil and gas property                          |   |                     | (3,455   | ) |   | - |   |   | - |   |
| Payment to fund terminated pension plan                       |   |                     | -        |   |   | - |   |   | (2,291 | ) |
| Other                                                         |   |                     | 227      |   |   | (720 | ) |   | (155 | ) |
| (Increase) decrease in working capital:                       |   |                     |     |   |   |   |   |   |   |   |
| Accounts receivable-customers                                 |   |                     | 13,006   |   |   | (4,868 | ) |   | 40,900 |   |
| Accounts receivable-joint interest partners                   |   |                     | (20,111  | ) |   | 34,545 |   |   | (25,270 | ) |
| Accounts receivable-other                                     |   |                     | (10,378  | ) |   | 799 |   |   | 1,461 |   |
| Accounts payable and accrued liabilities                      |   |                     | 30,223   |   |   | (33,281 | ) |   | 8,618 |   |
| Inventories                                                   |   |                     | 10,895   |   |   | (16,535 | ) |   | (19,777 | ) |
| Prepaid expenses                                              |   |                     | (1,377   | ) |   | 743 |   |   | (7,588 | ) |
| Net cash provided by continuing operations                    |   |                     | 100,447  |   |   | 136,893 |   |   | 629,659 |   |
| Net cash used in discontinued operations                      |   |                     | (2,217   | ) |   | (5,728 | ) |   | (6,262 | ) |
| Net cash provided by operating activities                     |   |                     | 98,230   |   |   | 131,165 |   |   | 623,397 |   |
|                                                          |   |                     |     |   |   |   |   |   |   |   |
|                                                          |   |                     |     |   |   |   |   |   |   |   |
| Cash flow from investing activities:                          |   |                     |     |   |   |   |   |   |   |   |
| Exploration, development and other capital expenditures       |   |                     | (217,252 | ) |   | (138,015 | ) |   | (236,383 | ) |
| Proceeds from sale of oil and gas property                    |   |                     | 2,920    |   |   | - |   |   | - |   |
| Acquisition of oil and gas properties, net                    |   |                     | (86,134  | ) |   | - |   |   | (2,826 | ) |
| Net cash used in continuing activities                        |   |                     | (300,466 | ) |   | (138,015 | ) |   | (239,209 | ) |
| Net cash from discontinued operations                         |   |                     | -        |   |   | - |   |   | - |   |
| Net cash used in investing activities                         |   | $                        | (300,466 | ) | $ | (138,015 | ) | $ | (239,209 | ) |
|                                                          |   |                     |     |   |   |   |   |   |   |   |

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|                                                          |   | Years Ended December 31, |    |
|---------------------------------------------------------------|--------|--------------------------|---------|
|                                                          |   | 2010                     |    | 2009 |   | 2008 |   |
|                                                          |   | (In thousands)           |    |
| Cash flow from financing activities:                          |   |                     |    |   |   |   |   |   |   |   |
| Proceeds from the sale of 5.75% convertible perpetual         |   |                     |    |   |   |   |   |   |   |   |
| preferred stock                                               |   | $                        | 700,000 |   | $ | - |   | $ | - |   |
| Proceeds from the sale of 4% convertible senior notes         |   |                     | 200,000 |   |   | - |   |   | - |   |
| Dividends paid and inducement payments on early conversion    |   |                     |    |   |   |   |   |   |   |   |
| of convertible preferred stock                                |   |                     | (27,306 | ) |   | (13,469 | ) |   | (23,565 | ) |
| Proceeds from exercise of stock options, warrants and other   |   |                     | 497     |   |   | - |   |   | 4,696 |   |
| Costs associated with the sale of 5.75% convertible perpetual |   |                     |    |   |   |   |   |   |   |   |
| preferred stock and sale of 4% convertible senior notes       |   |                     | (6,689  | ) |   | - |   |   | - |   |
| Net proceeds from sale of common stock                        |   |                     | -       |   |   | 84,976 |   |   | - |   |
| Net proceeds from sale of preferred stock                     |   |                     | -       |   |   | 83,275 |   |   | - |   |
| Payments under senior secured revolving credit facility, net  |   |                     |    |   |   | - |   |   | (274,000 | ) |
| Payments for induced conversion of convertible senior notes   |   |                     | -       |   |   | - |   |   | (2,663 | ) |
| Net cash provided by (used in) continuing operations          |   |                     | 866,502 |   |   | 154,782 |   |   | (295,532 | ) |
| Net cash activity from discontinued operations                |   |                     | -       |   |   | - |   |   | - |   |
| Net cash provided by (used in) financing activities           |   |                     | 866,502 |   |   | 154,782 |   |   | (295,532 | ) |
| Net increase in cash and cash equivalents                     |   |                     | 664,266 |   |   | 147,932 |   |   | 88,656 |   |
| Cash and cash equivalents at beginning of year                |   |                     | 241,418 |   |   | 93,486 |   |   | 4,830 |   |
| Cash and cash equivalents at end of year                      |   | $                        | 905,684 |   | $ | 241,418 |   | $ | 93,486 |   |
|                                                          |   |                     |    |   |   |   |   |   |   |   |
|                                                          |   |                     |    |   |   |   |   |   |   |   |
| Interest paid                                                 |   | $                        | 44,543  |   | $ | 43,059 |   | $ | 55,181 |   |
| Income taxes paid                                             |   | $                        | 63      |   | $ | 2,332 |   | $ | 3,370 |   |
|                                                          |   |                     |    |   |   |   |   |   |   |   |
| Supplemental Non-Cash Investing & Financing Activities:   |   |                     |    |   |   |   |   |   |   |   |
| Issuance of 51 million shares of common stock and other       |   |                     |    |   |   |   |   |   |   |   |
| non-cash purchase price consideration related to PXP          |   |                     |    |   |   |   |   |   |   |   |
| Acquisition                                                   |   | $                        | 926,010 |   | $ | - |   | $ | - |   |
|                                                          |   |                     |    |   |   |   |   |   |   |   |
| Accrued debt and preferred stock offering costs               |   | $                        | 1,006   |   | $ | - |   | $ | - |   |
|                                                          |   |                     |    |   |   |   |   |   |   |   |

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|                                                                                          |   | Years Ended December 31,                             |     |
|-----------------------------------------------------------------------------------------------|--------|------------------------------------------------------|----------|
|                                                                                          |   | 2010                                                 |     | 2009 |   | 2008 |   |
|                                                                                          |   | (In thousands, except share & per share amounts) |     |
| 8% Convertible Perpetual Preferred Stock:                                                     |   |                                                 |     |   |   |   |   |   |   |   |
| Balance at beginning of year, representing 86,250shares in 2010 and no shares in 2009 or 2008 |   | $                                                    | 86,250   |   | $ | - |   | $ | - |   |
| Shares converted in privately negotiated transactions,                                        |   |                                                 |     |   |   |   |   |   |   |   |
| representing 64,187 shares                                                                    |   |                                                 | (64,187  | ) |   | - |   |   | - |   |
| Shares sold in equity offering, representing 86,250 shares                                    |   |                                                 | -        |   |   | 86,250 |   |   | - |   |
| Balance at end of year, representing 22,063 shares in 2010,                                   |   |                                                 |     |   |   |   |   |   |   |   |
| 86,250 shares in 2009 and no shares in 2008                                                   |   |                                                 | 22,063   |   |   | 86,250 |   |   | - |   |
|                                                                                          |   |                                                 |     |   |   |   |   |   |   |   |
| 5.75% Convertible Perpetual Preferred Stock:                                                  |   |                                                 |     |   |   |   |   |   |   |   |
| Balance at beginning of year                                                                  |   | $                                                    | -        |   | $ | - |   | $ | - |   |
| Shares sold in equity offering, representing 700,000 shares                                   |   |                                                 | 700,000  |   |   | - |   |   | - |   |
| Balance at end of year, representing 700,000 shares in 2010                                   |   |                                                 |     |   |   |   |   |   |   |   |
| and no shares in 2009 and 2008                                                                |   |                                                 | 700,000  |   |   | - |   |   | - |   |
|                                                                                          |   |                                                 |     |   |   |   |   |   |   |   |
| 6¾% Mandatorily Convertible Preferred Stock:                                             |   |                                                 |     |   |   |   |   |   |   |   |
| Balance at beginning of year, representing 1,589,340 shares in                                |   |                                                 |     |   |   |   |   |   |   |   |
| 2010 and 2009 and 2,587,500 shares in 2008                                                    |   |                                                 | 158,934  |   |   | 158,934 |   |   | 258,750 |   |
| Shares converted representing 1,589,340 shares in 2010 and 998,160 in 2008                    |   |                                                 | (158,934 | ) |   | - |   |   | (99,816 |  ) |
| Balance at end of year, representing no shares in 2010 and                                    |   |                                                 |     |   |   |   |   |   |   |   |
| 1,589,340 shares in 2009 and 2008                                                             |   |                                                 | -        |   |   | 158,934 |   |   | 158,934 |   |
|                                                                                          |   |                                                 |     |   |   |   |   |   |   |   |
| Common Stock:                                                                                 |   |                                                 |     |   |   |   |   |   |   |   |
| Balance at beginning of year, representing 88,555,685 shares                                  |   |                                                 |     |   |   |   |   |   |   |   |
| in 2010, 72,981,734 shares in 2009 and 55,795,251 shares                                      |   |                                                 |     |   |   |   |   |   |   |   |
| in 2008                                                                                       |   |                                                 | 885      |   |   | 730 |   |   | 558 |   |
| Shares issued to Plains Exploration & Production Company                                  |   |                                                 |     |   |   |   |   |   |   |   |
| in 2010 (Notes 2 and 8), representing 51,000,000 shares                                       |   |                                                 | 510      |   |   | - |   |   | - |   |
| Preferred stock conversions, representing 20,061,622 shares                                   |   |                                                 |     |   |   |   |   |   |   |   |
| and 6,708,033 shares in 2008                                                                  |   |                                                 | 201      |   |   | - |   |   | 67 |   |
| Shares issued in equity offering, representing 15,547,400                                     |   |                                                 |     |   |   |   |   |   |   |   |
| shares (at $5.75 per share) in 2009 (Note 8)                                                  |   |                                                 | -        |   |   | 155 |   |   | - |   |
| Shares issued in debt conversion transactions, representing                                   |   |                                                 |     |   |   |   |   |   |   |   |
| 9,508,743 shares in 2008                                                                      |   |                                                 | -        |   |   | - |   |   | 95 |   |
| Exercise of stock warrants representing 636,811 shares                                        |   |                                                 |     |   |   |   |   |   |   |   |
| in 2008                                                                                       |   |                                                 | -        |   |   | - |   |   | 7 |   |
| Exercise of stock options and other, representing 180,045 in                                  |   |                                                 |     |   |   |   |   |   |   |   |
| 2010, 26,551 shares in 2009 and 332,896 shares in 2008                                        |   |                                                 | 2        |   |   | - |   |   | 3 |   |
| Balance at end of year, representing, 159,797,352 shares in                                   |   |                                                 |     |   |   |   |   |   |   |   |
| 2010, 88,555,685 shares in 2009 and 72,981,734 shares in                                      |   |                                                 |     |   |   |   |   |   |   |   |
| 2008                                                                                          |   |                                                 | 1,598    |   |   | 885 |   |   | 730 |   |
|                                                                                          |   |                                                 |     |   |   |   |   |   |   |   |

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TABLE OF CONTENTS

|                                                                                              |   |   | Years Ended December 31,                           |   |
|---------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------|--------|
|                                                                                              |   |   | 2010                                               |   |   | 2009 |   |   | 2008 |   |
|                                                                                              |   |   | (In thousands, except share and per share amounts) |   |
| Capital in Excess of Par Value:                                                                   |   |   |                                               |   |   |   |   |   |   |   |
| Balance at beginning of year                                                                      |   |   | 1,053,684                                          |   |   | 971,977 |   |   | 718,472 |   |
| Costs associated with preferred stock equity offerings                                            |   |   | (5,945                                             | )      |   | (2,975 | ) |   | - |   |
| Common stock issued, net of offering costs                                                        |   |   | 875,670                                            |   |   | 84,821 |   |   | - |   |
| Intrinsic value – convertible debt and equity beneficial conversion options (Notes 6 and 8) |   |   | 66,375                                             |   |   | - |   |   | - |   |
| Shares issued in debt conversion transactions                                                     |   |   | -                                                  |   |   | - |   |   | 140,127 |   |
| Preferred stock conversions                                                                       |   |   | 222,921                                            |   |   | - |   |   | 99,749 |   |
| Stock-based compensation expense                                                                  |   |   | 18,707                                             |   |   | 14,193 |   |   | 30,223 |   |
| Exercise of stock options and warrants                                                            |   |   | 2,119                                              |   |   | - |   |   | 5,692 |   |
| Preferred stock dividends, inducement payments and beneficial conversion option                   |   |   | (77,101                                            | )      |   | (14,332 | ) |   | (22,286 | ) |
| Balance at end of year                                                                            |   |   | 2,156,430                                          |   |   | 1,053,684 |   |   | 971,977 |   |

| Accumulated Deficit:                                        |   |   |       |   |   |     |   |   |     |   |
|-------------------------------------------------------------|--------|--------|------------|--------|--------|----------|--------|--------|----------|--------|
| Balance at beginning of year                                |   | $      | (987,139   | )      | $      | (776,153 | )      | $      | (559,459 | )      |
| Net loss                                                    |   |   | (120,342   | )      |   | (210,986 | )      |   | (216,694 | )      |
| Balance at end of year                                      |   |   | (1,107,481 | )      |   | (987,139 | )      |   | (776,153 | )      |
|                                                        |   |   |       |   |   |     |   |   |     |   |
| Accumulated Other Comprehensive Loss:                       |   |   |       |   |   |     |   |   |     |   |
| Balance at beginning of year                                |   |   | (346       | )      |   | (22      | )      |   | (653     | )      |
| Amortization of previously unrecognized pension             |   |   |       |   |   |     |   |   |     |   |
| components, net                                             |   |   | (40        | )      |   | (40      | )      |   | (40      | )      |
| Change in unrecognized net gains/losses of pension plans    |   |   | 289        |   |   | (284     | )      |   | 671      |   |
| Balance at end of year                                      |   |   | (97        | )      |   | (346     | )      |   | (22      | )      |
|                                                        |   |   |       |   |   |     |   |   |     |   |
| Common Stock Held in Treasury:                              |   |   |       |   |   |     |   |   |     |   |
| Balance at beginning of year, representing 2,511,132 shares |   |   |       |   |   |     |   |   |     |   |
| in 2010, 2,508,660 shares in 2009 and 2,471,674 in 2008     |   |   | (46,460    | )      |   | (46,443  | )      |   | (45,439  | )      |
| Tender of 98,295 shares in 2010, 2,472 shares in 2009 and   |   |   |       |   |   |     |   |   |     |   |
| 36,986 shares in 2008 associated with the exercise of stock |   |   |       |   |   |     |   |   |     |   |
| options and the vesting of restricted stock                 |   |   | (1,716     | )      |   | (17      | )      |   | (1,004   | )      |
| Balance at end of year, representing 2,609,427 shares in    |   |   |       |   |   |     |   |   |     |   |
| 2010, 2,511,132 shares in 2009 and 2,508,660 shares         |   |   |       |   |   |     |   |   |     |   |
| in 2008                                                     |   |   | (48,176    | )      |   | (46,460  | )      |   | (46,443  | )      |
|                                                        |   |   |       |   |   |     |   |   |     |   |
| Total stockholders’ equity                            |   | $      | 1,724,337  |   | $      | 265,808  |   | $      | 309,023  |   |

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| ·   | 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. |
|--------------------|--------------------------------------------------------------------------------------------------------------|

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| ·   | Geological and geophysical costs and costs of retaining unproved properties and undeveloped properties are charged to expense as incurred and are included as a use 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 |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | The costs of maintenance and repairs, which are not significant improvements, are expensed when incurred. |
|--------------------|-----------------------------------------------------------------------------------------------------------|

| ·   | 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 $10.1 million in 2010, $3.9 million in 2009 and $5.0 million in 2008. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | 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. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                     |   |              |   |   |
|----------------------------------------------------------|--------|-------------------|--------|--------|
| Property, Plant and Equipment                            |   |              |   |   |
| Cash consideration-                                      |   |              |   |   |
| Purchase price terms                                     | $      | 75,000            |   |   |
| Post-effective date cash items                           |   | 9,596             |   |   |
| Stock consideration-                                     |   |              |   |   |
| 51 million shares based on McMoRan’s closing stock |   |              |   |   |
| price of $17.18 per share on December 30, 2010           |   | 876,180           |   |   |
| Post-effective date non-cash items and other             |   | 39,948            |   |   |
| Assumed asset retirement obligations                     |   | 9,882             |   |   |
| Acquired property, plant and equipment                   | $      | 1,010,606         |   |   |
|                                                     |   |              |   |   |
| Inventory (cash consideration)                           | $      |   1,538 |   |   |

|                                                 | (Pro Forma, Unaudited) |
|------------------------------------------------------|------------------------|
|                                                 | Years Ended            |
|                                                 | December 31,           |
|                                                 |                   | 2010 |   |   | 2009 |   |
| Revenues                                             | $                      | 550,808 |   | $ | 562,726 |   |
| Operating loss                                       |                   | (58,331 | ) |   | (175,565 | ) |
| Net loss to common shareholders                      |                   | (175,771 | ) |   | (334,682 | ) |
| Basic and diluted net loss per share of common stock |                   | (1.20 | ) |   | (2.58 | )  |

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|                      |   | December 31, |   |
|---------------------------|--------|--------------|--------|
|                      |   | 2010         |   | 2009 |   |
| Accounts receivable:      |   |         |   |   |   |   |   |
| Customers                 |   | $            | 42,138 |   | $ | 55,144 |   |
| Joint interest partners   |   |         | 32,429 |   |   | 22,966 |   |
| Other                     |   |         | 11,949 |   |   | 1,571 |   |
| Total accounts receivable |   | $            | 86,516 |   | $ | 79,681 |   |

|                | Years Ended December 31, |   |
|---------------------|--------------------------|--------|
| Individual Customer | 2010                     |   | 2009 |   | 2008 |   |
| A                   |                     | 35     | % |   | 32 | % |   | 35 | % |
| B                   |                     | 14     |   |   | 15 |   |   | <10 |   |
| C                   |                     | <10 |   |   | 10 |   |   | 18 |   |
| D                   |                     | <10 |   |   | <10 |   |   | 12 |   |

|                                                 |   | December 31, |       |
|------------------------------------------------------|--------|--------------|------------|
|                                                 |   | 2010         |       | 2009 |   |
| Oil and gas property, plant and equipment            |   | $            | 3,491,386  |   | $ | 2,246,397 |   |
| Other                                                |   |         | 31         |   |   | 31 |   |
|                                                 |   |         | 3,491,417  |   |   | 2,246,428 |   |
| Accumulated depletion, depreciation and amortization |   |         | (1,705,810 | ) |   | (1,450,205 | ) |
| Property, plant and equipment, net                   |   | $            | 1,785,607  |   | $ | 796,223 |   |

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|                                                   |   | Years Ended December 31, |    |
|--------------------------------------------------------|--------|--------------------------|---------|
|                                                   |   | 2010                     |    | 2009 |   | 2008 |   |
| Depletion and depreciation expense                     |   | $                        | 148,358 |   | $ | 205,479 |   | $ | 357,458 |   |
| Accretion expense                                      |   |                     | 26,525  |   |   | 33,186 |   |   | 164,753 |   |
| Impairment charges/losses                              |   |                     | 107,179 |   |   | 75,315 |   |   | 332,587 |   |
| Total depletion, depreciation and amortization expense |   | $                        | 282,062 |   | $ | 313,980 |   | $ | 854,798 |   |

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|                        | December 31, 2010 |   | December 31, 2009 |   |
|-----------------------------|-------------------|--------|-------------------|--------|
|                        | Gross             |   |              |   |   |   | Gross |   |   |   |   |   |
|                        | Carrying          |   | Accumulated       |   |   |   | Carrying |   | Accumulated |   |   |   |
|                        | Amount            |   | Amortization      |   | Net |   | Amount |   | Amortization |   | Net |   |
| 11.875% Senior Notes        |              |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (due November 2014)         | $                 | 8,055  |              | $      | (3,602 | ) | $ | 4,453 |   | $ | 8,055 |   | $ | (2,451 | ) | $ | 5,604 |   |
| Revolving Credit Facility   |              |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (matures August 2012)       |              | 11,377 |              |   | (7,961 | ) |   | 3,416 |   |   | 11,377 |   |   | (5,820 | ) |   | 5,557 |   |
| 5¼% Convertible Senior |              |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Notes (due October 2011)    |              | 6,243  |              |   | (5,909 | ) |   | 334 |   |   | 6,243 |   |   | (5,473 | ) |   | 770 |   |
| 4% Convertible Senior       |              |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Notes (due December 2017)   |              | 1,750  |              |   | (1 | ) |   | 1,749 |   |   | - |   |   | - |   |   | - |   |
|                        | $                 | 27,425 |              | $      | (17,473 | ) | $ | 9,952 |   | $ | 25,675 |   | $ | (13,744 | ) | $ | 11,931 |   |

|                                                |   | December 31, |   |
|-----------------------------------------------------|--------|--------------|--------|
|                                                |   | 2010         |   | 2009 |   |
| Advances from third parties for future abandonment  |   |         |   |   |   |   |   |
|    costs (Note 15)                   |   | $            | 7,561  |   | $ | 7,767 |   |
| Employee postretirement medical liability (Note 11) |   |         | 3,916  |   |   | 4,346 |   |
| Liability for management services (Note 14)         |   |         | 2,839  |   |   | 2,734 |   |
| Nonqualified pension plan liability                 |   |         | 1,845  |   |   | 1,395 |   |
| Accrued workers compensation and group insurance    |   |         | 435    |   |   | 360 |   |
|                                                |   | $            | 16,596 |   | $ | 16,602 |   |

|                                                            | December 31, |    |
|-----------------------------------------------------------------|--------------|---------|
|                                                            | 2010         |    | 2009 |   |
| 11.875% senior notes (due 2014)                                 | $            | 300,000 |   | $ | 300,000 |   |
| 5¼% convertible senior notes (due 2011)                    |         | 74,720  |   |   | 74,720 |   |
| 4% convertible senior notes, net of $14,744 discount (due 2017) |         | 185,256 |   |   | - |   |
| Credit facility                                                 |         | -       |   |   | - |   |
| Total debt                                                      |         | 559,976 |   |   | 374,720 |   |
| Less current maturities                                         |         | (74,720 | ) |   | - |   |
| Long-term debt                                                  | $            | 485,256 |   | $ | 374,720 |   |

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|                                         |   | Years Ended December 31, |    |
|----------------------------------------------|--------|--------------------------|---------|
|                                         |   | 2010                     |    | 2009 |   | 2008 |   |
| Realized (gain) loss                         |   |                     |    |   |   |   |   |   |   |   |
| Gas puts                                     |   | $                        | (1,453  | ) | $ | (6,700 | ) | $ | 2,209 |   |
| Oil puts                                     |   |                     | 121     |   |   | 238 |   |   | 356 |   |
| Gas swaps                                    |   |                     | (10,754 | ) |   | (33,818 | ) |   | 4,005 |   |
| Oil swaps                                    |   |                     | 1,046   |   |   | (5,745 | ) |   | 17,739 |   |
| Total realized (gain) loss                   |   |                     | (11,040 | ) |   | (46,025 | ) |   | 24,309 |   |
|                                         |   |                     |    |   |   |   |   |   |   |   |
| Unrealized (gain) loss                       |   |                     |    |   |   |   |   |   |   |   |
| Gas puts                                     |   |                     | 578     |   |   | 1,167 |   |   | (3,178 | ) |
| Oil puts                                     |   |                     | (76     | ) |   | 929 |   |   | (1,483 | ) |
| Gas swaps                                    |   |                     | 7,536   |   |   | 18,002 |   |   | (7,872 | ) |
| Oil swaps                                    |   |                     | (1,238  | ) |   | 8,533 |   |   | (28,079 | ) |
| Total unrealized (gain) loss                 |   |                     | 6,800   |   |   | 28,631 |   |   | (40,612 | ) |
| Net gain on oil and gas derivative contracts |   | $                        | (4,240  | ) | $ | (17,394 | ) | $ | (16,303 | ) |

|                    | 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 |   |

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|                                                 |   | Years Ended December 31, |   |
|------------------------------------------------------|--------|--------------------------|--------|
|                                                 |   | 2010                     |   | 2009 |   | 2008 |   |
|                                                 |   |                     |   |   |   |   |   |   |   |   |
| In-the-money stock options a, b                      |   |                     | 2,938  |   |   | - |   |   | 1,631 |   |
| Shares issuable upon exercise of stock warrants a, c |   |                     | -      |   |   | - |   |   | 257 |   |
| Shares issuable upon assumed conversion of:          |   |                     |   |   |   |   |   |   |   |   |
| 8% preferred stock d                                 |   |                     | 2,875  |   |   | 6,631 |   |   | - |   |
| 6¾% preferred stock e                           |   |                     | 1,317  |   |   | 12,817 |   |   | 17,705 |   |
| 5.75% preferred stock f                              |   |                     | 120    |   |   | - |   |   | - |   |
| 5¼% notes g                                     |   |                     | 4,508  |   |   | 4,508 |   |   | 5,508 |   |
| 4% senior notes h                                    |   |                     | 34     |   |   | - |   |   | - |   |
| 6% notes i                                           |   |                     | -      |   |   | - |   |   | 2,635 |   |

| 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. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 and inducement payments totaled $14.9 million in 2010 and $3.6 million in 2009. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| e.   | Amount represents total equivalent common stock shares assuming conversion of 6¾% preferred stock (Note 8).  Preferred dividends, amortization of convertible preferred stock issuance costs and inducement payments for the early conversion of preferred stock totaled $9.4 million in 2010, $10.7 million in 2009 and $22.3 million in 2008. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| f.   | Amount represents total equivalent common stock shares assuming conversion of 5.75%  preferred stock (Note 8).  The 2010 amount is reduced from the total 43.8 million equivalent shares that would have been issued upon conversion to reflect the weighted average impact of the number of days the preferred stock was outstanding in 2010.  Preferred dividends and other charges totaled $51.8 million in 2010. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| g.   | Amount represents total equivalent common stock shares assuming conversion of 5¼% notes (Note 6).  Net interest expense on the 5¼% notes totaled $4.4 million in 2010, $4.0 million in 2009 and $4.4 million in 2008. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| h.   | Amount represents total equivalent common stock shares assuming conversion of 4% senior notes (Note 6).  The 2010 amount is reduced from the total 12.5 million equivalent shares that would have been issued upon conversion to reflect the weighted average impact of the number of days the debt was outstanding in 2010. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|                               |   | Years Ended December 31, |   |
|------------------------------------|--------|--------------------------|--------|
|                               |   | 2010                     |   |   | 2009 |   |   | 2008 |   |
| Outstanding options (in thousands) |   |                     | 7,696  |   |   |   | 8,271 |   |   |   | 232 |   |
| Average exercise price             |   | $                        | 16.53  |   |   | $ | 15.21 |   |   | $ | 23.83 |   |

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|                                            |   | Years Ended December 31, |   |
|-------------------------------------------------|--------|--------------------------|--------|
|                                            |   | 2010                     |   | 2009 |   | 2008 |   |
| Accretion and other – sulphur reclamation |   |                     |   |   |   |   |   |   |   |   |
| and contingency obligations                     |   | $                        | 1,415  |   | $ | 1,863 |   | $ | 3,295 |   |
| Caretaking costs- Port Sulphur                  |   |                     | 2,923  |   |   | 2,119 |   |   | 979 |   |
| Environmental remediation activities a          |   |                     | 36     |   |   | 2,027 |   |   | - |   |
| Sulphur retiree costs (credits)b                |   |                     | (1,330 | ) |   | (444 | ) |   | 494 |   |
| General and administrative and legal            |   |                     | 382    |   |   | 324 |   |   | 236 |   |
| Insurance                                       |   |                     | 213    |   |   | 177 |   |   | 432 |   |
| Other                                           |   |                     | (273   | ) |   | 31 |   |   | 60 |   |
| Loss from discontinued operations               |   | $                        | 3,366  |   | $ | 6,097 |   | $ | 5,496 |   |

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

| b.   | Reflects changes in the postretirement benefit cost obligation associated with certain retired former sulphur employees (Note 15). |
|----------------|------------------------------------------------------------------------------------------------------------------------------------|

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| Plan                                                  |   | Authorized amountof stock-based awards |   | Shares availablefor grant atDecember 31, 2010 |
|-------------------------------------------------------|--------|----------------------------------------|--------|-----------------------------------------------|
| 2008 Stock Incentive Plan (2008 Plan)                 |   | 11,500,000                             |   | 6,497,250                                     |
| 2005 Stock Incentive Plan (2005 Plan)                 |   | 3,500,000                              |   | 250                                           |
| 2004 Director Compensation Plan (2004 Directors Plan) |   | 175,000                                |   | 193                                           |
| 2003 Stock Incentive Plan (2003 Plan)                 |   | 2,000,000                              |   | 250                                           |
| 2001 Stock Incentive Plan (2001 Plan)                 |   | 1,250,000                              |   | 250                                           |

|               |   | 2010       |   | 2009         |   | 2008      |
|--------------------|--------|------------|--------|--------------|--------|-----------|
|               |   | Number of  |   | Average      |   | Number of |   | Average |   | Number of |   | Average |
|               |   | Options    |   | Option Price |   | Options   |   | Option Price |   | Options |   | Option Price |
| Beginning of year  |   | 10,446,250 |   | $13.37       |   |      | 9,116,750 |   | $14.91 |   |   | 7,754,100 |   | $14.96 |   |
| Granted            |   | 1,821,500  |   | 15.57        |   |      | 1,855,500 |   | 6.46 |   |   | 1,759,500 |   | 15.25 |   |
| Exercised          |   | (154,500   | )      | 13.75        |   |      | - |   | - |   |   | (318,475 | ) | 17.90 |   |
| Expired/forfeited  |   | (245,500   | )      | 14.00        |   |      | (526,000 | ) | 15.83 |   |   | (78,375 | ) | 15.29 |   |
| End of year        |   | 11,867,750 |   | 13.69        |   |      | 10,446,250 |   | 13.37 |   |   | 9,116,750 |   | 14.91 |   |
| Exercisable at end |   |       |   |         |   |      |   |   |   |   |   |   |   |   |   |
| of year            |   | 8,920,187  |   |         |   |      | 7,549,500 |   |   |   |   | 6,565,437 |   |   |   |

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|                                                       | Years Ended December 31, |   |
|------------------------------------------------------------|--------------------------|--------|
|                                                       | 2010                     |   | 2009 |   | 2008 |   |
| Cost of options awarded to employees (including directors) | $                        | 17,435 | a | $ | 13,152 | a | $ | 28,725 | a |
| Cost of options awarded to non-employees                   |                     | 870    |   |   | 696 |   |   | 1,251 |   |
| Cost of restricted stock units                             |                     | 402    |   |   | 345 |   |   | 247 |   |
| Total stock-based compensation cost                        | $                        | 18,707 |   | $ | 14,193 |   | $ | 30,223 |   |

| a.   | Includes $4.7 million, $1.8 million and $11.3 million of compensation charges associated with immediately vested stock options granted to certain executive officers including McMoRan’s Co-Chairmen during 2010, 2009 and 2008, respectively.  Also includes $2.0 million, $1.1 million and $4.9 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 2010, 2009 and 2008, respectively. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                | 2010   |   | 2009   |   | 2008   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|
| General and administrative expenses | $      | 9,750  |   | $      | 7,162  |   | $ | 14,818 |   |
| Exploration expenses                |   | 8,639  |   |   | 6,633  |   |   | 14,376 |   |
| Main Pass Energy Hub costs          |   | 318    |   |   | 398    |   |   | 1,029 |   |
| Total stock-based compensation cost | $      | 18,707 |   | $      | 14,193 |   | $ | 30,223 |   |

|                                                   | 2010   |   | 2009   |   | 2008  |   |
|--------------------------------------------------------|--------|--------|--------|--------|-------|--------|
| Weighted average fair value of stock options granted a | $      | 10.04  |   | $      | 3.97  |   | $ | 24.27 |   |
| Expected and weighted average volatility               |   | 66.79  | %      |   | 64.88 | %      |   | 52.3 | % |
| Expected life of options (in years) a                  |   | 6.62   |   |   | 6.43  |   |   | 6.41 |   |
| Risk-free interest rate                                |   | 3.02   | %      |   | 1.87  | %      |   | 3.04 | % |

| 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 2010, 2009 and 2008).  The expected life and fair value of stock options on the respective grant dates during the years ended December 31, 2010, 2009 and 2008 for such option awards are as follows: |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                        | 2010   |   | 2009   |   | 2008 |   |
|---------------------------------------------|--------|--------|--------|--------|------|--------|
| Expected life (in years)                    |   | 7.22   |   |   | 6.77 |   |   | 6.86 |   |
| Fair value of stock option on date of grant | $      | 10.60  |   | $      | 4.04 |   | $ | 25.41 |   |

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|                                           | Years Ended December 31, |   |
|------------------------------------------------|--------------------------|--------|
|                                           | 2010                     |   | 2009 |   |
| Change in benefit obligation:                  |                     |   |   |   |   |   |
| Benefit obligation at the beginning of year    | $                        | (4,851 | ) | $ | (4,873 | ) |
| Service cost                                   |                     | (49    | ) |   | (52 | ) |
| Interest cost                                  |                     | (214   | ) |   | (272 | ) |
| Actuarial gains (losses)                       |                     | 289    |   |   | (284 | ) |
| Participant contributions                      |                     | (197   | ) |   | (186 | ) |
| Benefits paid                                  |                     | 573    |   |   | 816 |   |
| Benefit obligation at end of year              |                     | (4,449 | ) |   | (4,851 | ) |
|                                           |                     |   |   |   |   |   |
| Change in plan assets:                         |                     |   |   |   |   |   |
| Fair value of plan assets at beginning of year |                     | -      |   |   | - |   |
| Return on plan assets                          |                     | -      |   |   | - |   |
| Employer/participant contributions             |                     | 573    |   |   | 816 |   |
| Benefits paid                                  |                     | (573   | ) |   | (816 | ) |
| Fair value of plan assets at end of year       |                     | -      |   |   | - |   |
|                                           |                     |   |   |   |   |   |
| Funded status                                  | $                        | (4,449 | ) | $ | (4,851 | ) |
|                                           |                     |   |   |   |   |   |
| Weighted-average assumptions :                 |                     |   |   |   |   |   |
| Discount rate                                  |                     | 5.2    | % |   | 5.2 | % |
| Expected return on plan assets                 |                     | -      |   |   | - |   |
| Rate of compensation increase                  |                     | -      |   |   | - |   |

|                                |   | Pension Benefits |   | Other Benefits |   |
|-------------------------------------|--------|------------------|--------|----------------|--------|
|                                |   | 2010             |   | 2009           |   | 2008 |   | 2010 |   | 2009 |   | 2008 |   |
| Service cost                        |   | $                | -      |           | $      | - |   | $ | - |   | $ | 49 |   | $ | 52 |   | $ | 48 |   |
| Interest cost                       |   |             | -      |           |   | - |   |   | 62 |   |   | 214 |   |   | 271 |   |   | 285 |   |
| Return on plan assets               |   |             | -      |           |   | - |   |   | (21 | ) |   | - |   |   | - |   |   | - |   |
| Amortization of prior service costs |   |             | -      |           |   | - |   |   | - |   |   | (40 | ) |   | (40 | ) |   | (40 | ) |
| Net periodic benefit cost           |   | $                | -      |           | $      | - |   | $ | 41 |   | $ | 223 |   | $ | 283 |   | $ | 293 |   |

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|                                                           |   | December 31,  |     |
|----------------------------------------------------------------|--------|--------------------|----------|
|                                                           |   | 2010               |     | 2009 |   |
| Federal and state net operating loss carryforwards             |   | $                  | 222,308  |   | $ | 181,120 |   |
| Property, plant and equipment                                  |   |               | 55,839   |   |   | 42,000 |   |
| Reclamation and shutdown reserves                              |   |               | 134,362  |   |   | 156,752 |   |
| Deferred compensation, postretirement and pension benefits and |   |               |     |   |   |   |   |
| accrued liabilities                                            |   |               | 35,437   |   |   | 30,158 |   |
| Tax credits and other, net                                     |   |               | 4,976    |   |   | 4,954 |   |
| Less: valuation allowance                                      |   |               | (452,922 | ) |   | (414,984 | ) |
| Net deferred tax asset                                         |   | $                  | -        |   | $ | - |   |

|                                       | Years Ended December 31, |    |
|--------------------------------------------|--------------------------|---------|
|                                       | 2010                     |    | 2009 |   | 2008 |   |
| Income tax benefit computed at the federal |                     |    |   |   |   |   |   |   |   |
| statutory income tax rate                  | $                        | 42,119  |   | $ | 74,701 |   | $ | 74,965 |   |
| Change in valuation allowance              |                     | (43,098 | ) |   | (71,922 | ) |   | (78,508 | ) |
| Other                                      |                     | 979     |   |   | (334 | ) |   | 1,100 |   |
| Federal income tax benefit (provision)     |                     | -       |   |   | 2,445 |   |   | (2,443 | ) |
| State income tax benefit (provision)       |                     | -       |   |   | - |   |   | (65 | ) |
| Total income tax benefit (provision)       | $                        | -       |   | $ | 2,445 |   | $ | (2,508 | ) |

|                                                     | Years Ended December 31, |     |
|----------------------------------------------------------|--------------------------|----------|
|                                                     | 2010                     |     | 2009 |   | 2008 |   |
| Net loss                                                 | $                        | (120,342 | ) | $ | (210,986 | ) | $ | (216,694 | ) |
| Other comprehensive loss                                 |                     |     |   |   |   |   |   |   |   |
| Amortization of previously unrecognized pension          |                     |     |   |   |   |   |   |   |   |
| components, net                                          |                     | (40      | ) |   | (40 | ) |   | (40 | ) |
| Change in unrecognized net gains/losses of pension plans |                     | 289      |   |   | (284 | ) |   | 671 |   |
| Comprehensive loss                                       | $                        | (120,093 | ) | $ | (211,310 | ) | $ | (216,063 | ) |

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TABLE OF CONTENTS

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TABLE OF CONTENTS

|                                               | Years Ended December 31, |     |
|----------------------------------------------------|--------------------------|----------|
|                                               | 2010                     |     | 2009 |   | 2008 |   |
| Oil and Natural Gas                                |                     |     |   |   |   |   |   |   |   |
| Asset retirement obligation at beginning of year   | $                        | 428,711  |   | $ | 421,201 |   | $ | 294,737 |   |
| Liabilities settled                                |                     | (124,142 | ) |   | (42,212 | ) |   | (43,782) |   |
| Scheduled accretion expense a                      |                     | 17,095   |   |   | 30,910 |   |   | 32,933 |   |
| Reclamation costs assumed and other, net           |                     | 2,268    |   |   | 2,711 |   |   | 5,335 |   |
| Properties sold                                    |                     | (411)    |   |   | - |   |   | - |   |
| Liabilities recorded in 2010 property acquisition  |                     | 9,882    |   |   | - |   |   | - |   |
| Revision for changes in estimates                  |                     | 25,221   |   |   | 16,101 |   |   | 131,978 | b |
| Asset retirement obligations at end of year        | $                        | 358,624  |   | $ | 428,711 |   | $ | 421,201 |   |
|                                               |                     |     |   |   |   |   |   |   |   |
| Sulphur                                            |                     |     |   |   |   |   |   |   |   |
| Asset retirement obligations at beginning of year: | $                        | 27,452   |   | $ | 23,003 |   | $ | 21,300 |   |
| Liabilities settled                                |                     | (3,601   | ) |   | (481 | ) |   | (1,591 | ) |
| Scheduled accretion expense                        |                     | 1,415    |   |   | 2,001 |   |   | 866 |   |
| Revision for changes in estimates                  |                     | -        |   |   | 2,929 |   |   | 2,428 |   |
| Asset retirement obligation at end of year         | $                        | 25,266   |   | $ | 27,452 |   | $ | 23,003 |   |

| 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. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

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TABLE OF CONTENTS

|                                           |   | Years Ended        |       |
|------------------------------------------------|--------|--------------------|------------|
|                                           |   | December 31,  |       |
|                                           |   | 2010               |       | 2009 |   |
|                                           |   | (In Thousands)     |       |
| Unproved properties                            |   | $                  | 1,054,399  |   | $ | 93,584 |   |
| Proved properties                              |   |               | 2,436,987  |   |   | 2,152,813 |   |
| Subtotal                                       |   |               | 3,491,386  |   |   | 2,246,397 |   |
| Less accumulated depreciation and amortization |   |               | (1,705,810 | ) |   | (1,450,205 | ) |
| Net oil and gas properties                     |   | $                  | 1,785,576  |   | $ | 796,192 |   |

|                       |   | Years Ended December 31, |      |
|----------------------------|--------|--------------------------|-----------|
|                       |   | 2010                     |      | 2009 |   | 2008 |   |
|                       |   | (In Thousands)           |      |
| Acquisition of properties: |   |                     |      |   |   |   |   |   |   |   |
| Proved                     |   | $                        | 191,605   |   | $ | 78 |   | $ | 2,230 |   |
| Unproved                   |   |                     | 819,001   |   |   | - |   |   | 2,808 |   |
| Exploration costs          |   |                     | 207,806   |   |   | 148,465 |   |   | 125,039 |   |
| Development costs          |   |                     | 53,465    |   |   | 16,715 |   |   | 126,199 |   |
|                       |   | $                        | 1,271,877 |   | $ | 165,258 |   | $ | 256,276 |   |

|                                                  | Years Ended December 31, |    |
|-------------------------------------------------------|--------------------------|---------|
|                                                  | 2010                     |    | 2009 |   | 2008 |   |
| Beginning of year                                     | $                        | 62,649  |   | $ | 43,791 |   | $ | 55,980 |   |
| Additions to capitalized exploratory well             |                     |    |   |   |   |   |   |   |   |
| costs pending determination of proved reserves        |                     | 163,563 | a |   | 85,356 |   |   | 141,263 |   |
| Reclassifications to wells, facilities, and equipment |                     |    |   |   |   |   |   |   |   |
| based on determination of proved reserves             |                     | -       |   |   | (6,180 | ) |   | (120,182 | ) |
| Amounts charged to expense                            |                     | (7,688  | ) a |   | (60,318 | ) |   | (33,270 | ) |
| End of year                                           | $                        | 218,524 |   | $ | 62,649 |   | $ | 43,791 |   |

| a.   | Excludes approximately $7.3 million of non-productive exploratory drilling costs initially capitalized and subsequently determined to be non-commercial in the same annual period (2010). |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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TABLE OF CONTENTS

|                            | Oil    |   | Natural Gas |   |
|---------------------------------|--------|--------|-------------|--------|
|                            | 2010   |   | 2009        |   | 2008 |   | 2010 |   | 2009 |   | 2008 |   |
| Proved reserves:                |   |   |        |   |   |   |   |   |   |   |   |   |
| Beginning of year               | 15,519 |   | 16,989      |   | 19,717 |   | 178,822 |   | 242,897 |   | 245,606 |   |
| Revisions of previous estimates | 629    |   | 1,369       |   | (335 | ) | 11,211 |   | (12,610 | ) | 5,469 |   |
| Discoveries and extensions      | -      |   | 131         |   | 1,016 |   | - |   | 4,377 |   | 45,993 |   |
| Production                      | (2,481 | )      | (2,970      | )      | (3,633 | ) | (43,976 | ) | (55,842 | ) | (67,891 | ) |
| Sales of reserves               | (222   | )      | -           |   | - |   | (140 | ) | - |   | - |   |
| Purchase of reserves            | 1,112  | a      | -           |   | 224 |   | 46,578 | a | - |   | 13,720 |   |
| End of year                     | 14,557 |   | 15,519      |   | 16,989 |   | 192,495 | b | 178,822 |   | 242,897 |   |
|                            |   |   |        |   |   |   |   |   |   |   |   |   |
| Proved developed reserves:      |   |   |        |   |   |   |   |   |   |   |   |   |
| Beginning of year               | 13,483 |   | 15,039      |   | 17,452 |   | 135,150 |   | 198,610 |   | 203,595 |   |
| End of year                     | 13,317 |   | 13,483      |   | 15,039 |   | 144,982 | b | 135,150 |   | 198,610 |   |

| a.   | Reflects the estimated proved reserves associated with the 2010 oil and gas property acquisition (Note 1). |
|----------------|------------------------------------------------------------------------------------------------------------|

| b.   | At December 31, 2010, McMoRan had natural gas imbalances of 1.0 Bcfe for under deliveries and 0.9 Bcfe for over deliveries which are not reflected in the above reserve quantities. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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TABLE OF CONTENTS

|                                                                  |   | December 31,  |      |
|-----------------------------------------------------------------------|--------|--------------------|-----------|
|                                                                  |   | 2010               |      | 2009 |   |
|                                                                  |   | (In Thousands)     |      |
| Future cash inflows                                                   |   | $                  | 2,024,752 |   | $ | 1,655,260 |   |
| Future costs applicable to future cash flows:                         |   |               |      |   |   |   |   |
| Production costs                                                      |   |               | (511,235  | )  |   | (519,995 | ) |
| Development and abandonment costs                                     |   |               | (595,335  | )  |   | (649,940 | ) |
| Future income taxes                                                   |   |               | -         |   |   | (2,348 | ) |
| Future net cash flows                                                 |   |               | 918,182   |   |   | 482,977 |   |
| Discount for estimated timing of net cash flows (10% discount rate) a |   |               | (267,262  | ) |   | (134,596 | ) |
|                                                                  |   | $                  | 650,920   |   | $ | 348,381 |   |

| 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, |     |
|-----------------------------------------------------------|--------|--------------------------|----------|
|                                                      |   | 2010                     |     | 2009 |   | 2008 |   |
|                                                      |   | (In Thousands)           |     |
| Beginning of year                                         |   | $                        | 348,381  |   | $ | 705,291 |   | $ | 1,638,266 |   |
| Revisions:                                                |   |                     |     |   |   |   |   |   |   |   |
| Changes in prices                                         |   |                     | 196,927  |   |   | (183,301 | ) |   | (534,921 | ) |
| Accretion of discount                                     |   |                     | 34,838   |   |   | 70,529 |   |   | 163,827 |   |
| Change in reserve quantities                              |   |                     | 53,306   |   |   | 15,459 |   |   | 4,204 |   |
| Other changes, including revised estimates of development |   |                     |     |   |   |   |   |   |   |   |
| costs and rates of production                             |   |                     | (71,337  | )  |   | (97,269 | ) |   | (234,425 | )a |
| Discoveries and extensions, less related costs            |   |                     | -        |   |   | 2,691 |   |   | 211,492 |   |
| Development costs incurred during the year                |   |                     | 175,340  | b |   | 65,256 |   |   | 50,811 |   |
| Change in future income taxes                             |   |                     | 1,476    |   |   | (324 | ) |   | 179,156 |   |
| Revenues, less production costs                           |   |                     | (235,541 | ) |   | (229,951 | ) |   | (800,354 | ) |
| Purchases reserves in place                               |   |                     | 154,967  |   |   | - |   |   | 27,235 |   |
| Sales of reserves in place                                |   |                     | (7,437)  |   |   | - |   |   | - |   |
| End of year                                               |   | $                        | 650,920  |   | $ | 348,381 |   | $ | 705,291 |   |

| 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.   | Includes net abandonment costs incurred of approximately $121.9 million. |
|----------------|--------------------------------------------------------------------------|

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TABLE OF CONTENTS

|                                                            |   |           |      |   |   | Freeport  |   |         |    | Consolidated |   |
|-----------------------------------------------------------------|--------|----------------|-----------|--------|--------|-----------|--------|--------------|---------|--------------|--------|
|                                                            |   | Parent         |      | MOXY   |   | Energy    |   | Eliminations |    | McMoRan      |   |
|                                                            |   | (In Thousands) |      |
| ASSETS                                                          |   |           |      |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Current assets:                                                 |   |           |      |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Cash and cash equivalents                                       |   | $              | 420       |   | $      | 904,889   |   | $            | 375     |         | $      | - |   | $ | 905,684 |   |
| Accounts receivable                                             |   |           | 66        |   |   | 86,450    |   |         | -       |         |   | - |   |   | 86,516 |   |
| Inventories                                                     |   |           | -         |   |   | 38,461    |   |         | -       |         |   | - |   |   | 38,461 |   |
| Prepaid expenses                                                |   |           | 657       |   |   | 14,821    |   |         | -       |         |   | - |   |   | 15,478 |   |
| Current assets from discontinued                                |   |           |      |   |   |      |   |         |    |         |   |   |   |   |   |   |
| operations                                                      |   |           | -         |   |   | -         |   |         | 702     |         |   | - |   |   | 702 |   |
| Total current assets                                            |   |           | 1,143     |   |   | 1,044,621 |   |         | 1,077   |         |   | - |   |   | 1,046,841 |   |
| Property, plant and equipment, net                              |   |           | -         |   |   | 1,785,576 |   |         | 31      |         |   | - |   |   | 1,785,607 |   |
| Investment in subsidiaries                                      |   |           | 1,525,531 |   |   | -         |   |         | -       |         |   | (1,525,531 | ) |   | - |   |
| Amounts due from affiliates                                     |   |           | 772,502   |   |   |      |   |         | -       |         |   | (772,502 | ) |   | - |   |
| Deferred financing costs and other                              |   |           |      |   |   |      |   |         |    |         |   |   |   |   |   |   |
| assets                                                          |   |           | 6,536     |   |   | 57,391    |   |         | -       |         |   | - |   |   | 63,927 |   |
| Discontinued sulphur assets                                     |   |           | -         |   |   | -         |   |         | 2,989   |         |   | - |   |   | 2,989 |   |
| Total assets                                                    |   | $              | 2,305,712 |   | $      | 2,887,588 |   | $            | 4,097   |         | $      | (2,298,033 | ) | $ | 2,899,364 |   |
|                                                            |   |           |      |   |   |      |   |         |    |         |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY  (DEFICIT) |   |           |      |   |   |      |   |         |    |         |
| Currentliabilities:                                             |   |           |      |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Accounts payable                                                |   | $              | 444       |   | $      | 100,163   |   | $            | 2,051   |         | $      | - |   | $ | 102,658 |   |
| Accrued liabilities                                             |   |           | 8,899     |   |   | 90,784    |   |         | (320    | )            |   | - |   |   | 99,363 |   |
| Current portion of debt                                         |   |           | 74,720    |   |   | -         |   |         | -       |         |   | - |   |   | 74,720 |   |
| Current portion of oil and gas                                  |   |           |      |   |   |      |   |         |    |         |   |   |   |   |   |   |
| accrued reclamation costs                                       |   |           | -         |   |   | 120,970   |   |         | -       |         |   | - |   |   | 120,970 |   |
| Other current liabilities                                       |   |           | 5,950     |   |   | 818       |   |         | -       |         |   | - |   |   | 6,768 |   |
| Current liabilities from discontinued                           |   |           |      |   |   |      |   |         |    |         |   |   |   |   |   |   |
| operations                                                      |   |           | -         |   |   | -         |   |         | 13,765  |         |   | - |   |   | 13,765 |   |
| Total current liabilities                                       |   |           | 90,013    |   |   | 312,735   |   |         | 15,496  |         |   | - |   |   | 418,244 |   |
| Long-term debt                                                  |   |           | 485,256   |   |   | -         |   |         | -       |         |   | - |   |   | 485,256 |   |
| Amounts due to affiliates                                       |   |           | -         |   |   | 770,373   |   |         | 2,129   |         |   | (772,502 | ) |   | - |   |
| Accrued oil and gas reclamation costs                           |   |           | -         |   |   | 237,654   |   |         | -       |         |   | - |   |   | 237,654 |   |
| Other long-term liabilities                                     |   |           | 6,106     |   |   | 8,876     |   |         | 1,614   |         |   | - |   |   | 16,596 |   |
| Long-term liabilities from discontinued                         |   |           |      |   |   |      |   |         |    |         |   |   |   |   |   |   |
| operations                                                      |   |           | -         |   |   | -         |   |         | 17,277  |         |   | - |   |   | 17,277 |   |
| Total liabilities                                               |   |           | 581,375   |   |   | 1,329,638 |   |         | 36,516  |         |   | (772,502 | ) |   | 1,175,027 |   |
| Commitments and contingencies                                   |   |           |      |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Stockholders’ equity (deficit)                            |   |           | 1,724,337 |   |   | 1,557,950 |   |         | (32,419 | )            |   | (1,525,531 | ) |   | 1,724,337 |   |
| Total liabilities and stockholders’                       |   |           |      |   |   |      |   |         |    |         |   |   |   |   |   |   |
| equity (deficit)                                                |   | $              | 2,305,712 |   | $      | 2,887,588 |   | $            | 4,097   |         | $      | (2,298,033 | ) | $ | 2,899,364 |   |

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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 |   |
| 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 |   |
| Discontinued sulphur assets                                     |   |           | -       |   |   | -         |   |         | 6,159   |         |   | - |   |   | 6,159 |   |
| 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 |   |
| Other long-term liabilities                                     |   |           | 6,010   |   |   | 8,975     |   |         | 1,617   |         |   | - |   |   | 16,602 |   |
| Long-term liabilities from discontinued                         |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| operations                                                      |   |           | -       |   |   | -         |   |         | 25,297  |         |   | - |   |   | 25,297 |   |
| 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) |     |
| Revenues:                                |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Oil and natural gas                      |   | $              | -        |   | $      | 418,816  |   | $            | -      |         | $      | - |   | $ | 418,816 |   |
| Service                                  |   |           | -        |   |   | 15,560   |   |         | -      |         |   | - |   |   | 15,560 |   |
| Total revenues                           |   |           | -        |   |   | 434,376  |   |         | -      |         |   | - |   |   | 434,376 |   |
| Costs and expenses:                      |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Production and delivery costs            |   |           | -        |   |   | 182,843  |   |         | (53    | )            |   | - |   |   | 182,790 |   |
| Depletion, depreciation and amortization |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| expense                                  |   |           | -        |   |   | 282,062  |   |         | -      |         |   | - |   |   | 282,062 |   |
| Exploration expenses                     |   |           | -        |   |   | 42,608   |   |         | -      |         |   | - |   |   | 42,608 |   |
| Gain on oil and gas derivative contracts |   |           | -        |   |   | (4,240   | )      |         | -      |         |   | - |   |   | (4,240 | ) |
| General and administrative expenses      |   |           | 13,931   |   |   | 37,598   |   |         | -      |         |   | - |   |   | 51,529 |   |
| Main Pass Energy HubTM costs             |   |           | -        |   |   | -        |   |         | 1,011  |         |   | - |   |   | 1,011 |   |
| Gain on sale of oil and gas property     |   |           | -        |   |   | (3,455   | )      |         | -      |         |   | - |   |   | (3,455 | ) |
| Insurance recoveries                     |   |           | -        |   |   | (38,944  | )      |         | -      |         |   | - |   |   | (38,944 | ) |
| Total costs and expenses                 |   |           | 13,931   |   |   | 498,472  |   |         | 958    |         |   | - |   |   | 513,361 |   |
| Operating loss                           |   |           | (13,931  | )      |   | (64,096  | )      |         | (958   | )            |   | - |   |   | (78,985 | ) |
| Interest expense, net                    |   |           | (38,196  | )      |   | (20      | )      |         | -      |         |   | - |   |   | (38,216 | ) |
| Equity in losses of consolidated         |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
|    subsidiaries           |   |           | (68,201  | )      |   | -        |   |         | -      |         |   | 68,201 |   |   | - |   |
| Other income (expense), net              |   |           | (14      | )      |   | 239      |   |         | -      |         |   | - |   |   | 225 |   |
| Loss from continuing operations before   |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| income taxes                             |   |           | (120,342 | )      |   | (63,877  | )      |         | (958   | )            |   | 68,201 |   |   | (116,976 | ) |
| Income tax benefit                       |   |           | -        |   |   | -        |   |         | -      |         |   | - |   |   |   |   |
| Loss from continuing operations          |   |           | (120,342 | )      |   | (63,877  | )      |         | (958   | )            |   | 68,201 |   |   | (116,976 | ) |
| Loss from discontinued operations        |   |           | -        |   |   | -        |   |         | (3,366 | )            |   | - |   |   | (3,366 | ) |
| Net loss                                 |   |           | (120,342 | )      |   | (63,877  | )      |         | (4,324 | )            |   | 68,201 |   |   | (120,342) |   |
| Preferred dividends and other related    |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| preferred stock costs                    |   |           | (77,101  | )      |   | -        |   |         | -      |         |   | - |   |   | (77,101 | ) |
| Net loss applicable to common stock      |   | $              | (197,443 | )      | $      | (63,877  | )      | $            | (4,324 | )            | $      | 68,201 |   | $ | (197,443 | ) |
|                                     |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |

----

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 |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| expense                                  |   |           | -        |   |   | 313,980  |   |         | -      |         |   | - |   |   | 313,980 |   |
| Exploration expenses                     |   |           | -        |   |   | 94,281   |   |         | -      |         |   | - |   |   | 94,281 |   |
| Gain on oil and gas derivative contracts |   |           | -        |   |   | (17,394  | )      |         | -      |         |   | - |   |   | (17,394 | ) |
| General and administrative expenses      |   |           | 5,749    |   |   | 37,181   |   |         | 24     |         |   | - |   |   | 42,954 |   |
| 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 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 other related    |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| preferred stock 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 |   |           |     |   |   |      |   |         |    |         |   |   |   |   |   |   |
| expense                                  |   |           | -        |   |   | 854,798   |   |         | -       |         |   | - |   |   | 854,798 |   |
| Exploration expenses                     |   |           | -        |   |   | 79,116    |   |         | -       |         |   | - |   |   | 79,116 |   |
| Gain on oil and gas derivative contracts |   |           | -        |   |   | (16,303   | )      |         | -       |         |   | - |   |   | (16,303 | ) |
| General and administrative expenses      |   |           | 7,624    |   |   | 41,024    |   |         | 351     |         |   | - |   |   | 48,999 |   |
| Main Pass Energy HubTM costs             |   |           | -        |   |   | -         |   |         | 6,047   |         |   | - |   |   | 6,047 |   |
| Insurance recoveries                     |   |           | -        |   |   | (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 other related    |   |           |     |   |   |      |   |         |    |         |   |   |   |   |   |   |
| preferred stock 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   |   | McMoRan      |   |
|                                      |   | (In Thousands) |     |
|                                      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Cash flow from operating activities:      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Net cash provided by (used in) continuing |   |           |     |   |   |     |   |         |   |   |   |   |   |
| operations                                |   | $              | (860,748 | )      | $      | 963,955  |   | $            | (2,760 | ) | $ | 100,447 |   |
| Net cash used in discontinued             |   |           |     |   |   |     |   |         |   |   |   |   |   |
| operations                                |   |           | -        |   |   | -        |   |         | (2,217 | ) |   | (2,217 | ) |
| Net cash provided by (used in)            |   |           |     |   |   |     |   |         |   |   |   |   |   |
| operating activities                      |   |           | (860,748 | )      |   | 963,955  |   |         | (4,977 | ) |   | 98,230 |   |
|                                      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Cash flow from investing activities:      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Exploration, development and other        |   |           |     |   |   |     |   |         |   |   |   |   |   |
| capital expenditures                      |   |           | -        |   |   | (217,252 | )      |         | -      |   |   | (217,252 | ) |
| Acquisition of properties, net            |   |           | -        |   |   | (86,134  | )      |         | -      |   |   | (86,134 | ) |
| Gain on sale of oil and gas property      |   |           | -        |   |   | 2,920    |   |         | -      |   |   | 2,920 |   |
| Net cash used in investing activities     |   |           | -        |   |   | (300,466 | )      |         | -      |   |   | (300,466 | ) |
|                                      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Cash flow from financing activities:      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Net proceeds from sale of preferred stock |   |           | 700,000  |   |   | -        |   |         | -      |   |   | 700,000 |   |
| Net proceeds from sale of senior notes    |   |           | 200,000  |   |   | -        |   |         | -      |   |   | 200,000 |   |
| Dividend and inducement payments          |   |           |     |   |   |     |   |         |   |   |   |   |   |
| on convertible preferred stock            |   |           | (27,306  | )      |   | -        |   |         | -      |   |   | (27,306 | ) |
| Costs associated with sale of preferred   |   |           |     |   |   |     |   |         |   |   |   |   |   |
| stock and senior notes                    |   |           | (6,689   | )      |   | -        |   |         | -      |   |   | (6,689 | ) |
| Proceeds from exercise of stock options   |   |           | 497      |   |   | -        |   |         | -      |   |   | 497 |   |
| Investment from parent                    |   |           | (5,350   | )      |   | -        |   |         | 5,350  |   |   | - |   |
| Net cash provided by financing activities |   |           | 861,152  |   |   | -        |   |         | 5,350  |   |   | 866,502 |   |
|                                      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Net increase (decrease) in cash and       |   |           |     |   |   |     |   |         |   |   |   |   |   |
| cash equivalents                          |   |           | 404      |   |   | 663,489  |   |         | 373    |   |   | 664,266 |   |
| Cash and cash equivalents at beginning    |   |           |     |   |   |     |   |         |   |   |   |   |   |
| of year                                   |   |           | 16       |   |   | 241,400  |   |         | 2      |   |   | 241,418 |   |
| Cash and cash equivalents at end of       |   |           |     |   |   |     |   |         |   |   |   |   |   |
| year                                      |   | $              | 420      |   | $      | 904,889  |   | $            | 375    |   | $ | 905,684 |   |
|                                      |   |           |     |   |   |     |   |         |   |   |   |   |   |

----

TABLE OF CONTENTS

|                                      |   |           |     |   |   | Freeport |   | Consolidated |   |
|-------------------------------------------|--------|----------------|----------|--------|--------|----------|--------|--------------|--------|
|                                      |   | Parent         |     | MOXY   |   | Energy   |   | McMoRan      |   |
|                                      |   | (In Thousands) |     |
|                                      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Cash flow from operating activities:      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Net cash provided by (used in) 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 |   |
| Dividend and inducement 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 | ) |
| Dividend and inducement 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 |   |
|                                   |   |           |    |   |   |     |   |         |   |   |   |   |   |

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|        |   |                                     |    | Operating    |   |    |   | Net Loss  |     |
|-------------|--------|------------------------------------------|---------|--------------|--------|---------|--------|-----------|----------|
|        |   |                                     |    | Income       |   | Net     |   | per Share |     |
|        |   | Revenues                                 |    |  (Loss) |   | Loss a  |   | Basic     |     | Diluted |   |
|        |   | (In Thousands, Except Per Share Amounts) |    |
| 2010        |   |                                     |    |         |   |    |   |      |     |   |   |   |   |   |   |   |
| 1st Quarter |   | $                                        | 132,488 |         | $      | (41,282 | )      | $         | (66,160  | ) | $ | (0.74 | ) | $ | (0.74 | ) |
| 2nd Quarter |   |                                     | 108,041 |         |   | (5,188  | )      |      | (21,746  | ) |   | (0.23 | ) |   | (0.23 | ) |
| 3rd Quarter |   |                                     | 94,840  |         |   | (10,927 | )      |      | (25,253  | ) |   | (0.26 | ) |   | (0.26 | ) |
| 4th Quarter |   |                                     | 99,007  |         |   | (21,588 | )      |      | (84,284  | ) |   | (0.83 | ) |   | (0.83 | ) |
|        |   | $                                        | 434,376 |         | $      | (78,985 | )      | $         | (197,443 | ) |   |   |   |   |   |   |

|        |   |                                     |    | 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 | ) |   |   |   |   |   |   |
|        |   |                                     |    |         |   |     |   |      |     |   |   |   |   |   |   |   |

| a.   | Represents net loss attributable to common shareholders, which includes preferred dividends and inducement payments for early conversion of preferred stock 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

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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

|                                                   | Number of Securities to beIssued upon Exercise ofOutstanding Options,Warrants and Rights |                                                                                                                                                                                                                                                                                                                                                   | Weighted AverageExercise Price ofOutstanding Options |    | Number of SecuritiesRemaining Available forFuture Grant Under EquityCompensation Plans |   |
|--------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|--------------|--------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                   |                                                                                                         |                                                                                                                                                                                                                                                                                                                                                   |                                                                     |         |                                                                                                                           |   |   |   |   |
| Equity compensation plans approved by stockholders     | $                                                                                                            | 11,966,250 a                                                                                                                                                                                                                                                                                                                                           |                                                                     | $            | 13.69 a                                                                                                                        |   | $ | 6,498,193 b |   |
| Equity compensation plans not approved by stockholders |                                                                                                         | -                                                                                                                                                                                                                                                                                                                                                      |                                                                     |         | -                                                                                                                              |   |   | - |   |
|                                                   |                                                                                                         |                                                                                                                                                                                                                                                                                                                                                   |                                                                     |         |                                                                                                                           |   |   |   |   |
| a.                                                |                                                                                                         | Includes shares issuable upon the vesting of 73,500 restricted stock units, and the termination of deferrals with respect to 25,000 restricted stock units that were vested as of December 31, 2010. These awards are not reflected in the “weighted average exercise price of outstanding options” as they do not have an exercise price. |                                                                     |

| b. | As of December 31, 2010, there were 6,497,250 shares remaining available for future issuance under the 2008 Stock Incentive Plan, all of which could be issued under the terms of the plan pursuant to awards of options and stock appreciation rights, and 3,411,500 of which could be issued under the terms of the plan pursuant to awards of restricted stock, restricted stock units and “other stock-based” awards.  In addition, there were 250 shares remaining available for future issuance under the 2005 Stock Incentive Plan, all of which could be issued under the terms of the plan pursuant to awards of options, stock appreciation rights, restricted stock, restricted stock units and “other stock-based” awards.  There were also 250 shares remaining available for future issuance under each of the 2003 Stock Incentive Plan and the 2001 Stock Incentive Plan, all of which could be issued under the respective terms of the plans pursuant to awards of options, stock appreciation rights, limited rights, restricted stock and “other stock-based” awards.  Finally, there were also 193 shares remaining available for future issuance to our non-management directors and advisory directors under the 2004 Director Compensation Plan. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

Item 14. Principal Accounting Fees and Services

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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

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SIGNATURES

| /s/ James R. Moffett    | Co-Chairman of the Board                            |
|-------------------------|-----------------------------------------------------|
| James R. Moffett        |                                                |
|                    |                                                |
| /s/ Richard C. Adkerson | Co-Chairman of the Board                            |
| Richard C. Adkerson     |                                                |
|                    |                                                |
| *                       | Vice Chairman of the Board                          |
| B.M. Rankin, Jr.        |                                                |
|                    |                                                |
| *                       | Executive Vice President                            |
| C. Howard Murrish       |                                                |
|                    |                                                |
| /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                                            |
| A. Peyton Bush, III     |                                                |
|                    |                                                |
| *                       | Director                                            |
| William P. Carmichael   |                                                |
|                    |                                                |
| *                       | Director                                            |
| Robert A. Day           |                                                |
|                    |                                                |
| *                       | Director                                            |
| James C. Flores         |                                                |
|                    |                                                |
| *                       | Director                                            |
| Gerald J. Ford          |                                                |
|                    |                                                |
| *                       | Director                                            |
| H. Devon Graham, Jr.    |                                                |
|                    |                                                |
| *                       | Director                                            |
| Suzanne T. Mestayer     |                                                |
|                    |                                                |
| *                       | Director                                            |
| John F. Wombwell        |                                                |
|                    |                                                |

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|                                    |   |
|-----------------------------------------|--------|
|                                    |   |
| *By:  /s/ Richard C. Adkerson |   |
| Richard C. Adkerson                     |   |
| Attorney-in-Fact                        |   |

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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 |
| 2.2           | Agreement and Plan of Merger dated September 19, 2010, by and among McMoRan, McMoRan Oil & Gas LLC, McMoRan GOM, LLC and McMoRan Offshore LLC, and Plains Exploration & Production Company, PXP Gulf Properties LLC and PXP Offshore LLC                                                                                |      | 10-Q                      | 001-07791 | 11/09/2010 |
| 3.1           | Composite Certificate of Incorporation of McMoRan                                                                                                                                                                                                                                                                               |      | 8-A/A                     | 001-07791 | 01/28/201  |
| 3.2      | Amended and Restated By-Laws of McMoRan as amended effective through February 1, 2010                                                                                                                                                                                                                                           |      | 8-K                       | 001-07791 | 02/03/2010 |
| 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, 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                               | First Supplemental Indenture dated as of November 14, 2007, by and between McMoRan and the Bank of New York, as trustee (related to the 11.875% Senior Notes due 2014)                                                                                                                                                          |      | 8-K                       | 001-07791 | 11/15/2007 |
| 4.6                               | 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 |
| 4.7                               | 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 |
| 4.8                               | Registration Rights Agreement dated December 30, 2010, by and among McMoRan and Plains Exploration & Production Company                                                                                                                                                                                                     |      | 8-K                       | 001-07791 | 01/04/2011 |
| 4.9                               | Registration Rights Agreement (related to the 4% Convertible Senior Notes) dated December 30, 2010 by and among McMoRan and investors                                                                                                                                                                                           |      | 8-K                       | 001-07791 | 01/04/2011 |

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| 4.10  | Registration Rights Agreement (related to the 5.75% Convertible Perpetual Preferred Stock, Series 1) dated December 30, 2010 by and among McMoRan and investors                                                 |   | 8-K  | 001-07791 | 01/04/2011 |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------|-----------|------------|
| 4.11  | Registration Rights Agreement dated December 30, 2010 by and among McMoRan and Freeport-McMoRan Preferred LLC                                                                                                   |   | 8-K  | 001-07791 | 01/04/2011 |
| 4.12  | Indenture dated December 30, 2010 by and among McMoRan and U.S. Bank National Association, as trustee                                                                                                           |   | 8-K  | 001-07791 | 01/04/2011 |
| 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 |
| 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 |

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| 10.13  | Amended and Restated Credit Agreement dated as of August 6, 2007, among McMoRan, 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, 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, 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, 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, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto                                                                                                                                                             |   | 10-K | 001-07791 | 03/12/2010 |
| 10.18  | Fifth Amendment to Credit Agreement dated as of April 6, 2010, among McMoRan, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto                                                                                                                                                                 |   | 10-Q | 001-07791 | 05/10/2010 |
| 10.19  | Underwriting Agreement dated June 16, 2009 between McMoRan 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  | Underwriting Agreement dated June 16, 2009 between McMoRan and J.P. Morgan Securities Inc., as representative of the several underwriters names in Schedule 1 thereto                                                                                                                                                                        |   | 8-K  | 001-07791 | 06/19/2009 |
| 10.21  | Stock Purchase Agreement dated September 19, 2010 by and among McMoRan, Freeport-McMoRan Preferred LLC and Freeport-McMoRan Copper & Gold Inc.                                                                                                                                                                                           |   | 10-Q | 001-07791 | 11/09/2010 |
| 10.22  | Stockholder Agreement dated December 30, 2010, by and among McMoRan and Plains Exploration & Production Company                                                                                                                                                                                                                          |   | 8-K  | 001-07791 | 01/04/2011 |
| 10.23  | Stockholder Agreement dated December 30, 2010, by and among McMoRan, Freeport-McMoRan Copper & Gold Inc. and Freeport-McMoRan Preferred LLC                                                                                                                                                                                              |   | 8-K  | 001-07791 | 01/04/2011 |
| 10.24  | Form of 4% Convertible Senior Notes Securities Purchase Agreement dated September 16, 2010, by investors and accepted by McMoRan                                                                                                                                                                                                             |   | 10-Q | 001-07791 | 11/09/2010 |
| 10.25  | Form of 5.75% Convertible Perpetual Preferred Stock Securities Purchase Agreement dated September 16, 2010, by investors and accepted by McMoRan                                                                                                                                                                                             |   | 10-Q | 001-07791 | 11/09/2010 |
| 10.26* | McMoRan 1998 Stock Option Plan, as amended and restated                                                                                                                                                                                                                                                                                      |   | 10-Q | 001-07791 | 05/10/2007 |
| 10.27* | McMoRan 1998 Stock Option Plan for Non-Employee Directors                                                                                                                                                                                                                                                                                    |   | 10-Q | 001-07791 | 05/10/2007 |

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| 10.28* | McMoRan Form of Notice of Grant of Nonqualified Stock Options under the 1998 Stock Option Plan                                          |   | 10-Q | 001-07791 | 08/04/2005 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------|--------|------|-----------|------------|
| 10.29* | McMoRan 2000 Stock Incentive Plan, as amended and restated                                                                              |   | 10-Q | 001-07791 | 05/10/2007 |
| 10.30* | McMoRan Form of Notice of Grant of Nonqualified Stock Options under the 2000 Stock Incentive Plan                                       |   | 10-Q | 001-07791 | 08/04/2005 |
| 10.31* | McMoRan 2001 Stock Incentive Plan, as amended and restated                                                                              |   | 10-Q | 001-07791 | 05/10/2007 |
| 10.32* | McMoRan 2003 Stock Incentive Plan, as amended and restated                                                                              |   | 10-Q | 001-07791 | 05/10/2007 |
| 10.33* | McMoRan’s Performance Incentive Awards Program as amended December 1, 2008                                                        |   | 10-K | 001-07791 | 02/27/2009 |
| 10.34* | McMoRan Form of Notice of Grant of Nonqualified Stock Options under the 2001 Stock Incentive Plan                                       |   | 10-Q | 001-07791 | 08/04/2005 |
| 10.35* | McMoRan Form of Restricted Stock Unit Agreement Under the 2001 Stock Incentive Plan                                                     |   | 10-Q | 001-07791 | 08/09/2007 |
| 10.36* | McMoRan Executive Services Program, as amended May 4, 2009                                                                              |   | 10-K | 001-07791 | 03/12/2010 |
| 10.37* | McMoRan Form of Notice of Grants of Nonqualified Stock Options under the 2003 Stock Incentive Plan                                      |   | 10-Q | 001-07791 | 08/04/2005 |
| 10.38* | McMoRan Form of Restricted Stock Unit Agreement Under the 2003 Stock Incentive Plan                                                     |   | 10-Q | 001-07791 | 08/09/2007 |
| 10.39* | McMoRan 2004 Director Compensation Plan, as amended and restated                                                                        |   | 10-Q | 001-07791 | 08/09/2010 |
| 10.40* | 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 |
| 10.41* | Amended and Restated Agreement for Consulting Services between FM Services Company and B.M. Rankin, Jr. effective as of January 1, 2010 |   | 10-K | 001-07791 | 03/12/2010 |
| 10.42* | McMoRan Director Compensation                                                                                                           |   | 10-Q | 001-07791 | 05/11/2009 |
| 10.43* | McMoRan 2005 Stock Incentive Plan                                                                                                       |   | 10-Q | 001-07791 | 05/10/2007 |
| 10.44* | Form of Notice of Grant of Nonqualified Stock Options under the 2005 Stock Incentive Plan                                               |   | 8-K  | 001-07791 | 05/06/2005 |
| 10.45* | Form of Restricted Stock Unit Agreement under the 2005 Stock Incentive Plan                                                             |   | 10-Q | 001-07791 | 08/09/2007 |
| 10.46* | McMoRan Supplemental Executive Capital Accumulation Plan                                                                                |   | 10-Q | 001-07791 | 05/08/2008 |
| 10.47* | McMoRan Supplemental Executive Capital Accumulation Plan Amendment One                                                                  |   | 10-Q | 001-07791 | 05/08/2008 |
| 10.48* | McMoRan Supplemental Executive Capital Accumulation Plan Amendment Two                                                                  |   | 10-K | 001-07791 | 02/27/2009 |
| 10.49* | McMoRan 2005 Supplemental Executive Capital Accumulation Plan                                                                           |   | 10-K | 001-07791 | 02/27/2009 |

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| 10.50* | McMoRan 2005 Supplemental Executive Capital Accumulation Plan Amendment One                                                                                                                |   | 10-Q   | 001-07791 | 05/10/2010 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|------------|
| 10.51* | McMoRan Amended and Restated 2008 Stock Incentive Plan                                                                                                                                     |   | 8-K    | 001-07791 | 05/04/2010 |
| 10.52* | Form of Notice of Grant of Nonqualified Stock Options under the 2008, 2005, 2003 and 2001 Stock Incentive Plans (adopted February 2011).                                              | X      |   |      |       |
| 10.53* | Form of Restricted Stock Unit Agreement under the 2008, 2005, 2003 and 2001 Stock Incentive Plans (adopted February 2011)                                                                  | X      |   |      |       |
| 10.54* | 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 |
| 10.55* | McMoRan Severance Plan.                                                                                                                                                                    |   | 10-K   | 001-07791 | 02/27/2009 |
| 10.56* | Letter Agreement between Nancy Parmelee and FM Services Company (partially allocated to McMoRan)                                                                                           |   | 10-K   | 001-07791 | 03/12/2010 |
| 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      |   |      |       |

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