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 June 30, 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 June 30, 2002, there were issued and outstanding
15,998,832 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                                           11

          Report of Independent Public Accountants          11

          Management's Discussion and Analysis
            of Financial Condition and Results of
            Operations                                      12

        Part II.  Other Information                         21

        Signature                                           22

        Exhibit Index                                       E-1


                     McMoRan Exploration Co.
                 Part I.  FINANCIAL INFORMATION

Item 1.     Financial Statements.

<TABLE>
<CAPTION>

                  McMoRan EXPLORATION CO.
              CONDENSED BALANCE SHEETS (Unaudited)


                                                     June 30,    December 31,
                                                       2002          2001
                                                    ----------    ---------
                                                         (In Thousands)
<S>                                                 <C>           <C>
ASSETS
Cash and cash equivalents, continuing operations    $   27,201    $     -
Cash and cash equivalents from discontinued
 sulphur operations, entire amount restricted
 at June 30, 2002                                        9,055          500
Accounts receivable                                      5,773       10,892
Inventories                                                598          690
Prepaid expenses                                         1,049          270
Current assets from discontinued sulphur
 operations, excluding cash                              2,021       12,477
                                                    ----------    ---------
  Total current assets                                  45,697       24,829
Property, plant and equipment, net                      60,185       98,519
Sulphur business assets, net                               355       54,607
Other assets, including restricted cash
 of $3.5 million                                         4,078       11,731
                                                    ----------    ---------
Total assets                                        $  110,315    $ 189,686
                                                    ==========    =========

LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable                                    $   10,642    $  20,862
Accrued liabilities                                      8,224       15,192
Borrowings outstanding on sulphur credit facility          -         55,000
Current portion of oil and gas credit facility             -          2,000
Current portion of accrued oil and gas
 reclamation costs                                         702          398
Current liabilities from discontinued sulphur           15,810       15,753
 operations
Other                                                      764          305
                                                    ----------    ---------
     Total current liabilities                          36,142      109,510
Accrued sulphur reclamation costs                       48,706       63,876
Accrued oil and gas reclamation costs                   17,524       18,278
Long-term borrowings on oil and gas credit facility        -         47,657
Contractual postretirement obligation                   21,344       21,122
Other long-term liabilities                             18,518       17,015
Mandatorily redeemable convertible preferred stock      33,777          -
Stockholders' deficit                                  (65,696)     (87,772)
                                                    ----------    ---------
Total liabilities and stockholders' deficit         $  110,315    $ 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     Six Months Ended
                                         June 30,              June 30,
                                   --------------------   -------------------
                                     2002       2001       2002       2001
                                   --------   ---------   --------   --------
                                    (In Thousands, Except Per Share Amounts)
<S>                                <C>        <C>         <C>        <C>
Revenues                           $ 11,400   $  16,093   $ 24,986   $ 31,891
Costs and expenses:
Production and delivery costs         6,272       9,452     12,690     19,236
Depreciation and amortization         3,892       4,064     10,597      7,155
Exploration expenses                  1,150      12,473      4,553     47,899
General and administrative expenses   2,135       4,364      3,857      7,880
Gain on disposition of oil and gas
 properties                            (886)        -      (30,084)       -
                                   --------   ---------   --------   --------
    Total costs and expenses         12,563      30,353      1,613     82,170
                                   --------   ---------   --------   --------
Operating income (loss)              (1,163)    (14,260)    23,373    (50,279)
Interest expense                        (22)        (89)      (543)      (357)
Other income, net                        36          62         59        428
Provision for income taxes              -           -           (7)       -
                                   --------   ---------   --------   --------
Income (loss) from continuing
 operations                          (1,149)    (14,287)    22,882    (50,208)
Loss from discontinued sulphur
 operations                          (1,324)     (4,730)    (1,316)   (13,597)
                                   --------   ---------   --------   --------
Net income (loss)                    (2,473)    (19,017)    21,566    (63,805)
Preferred dividends                     (49)        -          (49)       -
                                   --------   ---------   --------   --------
Net income (loss) applicable to
 common stock                      $ (2,522)  $ (19,017)  $ 21,517   $(63,805)
                                   ========   =========   ========   ========

Net income (loss) per share of common stock:
Basic net income (loss) from
 continuing operations               $(0.08)     $(0.90)     $1.43     $(3.16)
Basic net loss from discontinued
 sulphur operations                   (0.08)      (0.30)     (0.08)     (0.86)
                                     ------      ------      -----     ------
Basic net income (loss) per share
 of common stock                     $(0.16)     $(1.20)     $1.35     $(4.02)
                                     ======      ======      =====     ======

Diluted net income (loss) from
 continuing operations               $(0.08)     $(0.90)     $1.40     $(3.16)
Diluted net loss from discontinued
 sulphur operations                   (0.08)      (0.30)     (0.08)     (0.86)
                                     ------      ------      -----     ------
Diluted net income (loss) per
 share of common stock               $(0.16)     $(1.20)     $1.32     $(4.02)
                                     ======      ======      =====     ======
Average common shares outstanding:
 Basic                               15,977      15,861     15,946     15,856
                                     ======      ======     ======     ======
 Diluted                             15,977      15,861     16,349     15,856
                                     ======      ======     ======     ======

</TABLE>

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

<PAGE>                              4

<TABLE>
<CAPTION>

                     McMoRan EXPLORATION CO.
              STATEMENTS OF CASH FLOWS (Unaudited)


                                                           Six Months Ended
                                                               June 30,
                                                         --------------------
                                                            2002       2001
                                                         --------   ---------
                                                             (In Thousands)
<S>                                                      <C>         <C>
Cash flow from operating activities:
Net income (loss)                                        $ 21,517   $ (63,805)
Adjustments to reconcile net loss to net cash
 provided by (used in) operating activities:
  Loss from discontinued sulphur operations                1,316       13,597
  Depreciation and amortization                            10,597       7,155
  Exploration drilling and related expenditures             2,568      36,680
  Gain on disposition of oil and gas properties           (30,084)        -
  Change in assets and liabilities:
  Reclamation and mine shutdown expenditures                 (174)        -
  Other                                                      (686)        902
  (Increase) decrease in working capital:
      Accounts receivable                                   3,947      (1,621)
      Accounts payable and accrued liabilities             (8,661)      2,142
      Inventories and prepaid expenses                       (686)       (477)
                                                         --------   ---------
Net cash used in continuing operations                       (346)     (5,427)
Net cash provided by (used in) discontinued
  sulphur operations                                        1,979     (15,243)
                                                         --------   ---------
Net cash provided by (used in) operating activities         1,633     (20,670)
                                                         --------   ---------

Cash flow from investing activities:
Exploration, development and other capital expenditures   (13,695)    (64,498)
Proceeds from disposition of oil and gas properties        60,000       1,291
                                                         --------   ---------
Net cash provided by (used in) continuing operations       46,305     (63,207)
Net cash provided by discontinued sulphur operations       58,576       3,243
                                                         --------   ---------
Net cash provided by (used in) investing activities       104,881     (59,964)
                                                         --------   ---------
Cash flow from financing activities:
Net proceeds from equity offering                          33,777         -
Repayment of borrowings on oil and gas credit facility    (49,657)        -
Net borrowings on oil and gas credit facility                 -        23,000
Other                                                         122         328
                                                         --------   ---------
Net cash (used in) provided by continuing operations      (15,758)     23,328
Net cash (used in) provided by discontinued
 sulphur operations                                       (55,000)     12,000
                                                         --------   ---------
Net cash (used in) provided by financing activities       (70,758)     35,328
                                                         --------   ---------
Net increase (decrease) in cash and cash equivalents       35,756     (45,306)
Restricted cash of discontinued sulphur operations         (9,055)        -
                                                         --------   ---------
Net increase (decrease) in unrestricted cash and
 cash equivalents                                          26,701     (45,306)
Cash and cash equivalents at beginning of year                500      48,906
                                                         --------   ---------
Cash and cash equivalents at end of period               $ 27,201   $   3,600
                                                         ========   =========

</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 faced  significant liquidity issues in 2002 as a result
of adverse business conditions with its former sulphur operations
and significant nonproductive exploratory drilling costs incurred
during 2001 and 2000.  As discussed in Note 2 below, management
has substantially implemented its financial plan to address these
issues, and believes that the company has the financial resources
to conduct its business plan.  Management  is addressing its
remaining reclamation obligation at Main Pass.   The ultimate
resolution of this matter involves inherent uncertainties and
conditions beyond the control of McMoRan.  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 exit from the sulphur business, as
evidenced by its sale of 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
As discussed in Note 1, McMoRan has taken significant steps to
address its financial liquidity requirements and has developed
and substantially implemented a financial plan that McMoRan
believes  provides it the financial resources to conduct its
business plan. McMoRan's business plan for the remainder of 2002
and 2003 is to drill, or have third parties drill, its high-
potential, high-risk, deep-gas exploratory prospects in the
shallow-waters of the Gulf of Mexico.

  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 a portion of 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 formerly engaged in the sulphur
business and currently engaged in the production of oil from Main
Pass Block 299 (Main Pass), are parties 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.  Freeport Sulphur was required to
provide these financial assurances to the MMS by June 27, 2002,
but the MMS granted Freeport Sulphur an extension of this
requirement to September 27, 2002.   McMoRan's plan to satisfy
these requirements is currently in progress, as further described
below.

    In the first quarter of 2002, Freeport Sulphur and Offshore
Specialty Fabricators Inc. (OSFI) entered into contractual
agreements for the dismantlement and removal (reclamation) of the
Main Pass and Caminada sulphur mines and related facilities
located offshore in the Gulf of Mexico.   OSFI commenced its
reclamation activities at the Caminada mine in late March 2002
and its operations at the site are now substantially complete.

<PAGE>                      6

During the second quarter of 2002, McMoRan recorded a $5.0
million gain associated with the substantial resolution of its
Caminada sulphur reclamation obligations and the related
conveyance of assets to OSFI, as further discussed below. The
gain on the resolution of the Caminada reclamation obligation is
included in the caption "loss from discontinued sulphur
operations"in the accompanying statements of operations. OSFI
commenced its initial reclamation work at Main Pass in August
2002.

     As payment of its share of these reclamation costs, Freeport
Sulphur 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 a prior reclamation phase at Main Pass.  In
addition to these conveyed assets, Freeport Sulphur agreed to
provide to OSFI the proceeds from the sale of its economic
interest in the Main Pass oil operations and certain 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.

      When the contractual agreements between Freeport Sulphur
and OSFI were consummated, the parties expected to dispose of the
Main Pass oil facilities and related reclamation obligation
through a sale or monetization of those assets to a third party
and payment of the sales proceeds to OSFI as it completed the
Main Pass sulphur reclamation activities.  In addition, Freeport
Sulphur has been engaged in on-going activities to obtain
regulatory approval from the MMS to enable the establishment of a
new business enterprise to use certain of the Main Pass sulphur
facilities and infrastructure for non-hazardous oilfield waste
disposal.  At the time of the consummation of the contractual
agreements with OSFI, Freeport Sulphur contemplated that the
establishment of this new business enterprise would provide
initial payments by a third party to OSFI, and a retention of a
negotiated share of the revenues or profits of the enterprise
operated by the third party, which would be shared by OSFI and
Freeport Sulphur.

     Subsequently, Freeport Sulphur identified other potentially
attractive business opportunities for certain of the Main Pass
sulphur facilities in support of the offshore petroleum industry,
including the storage of natural gas and crude oil, as it
continues efforts to establish the non-hazardous oilfield waste
disposal enterprise.  Freeport Sulphur is currently engaged in
discussions with other companies and financial investors
regarding participation in these business opportunities.  In
addition, Freeport Sulphur and OSFI are currently engaged in
discussions regarding the compensation to OSFI for its
reclamation activities with respect to Main Pass.  The outcome of
these discussions may result in modifications to the existing
contractual arrangements and may involve the payment of cash to
OSFI in lieu of certain or all of the rights to property
interests to be provided to OSFI described above.

Sale of Sulphur Transportation and Terminaling Assets
On June 14, 2002, Freeport Sulphur sold substantially all the
assets used in its sulphur transportation and terminaling
business to Gulf Sulphur Services Ltd., LLP, a new sulphur joint
venture owned equally by IMC Global Inc. (IMC) and Savage
Industries Inc.  In connection with this transaction, McMoRan and
IMC  settled all outstanding disputes between the companies and
their respective subsidiaries.  In addition, Freeport Sulphur's
contract to supply sulphur to IMC also terminated upon completion
of the transactions.  The transactions provided Freeport Sulphur
with $58.0 million in gross proceeds, which it used to fund its
remaining sulphur working capital requirements, transaction costs
and to repay a substantial portion of its borrowings under the
sulphur credit facility (Note 3).  At June 30, 2002,
approximately $9.1 million of the funds from these transactions
remained deposited in various restricted escrow accounts, which
will be used to fund Freeport Sulphur's remaining sulphur working
capital requirements and to provide funding for certain retained
environmental obligations as further discussed below.  As a
result of these transactions, McMoRan recorded a $2.8 million
loss during the second quarter of 2002, which is located in the
accompanying statements of operations included in "loss from
discontinued sulphur operations."

     The assets sold to Gulf Sulphur Services included Freeport
Sulphur's terminal facilities at Galveston, Texas, its terminals
at Tampa and Pensacola, Florida, its marine transportation assets
and other assets and commercial contracts associated with its
sulphur transportation and terminaling business. Freeport
Sulphur's terminal facility at Port Sulphur, Louisiana was not
transferred to the Gulf Sulphur Services and is being actively
marketed separately.

     In connection with these preceding transactions, McMoRan has
also agreed to be responsible for any historical environmental
obligations relating to its sulphur transportation and
terminaling assets and has also agreed to indemnify Gulf Sulphur
Services and IMC from any liabilities with respect to the
historical sulphur operations engaged in by Freeport Sulphur and
its predecessor companies, including reclamation obligations.  In
addition, McMoRan assumed, and agreed to indemnify IMC from, any
obligations, including environmental obligations, other than
liabilities existing as of the closing of the sale, associated

<PAGE>                        7

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
On June 21, 2002, McMoRan completed a $35 million public offering
of 1.4 million shares of 5% mandatorily redeemable convertible
preferred stock (Note 4).  Proceeds received from the offering
totaled $33.8 million, net of an underwriting discount of $1.1
million and certain other issuance costs.   McMoRan used a
portion of the proceeds from the offering to repay all remaining
borrowings outstanding under its now-terminated sulphur credit
facility (Note 3) and will use the remaining funds for its
working capital requirements and other general corporate
purposes.  In July 2002, MOXY entered into a one-year, $10
million revolving bank credit facility agreement that currently
provides it with borrowing capacity of $4.5 million (Note 3).
McMoRan is also considering the sale of additional oil and gas
properties to raise additional capital.

Exploration Funding Arrangements
In May 2002, MOXY entered into a farm-out agreement with El Paso
Production Company (El Paso) that provides for the funding of
exploratory drilling and related development costs with respect
to four of its high-potential, deep-gas prospects in the shallow
waters of the Gulf of Mexico.  MOXY retains a potentially
significant reversionary interest in any discoveries made on
these prospects.  Under the program, El Paso will fund all
exploratory drilling and development costs and will own 100
percent of the program's interests in the four prospects until
aggregate production to the program totals 100 billion cubic feet
of gas equivalent (Bcfe).  After aggregate production of 100
Bcfe, ownership of 50 percent of the program's interests would
revert back to MOXY.  The four prospects in the exploration
program are "Hornung" at Eugene Island Block 108 (28-foot water
depth), "JB Mountain" at South Marsh Island Block 223 (10-foot of
water depth), "Lighthouse Point- Deep" at South Marsh Island
Block 207 (16-foot water depth) and "Mound Point" at Louisiana
State Lease 340 (10-foot water depth).  Drilling commenced at the
Hornung prospect in April 2002 and at JB Mountain and Lighthouse
Point-Deep in June 2002.  MOXY plans to enter into additional
farm-out or other exploration arrangements with other oil and gas
industry participants for other prospects.
                   __________________________

      McMoRan believes that the completed transactions described
above have substantially resolved its near-term financial
liquidity requirements for the remainder of 2002 and 2003.
McMoRan continues to actively pursue the completion of the Main
Pass reclamation activities and satisfaction of the related
obligation; however, because this matter involves inherent
uncertainties beyond McMoRan's control, there can be no assurance
that it will be resolved as described above.

    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.   BANK CREDIT FACILITIES
Freeport Sulphur's borrowings under the sulphur credit facility
totaled $55.0 million at December 31, 2001. On June 13, 2002,
borrowings under the sulphur credit facility totaled $58.5
million.  On June 14, 2002, after closing of the sale of the
sulphur transportation and terminaling assets (Note 2), Freeport
Sulphur repaid a substantial portion of these outstanding
borrowings and the availability under the sulphur credit facility
was reduced to $8 million.  On June 21, 2002, after completion of
McMoRan's pubic equity offering (Notes 2 and 4), Freeport Sulphur
repaid all remaining borrowings outstanding ($5.0 million) under
the facility, which was then terminated.

    In July 2002, MOXY entered into one-year, $10 million
revolving bank credit facility with Hibernia National Bank.
Amounts available for borrowing under this facility are subject
to a borrowing base, which currently provides MOXY up to $4.5
million of borrowing capacity under the facility.  The amount
available under the facility will decrease by $0.5 million per
month beginning in August 2002.  The variable rate loan is
secured by all of MOXY's oil and gas producing properties and is
guaranteed by McMoRan. At the time of this filing, MOXY has made
no borrowings under this credit facility.

<PAGE>                       8


4.   MANDATORILY REDEEMABLE PREFERRED STOCK
As previously discussed in Note 2, on June 21, 2002, McMoRan
completed a $35 million public offering of 1.4 million shares of
its 5% mandatorily redeemable convertible preferred stock.  Each
$25 share provides for a quarterly cash dividend of $0.3125 per
share ($1.25 per share annually) and is convertible at the option
of the holder at any time into 5.1975 shares of McMoRan's common
stock, which is equivalent to $4.81 per common share representing
a 20 percent premium over McMoRan's common stock closing price on
June 17, 2002.  McMoRan may redeem the preferred stock after June
30, 2007 and must redeem the stock by June 30, 2012.  Any
redemption by McMoRan must be made in cash.


5.   EARNINGS PER SHARE
Basic 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 following is a reconciliation of net
income and weighted average common shares outstanding for
purposes of calculating diluted net income (loss) per share (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
                                      Three Months           Six Months
                                     Ended June 30,        Ended June 30,
                                  --------------------   ------------------
                                    2002        2001       2002       2001
                                  --------   ---------   --------  ---------
<S>                               <C>        <C>         <C>       <C>
Diluted net income per share
 of common stock:
Income (loss) from continuing
 operations                       $ (1,149)  $ (14,287)  $ 22,882  $ (50,208)
Preferred dividends                    (49)        -          (49)       -
                                  --------   ---------   --------  ---------
Diluted income (loss) from
 continuing operations before
 assumed conversion                 (1,198)    (14,287)    22,833    (50,208)
Add:  Preferred dividends from
 assumed conversion                    -           -           49        -
                                  --------   ---------   --------  ---------
Diluted income (loss) from
 continuing operations              (1,198)    (14,287)    22,882    (50,208)
Loss from discontinued sulphur
 operations                         (1,324)     (4,730)    (1,316)   (13,597)
                                  --------   ---------   --------  ---------
Diluted net income (loss)
 applicable to common stock       $ (2,522)  $ (19,017)  $ 21,566  $ (63,805)
                                  ========   =========   ========  =========

Weighted average common shares
 outstanding                        15,977      15,861     15,946     15,856
Dilutive stock options                  -  a        -  a        1         -  a
Assumed conversion of preferred
 stock                                  -           -         402 b       -
                                  --------   ---------   --------  ---------
Weighted average common shares
 outstanding for purposes of
 calculating diluted net income
 per share                          15,977     15,861      16,349     15,856
                                  --------   ---------   --------  ---------

Diluted net income (loss) from
 continuing operations              $(0.08)    $(0.90)      $1.40     $(3.16)
Diluted net loss from
 discontinued sulphur operations     (0.08)     (0.30)      (0.08)     (0.86)
                                    ------     ------       -----     ------
Diluted net income per share        $(0.16)    $(1.20)      $1.32     $(4.02)
                                    ======     ======       =====     ======

</TABLE>

a.  Excludes options that otherwise would have been included in
  the diluted per share calculation but would make the calculations
  anti-dilutive considering the net loss incurred during the
  periods.  Excluded options represented 1,000 shares during the
  second quarter of 2002, 55,000 shares during the second quarter
  of 2001 and 72,000 shares for the six months ended June 30, 2001.
b.  Assumes the conversion of the 1.4 million shares of 5%
convertible preferred stock into approximately 7.3 million shares
of McMoRan common stock (Note 4).  The effect of the assumed
conversion during the second quarter of 2002 (10 days) equates to
approximately 0.4 million shares of McMoRan common stock.

     Outstanding stock options excluded from the computation of
diluted net loss per share of common stock because their exercise
prices were greater than the average market price of the common
stock during the period are as follows:

<TABLE>
<CAPTION>
                                    Second Quarter        Six Months
                                   ----------------    ----------------
                                     2002     2001       2002     2001
                                   -------  -------    -------  -------
<S>                                <C>      <C>        <C>      <C>
Outstanding options (in thousands)   3,503    1,836      3,503    1,822
Average exercise price             $ 14.84  $ 18.60    $ 14.84  $ 18.63

</TABLE>

<PAGE>                         9

6. RATIO OF EARNINGS TO FIXED CHARGES AND COMPREHENSIVE INCOME
McMoRan's ratio of earnings to fixed charges calculation was 5.7
to 1 for the six months ended June 30 2002, while the same
calculation resulted in a shortfall of $52.8 million for the six
months ended June 30, 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.

McMoRan had no items of other comprehensive income in 2002.
McMoRan's total comprehensive loss for the periods ended June 30,
2001 follows (in thousands):

<PAGE>                           9

<TABLE>
<CAPTION>
                                             Second       Six
                                             Quarter     Months
                                            ---------   ---------
<S>                                         <C>         <C>
Net loss                                    $ (19,017)  $ (63,805)
Other comprehensive loss:
Cumulative effect loss of change in                -         (492)
accounting principle
Change in unrealized derivatives' fair value      (73)       (245)
Reclassification to earnings                      215         436
                                            ---------   ---------
Total comprehensive loss                    $ (18,875)  $ (64,106)
                                            =========   =========
 </TABLE>

7. DISCONTINUED SULPHUR OPERATIONS
In June 2002, McMoRan sold its sulphur transportation and
terminaling assets to a newly formed sulphur services joint
venture, in which McMoRan does not own any interest (Note 2).

     Following is a summary of McMoRan's sulphur operations,
which are reflected on a net basis within loss from discontinued
sulphur operations in the accompanying statements of operations
(in thousands):

<TABLE>
<CAPTION>
                                  Three Months        Six Months Ended
                                  Ended June 30,          June 30,
                              -------------------   --------------------
                                2002       2001       2002       2001
                              --------   --------   --------   ---------
<S>                           <C>        <C>        <C>        <C>
Revenues                      $ 14,587   $ 15,429   $ 30,810   $  43,107
Production and delivery         15,195     16,692     28,326      52,172
Depreciation and amortization     -           751        646       3,000
General and administrative
  expenses                       1,152      1,372      1,963       2,781
                              --------   --------   --------   ---------
     Operating loss             (1,760)    (3,386)      (125)    (14,846)
Interest expense                (1,793)    (1,371)    (3,455)     (2,729)
Other income, net                2,229 a       27      2,264 a     3,978
                              --------   --------   --------   ---------
Net loss                      $ (1,324)  $ (4,730)  $ (1,316)  $ (13,597)
                              ========   ========   ========   =========

</TABLE>

a.  Reflects $5.0 million gain associated with the substantial
 resolution of McMoRan's Caminada sulphur reclamation obligation
 partially offset by the $2.8 million loss incurred from the
 sale of its sulphur transportation and terminaling assets (Note
 2).

8.  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.  McMoRan
will be required to recognize the cumulative-effect for changes
in its retirement obligation liabilities, asset retirement costs
and accumulated depreciation in the period this standard is
adopted.  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
whether this new standard will be adopted prior to its required
effective adoption date of January 1, 2003.

   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

<PAGE>                        10

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.






               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 June 30,
2002 and the related statements of operations for the three-month
and six-month periods ended June 30, 2002 and the statement of
cash flows for the six months ended June 30, 2002.  These
financial statements are the responsibility of the Company's
management.  The accompanying statements of operations for the
three-month and six-month periods ended June 30, 2001 and the
statement of cash flows for the six months ended June 30, 2001
were reviewed by other accountants whose report (dated July 18,
2001) stated that they were not aware of any material
modifications that should be made to those statements for them to
be in conformity with accounting principles generally accepted in
the United States.

    We conducted our review 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, which will be performed for the
full year with the objective of expressing an opinion regarding
the financial statements taken as a whole.  Accordingly, we do
not express such an opinion.

    Based on our review, we are not aware of any material
modifications that should be made to the accompanying financial
statements as of June 30, 2002, and for the three-month and six-
month periods then ended for them to be in conformity with
accounting principles generally accepted in the United States.

                                  /s/ ERNST & YOUNG LLP

New Orleans, Louisiana
July  25, 2002


<PAGE>                       11


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, through June 14, 2002, in the purchasing,
transporting, terminaling, processing and marketing of recovered
sulphur.

Status of 2002 Business Plan
  As previously disclosed, we have been required to address
significant financial liquidity issues in 2002 as a result of
adverse business conditions associated with our former sulphur
operations and significant nonproductive exploratory drilling and
related costs incurred during 2001 and 2000. Our December 31,
2001 financial statements reflect a stockholders' deficit of
$87.8 million and a working capital deficit of  $88.1 million,
which included $55 million of borrowings outstanding under our
now terminated sulphur credit facility.

  Our business plan for the remainder of 2002 and 2003 is to
drill, or have third parties drill our high-potential, high-risk,
deep-gas exploratory prospects in shallow-water depths in the
Gulf of Mexico included within our existing lease acreage
position. To enable us to accomplish our business plan and meet
our financial obligations, we developed a financial plan
requiring the achievement of various objectives.  During the
first half of 2002 we took the following actions:

  *  completed the sale of three oil and gas properties for $60
     million and repaid all of the debt outstanding under our previous
     oil and gas credit facility, which has been terminated;

  *  completed the sale of substantially all the assets used in
     our sulphur transportation and terminaling business and used the
     gross proceeds of $58 million to repay a substantial portion of
     our former sulphur credit facility and to fund our remaining
     sulphur working capital requirements;

  *  completed a $35 million public offering of redeemable
     preferred stock (Note 4), $33.8 million of proceeds net of
     issuance costs and expenses, which enabled us to repay all
     remaining amounts outstanding under our now terminated sulphur
     credit facility, with the remaining funds available for our
     working capital requirements and for other general corporate
     purposes;

  *  substantially completed the dismantlement and removal
     (reclamation) activities of the sulphur facilities at Caminada
     and have taken steps to resolve our sulphur reclamation
     obligations at Main Pass Block 299 (Main Pass);

  *  entered into a major farm-out agreement with El Paso
     Production Company (El Paso) to provide funding for four of our
     near-term prospects and plan to enter into additional farm-out or
     other exploration arrangements with other oil and gas industry
     participants; and

  *  entered  into a one-year, $10 million revolving credit
     facility with Hibernia National Bank that currently provides us
     with $4.5 million of borrowing availability (Note 3).

   For additional information regarding these transactions see
"Capital Resources and Liquidity" and "Exit from Sulphur
Operations" below.

  As discussed above, we have made substantial progress in
implementing our financial plan.  As a result of the above
transactions, we have repaid over $100 million of debt during the
first half of 2002 and as of June 30, 2002, we have $9.6 million
in positive working capital and $27.2 million of unrestricted
cash available for our operations, working capital requirements
and other general corporate purposes. We continue to pursue
actively the completion of the Main Pass reclamation activities
and satisfaction of the related obligation as described in Note 2.
Because the ultimate resolution of this matter involves
inherent uncertainties, including uncertainties beyond our
control, no assurances can be given that these transactions will
be completed as contemplated.  For more information regarding our
business plan and these transactions, see "Exit from 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 exit from the sulphur business, our only
remaining continuing operating segment is oil and gas exploration
and production activities.  See "Exit from Sulphur Operations"
below 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

<PAGE>                       12

the oil operations at Main Pass.  We use the successful efforts
accounting method for our oil and gas operations.   During the
second quarter of 2002, we recorded an operating loss of $1.2
million associated with our oil and gas operations, which
included non-recurring credits totaling $3.7 million that were
partially offset by nonproductive exploratory drilling and
related costs of $2.6 million. The non-recurring credits during
the second quarter of 2002 include a $0.8 million gain from the
disposition of our interests in West Cameron Block 616, $1.2
million reimbursement of previously incurred exploration costs
and a $1.7 million reduction of previously accrued insurance
costs as a result of the decrease in our drilling activities
during the past twelve months and our recent farm-out
transaction.

     For the six months ended June 30, 2002 our operating income
from oil and gas operations totaled $22.9 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 second quarter of
2001, our oil and gas operations resulted in an operating loss of
$14.3 million, including $5.6 million of nonproductive
exploratory drilling and related costs.  For the six months ended
June 30, 2001, our oil and gas operations resulted in an
operating loss of $50.3 million, which included $36.7 million of
nonproductive exploratory drilling and related costs.

Summarized operating data is as follows:

<TABLE>
<CAPTION>

                          Three Months Ended       Six Months Ended
                                June 30,               June 30,
                         --------------------   ----------------------
                            2002       2001       2002         2001
                         ---------  ---------   ---------    ---------
<S>                      <C>        <C>         <C>          <C>
Sales volumes:
  Gas (thousand cubic
   feet, or Mcf)         1,449,200  1,716,900   4,223,400 a  3,372,500
  Oil, excluding Main
   Pass (barrels)           31,600     42,000      90,100 b     75,500
  Oil from Main Pass
   (barrels)               237,200    282,300     527,700      425,600
  Plant products
   (equivalent barrels)      7,500        -        15,400          -
Average realizations:
  Gas (per Mcf)            $  3.38    $  4.81     $  2.76      $  5.84
  Oil, excluding Main
   Pass (per barrel)         26.54      26.60       22.83        27.57
  Oil from Main Pass
   (per barrel)              22.81      23.24       20.19        22.93

</TABLE>

a. Sales volumes include 856,000 Mcf of gas associated with oil
   and gas properties sold in February 2002.
b. Sales volumes include 18,500 barrels of oil associated with
   the oil and gas properties sold in February 2002.
c. We recorded approximately $0.2 million and $0.5 million of
   revenues associated with plant products (ethane, propane, butane,
   etc.) during the second quarter of 2002 and six months ending
   June 30, 2002, respectively.

Oil and Gas Operations
     A summary of increases (decreases) in our oil and gas
revenues between the periods follows (in thousands):

<TABLE>
<CAPTION>
                                Second       Six
                                Quarter     Months
                               --------    --------
    <S>                        <C>         <C>
    Oil and gas revenues -
       prior year period       $ 16,093    $ 31,891
    Increase (decrease)
      Sales volumes:
        Oil                      (1,325)      2,747
        Gas                      (1,288)      4,969
      Price realizations:
        Oil                        (104)     (1,889)
        Gas                      (2,072)    (13,008)
    Plant products revenues         185         517
    Other                           (89)       (241)
                               --------    --------
    Oil and gas revenues -
       current year period a   $ 11,400    $ 24,986
                               ========    ========
</TABLE>
<PAGE>                          13

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).  Oil
 and gas revenues for the six months ended June 30, 2002 also
 includes $0.3 million from West Cameron Block 616, which had no
 production during the second quarter of 2002 and which we
 farmed-out our ownership interests to a third party in June
 2002.

     Our second-quarter 2002 oil and gas revenues decreased 29
percent when compared to oil and gas revenues during the second
quarter of 2001.  The decrease between the comparable periods
reflects decreases in both the average realizations received for
gas (30 percent) and oil (2 percent), as well as reductions in
both volumes sold of gas (16 percent) and oil (17 percent).
Revenues for the second quarter of 2002 includes $0.2 million of
plant products revenues associated with approximately 7,500
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.

     For the six months ended June 30, 2002, our oil and gas
revenues decreased by 22 percent when compared to the oil and gas
revenues for the comparable period in 2001.  This decrease
primarily reflects a 53 percent decline in the average
realizations received for gas between the comparable periods.
The average realizations received for oil decreased by 13 percent
over levels received during the first half of 2001.  These
decreases in the average prices realized between the comparable
first-half 2002 and 2001 periods were partially offset by
increases in sales volumes of gas (25 percent) and oil (23
percent). 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 five 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-2001
commencement of production from four fields discovered during
2000, partially offset by the shut-in and subsequent disposition
of our West Cameron Block 616 field (see "Operational Activities"
below).   For the six months ended June 30, 2002, the revenues
associated with our plant products (discussed above) totaled $0.5
million from approximately 15,400 equivalent barrels of oil and
condensate.

     Production and delivery costs totaled $6.3 million in the
second quarter of 2002 and $12.7 million for the six months ended
June 30, 2002 compared to $9.5 million and $19.2 million for the
comparable periods in 2001. The decrease between the comparable
second-quarter periods is primarily attributed to decreases in
well workover costs, which totaled $0.6 million in the second
quarter of 2002 and $2.1 million during the second quarter of
2001, $0.8 million of costs associated with oil platform and
equipment maintenance work performed at Main Pass, lower sales
volumes and the shut-in and subsequent disposition of the West
Cameron Block 616 field during the second quarter of 2002.   The
decreases between the comparable first-half 2002 and 2001 periods
reflect approximately $1.9 million of costs associated with the
extensive Main Pass oil platform and equipment maintenance
performed in February 2001 and an aggregate total of $5.0 million
of lease workover costs for work performed at the Eugene Island
Block 193/208/215 and Vermilion Block 160 and 159 fields during
the first half of 2001.  During the first half of 2002, our
workover costs totaled $0.6 million, which represent our efforts
to re-establish production for the Mound Point No. 2 well at
Louisiana State Lease 340 (see "Operational Activities" below).
The decrease in production and delivery costs between the first
half of 2002 and the first half of 2001 were partially offset by
the increase in sales volumes.

     Depreciation and amortization expense totaled $3.9 million
in the second quarter of 2002 and $10.6 million for the six
months ended June 30, 2002 compared with $4.1 million and $7.2
million for the same periods last year.  The variance between the
respective periods represents the fluctuations in production
volumes, which decreased during the comparable second-quarter
2002 and 2001 periods but which have increased for the comparable
six-month 2002 and 2001 periods as a result of volumes
attributable to properties sold in February 2002 (see Note 2) and
other properties commencing production during the first quarter
of 2001.  The depreciation expense for both the second-quarter
and six-month  periods ended June 30, 2002 were affected by
higher unit-of-production depreciation rates compared to those in
the comparable periods during 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):

<PAGE>                      14


<TABLE>
<CAPTION>
                                   Second Quarter        Six Months
                                  ----------------    ----------------
                                   2002      2001      2002      2001
                                  ------    ------    ------    ------
<S>                               <C>       <C>       <C>       <C>
Geological and geophysical,
 including 3-D seismic purchases  $  0.1    $  5.4    $  1.7    $  9.4
Nonproductive exploratory
 well drilling costs, including
 lease amortization costs            1.5 a     5.6 b     2.6 a    36.7  b,c
Other                               (0.4)      1.5       0.3       1.8
                                  ------    ------    ------    ------
                                  $  1.2    $ 12.5    $  4.6    $ 47.9
                                  ======    ======    ======    ======
</TABLE>

a.  Includes residual costs associated with various
    nonproductive exploratory wells drilled in prior years totaling
    $0.9 million during the second quarter of 2002 and $1.5 million
    during the six months ended June 30, 2002.
b.  Includes nonproductive exploratory well costs associated
    with the Viosca Knoll Block 863 No. 1 well and additional
    plugging and abandonment costs associated with the Vermilion
    Block 144 No. 3 well.
c.  Includes nonproductive exploratory well drilling and related
    costs, primarily associated with the West Delta Block 12 No. 1
    and the Garden Banks Block 272 No. 1 wells.

Other Financial Results
     General and administrative expense totaled $2.1 million in
the second quarter of 2002 and $3.9 million for the six months
ended June 30, 2002 compared with $4.4 million for the second
quarter of 2001 and $7.9 million for the six months ended June
30, 2001.  The decreases during the comparable periods primarily
reflects reduced 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.

     We had relatively little interest expense during the second
quarter of 2002 as a result of repaying all our oil and gas
related debt following the February 2002 sale of three of our oil
and gas properties (see "Capital Resources and Liquidity" below
and Note 2).  Interest expense during the second quarter of 2001
reflects our initial borrowings under our previous oil and gas
credit facility. Interest expense totaled $0.5 million for the
six months ended June 30, 2002  compared to $0.4 million during
the same period last year. The increase between the comparable
first-half periods reflects our higher average debt balance during
2002 as compared to the first half of 2001.  Capitalized interest
totaled $0.3 million for the six months ended June 30, 2002 and
$0.3 million during the second quarter and six months ended June
30, 2001.  No interest expense was capitalized during the second
quarter of 2002.

     During the first quarter of 2002, we recorded a $29.2
million gain associated with the sale of our ownership interests
in Vermilion Block 196 and Main Pass Blocks 86 and 97 and 80
percent of our ownership interests in Ship Shoal Block 296 (see
"Capital Resources and Liquidity" below and Note 2). During the
second quarter of 2002, we recorded a $0.8 million gain from the
disposition of our interests in West Cameron Block 616 (see
"Operational Activities" below).

CAPITAL RESOURCES AND LIQUIDITY
     Operating activities provided cash of $1.6 million for the
six months ended June 30, 2002 compared to using cash of $20.7
million during the six months ended June 30, 2001.  Operating
cash flow from continuing operations used cash of $0.3 million
during the first half of 2002 compared with using $5.4 million
during the first half of 2001.  The improvement primarily
reflects lower geological and geophysical and other exploration
costs, which totaled $2.0 million for the six months ended June
30, 2002 and $11.2 million for the six months ended June 30,
2001.  The cash savings from the lower exploration costs between
the comparable periods was partially offset by changes in working
capital and certain oil and gas reclamation costs.  Operating
cash flow associated with our discontinued sulphur operations
provided $2.0 million of cash during the six months ended June
30, 2002 compared to using $15.2 million of cash during the six
months ended June 30, 2001.  This improvement is primarily
attributable to the improved operating results of our sulphur
operations during the first half of 2002 when compared with those
achieved during the first half of 2001.  In addition, during the
six months ended June 30, 2001 we incurred $10.4 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 "Exit From Sulphur Operations" below and Note 2).

    Our investing activities provided $104.9 million of cash
during the six months ended June 30, 2002 compared with using
cash of $60.0 million during the six months ended June 30, 2001.

<PAGE>                       15

Investing cash flow from our continuing operations provided cash
of $46.3 million during the first half of 2002 compared with
using cash of  $63.2 million during the first half of 2001.  Our
investing cash flow during 2002 included the receipt of $60.0
million associated with the sale of three of our oil and gas
property interests (see below), offset in part by $13.7 million
of exploration and development capital expenditures, including
$2.6 million of expensed exploratory drilling and related costs.
Our investing cash flow during 2001 included exploration and
development capital expenditures of $64.5 million, which included
$36.7 million of nonproductive exploratory drilling and related
costs primarily associated with the West Delta Block 12 No. 1,
Garden Banks Block 272 No. 1, Viosca Knoll Block 863 No. 1 and
Vermilion Block 144 No. 3 exploratory wells. Other capital
expenditures during the first half  of 2001 included
approximately $26.3 million of development costs primarily
associated with development on our year 2000 discoveries and the
costs incurred in recompletion operations at West Cameron Block
616 and Eugene Island Blocks 193/208/215.

    Our investing cash flows also include the sale of two of our
unproved oil and gas leases during the first half of  2001 for
$1.3 million.  Investing cash flow associated with our
discontinued sulphur operations totaled $58.6 million during the
six months ended June 30, 2002, which included the $58.0 million
of gross proceeds we received in June 2002 in connection with the
transactions that resulted in our exit from the recovered sulphur
business (see "Exit from Sulphur Operations" below).  The
discontinued sulphur investing cash flows also include a $0.6
million sale of miscellaneous assets from the Main Pass sulphur
facilities.

    Our financing activities resulted in a use of cash of $70.8
million for the six months ended June 30, 2002 compared to
providing cash of $35.3 million for the six months ended June 30,
2001.  Our continuing operations' financing activities used cash
of $15.8 million during the first half of 2002 primarily to repay
the $49.7 million of accumulated net borrowings under our oil and
gas credit facility as of December 31, 2001 (see below), compared
to providing $23.3 million during the first half of 2001. The
repayment of the oil and gas debt was partially offset by the
$33.8 million of net proceeds received from the successful public
preferred stock offering in June 2002 (see "Equity Offering"
below). Cash used by our discontinued sulphur operations totaled
$55.0 million during the six months ended June 30, 2002 compared
to providing cash of $12.0 million during the six months ended
June 30 2001.  The cash used by the discontinued sulphur
operations during 2002 represents the repayment of the
accumulated net borrowings outstanding under the sulphur credit
facility as of December 31, 2001 following the closing of the
sale of the sulphur transportation and terminaling assets (see
"Exit from the Sulphur Business below) and the completion of our
equity offering (see "Equity Offering" below).  The cash provided
by the discontinued sulphur operations during 2001 reflects the
net borrowings under the sulphur credit facility during that
period.

     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.  In July 2002 we
entered into a one-year revolving credit facility with Hibernia
National Bank providing up to $4.5 million of borrowing capacity
(see Note 3).  Our operating results for the six months ended
June 30, 2002 include a $29.2 million gain associated with this
sales transaction (see "Results of Operations" above).

Preferred Stock Offering
    On June 21, 2002, we completed a $35 million public offering
of 1.4 million shares of our 5% mandatorily preferred convertible
preferred stock.  Each $25 share provides for a quarterly cash
dividend of $0.3125 per share ($1.25 per share annually) and is
convertible at the option of the holder at any time into 5.1975
shares of our common stock, which is equivalent to $4.81 per
share representing a 20 percent premium over our common stock
closing price on June 17, 2002.  We can redeem the preferred
stock after June 30, 2007 and must redeem the stock by June 30,
2012.  Any redemption we make must be made in cash.

Exploration Program
     In May 2002, we entered into an exploration program with El
Paso Production Company, a subsidiary of El Paso Corporation,
through a major farm-out transaction covering four of our shallow-
water, high-potential, deep-gas prospects on 100,000 acres in the
Gulf of Mexico.  Under the program, El Paso will fund all

<PAGE>                        16

exploratory drilling and development costs and will own 100
percent of the program's interests in the four prospects until
aggregate production to the program totals 100 billion cubic feet
of gas equivalent (Bcfe).  After aggregate production of 100
Bcfe, ownership of 50 percent of the program's interests would
revert back to McMoRan.  The four prospects in the exploration
program are "Hornung" at Eugene Island Block 108 (28-foot water
depth), "JB Mountain" at South Marsh Island Block 223 (10-foot of
water depth), "Lighthouse Point- Deep" at South Marsh Island
Block 207 (16-foot water depth) and "Mound Point" at Louisiana
State Lease 340 (10-foot water depth).  Drilling commenced at the
Hornung prospect in April 2002 and at JB Mountain and Lighthouse
Point-Deep in June 2002.  We anticipate drilling at Mound Point
will commence in the fourth quarter of 2002.  We plan to enter
into additional farm-out or other exploration arrangements with
other oil and gas industry participants for other prospects.

OPERATIONAL ACTIVITIES
Our average net daily production approximated 18 million cubic
feet of gas equivalent (Mmcfe/d) in the second quarter of 2002
and is expected to average approximately 17 Mmcfe/d for the
remainder of 2002. We may experience temporary fluctuations in
our flow rates associated with required shut-in of our operations
at certain fields to allow for pipeline companies to perform some
routine maintenance on the lines connecting our fields to shore.

Eugene Island Blocks 193/208/215 (Deep Tern Prospect).  This
field was shut-in during early July while the pipeline company
servicing this field performed maintenance work on their
pipeline.  Production was restored in mid-July, at which time we
ran a log on the Eugene Island Block 193 C-1 well to assist us in
identifying the source of water production in the well, which had
reduced the gross flow rate from the well to approximately 2
Mmcfe/d, prior to it being shut in during early July 2002.  We
identified the source of the water and performed the necessary
remedial procedures to correct the problem.  Production from the
well was re-established in early August and is currently
producing at a rate approximating 10 Mmcfe/d, 4.3 Mmcfe/d net to
our interests.  We have a 53.4 percent working interest and 41.7
percent net revenue interest in the Eugene Island Block
193/208/215 field and a 42.2 percent working interest and 33.4
percent net revenue interest in the Eugene Island Block 193 C-1
well.  The field is located in approximately 100 feet of water
approximately 50 miles offshore Louisiana.

Eugene Island Block 97 (Thunderbolt)  Currently the three wells
comprising the Thunderbolt field are producing at an average
gross rate of 15.4 Mmcfe/d, 4.2 Mmcfe/d net to our interests. In
June 2002, the Thunderbolt No. 2 well depleted its reserves in
the zone from which it was producing, recompletion efforts were
initiated and in July 2002, the well was placed back on
production.   The most recent well test indicates the No. 2 well
is producing at a gross rate of 12.1 Mmcfe/d, 3.3 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.

West Cameron Block 616   At December 31, 2001, we had one well
producing at the West Cameron Block 616 field.  On February 26,
2002, the well ceased production and we initiated efforts to
either farm-our or sell our interest in the field.  In June 2002,
we farmed-out our interest in the field.  The parties acquiring
the field agreed to assume all of our reclamation obligations
associated with the wells and structures at the field.
Accordingly, we were able to record an approximate $0.8 million
gain associated with the transaction because we were able to
reverse our previously accrued reclamation costs for the field.
Under terms of the farm-out agreement, the acquirer is required
to attempt to restore production from one well that was producing
in early 2002 and drill at least one additional well or sidetrack
an existing well in the field.  We have retained a five percent
overriding royalty interest in this property, which would
increase to 10 percent after production of an additional 12 Bcfe
from the field.

Drilling Arrangements   As discussed in "Capital Resources and
Liquidity - Exploration Program" above, we completed an agreement
with El Paso to fund certain exploration and development
activities on certain of our prospects identified for drilling in
2002.  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.  These include the four
prospects included in the El Paso exploration program, which we
believe to be high quality, involving deep exploration targets
for natural gas accumulations in shallow waters near existing
production infrastructure.  We will continue our efforts to enter
into arrangements with industry participants that are similar to
our drilling arrangements with El Paso.  Under such arrangements,
we would expect to retain a potentially significant reversionary
interest in any discoveries made on any future shared prospects.

<PAGE>                         17

Exploration Commitments  Effective January 1, 2002, we entered
into an agreement with Texaco Exploration and Production Inc.
that committed us to expend $110 million by June 30, 2003 (see
Note 9 in our 2001 Annual Report on Form 10-K).  Under the
terms of the agreement, we have exceeded the requirement to
commit to spend an aggregate $80 million by June 30, 2002.  As
of June 30, 2002, we have incurred approximately $92 million of
expenditures and we anticipate that the remaining $18 million
of required expenditures will be incurred through our recent
farm-out transaction as discussed in "Drilling Arrangements"
above.

Supplemental Bonding Requirements  MOXY no longer qualifies for
the MMS waiver of the supplemental bonding requirements related
to its offshore federal leases.    MOXY is taking steps to
provide bonding for its reclamation obligations, which are not
significant and which do not involve the Main Pass reclamation
obligations of Freeport Sulphur (see "Exit From Sulphur
Operations" below).  MOXY believes the absence of this waiver
will not have a significant impact on its future financial
position because of its recent farm-out transaction as discussed
in "Drilling Arrangements" above and the expectation of entering
into similar arrangements for its exploration activities for the
foreseeable future.

EXIT FROM SULPHUR OPERATIONS
Sale Of Sulphur Transportation And Terminaling Assets
     On June 14, 2002, we sold substantially all the assets used
in our sulphur transportation and terminaling business to Gulf
Sulphur Services Ltd., LLP, a new sulphur joint venture owned
equally by IMC Global Inc. (IMC) and Savage Industries Inc.  In
connection with this transaction, we settled all outstanding
disputes between IMC and its subsidiaries and us.  In addition,
our contract to supply sulphur to IMC also terminated upon
completion of the transactions (see Item 1. "Legal Proceedings").
The transactions provided us with $58.0 million in gross
proceeds, which we used to fund our remaining sulphur working
capital requirements, transaction costs and to repay a
substantial portion of our borrowings under the sulphur credit
facility (Note 3).  At June 30, 2002, approximately $9.1 million
of the funds from these transactions remained deposited in
various restricted escrow accounts, which will be used to fund a
portion of our remaining sulphur working capital requirements and
to provide the potential funding for the retained environmental
obligations further discussed below.  As a result of these
transactions, we recorded a $2.8 million loss during the second
quarter of 2002, included in the accompanying statements of
operations in "loss from discontinued sulphur operations."

     In connection with these preceding transactions, we have
also agreed to be responsible for any historical environmental
obligations relating to our sulphur transportation and
terminaling assets and have also agreed to indemnify Gulf Sulphur
Services and IMC from any liabilities with respect to the
historical sulphur operations engaged in by our predecessor
companies, and us, including reclamation obligations.  In
addition, we assumed, and agreed to 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.

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 $10.4
million in first half of 2001 associated with these initial
reclamation activities.  During the first quarter of 2002, we
entered into contractual agreements with a third party to
dismantle and remove the remaining Main Pass and Caminada sulphur
facilities (see "Progress Towards 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.  The trust agreement was
subsequently extended by the MMS on a number of occasions, most
recently from June 27, 2002 to September 27, 2002.  We expect to
continue our progress towards resolving our sulphur reclamation
obligations during the third quarter of 2002, by commencing the
initial Main Pass reclamation activities. See "Progress Towards
Resolution of Sulphur Reclamation Obligations" below.

<PAGE>                       18

Progress Towards Resolution Of Sulphur Reclamation Obligations
     In the first quarter of 2002, we entered into contractual
agreements with Offshore Specialty Fabricators Inc. (OSFI) for
the dismantlement and removal (reclamation) of the Main Pass and
Caminada sulphur mines and related facilities located offshore in
the Gulf of Mexico. OSFI commenced its reclamation activities
at the Caminada mine in late March 2002 and its operations at the
site are now substantially complete.  During the second quarter
of 2002, we recorded a $5.0 million gain associated with the
substantial resolution of the Caminada sulphur reclamation
obligations and the related conveyance of assets to OSFI, as
further discussed below. The gain on the resolution of the
Caminada reclamation obligation is included in the caption "loss
from discontinued sulphur operations" in the accompanying
statements of operations.   OSFI commenced its initial
reclamation work at Main Pass in August 2002.

     As payment of its share of these reclamation costs, we
conveyed certain assets to OSFI including a supply service boat,
our dock facilities in Venice, Louisiana, and certain assets we
previously salvaged during a prior reclamation phase at Main
Pass.  In addition to these conveyed assets, we agreed to provide
to OSFI the proceeds from the sale of our economic interest
in the Main Pass oil operations and certain 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.

      When the contractual agreements between OSFI and us were
consummated, the parties expected to dispose of the Main Pass oil
facilities and related reclamation obligation through a sale or
monetization of those assets to a third party and payment of the
sales proceeds to OSFI as it completed the Main Pass sulphur
reclamation activities.  In addition, we have been engaged in on-
going activities to obtain regulatory approval from the MMS to
enable the establishment of a new business enterprise to use
certain of the Main Pass sulphur facilities and infrastructure
for non-hazardous oilfield waste disposal.  At the time of the
consummation of the contractual agreements with OSFI, we
contemplated that the establishment of this new business
enterprise would provide initial payments by a third party to
OSFI, and a retention of a negotiated share of the revenues or
profits of the enterprise operated by the third party, which
would be shared by OSFI and us.

     Subsequently, we identified other potentially attractive
business opportunities for certain of the Main Pass sulphur
facilities in support of the offshore petroleum industry,
including the storage of natural gas and crude oil, as we
continue our efforts to establish the non-hazardous oilfield
waste disposal enterprise.  We are currently engaged in
discussions with other companies and financial investors
regarding participation in these business opportunities.  In
addition, we are currently engaged in discussions with OSFI
regarding their compensation for its reclamation activities with
respect to Main Pass.  The outcome of these discussions may
result in modifications to the existing contractual arrangements
and may involve the payment of cash to OSFI in lieu of certain or
all of the rights to property interests to be provided to OSFI
described above.

     We believe that our sulphur bonding issues with the MMS will
be effectively resolved with the transactions described above.
We also anticipate significantly reducing or eliminating our accrued
Main Pass reclamation obligations, which approximate $35 million, and
recording related gains upon the resolution of our reclamation obligations.
Because these matters involve inherent uncertainties, including matters
beyond our control, no assurances can be given that these transactions
will be completed as contemplated.

Discontinued Sulphur Operations
     We sold approximately 376,000 long tons of recovered sulphur
during the second quarter of 2002 compared to approximately
443,000 long tons during the second quarter of 2001.  We sold an
approximate total of 823,000 long tons of recovered sulphur
during the first half of 2002 and 952,000 long tons during the
first half of 2001.  A summary of the increases (decreases) in
our sulphur revenues between the periods follows (in thousands):

<TABLE>
<CAPTION>

                                          Second       Six
                                          Quarter    Months
                                         --------   ---------
  <S>                                    <C>        <C>
  Sulphur revenues - prior year period   $ 15,429   $  43,107
  Increase (decrease)
     Sales volumes                         (2,344)     (5,844)
     Price realization                      1,515      (6,443)
  Other                                       (13)        (10)
                                         --------   ---------
  Sulphur revenues - current year period $ 14,587   $  30,810
                                         ========   =========
</TABLE>

<PAGE>                         19

     Our sulphur revenues decreased by 5 percent during the
second  quarter of 2002 and 29 percent for the six months ended
June 30, 2002 when compared with the comparable period in 2001.
The decrease between the comparable second-quarter periods
reflects an approximate 15 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 were
partially offset by the approximate 12 percent increase in
average realized sulphur prices to $38.81 per long ton in the
second quarter of 2002 from $34.78 per long ton in the second
quarter of 2001 that resulted from a difference in sales volumes
and pricing among different customers.  The decrease in our
sulphur revenues between the comparable six-month periods
reflects an approximate 14 percent reduction in sales volumes and
the approximate 17 percent decrease in the average realized
sulphur prices of $37.44 per long ton during the first half of
2002 from $45.27 per long ton during the same period in 2001.
The decreases reflect the existing weak market fundamentals
involving the phosphate fertilizer business, the principal
consumer of sulphur.

     Sulphur production and delivery costs totaled $15.2 million
for the second quarter of 2002 and $28.3 million for the six
months ended June 30, 2002 compared with $16.7 million for the
second quarter of 2001 and $52.2 million for the six months ended
June 30, 2001.  These decreases primarily reflect the reduced
costs to purchase our sulphur from U.S oil refiners and gas
processors together with the reduced volumes sold during the
first half of 2002.  Our second-quarter 2001 production costs
included a $4.6 million charge to adjust our sulphur inventory to
its net realizable value at June 30, 2001, which reflected the
decreases in sulphur market prices.  During the first half of
2001, total charges to adjust our sulphur inventory to its then
estimated net realizable value totaled $10.0 million.

     General and administrative expenses  totaled $1.2 million in
the second quarter of 2002 and $2.0 million for the six months
ended June 30, 2002 compared with $1.3 million and $2.8 million
during the comparable periods in 2001.  The decreases reflect the
plans to exit our sulphur operations. Interest expense totaled
$1.8 million during the second quarter of 2002 and $3.5 million
for the six months ended June 30, 2002 compared with $1.4 million
and  $2.7 million during the comparable period in 2001. The
increase primarily reflects the increased borrowings under our
sulphur credit facility.  For a discussion regarding the
repayment and termination of the sulphur credit facility, see
"Capital Resources and Liquidity - Sale of Sulphur Transportation
and Terminaling Assets" above.

     Other income for the second quarter and six months ended
June 30, 2002 totaled $2.2 million and $2.3 million,
respectively, compared to $4.0 million during the six months
ended June 30, 2001.  The amounts during 2002 represent the $5.0
million recorded gain from the substantial resolution of the
Caminada sulphur reclamation obligation, which was partially
offset by the $2.8 million loss we recorded on the sale of our
sulphur transportation and terminaling assets.  The amounts in
other income during 2001 primarily reflected the receipt of the
final $3.9 million of proceeds from the 1990 sale of a sulphur
distillation plant.

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.

      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; statements regarding our need for, and the
availability of, financing; our ability to sell the Main Pass oil
lease and to satisfy the MMS reclamation obligations with respect
to Main Pass; our ability to arrange for additional industry
participants 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.

<PAGE>                        20


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

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 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.  The transaction closed on June 14, 2002 and
all pending litigation between McMoRan and IMC has been settled.

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 legal proceedings of a character
normally incident to the ordinary course of our business.  We
believe that potential liability from any of these pending or
threatened proceedings will not have a material adverse effect on
our financial condition or results of operations. We maintain
liability insurance to cover some, but not all, of the potential
liabilities normally incident to the ordinary course of our
business as well as other insurance coverages customary in our
business, with coverage limits as we deem prudent.

Item 4.  Submission of Matters to a Vote of Security Holders.
     (a)  Our Annual Meeting of Stockholders was held May 10,
2002 (the Annual Meeting).  Proxies were solicited pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as
amended.

     (b)  At the Annual Meeting Morrison C. Bethea, Gerald J.
Ford, H. Devon Graham, Jr. and Glenn A. Kleinert were elected to
serve until the 2005 Annual Meeting of Stockholders.  In addition
to the directors elected at the Annual Meeting, the terms of the

<PAGE>                        21

following directors continued after the Annual Meeting: Richard
C. Adkerson, Robert A. Day, Gabrielle K. McDonald, James R.
Moffett, C. Howard Murrish, B. M. Rankin, Jr. and J. Taylor
Wharton.

     (c)  At the Annual Meeting, holders of McMoRan common stock
elected the following directors with the number of votes cast for
or withheld from each nominee as follows:

<TABLE>
<CAPTION>
Name                         For            Withheld
------------------        ----------        --------
<S>                       <C>                <C>
Morrison C. Bethea        14,291,869         277,458
Gerald J. Ford            14,282,775         286,552
H. Devon Graham, Jr.      14,291,326         278,001
Glenn A. Kleinert         14,292,760         276,567

</TABLE>

With respect to the election of the directors, there were no abstentions.


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 August 14, 2002 the registrant filed five
    Current Reports on Form 8-K.  McMoRan filed two Current Reports
    on Form 8-K reporting events under Item 5 dated April 1, 2002 and
    June 7, 2002 and one Current Report on Form 8-K reporting an
    event under Item 4 dated July 10, 2002.  McMoRan also filed a
    Current Report on Form 8-K reporting events under Items 5 and 7
    dated May 31, 2002 and a Current Report on Form 8-K reporting
    events under Items 2, 5 and 7 dated June 14, 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:  August 14, 2002


<PAGE>                          22

                     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).

4.5       Form of Certificate of McMoRan Preferred Stock

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     IMC/FSC Agreement dated as of March 29, 2002 among
          IMC Global Inc., IMC Phosphate Company, Phosphate
          Resource Partners Limited Partnership, IMC Phosphates
          MP Inc., McMoRan Oil & Gas and McMoRan.

10.11     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).

10.12     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).

10.13     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).

10.14     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).

10.15     Termination Agreement dated January 25, 2002 between
          Halliburton Company, Halliburton Energy Services Inc.
          and McMoRan Oil & Gas.

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     Credit Agreement dated as of July 1, 2002 among
          McMoRan Oil & Gas, as borrower, Hibernia National
          Bank, as agent, and the Lenders signatory thereto.

10.19     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).

10.20     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).

10.21     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).

<PAGE>                         E-2

10.22     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).

10.23     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).

10.24     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).

10.25     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.)

10.26     Purchase and Sale Agreement dated as of March 29,
          2002 by and among Freeport Sulphur, McMoRan, MOXY and
          Gulf Sulphur Services Ltd., LLP. (Incorporated by
          reference to Exhibit 10.37 to McMoRan's First-Quarter
          2002 Form 10-Q.)

10.27     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. (Incorporated
          by reference to Exhibit 10.38 to McMoRan's First-
          Quarter 2002 Form 10-Q.)

10.28     Purchase and Sale Agreement dated May 9, 2002 by and
          between McMoRan Oil & Gas and El Paso Production
          Company.

10.29     Amendment to Purchase and Sale Agreement dated May
          22, 2002 by and between McMoRan Oil & Gas and El Paso
          Production Company.

          Executive and Director Compensation Plans and
          Arrangements (Exhibits 30 through 43).

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

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

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

10.33     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.

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

10.35     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).

10.36     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).

<PAGE>                      E-3

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

10.38     McMoRan 2002 Stock Bonus Plan.

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

10.40     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).

10.41     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).

10.42     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).

10.43     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 July 25, 2002 from Ernst & Young LLP
          regarding the unaudited interim financial statements.


<PAGE>                          E-4