SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                            FORM 10-Q

     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934

              For the Quarter Ended  March 31, 2002



                Commission File Number: 001-07791



                     McMoRan Exploration Co.



 Incorporated in Delaware                      72-1424200
                                    (IRS Employer Identification No.)


        1615 Poydras Street, New Orleans, Louisiana 70112


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


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


    On April  1, 2002, there were issued and outstanding
15,957,103 shares of the registrant's Common Stock, par value
$0.01 per share.



                     McMoRan Exploration Co.
                        TABLE OF CONTENTS

                                                           Page

        Part I.  Financial Information

          Financial Statements:

            Condensed Balance Sheets                         3

            Statements of Operations                         4

            Statements of Cash Flows                         5

            Notes to Financial Statements                    6

          Remarks                                            9

          Report of Independent Public Accountants          10

          Management's Discussion and Analysis
            of Financial Condition and Results of
            Operations                                      11

        Part II.  Other Information                         17

        Signature                                           18

        Exhibit Index                                      E-1


                     McMoRan Exploration Co.
                 Part I.  FINANCIAL INFORMATION

Item 1.     Financial Statements.

<TABLE>
<CAPTION>

                     McMoRan EXPLORATION CO.
              CONDENSED BALANCE SHEETS (Unaudited)


                                                  March 31,   December 31,
                                                    2002          2001
                                                  ---------    ----------
                                                       (In Thousands)
<S>                                               <C>          <C>
ASSETS
Cash and cash equivalents                         $   9,200    $      500
Accounts receivable                                   8,371        10,892
Inventories                                             413           690
Prepaid expenses                                        233           270
Current assets from discontinued sulphur
  operations, excluding cash                         13,892        12,477
                                                  ---------    ----------
Total current assets                                 32,109        24,829
Property, plant and equipment, net                   65,445        98,519
Sulphur business assets, net                         53,961        54,607
Other assets, including restricted cash
   of $3.5 million                                    3,766        11,731
                                                  ---------    ----------
Total assets                                      $ 155,281    $  189,686
                                                  =========    ==========

LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable                                  $  22,675    $   22,230
Accrued liabilities                                   9,622        15,192
Borrowings outstanding on sulphur credit facility    56,000        55,000
Current portion of oil and gas credit facility          -           2,000
Current portion of accrued sulphur
  reclamation costs                                   7,486           -
Current portion of accrued oil and gas
  reclamation costs                                     601           398
Current liabilities from discontinued
  sulphur operations                                 18,761        17,849
Other                                                   689           305
                                                  ---------    ----------
  Total current liabilities                         115,834       112,974
Accrued sulphur reclamation costs                    48,801        63,876
Accrued oil and gas reclamation costs                18,245        18,278
Long-term borrowings on oil and gas credit facility     -          47,657
IMC Global Inc. postretirement medical benefits
  obligation                                         21,536        19,922
Other long-term liabilities                          14,353        14,751
Stockholders' deficit                               (63,488)      (87,772)
                                                  ---------    ----------
Total liabilities and stockholders' deficit       $ 155,281    $  189,686
                                                  =========    ==========

</Table>

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

<PAGE>                          3


<TABLE>
<CAPTION>

                     McMoRan EXPLORATION CO.
              STATEMENTS OF OPERATIONS (Unaudited)

                                                Three Months Ended
                                                     March 31,
                                               ---------------------
                                                  2002       2001
                                               ---------   ---------
<S>                                            <C>         <C>
                                               (In Thousands, Except
                                                 Per Share Amounts)
Revenues                                       $  13,586   $  15,798
Costs and expenses:
Production and delivery costs                      6,418       9,784
Depreciation and amortization                      6,705       3,091
Exploration expenses                               3,403      35,426
General and administrative expenses                1,722       3,516
Gain on sale of oil and gas properties           (29,198)        -
                                               ---------   ---------
  Total costs and expenses                       (10,950)     51,817
                                               ---------   ---------
Operating income (loss)                           24,536     (36,019)
Interest expense                                    (521)       (268)
Other income, net                                     23         366
Provision for income taxes                            (7)        -
                                               ---------   ---------
Income (loss) from continuing operations          24,031     (35,921)
Income (loss) from discontinued sulphur
  operations                                           8      (8,867)
                                               ---------   ---------
Net income (loss)                              $  24,039   $ (44,788)
                                               =========   =========

Basic and diluted net income (loss) per share
 of common stock:
  Net income (loss) from continuing operations    $1.51       $(2.27)
  Net income (loss) from discontinued sulphur
   operations                                        -         (0.56)
                                                  -----       ------
Basic and diluted net income (loss) per share
 of common stock                                  $1.51       $(2.83)
                                                  =====       ======
Basic and diluted average common shares
 outstanding                                     15,916       15,851
                                                 ======       ======

</TABLE>

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

<PAGE>                           4


<TABLE>
<CAPTION>
                     McMoRan EXPLORATION CO.
              STATEMENTS OF CASH FLOWS (Unaudited)

                                                           Three Months Ended
                                                                March 31,
                                                         ----------------------
                                                            2002        2001
                                                         ---------    ---------
                                                             (In Thousands)
<S>                                                      <C>          <C>
Cash flow from operating activities:
Net income (loss)                                        $  24,039    $ (44,788)
Adjustments to reconcile net income (loss) to net
  cash provided by (used in) operating activities:
  Net (income) loss from discontinued sulphur operations        (8)       8,867
  Depreciation and amortization                              6,704        3,091
  Exploration drilling and related expenditures              1,123       31,103
  Gain on sale of oil and gas properties                   (29,198)         -
  Change in other assets and liabilities                    (1,455)         (69)
  (Increase) decrease in working capital
    Accounts receivable                                      1,922       (5,145)
    Accounts payable and accrued liabilities                 1,577        1,785
    Inventories and prepaid expenses                           316         (514)
                                                         ---------    ---------
Net cash provided by (used in) continuing operations         5,020       (5,670)
Net cash provided by (used in) discontinued
  sulphur operations                                           450      (11,000)
                                                         ---------    ---------
Net cash provided by (used in) operating activities          5,470      (16,670)
                                                         ---------    ---------

Cash flow from investing activities:
Exploration, development and other capital expenditures     (8,822)     (34,610)
Proceeds from sale of oil and gas properties                60,000        1,000
                                                         ---------    ---------
Net cash provided by (used in) continuing activities        51,178      (33,610)
Net cash provided by discontinued sulphur operations           650          -
                                                         ---------    ---------
Net cash provided by (used in) investing activities         51,828      (33,610)
                                                         ---------    ---------

Cash flow from financing activities:
Repayment of oil and gas credit facility                   (49,657)         -
Other                                                           59          176
                                                         ---------    ---------
Net cash provided by (used in) continuing operations       (49,598)         176
Net borrowings on sulphur credit facility                    1,000       11,000
                                                         ---------    ---------
Net cash provided by (used in) financing activities        (48,598)      11,176
                                                         ---------    ---------
Net increase (decrease) in cash and cash equivalents         8,700      (39,104)
Cash and cash equivalents at beginning of year                 500       48,906
                                                         ---------    ---------
Cash and cash equivalents at end of period               $   9,200    $   9,802
                                                         =========    =========

</TABLE>

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

<PAGE>                          5

                    McMoRan  EXPLORATION CO.
                  NOTES TO FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION
McMoRan Exploration Co.'s (McMoRan) financial statements are
prepared in accordance with accounting principles generally
accepted in the United States. As further discussed in Note 2,
McMoRan faces significant liquidity issues in 2002 as a result of
adverse business conditions with its sulphur operations and
significant nonproductive exploratory drilling costs incurred
during 2001 and 2000. Management's plans to address these
matters, which involve inherent uncertainties and conditions
beyond the control of McMoRan, are also discussed in Note 2. The
accompanying financial statements have been prepared on the basis
that McMoRan will continue as a going concern and do not include
any adjustments that might result from the outcome of such
uncertainties.

  As a result of McMoRan's intention to exit the sulphur
business, as evidenced by its agreement to sell substantially all
of its sulphur assets (Note 2), its sulphur results have been
presented as discontinued operations and the major classes of
assets and liabilities related to the sulphur business held for
sale have been separately shown for all periods presented.

2.  CAPITAL RESOURCES and LIQUIDITY
McMoRan has taken steps to address its requirements for financial
liquidity and has developed a financial plan that McMoRan
believes will provide it sufficient financial resources to
conduct its business plans during 2002. This business plan
involves arranging for exploratory drilling on certain of
McMoRan's oil and gas properties to be undertaken and financed by
oil and gas industry participants under agreements which
management believes could provide the opportunity for future
significant additions to McMoRan's oil and gas reserves. Success
in this business plan is essential for McMoRan to continue its
operations in the future and to meet its long-term financial
obligations.

  The steps taken by McMoRan to address its financial liquidity
requirements are described below.

Sale of Certain Oil and Gas Properties
On February 22, 2002, McMoRan Oil & Gas LLC (MOXY), McMoRan's
wholly owned subsidiary engaged in oil and gas exploration and
production activities, sold three of its oil and gas properties
for $60.0 million.  The sale was effective January 1, 2002.
McMoRan sold its interest in Vermilion Block 196 and Main Pass
Blocks 86/97, and 80 percent of its interest in Ship Shoal Block
296.  McMoRan has retained its interests in exploratory prospects
lying 100 feet below the stratigraphic equivalent of the deepest
currently producing interval at both Vermilion Block 196 and Ship
Shoal Block 296. The properties were sold subject to a
reversionary interest after a defined payout, which would occur
when the purchaser receives aggregate cumulative proceeds from
the properties of $60.0 million plus an agreed annual rate of
return. McMoRan's current estimates of proved reserves do not
include any reserves for McMoRan's reversionary interest;
however, whether or not payout ultimately occurs will depend
primarily upon future production and future market prices of both
natural gas and oil.

     McMoRan used the proceeds from this transaction to repay all
borrowings under its oil and gas credit facilities, which totaled
$51.7 million on February 22, 2002, and to fund its working
capital requirements. The credit facilities were terminated at
that time.  McMoRan recorded a gain on the sale of its interests
in these properties, which commenced production in mid-2001,
totaling $29.2 million during the first quarter of 2002.

Sulphur Reclamation Obligations
McMoRan and Freeport McMoRan Sulphur LLC (Freeport Sulphur),
McMoRan's wholly owned subsidiary engaged in the purchasing,
transportation, terminaling, processing and marketing of
recovered sulphur and production of oil from Main Pass Block 299
(Main Pass), are party to a trust agreement with the Minerals
Management Service (MMS) to provide financial assurances
regarding the future costs associated with the Main Pass
reclamation activities by June 27, 2002.   Steps taken by McMoRan
to satisfy the MMS' reclamation requirements are described below.

    On February 22, 2002, Freeport Sulphur and Offshore Specialty
Fabricators Inc. (OSFI) entered into an agreement for the
dismantlement and reclamation of the Caminada sulphur mine and
related facilities located offshore in the Gulf of Mexico.   A
third party is contractually obligated to reimburse Freeport
Sulphur for 50 percent of such reclamation cost.  OSFI commenced
its Caminada reclamation activities in late March 2002, and
expects to complete these activities in the second quarter of
2002.  On March 28, 2002, Freeport Sulphur and OSFI entered into
an agreement for the dismantlement and


<PAGE>                         6

reclamation of the Main
Pass sulphur mine and related facilities.  OSFI will commence
removal of these structures within 30 days of the completion of
the reclamation activities at the Caminada mine.

     For payment of its share of these costs, Freeport Sulphur
has conveyed certain assets to OSFI including a supply service
boat, Freeport Sulphur's dock facilities in Venice, Louisiana,
and certain assets previously salvaged by Freeport Sulphur during
the initial reclamation phase at Main Pass.  In addition to these
conveyed assets, OSFI will be entitled to Freeport Sulphur's
economic interest in the Main Pass oil operations (see below).

     As previously disclosed on March 27, 2002, Freeport Sulphur
and OSFI entered into an agreement to sell Freeport Sulphur's
Main Pass oil assets to a third party with the proceeds to be
paid to OSFI as part of its compensation for the dismantlement
and reclamation of the Main Pass sulphur mine and related
facilities.  That agreement has been terminated.  Freeport
Sulphur and OSFI expect either to sell the Main Pass oil assets
to a third party, with the proceeds of any sale being paid to
OSFI, or to transfer these assets to OSFI.

     OSFI will also receive any initial payments relating to the
establishment of a business enterprise using certain of the Main
Pass sulphur facilities for the disposal of non-hazardous
oilfield waste from offshore oil operations and potentially for
other business services in support of the offshore petroleum
industry, including potentially the storage of crude oil and
natural gas.  Freeport Sulphur and other third parties are in
negotiations to establish and are seeking final regulatory
approval from the MMS for this new business enterprise's non-
hazardous oilfield waste disposal operations.  If this business
enterprise is successfully established, Freeport Sulphur would
receive a negotiated share of the revenues or profits of the
enterprise, which would be operated by another company.

Sale of Sulphur Transportation and Terminaling Assets
On March 29, 2002, Freeport Sulphur entered into a definitive
agreement to sell its sulphur transportation and terminaling
assets to Gulf Sulphur Services Ltd., LLP, a new sulphur joint
venture to be owned by IMC Global Inc. (IMC) and Savage
Industries Inc.  In connection with this agreement, McMoRan and
IMC have agreed to settle all outstanding disputes between the
companies and their respective subsidiaries.  The transactions
are expected to provide Freeport Sulphur with $58.0 million in
gross proceeds, which will be used to fund working capital
requirements, transaction costs and to repay most of the
borrowings under the sulphur credit facility (Note 3), which had
$56.0 million outstanding at March 31, 2002. The maturity of the
sulphur facility has been extended to the earlier of the
completion of the transactions or May 31, 2002. The transactions
are subject to Gulf Sulphur Services securing financing
arrangements and IMC negotiating new sulphur supply agreements
with each of three significant by-product sulphur producers, who
have agreed to sulphur transportation and terminaling
arrangements with the proposed joint venture. At the closing of
these transactions, Freeport Sulphur's contract to supply sulphur
to IMC will terminate. McMoRan currently estimates that
approximately $8 million will remain outstanding under the
sulphur credit facility after these transactions are completed,
and has reached agreement with the lenders in sulphur bank credit
facility to repay this remaining outstanding amount by no later
than September 30, 2002, subject to the satisfaction of certain
conditions. No material gain or loss is expected to result from
these transactions.

     In connection with the anticipated sale of its sulphur
transportation and terminaling assets, McMoRan has agreed to be
responsible for any historical environmental obligations relating
to those assets and has also agreed to indemnification
obligations with respect to the historical sulphur operations
engaged in by Freeport Sulphur and its predecessor companies.  In
addition, McMoRan agreed that, upon closing of the transactions,
it will assume, and indemnify IMC from, any obligations,
including environmental obligations, other than liabilities
existing as of the closing of the sale, associated with
historical oil and gas operations undertaken by the Freeport-
McMoRan companies prior to the 1997 merger of Freeport-McMoRan
Inc. and IMC.

Additional Capital
In April 2002, McMoRan received a commitment letter, subject to
specified conditions, from an investment-banking firm to
underwrite an offering of equity in an amount, which McMoRan
believes, would be sufficient to meet its working capital
requirements and other obligations currently due in 2002. The
successful completion of any offering to raise capital inherently
involves uncertainties, including financial market conditions.
As a result, no assurances can be given that McMoRan will
successfully complete an equity offering or, if completed, that
the offering will raise funds sufficient to meet McMoRan's debt
and working capital obligations for 2002.  McMoRan is also
considering the sale of properties and new reserve-based debt
financing to raise additional capital.

<PAGE>                       7

Exploration Funding Arrangements
McMoRan has completed agreements with an industry partner to fund
certain exploration and development activities on certain of its
prospects identified for drilling in 2002. McMoRan's will retain
a potentially significant reversionary interest in any
discoveries made on these prospects.
                   __________________________

     Consummation of the above transactions is expected to occur
during 2002. McMoRan believes that these transactions would
provide sufficient funding to meet its debt obligations and
working capital requirements for 2002. Because these transactions
are not complete, they involve inherent uncertainties, including
uncertainties beyond McMoRan's control. As a result, McMoRan's
independent public accountants, after considering the plans
described above, advised McMoRan that they had reached a
conclusion that such uncertainties raise substantial doubt
regarding McMoRan's ability to continue as a going concern and as
required by auditing standards generally accepted in the United
States, included in their auditors' report on McMoRan's 2001
financial statements an explanatory paragraph to reflect that
conclusion.

    McMoRan believes that completion of the transactions
described above will provide sufficient financial resources to
conduct its business plans during 2002.  However, there are no
assurances that McMoRan will successfully accomplish the
objectives of such plans.

    For more information regarding McMoRan's sulphur operations,
its decision to exit the sulphur business, its plans for
resolving its sulphur reclamation obligations with the MMS and
information regarding its sulphur credit facility see Notes 2, 8,
9 and 11 of the Notes to Consolidated Financial Statements
included within its 2001 Annual Report on Form 10-K as filed with
the Securities and Exchange Commission.

3.   SULPHUR CREDIT FACILITY
At March 31, 2002, Freeport Sulphur's borrowings under the
sulphur credit facility totaled $56.0 million and at December 31,
2001 its borrowings totaled $55.0 million.  On May 9, 2002
borrowings under the facility totaled $56.0 million.  The current
commitment under the facility totals $58.5 million and borrowings
are secured by substantially all the assets of Freeport Sulphur.
In addition, McMoRan and MOXY have each guaranteed this facility.
McMoRan has pledged its equity ownership of MOXY and MOXY has
pledged its assets to secure the guarantee.  As discussed in Note
2 above, Freeport Sulphur expects to repay a substantial portion
of its borrowings under this credit facility upon finalizing the
sale of its sulphur transportation and terminaling assets in May
2002.  Freeport Sulphur has negotiated a short-term extension of
the credit facility to provide up to $8 million of borrowings to
Freeport Sulphur to use to meet its working capital requirements.
This facility will mature upon the earlier of the completion of a
future McMoRan equity offering or September 30, 2002.

4.   EARNINGS PER SHARE
Basic and diluted net income (loss) per share of common stock was
calculated by dividing net income (loss) applicable to common
stock by the weighted-average number of common shares outstanding
during the periods presented.  The diluted net loss per share
calculation excluded options representing 82,000 shares of common
stock during the first quarter of 2001 that otherwise would have
been included in the calculation of diluted loss per share but
were excluded as anti-dilutive considering the net loss incurred
during the period.   There were no options considered dilutive in
the first quarter of 2002 because all of the McMoRan's
outstanding options had exercise prices greater than the average
market price of McMoRan's stock for the period.

     Outstanding options to purchase approximately 3,603,000
shares of common stock, at an average exercise price of $14.82
per share during the first quarter of 2002, and 1,841,000 shares
of common stock, at an average exercise price of  $18.62 per
share during the first quarter of 2001, were not included in the
computation of diluted net loss per share. These options were
excluded because their exercise prices were greater than the
average market price during the periods presented.

5. RATIO OF EARNINGS TO FIXED CHARGES AND COMPREHENSIVE INCOME
McMoRan's ratio of earnings to fixed charges calculation was 9.6
to 1 for the first quarter of 2002, while the same calculation
resulted in a shortfall of $3.5 million for the first quarter of
2001. For this calculation, earnings consist of income from
continuing operations before income taxes and fixed charges.
Fixed charges include interest and that portion of rent deemed
representative of interest.

<PAGE>                          8

McMoRan had no items of other comprehensive income in the first
quarter of 2002.  McMoRan's first-quarter 2001 total
comprehensive loss follows (in thousands):
<TABLE>
     <S>                                          <C>
     Net loss                                     $ (44,788)
     Other comprehensive loss:
     Cumulative effect loss of change in
       accounting principle                            (492)
     Change in unrealized derivatives' fair value      (172)
     Reclass to earnings                                221
                                                  ---------
     Total comprehensive loss                     $ (45,231)
                                                  =========
</TABLE>

6.  NEW ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board (FASB)
issued SFAS No. 143, "Accounting for Asset Retirement
Obligations," which requires the fair value of liabilities for
asset retirement obligations to be recorded in the period
incurred.  The standard is effective for fiscal years beginning
after June 15, 2002, with earlier application permitted.  Upon
adoption of the standard, McMoRan will be required to use a
cumulative-effect approach to recognize transition amounts for
any existing asset retirement obligation liabilities, asset
retirement costs and accumulated depreciation.  McMoRan has begun
work on identifying and quantifying its asset retirement
obligations in accordance with the new standard, but it has not
completed this analysis or determined when it will adopt the new
rules.

     In August 2001, the FASB issued SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets", which
supersedes SFAS No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of."  SFAS
No. 144 also supersedes certain aspects of Accounting Principles
Board Opinion (APB) No. 30, "Reporting the Results of Operations-
Reporting the effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and
Transaction," with regard to reporting the effects of a disposal
of a segment of a business and will require expected future
operating losses from discontinued operations to be separately
reported in the period incurred rather than as of the measurement
date as presently required by APB 30.  Additionally, certain
asset dispositions previously not qualifying for discontinued
operations treatment may now be required to be presented in this
manner.  The provisions of this statement are required to be
applied for fiscal years beginning after December 15, 2001 and
interim periods within those fiscal years, and accordingly,
McMoRan adopted this new standard effective January 1, 2002.  As
a result, McMoRan has reflected its sulphur operations as
discontinued operations for all periods presented as discussed in
Note 1.



                       -----------------
                            Remarks

The information furnished herein should be read in conjunction
with McMoRan's financial statements contained in its 2001 Annual
Report on Form 10-K.  The information furnished herein reflects
all adjustments which are, in the opinion of management,
necessary for a fair statement of the results for the periods.
All such adjustments are, in the opinion of management, of a
normal recurring nature.

<PAGE>                         9



               REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of McMoRan Exploration
Co.:

We have reviewed the accompanying condensed balance sheet of
McMoRan Exploration Co. (a Delaware Corporation) as of March 31,
2002, and the related statements of operations and cash flow for
the three-month periods ended March 31, 2002 and 2001. These
financial statements are the responsibility of the Company's
management.

We conducted our reviews in accordance with standards established
by the American Institute of Certified Public Accountants.  A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with auditing standards generally
accepted in the United States, the objective of which is the
expression of an opinion regarding the financial statements taken
as a whole.  Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material
modifications that should be made to the financial statements
referred to above for them to be in conformity with accounting
principles generally accepted in the United States.

We have previously audited, in accordance with auditing standards
generally accepted in the United States, the balance sheet of
McMoRan Exploration Co. as of December 31, 2001, and the related
statements of operations, cash flows and stockholders' equity
(deficit) for the year then ended (not presented herein), and, in
our report dated April 16, 2002, we included a reference to
certain matters which raise substantial doubt about the Company's
ability to continue as a going concern.  In our opinion, the
information set forth in the accompanying condensed balance sheet
as of December 31, 2001 (which has been restated to conform to
the Company's presentation of discontinued sulphur operations as
discussed in Note 1), is fairly stated, in all material respects,
in relation to the balance sheet from which it has been derived


                                  /s/ ARTHUR ANDERSEN LLP

New Orleans, Louisiana
May 9, 2002

<PAGE>                         10


Item 2.Management's Discussion and Analysis of Financial Condit
ion and Results of Operations.

OVERVIEW
  We engage in the exploration, development and production of
oil and gas offshore in the Gulf of Mexico and onshore in the
Gulf Coast region and in the purchasing, transporting,
terminaling, processing and marketing of recovered sulphur.

Requirements For Additional Capital and Business Plan
  We face significant financial liquidity issues in 2002 as a
result of adverse business conditions with our sulphur operations
and significant nonproductive exploratory drilling costs incurred
during 2001 and 2000. The accompanying financial statements
reflect stockholders' deficits of $63.5 million at March 31, 2002
and $87.8 million at December 31, 2001 and working capital
deficits of $83.7 million at March 31, 2002 and $88.1 million at
December 31, 2001, which include amounts due under our sulphur
credit facility. In addition, we have little additional borrowing
capacity under our existing credit facility.

  Our business plan for the remainder of 2002 is to arrange for
drilling the high-potential, high-risk exploratory prospects in
shallow water depths from our existing lease acreage position.
As described below, we have developed a financial plan to enable
us to execute our business plan.  To accomplish our business plan
and meet our financial obligations, we must:

  *  Consummate the sale of our sulphur transportation and
     terminaling assets

  *  Raise additional capital to fund our working capital
     requirements and to repay the $8 million amount expected to be
     outstanding on the sulphur credit facility upon completion of the
     sulphur asset sale transaction

  *  Complete the process that we have initiated to resolve our
     sulphur reclamation requirements with the Minerals Management
     Service (MMS)

  *  Enter into exploration arrangements with oil and gas
     industry participants (see "Operational Activities" below), or
     otherwise raise capital, to provide funding for our exploration
     and development activities for 2002

    In February 2002, we sold three of our oil and gas
properties for $60.0 million and repaid all borrowings under our
oil and gas credit facility, which was then terminated.  We also
entered into a definitive agreement to satisfy our Main Pass
Block 299 (Main Pass) and Caminada sulphur reclamation
obligations. On March 29, 2002, we entered into a definitive
agreement to sell our sulphur assets, that comprise our recovered
sulphur transportation, terminaling, logistics and marketing
business (transportation and terminaling assets) and to resolve
all pending disputes with IMC Global Inc. and its subsidiaries
(collectively IMC).  Available proceeds from these transactions
would be used to repay a substantial portion of our borrowings
under the sulphur credit facility (Note 3).  For additional
information regarding these transactions see "Capital Resources
and Liquidity" and "Decision to Exit Sulphur Operations" below.

     We have been actively pursuing the transactions described
above and in Note 2, the ultimate resolution of which will have a
significant impact on our financial condition and liquidity.
Because these transactions have not yet occurred, they involve
inherent uncertainties, including uncertainties beyond our
control.  As a result, no assurances can be given that these
transactions will be completed as contemplated or at all, which
could have a detrimental effect on our ability to continue to
conduct our operations.  For more information regarding our
business plan and these transactions, see "Decision to Exit
Sulphur Operations" below and Note 2 and for the related risks,
see "Risk Factors" in Items 1. and 2. included in our 2001 Annual
Report on Form 10-K.

RESULTS OF OPERATIONS
     As a result of our definitive agreement to sell our sulphur
transportation and terminaling assets, our only remaining
continuing operating segment is "oil and gas."  See "Decision to
Exit Sulphur Operations" for information regarding our former
sulphur segment. The oil and gas segment includes all of our oil
and gas operations located in the Gulf of Mexico and Gulf Coast
region, including the oil operations at Main Pass.  We use the
successful efforts accounting method for our oil and gas
operations.  As a result of our anticipated exploration
expenditures and the requirements of the successful efforts
accounting method to charge all nonproductive exploratory
drilling costs and other exploration expenditures to expense, we
are likely to continue to report operating losses in future
periods.  During the first quarter of 2002 we recorded operating
income of $24.5 million, which included a $29.2 million gain on
the sale of certain ownership interests in three of our oil and
gas properties (see "Capital Resources and Liquidity" below and
Note 2).  During the first quarter of 2001, our oil and gas

<PAGE>                       11

operations resulted in an operating loss of $36.0 million, which
included $31.1 million of nonproductive exploratory drilling
costs.

Summarized operating data is as follows:

<TABLE>
<CAPTION>
                                           Three Months Ended
                                                March 31,
                                          --------------------
                                            2002       2001
                                          ---------  ---------
<S>                                       <C>        <C>
OPERATING DATA:
Sales Volumes
  Gas (thousand cubic feet, or Mcf)  a    2,774,200  1,655,600
  Oil, excluding Main Pass (barrels) b       58,500     33,300
  Oil from Main Pass (barrels) c            290,500    143,400
  Plant Products (equivalent barrels) d       7,900        -
Average Realization
  Gas (per Mcf)                              $ 2.43    $  6.90
  Oil, excluding Main Pass (per barrel)       20.82      28.78
  Oil from Main Pass (per barrel)             18.05      22.31

</TABLE>

a.   Sales volumes during 2002 include 856,000 Mcf of gas
  associated with oil and gas properties sold in February 2002 (see
  Capital Resources and Liquidity" below and Note 2).
b.   Sales volumes during 2002 include 18,500 barrels of oil
  associated with the oil and gas properties sold in February 2002.
c.   We anticipate disposing of our ownership interest in the oil
  operations at Main Pass (see "Decision to Exit Sulphur
  Operations" below).
d.   We received approximately $0.3 million of revenues
  associated with plant products (see "Oil and Gas Operations"
  below).

Oil and Gas Operations

<TABLE>
<CAPTION>
     A summary of increases (decreases) in our oil and gas
revenues between the periods follows (in thousands):

                                                   First
                                                  Quarter
                                                 ---------
      <S>                                        <C>
      Oil and gas revenues - prior year period   $  15,798
      Increase (decrease)
        Sales volumes:
            Oil                                      4,007
            Gas                                      7,718
        Price realizations:
            Oil                                     (1,704)
            Gas                                    (12,401)
      Plant products revenues                          322
      Other                                           (154)
                                                 ---------
      Oil and gas revenues - current year period $  13,586 a
                                                 =========
</TABLE>

a.  Current year oil and gas revenues include $2.4 million
 associated with the properties that were sold in February 2002
 (see "Capital Resources and Liquidity" below and Note 2).

     Our first-quarter 2002 oil and gas revenues reflect the
decreases in average realizations for gas (65 percent) and oil
(21 percent) when compared to prices realized during the first
quarter of 2001. These decreases were partially offset by
increases in sales volumes of gas (68 percent) and oil (102
percent) over sales levels a year ago. The increase in oil sales
volumes is primarily attributable to the Main Pass oil
operations, which includes the additional 16.7 percent interest
we purchased in June 2001 and the operations having only two
months of production in 2001 because of the shut-in of its
operations during February 2001 for the performance of platform
and equipment maintenance.  The increase in sales volumes of gas
primarily reflects the mid-2001commencement of production from
four fields discovered during 2000.  Revenues during the first
quarter of 2002 also includes $0.3 million of plant products
revenues associated with approximately 7,900 equivalent barrels
of oil and condensate received for products (ethane, propane,
butane, etc.) recovered from the processing of our natural gas.
We did not start receiving significant amounts of these types of
plant products revenues until the second half of 2001.

     Production and delivery costs totaled $6.4 million in the
first quarter of 2002 compared to $9.8 million in the first
quarter of 2001. The decrease is primarily attributed to the
approximate $1.1 million of costs associated with the Main Pass
oil platform and equipment maintenance performed in February 2001
and $2.8 million of lease workover costs at Eugene Island Blocks
193/208/215 during the first quarter of

<PAGE>                        12

2001. The decrease in
production and delivery costs between the first quarters of 2002
and 2001 was partially offset by the higher production volumes
during the first quarter of 2002.

     Depreciation and amortization expense totaled $6.7 million
in the first quarter of 2002 compared with $3.1 million for the
same period last year.  The increase reflects higher production
volumes and unit-of-production depreciation rates in the first
quarter of 2002 compared to the first quarter of 2001.

     Our exploration expenses will fluctuate in future periods
based on the number, results and costs of our exploratory
drilling projects and the incurrence of geological and
geophysical costs, including seismic data. Summarized exploration
expenses are as follows (in millions):

<TABLE>
<CAPTION>
                                       Three Months Ended
                                            March 31,
                                       ------------------
                                         2002      2001
                                       -------   --------
     <S>                               <C>       <C>
     Geological and geophysical,
       including 3-D seismic purchases $   1.6   $    4.0
     Non productive exploratory costs,
       including lease costs               1.1 a     31.1 b
     Other                                 0.7        0.3
                                       -------   --------
                                       $   3.4   $   35.4
                                       =======   ========
</TABLE>

a.   Includes residual costs associated with various unproductive
  exploratory wells drilled in prior years totaling $0.6 million.
b.   Includes unproductive exploratory well drilling and related
  costs, primarily associated with the West Delta Block 12 No. 1
  well and the Garden Banks Block 272 No. 1 well.

Other Financial Results
     General and administrative expense totaled $1.7 million in
the first quarter of 2002 compared with $3.5 million for the
first quarter of 2001.  The decrease during the comparable
periods primarily reflects the reduced direct and allocated
administrative costs incurred as a result of the sale of certain
oil and gas properties and the decrease in our exploration and
development activities, as well as the effect of our two Co-
Chairmen agreeing not to receive any cash compensation during
2002.

     Interest expense totaled $0.5 million during the first
quarter of 2002 compared to $0.3 million during the first quarter
of 2001.  The increase reflects the borrowings under our oil and
gas credit facility through February 22, 2002, at which time all
borrowings were repaid and the facility was terminated (see
"Capital Resources and Liquidity" below and Note 2), as well as
the amortization of the remaining deferred financing costs
associated with the facility.  During the first quarter of 2001
we had no borrowings outstanding under the oil and gas credit
facility so that interest expense represented only the
amortization of deferred financing costs.

     We recorded a $29.2 million gain associated with the
sale of our ownership interests in Vermilion Block 196 and Main
Pass Block 86 and 97 and 80 percent of our ownership interests in
Ship Shoal Block 296 (see "Capital Resources and Liquidity" below
and Note 2).

CAPITAL RESOURCES AND LIQUIDITY
     Operating activities provided cash of $5.5 million in the
first quarter of 2002 compared to using cash of $16.7 million
during the first quarter of 2001.  Operating cash flow from
continuing operations provided cash of $5.0 million during the
first quarter of 2002 compared with using $5.7 million during the
first quarter of 2001.  The increase primarily reflects the
changes in working capital between the comparable periods.
Operating cash flow associated with our discontinued sulphur
operations provided $0.5 million of cash during the first quarter
of 2002 compared to using $11.0 million of cash during the first
quarter of 2001.  This increase is primarily attributable to the
improved operating results of our sulphur operations during the
first quarter of 2002 when compared with the first quarter of
2001.  In addition, during the first quarter of 2001 we incurred
$8.1 million of Main Pass sulphur mine reclamation costs.  A
significant portion of our remaining sulphur reclamation costs is
being or will be incurred by a third party under the terms of a
contractual agreement (see "Decision To Exit Sulphur Operations"
below and Note 2).

    Our investing activities provided $51.8 million of cash in
the first quarter of 2002 compared with using $33.6 million in
the first quarter of 2001.  Investing cash flow from our
continuing operations provided $51.2 million during the first
quarter of 2002 compared with using $33.6 million during the
first quarter of 2001.  Our investing cash flow during 2002
included the receipt of $60.0 million associated with

<PAGE>                       13

the sale of
three of our oil and gas property interests (see below), offset
in part by $8.8 million of exploration and development capital
expenditures, including $1.1 million of expensed exploratory
drilling and related costs.  Our investing cash flow during 2001
included exploration and development capital expenditures of
$34.6 million, which included $31.1 million of expensed
exploratory drilling and related costs primarily associated with
the West Delta Block 12 No. 1 and Garden Banks Block 272 No. 1
exploratory wells. Other capital expenditures, during the first
quarter of 2001 included the costs incurred in recompletion
operations at West Cameron Block 616 and Eugene Island Blocks
193/208/215, as well as initial recompletion costs associated
with the development of our 2000 discoveries.  We sold one lease
during the first quarter of 2001 for $1.0 million.  Investing
cash flow associated with our discontinued sulphur operations
totaled $0.6 million during the first quarter of 2002, which
represented the sale of miscellaneous assets from the Main Pass
sulphur facilities.

    Our financing activities resulted in a use of cash totaling
$48.6 million during the first quarter of 2002 compared with
providing cash of $11.2 million during the first quarter of 2001.
Our continuing operations' financing activities used $49.6
million during the first quarter of 2002 primarily to repay the
borrowings under our oil and gas credit facility (see below),
compared to providing $0.2 million during the first quarter of
2001.  Cash provided by our discontinued sulphur operations
totaled $1.0 million during the first quarter of 2002 and $11.0
million during the first quarter of 2001, which represented the
net borrowings under our sulphur credit facility for each of the
respective periods.

     In February 2002, we sold three of our oil and gas
properties for $60.0 million.  Under terms of the sales
agreement, we sold our ownership interests in Vermilion Block
196, Main Pass Blocks 86/97, and 80 percent of our interests in
Ship Shoal Block 296.  We have retained our interests in
exploratory prospects lying 100 feet below the stratigraphic
equivalent of the deepest currently producing interval at both
Vermilion Block 196 and Ship Shoal Block 296.  We also have
retained a potential reversionary interest in these properties
equal to 75 percent of the transferred interests following payout
of $60 million plus a specified annual rate of return.  Whether
or not payout ultimately occurs will depend upon future
production and future market prices of both natural gas and oil,
among other factors.  Upon closing, we used the proceeds to repay
all borrowings outstanding on the oil and gas credit facility
($51.7 million), which then was terminated.  We are currently in
discussions with certain banks for a new credit facility to be
used to fund our working capital requirements.  Our first-quarter
operating results include a $29.2 million gain associated with
this sales transaction (see "Results of Operations" above).

OPERATIONAL ACTIVITIES
Eugene Island Block 97 (Thunderbolt)  The recompletion efforts at
the Thunderbolt No. 2 well have been successfully completed and
the well has been placed back on production.  In a well test
conducted on May 7, 2002, the gross daily production from the No.
2 well totaled approximately 10 million cubic feet per day
(MMcf/d) of natural gas and 319 barrels of oil and condensate.
The three wells that comprise the Thunderbolt field are currently
averaging a gross daily production rate of approximately 16.3
MMcf/d of gas and 340 barrels of oil and condensate or
approximately 18.3 million cubic feet of gas equivalent (MMcfe),
5.0 MMcfe net to our interests.  We have an approximate 38.0
percent working interest and 27.2 net revenue interest in the
Thunderbolt prospect, which is located approximately 25 miles
offshore Louisiana in 27 feet of water.

Eugene Island Blocks 97/108/109 (Hornung Unit) The Hornung
prospect is located south of and adjacent to our Thunderbolt
prospect where we have participated in three discoveries over the
past two years.  On April 30, 2002, drilling commenced at the
Eugene Island Block 108 (Hornung) No. 14 exploratory well.  The
well has a total planned measured depth of approximately 21,800
feet and the operator is currently running casing at
approximately 6,000 feet measured depth.  We currently have an
approximate 40.0 percent working interest and 29.5 percent net
revenue interest in the well, which is located approximately 25
miles offshore Louisiana in 32 feet of water.

Drilling Arrangements.   We have completed agreements with an
industry partner to fund certain exploration and development
activities on certain of our prospects identified for drilling in
2002.  We will retain a potentially significant reversionary
interest in any discoveries made on these prospects. Over the
past two years, our exploration team has undertaken an intensive
process to evaluate our substantial acreage position from a
technical standpoint and we have identified a group of over 20
prospects, which we believe to be high quality, involving deep
exploration targets for natural gas accumulations in shallow
waters near existing production infrastructure.

<PAGE>                        14

DECISION TO EXIT SULPHUR OPERATIONS
Sale Of Sulphur Transportation And Terminaling Assets
     On March 29, 2002, we entered into a definitive agreement to
sell, subject to certain conditions, our sulphur transportation
and terminaling assets to Gulf Sulphur Services Ltd., LLP, a new
sulphur services joint venture to be owned by IMC Global Inc.
(IMC) and Savage Industries Inc. (Savage). IMC and Savage have
agreed to contribute capital to the joint venture and are taking
steps to secure additional financing to purchase the sulphur
transportation and terminaling assets from us. Also, in
connection with this proposed transaction, we entered into an
agreement with IMC that would settle all our disputes with IMC
and its subsidiaries with respect to our existing long-term
sulphur supply contract with IMC (see Item. 1 "Legal
Proceedings").  In these transactions, we have agreed to
indemnification obligations with respect to the sulphur assets to
be sold to the joint venture, including certain environmental
issues, and with respect to the historical sulphur operations
engaged in by us and our predecessor companies.  In addition, we
agreed that, upon closing of the transactions, we will assume,
and indemnify IMC from, any obligations, including environmental
obligations, other than liabilities existing as of the closing of
the sale, associated with historical oil and gas operations
undertaken by the Freeport-McMoRan companies prior to the 1997
merger of Freeport-McMoRan Inc. and IMC.  See "Risk Factors"
included in our 2001 Annual Report on Form 10-K.

     We expect to receive gross cash proceeds totaling $58
million upon the completion of the transactions, which we expect
to occur no later than May 31, 2002.  We will use proceeds from
the sale, after payment of certain working capital items and
transactions costs, to repay a substantial portion of the
borrowings outstanding under the sulphur credit facility.  We
currently estimate that our payments will reduce the credit
facility to approximately $8 million.  We have reached an
agreement to repay the remaining amounts outstanding by no later
than September 30, 2002, subject to satisfaction of certain
conditions. See Notes 2 and 3 for additional information
regarding the sale of our sulphur transportation and terminaling
assets and our arrangement to satisfy our sulphur debt
obligations.

     We recorded a $10.8 million charge in our year-end 2001
financial statements to reduce the carrying values of the sulphur
transportation and terminaling assets to their estimated fair
value (see "Results of Operations" in our 2001 Annual Report on
Form 10-K).  We do not anticipate the sale of the sulphur
transportation and terminaling assets will result in a material
gain or loss during 2002.

MMS Bonding Requirement Settlement
     We have completed the initial reclamation activities at the
Main Pass sulphur mine, including the plugging and abandonment of
the sulphur wells and removal of the living quarters and
warehouse facility.  We incurred reclamation costs totaling $8.1
million in first quarter of 2001 associated with these initial
reclamation activities.  We have recently entered into
contractual agreements with a third party to dismantle and remove
the remaining Main Pass and Caminada sulphur facilities (see
"Resolution of Sulphur Reclamation Obligations" below).

     In July 2001, the MMS, which has regulatory authority to
ensure offshore leaseholders fulfill the abandonment and site
clearance obligations related to their properties, informed us
that they were considering requiring us or Freeport Sulphur
either to post a bond of approximately $35 million or to enter
into other funding arrangements acceptable to the MMS, relative
to reclamation of the Main Pass sulphur mine and related
facilities as well as the Main Pass oil production facilities. In
October 2001, Freeport Sulphur entered into a trust agreement
with the MMS to provide financial assurances meeting the MMS
requirements by February 3, 2002.  Under terms of the agreement,
we provided a non-cash financial assurance of $10 million to the
MMS by the February 3, 2002 deadline. The remaining financial
assurance requirements were expected to be fulfilled by a
combination of a surety bond and additional non-cash financial
assurances or otherwise through cash deposits made by Freeport
Sulphur over a five-year period. The MMS extended the date to
comply with the terms of this trust agreement until June 27,
2002.  We expect that all of our sulphur reclamation obligation
matters will be resolved by the extension date. See "Resolution
of Sulphur Reclamation Obligations" below.

Resolution Of Sulphur Reclamation Obligations
     During February and March of 2002, Freeport Sulphur and
Offshore Specialty Fabricators Inc. (OSFI) entered into
definitive contractual agreements for the removal and
dismantlement of all remaining Main Pass and Caminada sulphur
facilities.  OSFI will perform all reclamation activities for
both of these mines, with work having commenced at Caminada in
March 2002 and expected to be completed during the second quarter
of 2002.  OSFI expects to commence work at Main Pass within 30
days after completing its work at Caminada.  Fifty percent of the
Caminada mine reclamation contract cost will be paid by the
original lease holder, which has a contractual obligation for its
share of such costs.  For our share of the total reclamation
costs for both Main Pass and Caminada, Freeport Sulphur has
conveyed to

<PAGE>                        15

OSFI title to certain assets that were part of our
initial reclamation activities at Main Pass including the living
quarters, a marine vessel previously used to service the Main
Pass sulphur mining operations and dock facilities in Venice,
Louisiana.  OSFI will be entitled to receive Freeport Sulphur's
economic interests in its oil operations at Main Pass, as further
discussed below.

     As previously disclosed on March 27, 2002, Freeport Sulphur
and OSFI entered into an agreement to sell Freeport Sulphur's
Main Pass oil assets to a third party with the proceeds to be
paid to OSFI as part of its compensation for the dismantlement
and reclamation of the Main Pass sulphur mine and related
facilities.  That agreement has been terminated.  Freeport
Sulphur and OSFI expect either to sell the Main Pass oil assets
to a third party, with the proceeds of any sale being paid to
OSFI, or to transfer these assets to OSFI.

     OSFI will also receive any initial payments relating to the
establishment of a business enterprise using certain of the Main
Pass sulphur facilities for the disposal of non-hazardous
oilfield waste from offshore oil operations and potentially for
other business services in support of the offshore petroleum
industry, including potentially the storage of crude oil and
natural gas.  We are in negotiations with other third parties to
establish this new business enterprise's non-hazardous oilfield
waste disposal operations, while we seek the final regulatory
approval of such operations from the MMS.  If this business
enterprise is successfully established, we would receive a
negotiated share of the revenues or profits of the enterprise,
which would be operated by another company.

     We expect to record a gain during 2002 in connection with
the above transactions.  We also believe that our future sulphur
bonding issues with the MMS will be effectively resolved with the
transactions described above.

Discontinued Sulphur Operations

     A summary of the decrease in the revenues of our
discontinued sulphur operations between the periods follows (in
thousands):
<TABLE>
<CAPTION>
                                                First
                                               Quarter
                                             -----------
     <S>                                     <C>
     Sulphur revenues - prior year period    $    27,678
     Decrease
        Sales volumes                             (3,324)
        Price realization                         (8,111)
     Other                                           (20)
                                             -----------
     Sulphur revenues - current year period  $    16,223
                                             ===========
</TABLE>

     Our sulphur revenues decreased by 41 percent during the
first quarter of 2002 when compared with the first quarter of
2001. This decrease reflects an approximate 12 percent decrease
in sales volumes resulting from reduced demand because of
depressed conditions in the historically cyclical phosphate
fertilizer industry, the principal consumer of sulphur.    These
conditions also contributed to the approximate 33 percent
decrease in average realized sulphur prices to $36.29 per long
ton in the first quarter of 2002 from $54.41 per long ton in the
first quarter of 2001.

     Sulphur production and delivery costs for the first quarter
of 2002 totaled $13.8 million compared with $35.5 million for the
first quarter of 2001.  This decrease primarily reflects the
reduced costs to purchase our sulphur from U.S oil refiners and
gas processors together with the reduced volumes sold during the
first quarter of 2002. Our first-quarter 2001 production costs
included a $5.4 million charge to adjust our sulphur inventory to
its net realizable value at March 31, 2001, which reflected the
decreases in sulphur market prices.

     General and administrative expenses for the first quarter of
2002 totaled $0.8 million compared with $1.4 million in the first
quarter of 2001.  The decrease reflects the plan to exit our
sulphur operations. Interest expense during the first quarter of
2002 totaled $1.7 million compared with $1.4 million during the
first quarter of 2001.  The increase primarily reflects the
increased borrowings under our sulphur credit facility (see Note 3).

CAUTIONARY STATEMENT
     Management's Discussion and Analysis of Financial Condition
and Results of Operations contain forward-looking statements.
All statements other than statements of historical fact included
in this report, including, without limitation, statements
regarding plans and objectives of our management for future
operations and our exploration and development activities are
forward-looking statements.

<PAGE>                      16

      This report includes "forward looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, including
statements about our plans, strategies, expectations, assumptions
and prospects.  "Forward-looking statements" are all statements
other than statements of historical fact, such as: statements
regarding our financial plan to address our liquidity issues and
our business plan for 2002; statements regarding our need for,
and the availability of, financing; our ability to complete the
transactions to sell our sulphur transportation and terminaling
assets, settle the disputes with IMC and generate proceeds of
approximately $58 million; our ability to sell the Main Pass oil
lease and to satisfy the MMS reclamation obligations with respect
to Main Pass and Caminada; our ability to conduct an equity
offering; our ability to arrange for an industry participant to
fund our exploration activities with respect to our prospects;
drilling potential and results; anticipated flow rates of
producing wells; anticipated initial flow rates of new wells;
reserve estimates and depletion rates; general economic and
business conditions; risks and hazards inherent in the production
of oil and natural gas; demand and potential demand for oil and
gas; trends in oil and gas prices; amounts and timing of capital
expenditures and reclamation costs; and other environmental
issues.  Further information regarding these and other factors
that may cause our future performance to differ from that
projected in the forward looking statements are described in more
detail under "Risk Factors" included in Items 1. and 2. "Business
and Properties" in our 2001 Annual Report on Form 10-K.


                   ------------------------

The results of operations reported and summarized above are not
necessarily indicative of future operating results.


                   PART II--OTHER INFORMATION

Item 1.  Legal Proceedings.
Freeport-McMoRan Sulphur LLC v. IMC-Agrico Company, Civ. Act. No.
462,776 (19th Jud. Dist. Ct. for Parish of East Baton Rouge, La.;
filed July 22, 1999).  The sulphur supply agreement between
Freeport Sulphur and IMC-Agrico, now known as IMC Phosphate
Company (IMC), requires good faith renegotiation of the pricing
provisions if a party can prove that fundamental changes in IMC's
operations or the sulphur and sulphur transportation markets
invalidate certain assumptions and result in the performance by
that party becoming "commercially impracticable" or "grossly
inequitable."  In the fourth quarter of 1998, IMC attempted to
invoke this contract provision in an effort to renegotiate the
pricing terms of the agreement.  After careful review of the
agreement, IMC's operations and the referenced markets, we
determined that there was no basis for renegotiation of the
pricing provisions of the agreement.  After discussions failed to
resolve this dispute, Freeport Sulphur filed suit against IMC
seeking a judicial declaration that no basis existed under the
agreement for a renegotiation of its pricing terms.

     On July 25, 2000, IMC filed a supplemental demand alleging
that Freeport Sulphur's suspension of sulphur production at Main
Pass and the proposed sale of Freeport Sulphur's transportation
assets constituted a statement of intent to breach the sulphur
supply agreement.  In March 2001, the court ruled that the
ceasing of production from Main Pass was not a breach of the
sulphur supply agreement but refused to grant either of the two
parties summary judgment motions relating to the assignment of
the sulphur supply agreement.  On July 13, 2001, Freeport Sulphur
filed a series of motions for partial summary judgment and
exceptions for prescription and no cause of action to dismiss on
all substantive claims.  On October 15, 2001, the court ruled in
favor of Freeport Sulphur's motions for partial summary judgment.
The court found that IMC presented no facts to support its claims
of commercial impracticability or gross inequity and agreed with
Freeport Sulphur that there is no basis for renegotiation of the
contract.  IMC appealed the court's decision.

     During 2002 Freeport Sulphur elected under the sulphur
supply agreement not to supply optional quantities available
under the contract totaling 500,000 tons.  IMC disputed this
right and requested that the court issue a declaratory judgment
confirming its view.  IMC has also withheld payments for 2002
amounts we consider due under the contract through March 31, 2002
in the aggregate amount of approximately $2.1 million and has
indicated that it plans to continue withholding these payments.
Freeport Sulphur filed for summary judgment with respect to the
IMC claim.  Freeport Sulphur also filed a claim for underpayment
of additional amounts for 2002 and 2001 with respect to the
pricing formula used in a contract based upon IMC's improper
calculation of the price. The court has not ruled on any of these
recent claims and motions.

<PAGE>                        17

     On March 29, 2002, Freeport Sulphur entered into a
definitive agreement for the sale of its sulphur transportation
and terminaling assets.  In connection with the transaction, both
McMoRan and IMC agreed to settle all litigation and disputes
between the two companies and their subsidiaries, subject to
certain conditions.

Daniel W. Krasner v. James R. Moffett; Rene L. Latiolais; J.
Terrell Brown; Thomas D. Clark, Jr.; B.M. Rankin, Jr.; Richard C.
Adkerson; Robert M. Wohleber; Freeport-McMoRan Sulphur Inc. and
McMoRan Oil & Gas Co., Civ. Act. No. 16729-NC (Del. Ch. filed
Oct. 22, 1998).  Gregory J. Sheffield and Moise Katz v. Richard
C. Adkerson, J. Terrell Brown, Thomas D. Clark, Jr., Rene L.
Latiolais, James R. Moffett, B.M. Rankin, Jr., Robert M. Wohleber
and McMoRan Exploration Co., (Court of Chancery of the State of
Delaware, filed December 15, 1998.)  These two lawsuits were
consolidated in January 1999.  The complaint alleges that
Freeport-McMoRan Sulphur Inc.'s directors breached their
fiduciary duty to Freeport-McMoRan Sulphur Inc.'s stockholders in
connection with the combination of Freeport Sulphur and McMoRan
Oil & Gas.  The plaintiffs contend that the transaction was
structured to give preference to McMoRan Oil & Gas stockholders
and failed to recognize the true value of Freeport Sulphur.  The
plaintiffs claim that the directors failed to take actions that
were necessary to obtain the true value of Freeport Sulphur such
as auctioning the company to the highest bidder or evaluating
Freeport Sulphur's worth as an acquisition candidate.  The
plaintiffs also claim that McMoRan Oil & Gas Co. knowingly aided
and abetted the breaches of fiduciary duty committed by the other
defendants.  In January 2001, the court granted the motions to
dismiss for the defendants with 30 days leave for the plaintiffs
to amend.  In February 2001, the plaintiffs filed an amended
complaint.  In April 2001, the defendants filed a brief in
support of their motion to dismiss.  In March 2002, the
plaintiffs filed an answering brief in opposition to the
defendants' motion to dismiss the second amendment complaint.  We
will continue to defend this action vigorously.

    Other than the proceedings discussed above, we may from time
to time be involved in various

Item 6.   Exhibits and Reports on Form 8-K.

(a)   The exhibits to this report are listed in the Exhibit Index
  appearing on page E-1 hereof.
(b)  During the period covered by this Quarterly Report on Form
  10-Q and through May 9, 2002 the registrant filed five Current
  Reports on Form 8-K.  McMoRan filed four Current Reports on Form
  8-K reporting events under Item 5 dated January 28, 2002,
  February 1, 2002, March 11, 2002 and April 1, 2002.  McMoRan also
  filed a Current Report on Form 8-K reporting events under Items 2
  and 7 dated February  22, 2002.



                     McMoRan Exploration Co.
                            SIGNATURE

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

                             McMoRan Exploration Co.

                             By:   /s/ C. Donald Whitmire, Jr.
                                 ------------------------------
                                       C. Donald Whitmire, Jr.
                                    Vice President and Controller-
                                         Financial Reporting
                                     (authorized signatory and
                                    Principal Accounting Officer)
Date:  May 10, 2002


<PAGE>                         18

                     McMoRan Exploration Co.
                          Exhibit Index

  Exhibit Number

 2.1       Agreement and Plan of Mergers dated as of August 1,
          1998. (Incorporated by reference to Annex A to McMoRan's
          Registration Statement on Form S-4 (Registration No. 333-
          61171) filed with the SEC on October 6, 1998 (the
          McMoRan S-4)).

 3.1       Amended and Restated Certificate of Incorporation of
          McMoRan.  (Incorporated by reference to Exhibit 3.1 to
          McMoRan's 1998 Annual Report on Form 10-K (the McMoRan
          1998 Form 10-K).

 3.2       By-laws of McMoRan as amended effective February 1,
          1999.  (Incorporated by reference to Exhibit 3.2 to the
          McMoRan 1998 Form 10-K).

 4.1       Form of Certificate of McMoRan Common Stock
          (Incorporated by reference to Exhibit 4.1 of the McMoRan
          S-4).

 4.2       Rights Agreement dated as of November 13, 1998.
          (Incorporated by reference to Exhibit 4.2 to McMoRan
          1998 Form 10-K).

 4.3       Amendment to Rights Agreement dated December 28, 1998.
          (Incorporated by reference to Exhibit 4.3 to McMoRan
          1998 Form 10-K).

 4.4       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.
          (Incorporated by reference to Exhibit 4.4 to McMoRan's
          Third Quarter 1999 Form 10-Q).

10.1       Main Pass 299 Sulphur and Salt Lease, effective May 1,
          1988.  (Incorporated by reference to Exhibit 10.1 to
          McMoRan's 2001 Annual Report on Form 10-K (the McMoRan
          2001 Form 10-K)).

10.2       Joint Operating Agreement by and between Freeport-
          McMoRan Resource Partners, IMC-Fertilizer, Inc. and
          Felmont Oil Corporation, dated as of May 1, 1988
          (Incorporated by reference to Exhibit 10.2 to McMoRan's
          2001 Form 10-K).

10.3       Agreement to Coordinate Operating Agreements by and
          between Freeport-McMoRan Resource Partners,
          IMC-Fertilizer and Felmont Oil Corporation, dated as of
          May 1, 1988 (Incorporated by reference to Exhibit 10.3
          to McMoRan's 2001 Form 10-K).

10.4       Joint Operating Agreement by and between Freeport-
          McMoRan Resource Partners, IMC-Fertilizer, Inc. and
          Felmont Oil Corporation, dated as of June 5, 1990
          (Incorporated by reference to Exhibit 10.4 to McMoRan's
          2001 Form 10-K).

10.5       Amendment No. 1 to Joint Operating Agreement dated July
          1, 1993 between Freeport McMoRan Resource Partners, IMC
          Fertilizer, Inc. and Homestake Sulphur Company.
          (Incorporated by reference to Exhibit 10.14 to McMoRan's
          1999 Annual Report on Form 10-K (the McMoRan 1999 Form
          10-K)).

10.6       Amendment No. 2 to Joint Operating Agreement dated
          November 30, 1993 between Freeport McMoRan Resource
          Partners, IMC Fertilizer, Inc. and Homestake Sulphur
          Company. (Incorporated by reference to Exhibit 10.15 in
          the McMoRan 1999 Form 10-K).

<PAGE>                            E-1

10.7       Processing and Marketing Agreement between the Freeport
          Sulphur (a division of Freeport-McMoRan Resource
          Partners) and Felmont Oil Corporation dated as of June
          19, 1990 (Processing Agreement) (Incorporated by
          reference to Exhibit 10.7 to McMoRan's 2001 Form 10-K).

10.8       Amendment Number 1 to the Processing Agreement
          (Incorporated by reference to Exhibit 10.8 to McMoRan's
          2001 Form 10-K).

10.9       Amendment Number 2 to the Processing Agreement
          (Incorporated by reference to Exhibit 10.9 to McMoRan's
          2001 Form 10-K).

10.10      Agreement for Sulphur Supply, as amended, dated as of
          July 1, 1993 among Freeport-McMoRan Resource Partners,
          IMC Fertilizer and IMC-Agrico Company (Sulphur Supply
          Agreement) (Incorporated by reference to Exhibit 10.10
          to McMoRan's 2001 Form 10-K).

10.11      Side letter with IGL regarding the Sulphur Supply
          Agreement (Incorporated by reference to Exhibit 10.11 to
          McMoRan's 2001 Form 10-K).

10.12      Services Agreement dated as of November 17, 1998 between
          McMoRan and FM Services Company. (Incorporated by
          reference to Exhibit 10.11 to McMoRan 1998 Form 10-K).

10.13      Participation Agreement between McMoRan Oil & Gas and
          Gerald J.  Ford dated as of December 15, 1997
          (Incorporated by reference to Exhibit 10.13 to McMoRan's
          2001 Form 10-K).

10.14      Offshore Exploration Agreement dated December 20, 1999
          between Texaco Exploration and Production Inc. and
          McMoRan Oil & Gas. (Incorporated by reference to Exhibit
          10.34 in the McMoRan 1999 Form 10-K).

10.15      Participation Agreement dated as of June 15, 2000 but
          effective as of March 24, 2000 between McMoRan Oil & Gas
          and Halliburton Energy Services, Inc.  (Incorporated by
          reference to Exhibit 10.34 to McMoRan's Second-Quarter
          2000 Form 10-Q).

10.16      Letter Agreement dated August 22, 2000 between Devon
          Energy Corporation and Freeport Sulphur.  (Incorporated
          by reference to Exhibit 10.36 to McMoRan's Third-Quarter
          2000 Form 10-Q).

10.17      Exploration Agreement dated November 14, 2000 between
          McMoRan Oil & Gas LLC and Samedan Oil Corporation.
          (Incorporated by reference to Exhibit 10.17 to McMoRan's
          2000 Form 10-K).

10.18      Amended and Restated Credit Agreement dated November 17,
          1998 among Freeport Sulphur, as borrower, McMoRan, as
          Guarantor and, the financial institutions party thereto.
          (Incorporated by reference to Exhibit 10.29 to McMoRan
          1998 Form 10-K).

10.19      Amendment to the amended and restated credit facility as
          of November 17, 1998, dated August 11, 2000 among
          Freeport Sulphur, as borrower, McMoRan, as Guarantor
          and, the financial institutions party thereto.
          (Incorporated by reference to Exhibit 10.26 to McMoRan's
          Third Quarter 2000 Form 10-Q).

10.20      Amendment, dated as of April 16, 2001, to the Credit
          Agreement dated as of December 12, 1997, as amended and
          restated as of November 17, 1998, as amended as of
          January 20, 1999 and as of August 11, 2000, among
          Freeport Sulphur, as borrower, McMoRan as Guarantor and,
          the financial institutions party thereto.  (Incorporated
          by reference to Exhibit 10.20 to McMoRan's First-Quarter
          Form 10-Q.)

<PAGE>                              E-2

10.21      Amendment dated as of August 31, 2001, to the Credit
          Agreement dated December 31, 1997, as amended and
          restated as of November 17, 1998, as amended as of
          January 20, 1999, as amended August 11, 2000 and as
          amended April 16, 2001, among Freeport Sulphur, as
          borrower, McMoRan as Guarantor and, the financial
          institutions party thereto.  (Incorporated by reference
          to Exhibit 10.1 to McMoRan's Form 8-K dated August 30,
          2001).

10.22      Amended and Restated Credit Agreement dated June 15,
          2000 among McMoRan Oil and Gas, as borrower, Chase Bank
          of Texas, National Association, as agent and the Lenders
          Signatory thereto.  (Incorporated by reference to
          Exhibit 10.31 to McMoRan's Second- Quarter 2000 Form 10-
          Q).

10.23      Second Amendment and Supplement to Amended and Restated
          Credit Agreement dated November 14, 2001, among McMoRan
          Oil and Gas, as borrower, The Chase Manhattan Bank
          (formerly Chase Bank of Texas, National Association) as
          agent and the Lender Signatory thereto (Incorporated by
          reference to Exhibit 10.23 to McMoRan's 2001 Form 10-K).

10.24      Asset Sale Agreement for Main Pass Block 299 between
          Freeport-McMoRan Resource Partners, Limited Partnership
          (Freeport-McMoRan Resource Partners) and Chevron USA,
          Inc. dated as of May 2, 1990 (Incorporated by reference
          to Exhibit 10.24 to McMoRan's 2001 Form 10-K).

10.25      Asset Purchase Agreement between Freeport-McMoRan
          Resource Partners and Pennzoil Company dated as of
          October 22, 1994 (Asset Purchase Agreement)
          (Incorporated by reference to Exhibit 10.25 to McMoRan's
          2001 Form 10-K).

10.26      Amendment No. 1 to the Asset Purchase Agreement dated as
          of January 3, 1995 (Incorporated by reference to Exhibit
          10.26 to McMoRan's 2001 Form 10-K).

10.27      Agreement for Purchase and Sale dated as of August 1,
          1997 between FM Properties Operating Co. and McMoRan Oil
          & Gas (Incorporated by reference to Exhibit 10.27 to
          McMoRan's 2001 Form 10-K).

10.28      Asset Purchase Agreement dated effective December 1,
          1999 between SOI Finance Inc., Shell Offshore Inc. and
          McMoRan Oil & Gas. (Incorporated by reference to Exhibit
          10.33 in the McMoRan 1999 Form 10-K).

10.29      Employee Benefits Agreement by and between Freeport-
          McMoRan Inc. and Freeport Sulphur (Incorporated by
          reference to Exhibit 10.29 to McMoRan's 2001 Form 10-K).

10.30      Amendment dated as of October 31, 2001 to the Credit
          Agreement dated December 31, 1997, as amended and
          restated as of November 17, 1998, as amended as of
          January 20, 1999, as amended as of August 11, 2000 and
          as amended as of August 31, 2001, among Freeport
          Sulphur, as borrower, McMoRan as Guarantor and, the
          financial institutions thereto (Incorporated by
          reference to Exhibit 10.30 to McMoRan's 2001 Form 10-
          K)..

10.31      Amendment dated as of January 31, 2002 to the Credit
          Agreement dated December 31, 1997, as amended and
          restated as of November 17, 1998, as amended as of
          January 20, 1999, as amended as of August 11, 2000, as
          amended as of August 31, 2001 and as amended October 31,
          2001, among Freeport Sulphur, as borrower, McMoRan as
          Guarantor and, the financial institutions thereto
          (Incorporated by reference to Exhibit 10.31 to McMoRan's
          2001 Form 10-K).

10.32      Amendment dated as of February 22, 2002 to the Credit
          Agreement dated December 31, 1997, as amended and
          restated as of November 17, 1998, as amended as of
          January 20, 1999, as amended as of August 11, 2000, as
          amended as of August 31, 2001, as amended October 31,
          2001 and as amended as of January 31, 2002, among
          Freeport Sulphur, as borrower, McMoRan as Guarantor and,
          the financial institutions thereto (Incorporated by
          reference to Exhibit 10.32 to McMoRan's 2001 Form 10-K).

<PAGE>                            E-3

10.33      Amendment dated as of March 1, 2002 to the Credit
          Agreement dated December 31, 1997, as amended and
          restated as of November 17, 1998, as amended as of
          January 20, 1999, as amended as of August 11, 2000, as
          amended as of August 31, 2001, as amended October 31,
          2001, as amended as of January 31, 2002, and as amended
          as of February 22, 2002, among Freeport Sulphur, as
          borrower, McMoRan as Guarantor and, the financial
          institutions thereto (Incorporated by reference to
          Exhibit 10.33 to McMoRan's 2001 Form 10-K).

10.34      Amendment dated as of April 3, 2002 to the Credit
          Agreement dated December 31, 1997, as amended and
          restated as of November 17, 1998, as amended as of
          January 20, 1999, as amended as of August 11, 2000, as
          amended as of August 31, 2001, as amended October 31,
          2001, as amended as of January 31, 2002, as amended as
          of February 22, 2002 and as amended as of March 1, 2002,
          among Freeport Sulphur, as borrower, McMoRan as
          Guarantor and, the financial institutions thereto
          (Incorporated by reference to Exhibit 10.34 to McMoRan's
          2001 Form 10-K).

10.35      Third Amendment and Supplement to Amended and Restated
          Credit Agreement dated as of January 25, 2002, among
          McMoRan Oil & Gas LLC, The Chase Manhattan Bank, and the
          Lenders Signatory thereto (Incorporated by reference to
          Exhibit 10.35 to McMoRan's 2001 Form 10-K).

10.36      Purchase and Sales agreement dated January 25, 2002 but
          effective January 1, 2002 by and between McMoRan Oil &
          Gas and Halliburton Energy Services, Inc. (Incorporated
          by reference to Exhibit 10.1 to McMoRan's Current Report
          on Form 8-K dated February 22, 2002.)

10.37      Purchase and Sale Agreement dated as of March 29, 2002
          by and among Freeport Sulphur, McMoRan, MOXY and Gulf
          Sulphur Services Ltd., LLP.

10.38      Turnkey contract for the reclamation removal, site
          clearance and scrapping of Main Pass Block 299 dated as
          of March 2, 2002 between Offshore Specialty Fabricators
          Inc. and Freeport Sulphur.

           Executive and Director Compensation Plans and
          Arrangements (Exhibits 39 through 51).

10.39      McMoRan Adjusted Stock Award Plan.  (Incorporated by
          reference to Exhibit 10.1 of the McMoRan S-4).

10.40      McMoRan 1998 Stock Option Plan.  (Incorporated by
          reference to Annex D to the McMoRan S-4).

10.41      McMoRan 2000 Stock Incentive Plan.  (Incorporated by
          reference to Exhibit 10.5 to McMoRan's Second-Quarter
          2000 Form 10-Q).

10.42      Stock Bonus Plan (Incorporated by reference from
          McMoRan's Registration Statement on Form S-8
          (Registration No. 333-67963) filed with the SEC on
          November 25, 1998.

10.43      McMoRan 1998 Stock Option Plan for Non-Employee
          Directors.  (Incorporated by reference to Exhibit 10.2
          of the McMoRan S-4).

10.44      McMoRan's Performance Incentive Awards Program as
          amended effective February 1, 1999.  (Incorporated by
          reference to Exhibit 10.18 to McMoRan's 1998 Form 10-K).

<PAGE>                          E-4

10.45      McMoRan Financial Counseling and Tax Return Preparation
          and Certification Program, effective September 30, 1998.
          (Incorporated by reference to Exhibit 10.13 to McMoRan's
          1998 Form 10-K).

10.46      McMoRan 2001 Stock Bonus Plan.  (Incorporated by
          reference to Exhibit 10.35 to McMoRan's First-Quarter
          2001 Form 10-Q).

10.47      McMoRan 2001 Stock Incentive Plan.  (Incorporated by
          reference to Exhibit 10.36 to McMoRan's Second-Quarter
          2001 Form 10-Q).

10.48      Agreement for Consulting Services between Freeport-
          McMoRan and B. M. Rankin, Jr. effective as of January 1,
          1991)(assigned to FM Services as of January 1, 1996); as
          amended on December 15, 1997 and on December 7, 1998.
          (Incorporated by reference to Exhibit 10.32 to McMoRan
          1998 Form 10-K).

10.49      Supplemental Agreement between FM Services and B.M.
          Rankin, Jr. dated February 5, 2001.  (Incorporated by
          reference to Exhibit 10.36b to McMoRan's 2000 Form 10-K).

10.50      Supplemental Agreement between FM Services and B.M.
          Rankin, Jr. dated December 13, 2001 (Incorporated by
          reference to Exhibit 10.49 to McMoRan's 2001 Form 10-K).

10.51      Supplemental Agreement between FM Service and Morrison
          C. Bethea dated October 15, 2001, providing an Amendment
          to the Consulting Agreement of November 1, 1993 as
          amended and Supplemental Agreement of December 21, 1999
          (Incorporated by reference to Exhibit 10.49 to McMoRan's
          2001 Form 10-K).

15.1       Letter dated May 9, 2002 from Arthur Andersen LLP
          regarding the unaudited interim financial statements.

<PAGE>                          E-5