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| UNITED STATES                                          |
|--------------------------------------------------------|
| SECURITIES AND EXCHANGE COMMISSION                     |
| Washington, D.C. 20549                                 |
|                                                   |
| FORM 10-Q                                              |
|                                                   |
| (Mark One)                                             |
| [X]                                                    |                                                       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
| SECURITIES EXCHANGE ACT OF 1934                        |
| For the quarterly period ended March 31, 2010          |
| OR                                                     |
| [  ]           |                                                        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
| SECURITIES EXCHANGE ACT OF 1934                        |
| For the transition period from                         |   | to |
| Commission File Number: 001-07791                      |
|                                                   |
|                                                        |
|                                                   |
| McMoRan Exploration Co.                                |
| (Exact name of registrant as specified in its charter) |

| Delaware                                                      | 72-1424200                        |
|---------------------------------------------------------------|-----------------------------------|
| (State or other jurisdiction ofincorporation or organization) | (IRS Employer Identification No.) |
|                                                          |                              |
| 1615 Poydras Street                                           |                              |
| New Orleans, Louisiana                                        | 70112                             |
| (Address of principal executive offices)                      | (Zip Code)                        |
|                                                          |
| (504) 582-4000                                                |
| (Registrant's telephone number, including area code)          |
|                                                          |

| Large accelerated filer   o               | Accelerated filer T               |
|----------------------------------------------------------|-----------------------------------|
| Non-accelerated filer oÿ (Do not check if a smaller | Smaller reporting company ÿo |
| reporting company)                                       |                              |

|   | ÿo Yes S No |
|--------|------------------|

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|                                                                                 |
|--------------------------------------------------------------------------------------|
| McMoRan Exploration Co.                                                              |
| TABLE OF CONTENTS                                                                    |
|                                                                                 |
|                                                                                 | Page |
|                                                                                 |   |
| Part I.  Financial Information                                             |   |
|                                                                                 |   |
| Item 1.   Consolidated Financial Statements:                          |   |
|                                                                                 |   |
| Condensed Consolidated Balance Sheets (Unaudited)                                    | 3 |
|                                                                                 |   |
| Consolidated Statements of Operations (Unaudited)                                    | 4 |
|                                                                                 |   |
| Consolidated Statements of Cash Flow (Unaudited)                                     | 5 |
|                                                                                 |   |
| Notes to Consolidated Financial Statements                                           | 6 |
|                                                                                 |   |
|   Report of Independent Registered Public Accounting Firm                  | 20 |
|                                                                                 |   |
| Item 2.   Management's Discussion and Analysis                        |   |
| of Financial Condition and Results of Operations                                     | 21 |
|                                                                                 |   |
| Item 3.   Quantitative and Qualitative Disclosures about Market Risks | 30 |
|                                                                                 |   |
| Item 4.   Controls and Procedures                                     | 30 |
|                                                                                 |   |
| Part II.  Other Information                                                |   |
|                                                                                 |   |
| Item 1.   Legal Proceedings                                           | 31 |
|                                                                                 |   |
| Item 1A. Risk Factors                                                                | 31 |
|                                                                                 |   |
| Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds | 31 |
|                                                                                 |   |
| Item 6.   Exhibits                                                    | 31 |
|                                                                                 |   |
| Signature                                                                            | 32 |
|                                                                                 |   |
| Exhibit Index                                                                        | E-1 |

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TABLE OF CONTENTS

Part I.  FINANCIAL INFORMATION

| Item 1. | Consolidated Financial Statements. |
|---------|------------------------------------|

|   | McMoRan EXPLORATION CO. |
|--------|-------------------------|

CONDENSED CONSOLIDATED BALANCE SHEETS 

|                                                                           |   | March 31,      |      | December 31, |   |
|--------------------------------------------------------------------------------|--------|----------------|-----------|--------------|--------|
|                                                                           |   | 2010           |      | 2009         |   |
|                                                                           |   | (In Thousands) |      |
| ASSETS                                                                         |   |           |      |         |   |   |   |
| Cash and cash equivalents                                                      |   | $              | 267,778   |         | $      | 241,418 |   |
| Accounts receivable                                                            |   |           | 66,251    |         |   | 79,681 |   |
| Inventories                                                                    |   |           | 48,362    |         |   | 47,818 |   |
| Prepaid expenses                                                               |   |           | 10,031    |         |   | 14,457 |   |
| Fair value of oil and gas derivative contracts                                 |   |           | 8,766     |         |   | 8,693 |   |
| Current assets from discontinued operations, including restricted cash         |   |           |      |         |   |   |   |
| of $3,600 and $470, respectively                                               |   |           | 3,795     |         |   | 825 |   |
| Total current assets                                                           |   |           | 404,983   |         |   | 392,892 |   |
| Property, plant and equipment, net                                             |   |           | 736,521   |         |   | 796,223 |   |
| Restricted cash                                                                |   |           | 45,430    |         |   | 41,677 |   |
| Deferred financing costs and other assets                                      |   |           | 11,301    |         |   | 11,931 |   |
| Long-term assets from discontinued assets                                      |   |           | 2,996     |         |   | 6,159 |   |
| Total assets                                                                   |   | $              | 1,201,231 |         | $      | 1,248,882 |   |
|                                                                           |   |           |      |         |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                     |   |           |      |         |   |   |   |
| Accounts payable                                                               |   | $              | 72,221    |         | $      | 66,544 |   |
| Accrued liabilities                                                            |   |           | 64,294    |         |   | 51,945 |   |
| Accrued interest and dividends payable                                         |   |           | 17,889    |         |   | 8,535 |   |
| Current portion of accrued oil and gas reclamation costs                       |   |           | 116,954   |         |   | 106,791 |   |
| Fair value of oil and gas derivative contracts                                 |   |           | 867       |         |   | 1,237 |   |
| Current portion of accrued sulphur reclamation costs (discontinued operations) |   |           | 8,300     |         |   | 8,300 |   |
| Current liabilities from discontinued operations                               |   |           | 1,577     |         |   | 1,183 |   |
| Total current liabilities                                                      |   |           | 282,102   |         |   | 244,535 |   |
| 5¼% convertible senior notes                                              |   |           | 74,720    |         |   | 74,720 |   |
| 11.875% senior notes                                                           |   |           | 300,000   |         |   | 300,000 |   |
| Accrued oil and gas reclamation costs                                          |   |           | 292,395   |         |   | 321,920 |   |
| Other long-term liabilities                                                    |   |           | 17,101    |         |   | 16,602 |   |
| Accrued sulphur reclamation costs (discontinued operations)                    |   |           | 19,273    |         |   | 19,152 |   |
| Other long-term liabilities from discontinued operations                       |   |           | 6,134     |         |   | 6,145 |   |
| Total liabilities                                                              |   |           | 991,725   |         |   | 983,074 |   |
| Stockholders' equity                                                           |   |           | 209,506   |         |   | 265,808 |   |
| Total liabilities and stockholders' equity                                     |   | $              | 1,201,231 |         | $      | 1,248,882 |   |
|                                                                           |   |           |      |         |   |   |   |

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TABLE OF CONTENTS

CONSOLIDATED STATEMENTS OF OPERATIONS 

|                                                                |   | Three Months Ended  March 31,  |    |
|---------------------------------------------------------------------|--------|------------------------------------------|---------|
|                                                                |   | 2010                                     |    | 2009 |   |
|                                                                |   | (In Thousands, Except Per Share Amounts) |    |
| Revenues:                                                           |   |                                     |    |   |   |   |   |
| Oil and natural gas                                                 |   | $                                        | 128,846 |   | $ | 95,082 |   |
| Service                                                             |   |                                     | 3,642   |   |   | 2,294 |   |
| Total revenues                                                      |   |                                     | 132,488 |   |   | 97,376 |   |
| Costs and expenses:                                                 |   |                                     |    |   |   |   |   |
| Production and delivery costs                                       |   |                                     | 42,785  |   |   | 49,046 |   |
| Depletion, depreciation and amortization expense                    |   |                                     | 108,245 |   |   | 93,397 |   |
| Exploration expenses                                                |   |                                     | 12,409  |   |   | 28,426 |   |
| Gain on oil and gas derivative contracts                            |   |                                     | (3,745  | ) |   | (18,858 | ) |
| General and administrative expenses                                 |   |                                     | 13,743  |   |   | 12,446 |   |
| Main Pass Energy Hub™ costs                                   |   |                                     | 333     |   |   | 765 |   |
| Insurance recoveries                                                |   |                                     | -       |   |   | (18,707 | ) |
| Total costs and expenses                                            |   |                                     | 173,770 |   |   | 146,515 |   |
| Operating loss                                                      |   |                                     | (41,282 | ) |   | (49,139 | ) |
| Interest expense, net                                               |   |                                     | (10,533 | ) |   | (10,666 | ) |
| Other income, net                                                   |   |                                     | 61      |   |   | 329 |   |
| Loss from continuing operations before income taxes                 |   |                                     | (51,754 | ) |   | (59,476 | ) |
| Income tax expense                                                  |   |                                     | -       |   |   | (16 | ) |
| Loss from continuing operations                                     |   |                                     | (51,754 | ) |   | (59,492 | ) |
| Loss from discontinued operations                                   |   |                                     | (1,640  | ) |   | (1,067 | ) |
| Net loss                                                            |   |                                     | (53,394 | ) |   | (60,559 | ) |
| Preferred dividends and inducement payments for early conversion of |   |                                     |    |   |   |   |   |
| convertible preferred stock                                         |   |                                     | (12,766 | ) |   | (2,682 | ) |
| Net loss applicable to common stock                                 |   | $                                        | (66,160 | ) | $ | (63,241 | ) |
|                                                                |   |                                     |    |   |   |   |   |
| Basic and diluted net loss per share of common stock:               |   |                                     |    |   |   |   |   |
| Continuing operations                                               |   |                                     | $(0.72  | ) |   | $(0.88 | ) |
| Discontinued operations                                             |   |                                     | (0.02   | ) |   | (0.02 | ) |
| Net loss per share of common stock                                  |   |                                     | $(0.74  | ) |   | $(0.90 | ) |
|                                                                |   |                                     |    |   |   |   |   |
| Average shares outstanding:                                         |   |                                     |    |   |   |   |   |
| Basic and diluted                                                   |   |                                     | 89,762  |   |   | 70,475 |   |
|                                                                |   |                                     |    |   |   |   |   |

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CONSOLIDATED STATEMENTS OF CASH FLOW 

|                                                          |   | Three Months Ended |    |
|---------------------------------------------------------------|--------|--------------------|---------|
|                                                          |   | March 31,          |    |
|                                                          |   | 2010               |    | 2009 |   |
|                                                          |   | (In Thousands)     |    |
| Cash flow from operating activities:                          |   |               |    |   |   |   |   |
| Net loss                                                      |   | $                  | (53,394 | ) | $ | (60,559 | ) |
| Adjustments to reconcile net loss to net cash provided        |   |               |    |   |   |   |   |
| by operating activities:                                      |   |               |    |   |   |   |   |
| Loss from discontinued operations                             |   |               | 1,640   |   |   | 1,067 |   |
| Depletion, depreciation, and amortization expense             |   |               | 108,245 |   |   | 93,397 |   |
| Exploration drilling and related expenditures, net            |   |               | 4,612   |   |   | 16,226 |   |
| Compensation expense associated with stock-based awards       |   |               | 9,688   |   |   | 6,347 |   |
| Amortization of deferred financing costs                      |   |               | 896     |   |   | 931 |   |
| Change in fair value of oil and gas derivative contracts      |   |               | (442    | ) |   | (778 | ) |
| Reclamation expenditures, net of prepayments by third parties |   |               | (17,540 | ) |   | (12,351 | ) |
| Increase in restricted cash                                   |   |               | (3,753  | ) |   | (3,772 | ) |
| Other                                                         |   |               | 227     |   |   | 64 |   |
| (Increase) decrease in working capital:                       |   |               |    |   |   |   |   |
| Accounts receivable                                           |   |               | 20,164  |   |   | 14,697 |   |
| Accounts payable and accrued liabilities                      |   |               | 7,109   |   |   | (12,846 | ) |
| Prepaid expenses and inventories                              |   |               | 3,880   |   |   | (8,193 | ) |
| Net cash provided by continuing operations                    |   |               | 81,332  |   |   | 34,230 |   |
| Net cash used in discontinued operations                      |   |               | (1,038  | ) |   | (436) |   |
| Net cash provided by operating activities                     |   |               | 80,294  |   |   | 33,794 |   |
|                                                          |   |               |    |   |   |   |   |
| Cash flow from investing activities:                          |   |               |    |   |   |   |   |
| Exploration, development and other capital expenditures       |   |               | (40,838 | ) |   | (29,163 | ) |
| Net cash used in continuing operations                        |   |               | (40,838 | ) |   | (29,163 | ) |
| Net cash activity from discontinued operations                |   |               | -       |   |   | - |   |
| Net cash used in investing activities                         |   |               | (40,838 | ) |   | (29,163 | ) |
|                                                          |   |               |    |   |   |   |   |
| Cash flow from financing activities:                          |   |               |    |   |   |   |   |
| Dividends paid and inducement payments on early conversion of |   |               |    |   |   |   |   |
| convertible preferred stock                                   |   |               | (13,274 | ) |   | (2,682 | ) |
| Proceeds from exercise of stock options and other             |   |               | 178     |   |   | - |   |
| Net cash used in continuing operations                        |   |               | (13,096 | ) |   | (2,682 | ) |
| Net cash activity from discontinued operations                |   |               | -       |   |   | - |   |
| Net cash used in financing activities                         |   |               | (13,096 | ) |   | (2,682 | ) |
| Net increase in cash and cash equivalents                     |   |               | 26,360  |   |   | 1,949 |   |
| Cash and cash equivalents at beginning of year                |   |               | 241,418 |   |   | 93,486 |   |
| Cash and cash equivalents at end of period                    |   | $                  | 267,778 |   | $ | 95,435 |   |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|                                     | March 31, |    | December 31, |   |
|------------------------------------------|-----------|---------|--------------|--------|
|                                     | 2010      |    | 2009         |   |
| Senior secured revolving credit facility | $         | -       |         | $      | - |   |
| 11.875% senior notes                     |      | 300,000 |         |   | 300,000 |   |
| 5¼% convertible senior notes        |      | 74,720  |         |   | 74,720 |   |
| Total debt                               |      | 374,720 |         |   | 374,720 |   |
| Less current maturities                  |      | -       |         |   | - |   |
| Long-term debt                           | $         | 374,720 |         | $      | 374,720 |   |

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TABLE OF CONTENTS

|                              | March 31, |    | December 31, |   |
|-----------------------------------|-----------|---------|--------------|--------|
|                              | 2010      |    | 2009         |   |
| 5¼% convertible senior notes | $         | 79,715  |         | $      | 70,302 |   |
| 11.875% senior notes              |      | 323,250 |         |   | 307,125 |   |

|                                        | First Quarter |   |
|---------------------------------------------|---------------|--------|
|                                        | 2010          |   | 2009 |   |
|                                        |          |   |   |   |   |   |
| Stock options a                             |          | 1,397  |   |   | - |   |
| Shares issuable upon assumed conversion of: |          |   |   |   |   |   |
|   8% preferred stock b            |          | 9,002  |   |   | - |   |
|   6¾% preferred stock b      |          | 10,681 |   |   | 12,817 |   |
|   5¼% notes c                |          | 4,508  |   |   | 4,508 |   |

| a.   | McMoRan uses the treasury stock method to determine total shares related to in-the-money stock options for purposes of its diluted earnings per share calculation.  The amounts represent stock options with an exercise price less than the average market price for McMoRan’s common stock for the periods presented. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | In the first quarter of 2010, McMoRan induced conversion of approximately 47,600 shares of its 8% preferred stock (Note 7).  Preferred dividends and inducement payments for the early conversion of shares of McMoRan’s convertible preferred stock were $12.8 million and $2.7 million for the quarters ended March 31, 2010 and 2009, respectively.  See Note 8 of the 2009 Form 10-K for information regarding McMoRan’s 8% and 6¾% preferred stock. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | Net interest expense on the 5¼% notes totaled $1.0 million during the quarters ended March 31, 2010 and 2009, respectively. Additional information regarding McMoRan’s 5¼% notes is disclosed in Note 6 of the 2009 Form 10-K. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                               |   | First Quarter |   |
|------------------------------------|--------|---------------|--------|
|                               |   | 2010          |   |   | 2009 |   |
| Outstanding options (in thousands) |   |          | 7,932  |   |   |   | 8,480 |   |
| Average exercise price per share   |   | $             | 16.51  |   |   | $ | 15.40 |   |

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TABLE OF CONTENTS

|   | Natural Gas Positions (million MMbtu) |   |
|--------|---------------------------------------|--------|
|   | Open Swap Positions a                 |   | Put Options b |   |
|   | Annual                                |   | Average |   | Annual |   | Average |   |
|   | Volumes                               |   | Swap Price c |   | Volumes |   | Floor c |   |
| 2010   | 1.5                                   |   | $ |  8.61 |   |              1.2 |   | $ |  6.00 |   |

|   | Oil Positions (thousand bbls)                                        |   |
|--------|----------------------------------------------------------------------|--------|
|   | Open Swap Positions a                                                |   | Put Options b |   |
|   | Annual                                                               |   | Average |   | Annual |   | Average |   |
|   | Volumes                                                              |   | Swap Price d |   | Volumes |   | Floor d |   |
| 2010   |            63 |   | $ |  70.85 |   |               50 |   | $ |  50.00 |   |

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

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

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

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

|                                     | First Quarter |   |
|------------------------------------------|---------------|--------|
|                                     | 2010          |   | 2009 |   |
| Realized (gain) loss                     |          |   |   |   |   |   |
| Gas puts                                 | $             | -      |   | $ | - |   |
| Oil puts                                 |          | -      |   |   | - |   |
| Gas swaps                                |          | (3,732 | ) |   | (13,716 | ) |
| Oil swaps                                |          | 429    |   |   | (4,364 | ) |
| Total realized (gain) loss               |          | (3,303 | ) |   | (18,080 | ) |
|                                     |          |   |   |   |   |   |
| Unrealized (gain) loss                   |          |   |   |   |   |   |
| Gas puts                                 |          | (1,083 | ) |   | (4,241 | ) |
| Oil puts                                 |          | 42     |   |   | 358 |   |
| Gas swaps                                |          | 968    |   |   | 13 |   |
| Oil swaps                                |          | (369   | ) |   | 3,092 |   |
| Total unrealized gain                    |          | (442   | ) |   | (778 | ) |
| Gain on oil and gas derivative contracts | $             | (3,745 | ) | $ | (18,858 | ) |

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TABLE OF CONTENTS

|                    | March 31, 2010 |   |
|-------------------------|----------------|--------|
|                    | Puts           |   | Swaps |   |   |   |   |
|                    | Gas            |   | Oil |   | Gas |   | Oil |   | Total |   |
| Current assets          | $              | 2,196  |   | $ | 3 |   | $ | 6,567 |   | $ | - |   | $ | 8,766 |   |
| Current liabilities     |           | -      |   |   | - |   |   | - |   |   | (867 | ) |   | (867 | ) |
| Fair value of contracts | $              | 2,196  |   | $ | 3 |   | $ | 6,567 |   | $ | (867 | ) | $ | 7,899 |   |

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

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TABLE OF CONTENTS

| Oil and Natural Gas                                |   |    |   |
|----------------------------------------------------|--------|---------|--------|
| Asset retirement obligation at beginning of year   | $      | 428,711 |   |
| Liabilities settled                                |   | (25,334 | )      |
| Accretion expense                                  |   | 4,281   |   |
| Reclamation obligations assumed from third parties |   | 1,271   |   |
| Incurred liabilities                               |   | -       |   |
| Revision for changes in estimates                  |   | 420     |   |
| Asset retirement obligations at March 31, 2010     | $      | 409,349 |   |

|                                              |   |   |   |
|---------------------------------------------------|--------|--------|--------|
| Sulphur                                           |   |   |   |
| Asset retirement obligations at beginning of year | $      | 27,452 |   |
| Liabilities settled                               |   | (232   | )      |
| Accretion expense                                 |   | 353    |   |
| Revision for changes in estimates                 |   | -      |   |
| Asset retirement obligation at March 31, 2010     | $      | 27,573 |   |

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|                                |   | First Quarter |   |
|-------------------------------------|--------|---------------|--------|
|                                |   | 2010          |   | 2009 |   |
| Service cost                        |   | $             | 17     |   | $ | 13 |   |
| Interest cost                       |   |          | 60     |   |   | 72 |   |
| Return on plan assets               |   |          | -      |   |   | - |   |
| Amortization of prior service costs |   |          |   |   |   |   |   |
| and actuarial gains                 |   |          | (9     | ) |   | (10 | ) |
| Net periodic benefit expense        |   | $             | 68     |   | $ | 75 |   |

|                                                     |   | First Quarter |   |
|----------------------------------------------------------|--------|---------------|--------|
|                                                     |   | 2010          |   | 2009 |   |
| Stock options awarded to employees (including directors) |   | $             | 9,266  |   | $ | 6,013 |   |
| Stock options awarded to non-employees                   |   |          | 332    |   |   | 253 |   |
| Restricted stock units                                   |   |          | 90     |   |   | 81 |   |
| Total compensation cost                                  |   | $             | 9,688  |   | $ | 6,347 |   |

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TABLE OF CONTENTS

|                                            | First Quarter |    |
|-------------------------------------------------|---------------|---------|
|                                            | 2010          |    | 2009 |   |
| Net loss                                        | $             | (53,394 | ) | $ | (60,559 | ) |
| Other comprehensive loss:                       |          |    |   |   |   |   |
| Amortization of previously unrecognized pension |          |    |   |   |   |   |
| components, net                                 |          | (9      | ) |   | (10 | ) |
| Comprehensive loss                              | $             | (53,403 | ) | $ | (60,569 | ) |

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|                                             |   |           |    |   |   | Freeport  |   |         |    | Consolidated |   |
|--------------------------------------------------|--------|----------------|---------|--------|--------|-----------|--------|--------------|---------|--------------|--------|
|                                             |   | Parent         |    | MOXY   |   | Energy    |   | Eliminations |    | McMoRan      |   |
|                                             |   | (In Thousands) |    |
| ASSETS                                           |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Current assets:                                  |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Cash and cash equivalents                        |   | $              | 172     |   | $      | 267,511   |   | $            | 95      |         | $      | - |   | $ | 267,778 |   |
| Accounts receivable                              |   |           | -       |   |   | 66,251    |   |         | -       |         |   | - |   |   | 66,251 |   |
| Inventories                                      |   |           | -       |   |   | 48,362    |   |         | -       |         |   | - |   |   | 48,362 |   |
| Prepaid expenses                                 |   |           | 2,722   |   |   | 7,309     |   |         | -       |         |   | - |   |   | 10,031 |   |
| Fair value of derivative contracts               |   |           | -       |   |   | 8,766     |   |         | -       |         |   | - |   |   | 8,766 |   |
| Current assets from discontinued                 |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| operations                                       |   |           | -       |   |   | -         |   |         | 3,795   |         |   | - |   |   | 3,795 |   |
| Total current assets                             |   |           | 2,894   |   |   | 398,199   |   |         | 3,890   |         |   | - |   |   | 404,983 |   |
| Property, plant and equipment, net               |   |           | -       |   |   | 736,490   |   |         | 31      |         |   | - |   |   | 736,521 |   |
| Investment in subsidiaries                       |   |           | 663,542 |   |   | -         |   |         | -       |         |   | (663,542 | ) |   | - |   |
| Amounts due from affiliates                      |   |           | -       |   |   | 68,269    |   |         | -       |         |   | (68,269 | ) |   | - |   |
| Deferred financing costs and other assets        |   |           | 6,244   |   |   | 50,487    |   |         | -       |         |   | - |   |   | 56,731 |   |
| Discontinued sulphur assets                      |   |           | -       |   |   | -         |   |         | 2,996   |         |   | - |   |   | 2,996 |   |
| Total assets                                     |   | $              | 672,680 |   | $      | 1,253,445 |   | $            | 6,917   |         | $      | (731,811 | ) | $ | 1,201,231 |   |
|                                             |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY       |   |           |    |   |   |      |   |         |    |         |
| Currentliabilities:                              |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Accounts payable                                 |   | $              | 191     |   | $      | 71,969    |   | $            | 61      |         | $      | - |   | $ | 72,221 |   |
| Accrued liabilities                              |   |           | 967     |   |   | 63,337    |   |         | (10     | )            |   | - |   |   | 64,294 |   |
| Current portion of oil and gas                   |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| accrued reclamation costs                        |   |           | -       |   |   | 116,954   |   |         | -       |         |   | - |   |   | 116,954 |   |
| Other current liabilities                        |   |           | 17,077  |   |   | 1,679     |   |         | -       |         |   | - |   |   | 18,756 |   |
| Current liabilities from discontinued            |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| operations                                       |   |           | -       |   |   | -         |   |         | 9,877   |         |   | - |   |   | 9,877 |   |
| Total current liabilities                        |   |           | 18,235  |   |   | 253,939   |   |         | 9,928   |         |   | - |   |   | 282,102 |   |
| Long-term debt                                   |   |           | 374,720 |   |   | -         |   |         | -       |         |   | - |   |   | 374,720 |   |
| Amounts due to affiliates                        |   |           | 63,822  |   |   | -         |   |         | 4,447   |         |   | (68,269 | ) |   | - |   |
| Accrued oil and gas reclamation costs            |   |           | -       |   |   | 292,395   |   |         | -       |         |   | - |   |   | 292,395 |   |
| Other long-term liabilities                      |   |           | 6,397   |   |   | 9,087     |   |         | 1,617   |         |   | - |   |   | 17,101 |   |
| Long-term liabilities from discontinued          |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
|   operations                           |   |           | -       |   |   | -         |   |         | 25,407  |         |   | - |   |   | 25,407 |   |
| Total liabilities                                |   |           | 463,174 |   |   | 555,421   |   |         | 41,399  |         |   | (68,269 | ) |   | 991,725 |   |
| Commitments and contingencies                    |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Stockholders’ equity (deficit)             |   |           | 209,506 |   |   | 698,024   |   |         | (34,482 | )            |   | (663,542 | ) |   | 209,506 |   |
| Total liabilities and stockholders’ equity |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| (deficit)                                        |   | $              | 672,680 |   | $      | 1,253,445 |   | $            | 6,917   |         | $      | (731,811 | ) | $ | 1,201,231 |   |

----

TABLE OF CONTENTS

|                                             |   |           |    |   |   | Freeport  |   |         |    | Consolidated |   |
|--------------------------------------------------|--------|----------------|---------|--------|--------|-----------|--------|--------------|---------|--------------|--------|
|                                             |   | Parent         |    | MOXY   |   | Energy    |   | Eliminations |    | McMoRan      |   |
|                                             |   | (In Thousands) |    |
| ASSETS                                           |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Current assets:                                  |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Cash and cash equivalents                        |   | $              | 16      |   | $      | 241,400   |   | $            | 2       |         | $      | - |   | $ | 241,418 |   |
| Accounts receivable                              |   |           | -       |   |   | 79,681    |   |         | -       |         |   | - |   |   | 79,681 |   |
| Inventories                                      |   |           | -       |   |   | 47,818    |   |         | -       |         |   | - |   |   | 47,818 |   |
| Prepaid expenses                                 |   |           | 2,919   |   |   | 11,538    |   |         | -       |         |   | - |   |   | 14,457 |   |
| Fair value of derivative contracts               |   |           | -       |   |   | 8,693     |   |         | -       |         |   | - |   |   | 8,693 |   |
| Current assets from discontinued                 |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| operations                                       |   |           | -       |   |   | -         |   |         | 825     |         |   | - |   |   | 825 |   |
| Total current assets                             |   |           | 2,935   |   |   | 389,130   |   |         | 827     |         |   | - |   |   | 392,892 |   |
| Property, plant and equipment, net               |   |           | -       |   |   | 796,192   |   |         | 31      |         |   | - |   |   | 796,223 |   |
| Investment in subsidiaries                       |   |           | 694,820 |   |   | -         |   |         | -       |         |   | (694,820 | ) |   | - |   |
| Amounts due from affiliates                      |   |           |    |   |   | 53,173    |   |         | -       |         |   | (53,173 | ) |   | - |   |
| Deferred financing costs and other assets        |   |           | 6,374   |   |   | 47,234    |   |         | -       |         |   | - |   |   | 53,608 |   |
| Discontinued sulphur assets                      |   |           | -       |   |   | -         |   |         | 6,159   |         |   | - |   |   | 6,159 |   |
| Total assets                                     |   | $              | 704,129 |   | $      | 1,285,729 |   | $            | 7,017   |         | $      | (747,993 | ) | $ | 1,248,882 |   |
|                                             |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY       |   |           |    |   |   |      |   |         |    |         |
| Currentliabilities:                              |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Accounts payable                                 |   | $              | 188     |   | $      | 66,209    |   | $            | 147     |         | $      | - |   | $ | 66,544 |   |
| Accrued liabilities                              |   |           | 728     |   |   | 51,217    |   |         |    |         |   | - |   |   | 51,945 |   |
| Current portion of oil and gas                   |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| accrued reclamation costs                        |   |           | -       |   |   | 106,791   |   |         | -       |         |   | - |   |   | 106,791 |   |
| Other current liabilities                        |   |           | 7,698   |   |   | 2,074     |   |         | -       |         |   | - |   |   | 9,772 |   |
| Current liabilities from discontinued            |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| operations                                       |   |           | -       |   |   | -         |   |         | 9,483   |         |   | - |   |   | 9,483 |   |
| Total current liabilities                        |   |           | 8,614   |   |   | 226,291   |   |         | 9,630   |         |   | - |   |   | 244,535 |   |
| Long-term debt                                   |   |           | 374,720 |   |   | -         |   |         | -       |         |   | - |   |   | 374,720 |   |
| Amounts due to affiliates                        |   |           | 48,977  |   |   | -         |   |         | 4,196   |         |   | (53,173 | ) |   | - |   |
| Accrued oil and gas reclamation costs            |   |           | -       |   |   | 321,920   |   |         | -       |         |   | - |   |   | 321,920 |   |
| Other long-term liabilities                      |   |           | 6,010   |   |   | 8,975     |   |         | 1,617   |         |   | - |   |   | 16,602 |   |
| Long-term liabilities from discontinued          |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
|   operations                           |   |           | -       |   |   | -         |   |         | 25,297  |         |   | - |   |   | 25,297 |   |
| Total liabilities                                |   |           | 438,321 |   |   | 557,186   |   |         | 40,740  |         |   | (53,173 | ) |   | 983,074 |   |
| Commitments and contingencies                    |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Stockholders’ equity (deficit)             |   |           | 265,808 |   |   | 728,543   |   |         | (33,723 | )            |   | (694,820 | ) |   | 265,808 |   |
| Total liabilities and stockholders’ equity |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| (deficit)                                        |   | $              | 704,129 |   | $      | 1,285,729 |   | $            | 7,017   |         | $      | (747,993 | ) | $ | 1,248,882 |   |

----

TABLE OF CONTENTS
|                                     |   |           |    |   |   | Freeport |   |         |   | Consolidated |   |
|------------------------------------------|--------|----------------|---------|--------|--------|----------|--------|--------------|--------|--------------|--------|
|                                     |   | Parent         |    | MOXY   |   | Energy   |   | Eliminations |   | McMoRan      |   |
|                                     |   | (In Thousands) |    |
| Revenues:                                |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Oil and natural gas                      |   | $              | -       |   | $      | 128,846  |   | $            | -      |         | $      | - |   | $ | 128,846 |   |
| Service                                  |   |           | -       |   |   | 3,642    |   |         | -      |         |   | - |   |   | 3,642 |   |
| Total revenues                           |   |           | -       |   |   | 132,488  |   |         | -      |         |   | - |   |   | 132,488 |   |
| Costs and expenses:                      |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Production and delivery costs            |   |           | -       |   |   | 42,797   |   |         | (12    | )            |   | - |   |   | 42,785 |   |
| Depletion, depreciation and amortization |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| expense                                  |   |           | -       |   |   | 108,245  |   |         | -      |         |   | - |   |   | 108,245 |   |
| Exploration expenses                     |   |           | -       |   |   | 12,409   |   |         | -      |         |   | - |   |   | 12,409 |   |
| Gain on oil and gas derivative contracts |   |           | -       |   |   | (3,745   | )      |         | -      |         |   | - |   |   | (3,745 | ) |
| General and administrative expenses      |   |           | 1,531   |   |   | 12,212   |   |         | -      |         |   | - |   |   | 13,743 |   |
| Main Pass Energy HubTM costs             |   |           | -       |   |   | -        |   |         | 333    |         |   | - |   |   | 333 |   |
| Total costs and expenses                 |   |           | 1,531   |   |   | 171,918  |   |         | 321    |         |   | - |   |   | 173,770 |   |
| Operating loss                           |   |           | (1,531  | )      |   | (39,430  | )      |         | (321   | )            |   | - |   |   | (41,282 | ) |
| Interest expense, net                    |   |           | (10,284 | )      |   | (249     | )      |         | -      |         |   | - |   |   | (10,533 | ) |
| Equity in losses of consolidated         |   |           |    |   |   |     |   |         |   |         |   |   |   |   | - |   |
| subsidiaries                             |   |           | (41,583 | )      |   | -        |   |         | -      |         |   | 41,583 |   |   | - |   |
| Other income, net                        |   |           | 4       |   |   | 57       |   |         | -      |         |   | - |   |   | 61 |   |
| Loss from continuing operations before   |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| income taxes                             |   |           | (53,394 | )      |   | (39,622  | )      |         | (321   | )            |   | 41,583 |   |   | (51,754 | ) |
| Income tax expense                       |   |           | -       |   |   | -        |   |         | -      |         |   | - |   |   | - |   |
| Loss from continuing operations          |   |           | (53,394 | )      |   | (39,622  | )      |         | (321   | )            |   | 41,583 |   |   | (51,754 | ) |
| Loss from discontinued operations        |   |           | -       |   |   | -        |   |         | (1,640 | )            |   | - |   |   | (1,640 | ) |
| Net loss                                 |   |           | (53,394 | )      |   | (39,622  | )      |         | (1,961 | )            |   | 41,583 |   |   | (53,394 | ) |
| Preferred dividends and other related    |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| preferred stock costs                    |   |           | (12,766 | )      |   | -        |   |         | -      |         |   | - |   |   | (12,766 | ) |
| Net loss applicable to common stock      |   | $              | (66,160 | )      | $      | (39,622  | )      | $            | (1,961 | )            | $      | 41,583 |   | $ | (66,160 | ) |
|                                     |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |

----

TABLE OF CONTENTS

|                                     |   |           |    |   |   | Freeport |   |         |   | Consolidated |   |
|------------------------------------------|--------|----------------|---------|--------|--------|----------|--------|--------------|--------|--------------|--------|
|                                     |   | Parent         |    | MOXY   |   | Energy   |   | Eliminations |   | McMoRan      |   |
|                                     |   | (In Thousands) |    |
| Revenues:                                |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Oil and natural gas                      |   | $              | -       |   | $      | 95,082   |   | $            | -      |         | $      | - |   | $ | 95,082 |   |
| Service                                  |   |           | -       |   |   | 2,294    |   |         | -      |         |   | - |   |   | 2,294 |   |
| Total revenues                           |   |           | -       |   |   | 97,376   |   |         | -      |         |   | - |   |   | 97,376 |   |
| Costs and expenses:                      |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Production and delivery costs            |   |           | -       |   |   | 49,058   |   |         | (12    | )            |   | - |   |   | 49,046 |   |
| Depletion, depreciation and amortization |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| expense                                  |   |           | -       |   |   | 93,397   |   |         | -      |         |   | - |   |   | 93,397 |   |
| Exploration expenses                     |   |           | -       |   |   | 28,426   |   |         | -      |         |   | - |   |   | 28,426 |   |
| Gain on oil and gas derivative contracts |   |           | -       |   |   | (18,858  | )      |         | -      |         |   | - |   |   | (18,858 | ) |
| General and administrative expenses      |   |           | 1,777   |   |   | 10,648   |   |         | 21     |         |   | - |   |   | 12,446 |   |
| Main Pass Energy HubTM  costs  |   |           | -       |   |   | -        |   |         | 765    |         |   | - |   |   | 765 |   |
| Insurance recoveries                     |   |           | -       |   |   | (18,707  | )      |         | -      |         |   | - |   |   | (18,707 | ) |
| Total costs and expenses                 |   |           | 1,777   |   |   | 143,964  |   |         | 774    |         |   | - |   |   | 146,515 |   |
| Operating loss                           |   |           | (1,777  | )      |   | (46,588  | )      |         | (774   | )            |   | - |   |   | (49,139 | ) |
| Interest expense, net                    |   |           | (10,284 | )      |   | (382     | )      |         | -      |         |   | - |   |   | (10,666 | ) |
| Equity in losses of consolidated         |   |           |    |   |   |     |   |         |   |         |   |   |   |   | - |   |
| subsidiaries                             |   |           | (48,476 | )      |   | -        |   |         | -      |         |   | 48,476 |   |   | - |   |
| Other income (expense), net              |   |           | (6      | )      |   | 335      |   |         | -      |         |   | - |   |   | 329 |   |
| Loss from continuing operations before   |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| income taxes                             |   |           | (60,543 | )      |   | (46,635  | )      |         | (774   | )            |   | 48,476 |   |   | (59,476 | ) |
| Income tax expense                       |   |           | (16     | )      |   | -        |   |         | -      |         |   | - |   |   | (16 | ) |
| Loss from continuing operations          |   |           | (60,559 | )      |   | (46,635  | )      |         | (774   | )            |   | 48,476 |   |   | (59,492 | ) |
| Loss from discontinued operations        |   |           | -       |   |   | -        |   |         | (1,067 | )            |   | - |   |   | (1,067 | ) |
| Net loss                                 |   |           | (60,559 | )      |   | (46,635  | )      |         | (1,841 | )            |   | 48,476 |   |   | (60,559 | ) |
| Preferred dividends and other related    |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| preferred stock costs                    |   |           | (2,682  | )      |   | -        |   |         | -      |         |   | - |   |   | (2,682 | ) |
| Net loss applicable to common stock      |   | $              | (63,241 | )      | $      | (46,635  | )      | $            | (1,841 | )            | $      | 48,476 |   | $ | (63,241 | ) |
|                                     |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |

----

TABLE OF CONTENTS

|                                     |   |           |    |   |   | Freeport |   | Consolidated |   |
|------------------------------------------|--------|----------------|---------|--------|--------|----------|--------|--------------|--------|
|                                     |   | Parent         |    | MOXY   |   | Energy   |   | McMoRan      |   |
|                                     |   | (In Thousands) |    |
|                                     |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Cash flow from operating activities:     |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Net cash provided by (used in)           |   |           |    |   |   |     |   |         |   |   |   |   |   |
| continuing operations                    |   | $              | 14,302  |   | $      | 66,949   |   | $            | 81     |   | $ | 81,332 |   |
| Net cash used in discontinued operations |   |           | -       |   |   | -        |   |         | (1,038 | ) |   | (1,038 | ) |
| Net cash provided by (used in)           |   |           |    |   |   |     |   |         |   |   |   |   |   |
| operating activities                     |   |           | 14,302  |   |   | 66,949   |   |         | (957   | ) |   | 80,294 |   |
|                                     |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Cash flow from investing activities:     |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Exploration, development and other       |   |           |    |   |   |     |   |         |   |   |   |   |   |
| capital expenditures                     |   |           | -       |   |   | (40,838  | )      |         | -      |   |   | (40,838 | ) |
| Net cash used in investing activities    |   |           | -       |   |   | (40,838  | )      |         | -      |   |   | (40,838 | ) |
|                                     |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Cash flow from financing activities:     |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Dividends paid and conversion            |   |           |    |   |   |     |   |         |   |   |   |   |   |
| inducement payments on convertible       |   |           |    |   |   |     |   |         |   |   |   |   |   |
| preferred stock                          |   |           | (13,274 | )      |   | -        |   |         | -      |   |   | (13,274 | ) |
| Proceeds from exercise of stock options  |   |           | 178     |   |   | -        |   |         | -      |   |   | 178 |   |
| Investment from parent                   |   |           | (1,050  | )      |   | -        |   |         | 1,050  |   |   | - |   |
| Net cash provided by (used in)           |   |           |    |   |   |     |   |         |   |   |   |   |   |
| financing activities                     |   |           | (14,146 | )      |   | -        |   |         | 1,050  |   |   | (13,096 | ) |
|                                     |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Net increase in cash and cash            |   |           |    |   |   |     |   |         |   |   |   |   |   |
| equivalents                              |   |           | 156     |   |   | 26,111   |   |         | 93     |   |   | 26,360 |   |
| Cash and cash equivalents at beginning   |   |           |    |   |   |     |   |         |   |   |   |   |   |
| of year                                  |   |           | 16      |   |   | 241,400  |   |         | 2      |   |   | 241,418 |   |
| Cash and cash equivalents at end of      |   |           |    |   |   |     |   |         |   |   |   |   |   |
| year                                     |   | $              | 172     |   | $      | 267,511  |   | $            | 95     |   | $ | 267,778 |   |
|                                     |   |           |    |   |   |     |   |         |   |   |   |   |   |

----

TABLE OF CONTENTS
|                                     |   |           |   |   |   | Freeport |   | Consolidated |   |
|------------------------------------------|--------|----------------|--------|--------|--------|----------|--------|--------------|--------|
|                                     |   | Parent         |   | MOXY   |   | Energy   |   | McMoRan      |   |
|                                     |   | (In Thousands) |   |
|                                     |   |           |   |   |   |     |   |         |   |   |   |   |   |
| Cash flow from operating activities:     |   |           |   |   |   |     |   |         |   |   |   |   |   |
| Net cash provided by (used in)           |   |           |   |   |   |     |   |         |   |   |   |   |   |
| continuing operations                    |   | $              | 4,067  |   | $      | 30,952   |   | $            | (789   | ) | $ | 34,230 |   |
| Net cash used in discontinued operations |   |           | -      |   |   | -        |   |         | (436   | ) |   | (436 | ) |
| Net cash provided by (used in)           |   |           |   |   |   |     |   |         |   |   |   |   |   |
| operating activities                     |   |           | 4,067  |   |   | 30,952   |   |         | (1,225 | ) |   | 33,794 |   |
|                                     |   |           |   |   |   |     |   |         |   |   |   |   |   |
| Cash flow from investing activities:     |   |           |   |   |   |     |   |         |   |   |   |   |   |
| Exploration, development and other       |   |           |   |   |   |     |   |         |   |   |   |   |   |
| capital expenditures                     |   |           | -      |   |   | (29,163  | )      |         | -      |   |   | (29,163 | ) |
| Net cash used in investing activities    |   |           | -      |   |   | (29,163  | )      |         | -      |   |   | (29,163 | ) |
|                                     |   |           |   |   |   |     |   |         |   |   |   |   |   |
| Cash flow from financing activities:     |   |           |   |   |   |     |   |         |   |   |   |   |   |
| Dividends paid on convertible preferred  |   |           |   |   |   |     |   |         |   |   |   |   |   |
| stock                                    |   |           | (2,682 | )      |   | -        |   |         | -      |   |   | (2,682 | ) |
| Investment from parent                   |   |           | (1,350 | )      |   | -        |   |         | 1,350  |   |   | - |   |
| Net cash provided by (used in)           |   |           |   |   |   |     |   |         |   |   |   |   |   |
| financing activities                     |   |           | (4,032 | )      |   | -        |   |         | 1,350  |   |   | (2,682 | ) |
|                                     |   |           |   |   |   |     |   |         |   |   |   |   |   |
| Net increase in cash and cash            |   |           |   |   |   |     |   |         |   |   |   |   |   |
| equivalents                              |   |           | 35     |   |   | 1,789    |   |         | 125    |   |   | 1,949 |   |
| Cash and cash equivalents at beginning   |   |           |   |   |   |     |   |         |   |   |   |   |   |
| of year                                  |   |           | 35     |   |   | 93,442   |   |         | 9      |   |   | 93,486 |   |
| Cash and cash equivalents at end of      |   |           |   |   |   |     |   |         |   |   |   |   |   |
| year                                     |   | $              | 70     |   | $      | 95,231   |   | $            | 134    |   | $ | 95,435 |   |
|                                     |   |           |   |   |   |     |   |         |   |   |   |   |   |

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

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|                              | First Quarter                 |
|-----------------------------------|-------------------------------|
|                              | 2010                          |   | 2009 |
| Sales Volumes                     |                          |   |   |
| Gas (thousand cubic feet, or Mcf) | 11,238,800                    |   | 12,165,600 |
| Oil (barrels)                     | 691,500                       |   | 749,200 |
| Plant products (Mcf equivalent) a | 1,749,000                     |   | 1,118,100 |
| Average Realization b             |                          |   |   |
| Gas (per Mcf)                     | $    5.53 |   | $    4.88 |
| Oil (per barrel)                  | 76.34                         |   | 40.91 |

| a.   | We received approximately $13.9 million and $5.0 million of revenues associated with plant products (ethane, propane, butane, etc.) during the first quarters of 2010 and 2009, respectively (see “Oil and Gas Operations” below).  One Mcf equivalent is determined using an estimated energy content differential ratio of six Mcf of natural gas to one barrel of crude oil, condensate or natural gas liquids. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Excludes the impact of realized gains and losses of derivative contracts. |
|----------------|---------------------------------------------------------------------------|

|                                                     |   | First   |    |
|----------------------------------------------------------|--------|---------|---------|
|                                                     |   | Quarter |    |
| Oil and natural gas revenues – prior year period   |   | $       | 95,082  |   |
| Increase (decrease)                                      |   |    |    |   |
| Price realizations:                                      |   |    |    |   |
| Natural gas                                              |   |    | 7,305   |   |
| Oil and condensate                                       |   |    | 24,500  |   |
| Sales volumes:                                           |   |    |    |   |
| Natural gas                                              |   |    | (4,523  | ) |
| Oil and condensate                                       |   |    | (2,361  | ) |
| Plant products revenue                                   |   |    | 8,893   |   |
| Other                                                    |   |    | (50     | ) |
| Oil and natural gas revenues – current year period |   | $       | 128,846 |   |

|                                | First Quarter |   |
|-------------------------------------|---------------|--------|
|                                |          |   | Per |   |   |   | Per |   |
|                                | 2010          |   | Mcfe |   | 2009 |   | Mcfe |   |
| Lease operating expense             | $26.9         |   | $1.57 |   | $26.9 |   | $1.51 |   |
| Workover costs                      | 2.3           |   | 0.13 |   | 2.0 |   | 0.11 |   |
| Hurricane related expenses          | 0.5           |   | 0.03 |   | 10.8 |   | 0.61 |   |
| Insurance                           | 6.7           |   | 0.39 |   | 5.7 |   | 0.32 |   |
| Transportation and production taxes | 6.5           |   | 0.38 |   | 4.4 |   | 0.25 |   |
| Other                               | (0.1          | )      | (0.01 | ) | (0.8 | ) | (0.05 | ) |
| Total                               | $42.8         |   | $2.49 |   | $49.0 |   | $2.75 |   |

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|                               | First Quarter |
|------------------------------------|---------------|
|                               |          |   | Per |   |   |   | Per |
|                               | 2010          |   | Mcfe |   | 2009 |   | Mcfe |
| Depletion and depreciation expense | $46.6         |   | $2.72 |   | $46.3 |   | $2.61 |
| Accretion expense                  | 4.6           |   | 0.27 |   | 8.1 |   | 0.46 |
| Impairment charges/losses          | 57.0          |   | 3.33 |   | 39.0 |   | 2.19 |
| Total                              | $108.2        |   | $6.32 |   | $93.4 |   | $5.26 |

|                                        | First Quarter |   |
|---------------------------------------------|---------------|--------|
|                                        | 2010          |   | 2009 |   |
| Geological and geophysical,                 |          |   |   |   |   |   |
| including 3-D seismic purchases a           | $             | 7.0    |   | $ | 9.9 |   |
| Non productive exploratory costs, including |          |   |   |   |   |   |
| related lease costs                         |          | 4.6    | b |   | 16.2 | c |
| Other                                       |          | 0.8    |   |   | 2.3 |   |
|                                        | $             | 12.4   |   | $ | 28.4 |   |

| a.   | Includes compensation costs associated with outstanding stock-based awards totaling $4.6 million in |
|----------------|-----------------------------------------------------------------------------------------------------|

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| b.   | Includes the costs of the Blueberry Hill offset appraisal well incurred through March 31, 2010 below 19,000 feet, the depth at which current sidetracking drilling operations have commenced. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | In February 2009, the Gladstone East well was determined to be non-productive and we charged $5.4 million of drilling costs incurred through December 31, 2008 to exploration expense in the December 31, 2008 financial statements.  In the first quarter of 2009, we charged an additional $5.4 million to exploration expense for costs incurred subsequent to December 31, 2008.  We also charged $10.8 million to exploration expense in the first quarter of 2009 for the Tom Sauk well, which was also determined to be non-productive. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                |   | First Quarter |   |
|-------------------------------------|--------|---------------|--------|
|                                |   | 2010          |   | 2009 |   |
| General and administrative expenses |   | $             | 4,930  |   | $ | 3,120 |   |
| Exploration expenses                |   |          | 4,595  |   |   | 3,046 |   |
| Main Pass Energy Hub start-up costs |   |          | 163    |   |   | 181 |   |
| Total stock-based compensation cost |   | $             | 9,688  |   | $ | 6,347 |   |

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|                    | First Quarter |                                        |
|-------------------------|---------------|---------------------------------------------|
|                    | 2010          |                                        |   | 2009 |   |
| Continuing operations   |          |                                        |   |   |   |   |   |
| Operating               | $             | 81.3                                        |   |   | $ | 34.2 |   |
| Investing               |          | (40.8                                       | ) |   |   | (29.2 | ) |
| Financing               |          | (13.1                                       | ) |   |   | (2.7 | ) |
|                    |          |                                        |   |   |   |   |   |
| Discontinued operations |          |                                        |   |   |   |   |   |
| Operating               |          | (1.0                                        | ) |   |   | (0.4 | ) |
| Investing               |          |        - |   |   |   |        - |   |
| Financing               |          |       -       |   |   |   |       - |   |
|                    |          |                                        |   |   |   |   |   |
| Total cash flow         |          |                                        |   |   |   |   |   |
| Operating               |          | 80.3                                        |   |   |   | 33.8 |   |
| Investing               |          | (40.8                                       | ) |   |   | (29.2 | ) |
| Financing               |          | (13.1                                       | ) |   |   | (2.7 | ) |

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Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

Item 4.   Controls and Procedures.

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PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings.

Item 1A.  Risk Factors.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

Item 6.   Exhibits.

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SIGNATURE

|                          | McMoRan Exploration Co.                        |
|-------------------------------|------------------------------------------------|
|                          |                                           |
|                          | By:  /s/ Nancy D. Parmelee           |
|                          | Nancy D. Parmelee                              |
|                          | Senior Vice President, Chief Financial Officer |
|                          | and Secretary                                  |
|                          | (authorized signatory and Principal            |
|                          | Financial Officer)                             |
|                          |                                           |
|                          |                                           |
|                          |                                           |
| Date:  May 10, 2010 |                                           |

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Exhibit Index

|    |                                                                                                                                                                                         | Filed     |                      |      |       |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|---------------------------|-----------|------------|
| Exhibit |                                                                                                                                                                                         | with this | Incorporated by Reference |
| Number  | Exhibit Title                                                                                                                                                                                | Form 10-Q | Form                      | File No.  | Date Filed |
| 3.1     | Composite Certificate of Incorporation of McMoRan                                                                                                                                            | X         |                      |      |       |
| 3.2     | Amended and Restated By-Laws of McMoRan as amended effective February 1, 2010                                                                                                                |      | 8-K                       | 001-07791 | 02/03/2010 |
| 10.1    | Fifth Amendment to Credit Agreement dated as of April 6, 2010, among McMoRan Exploration Co., as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto | X         |                      |      |       |
| 10.2*   | McMoRan Exploration Co. 2005 Supplemental Executive Capital Accumulation Plan                                                                                                                | X         |                      |      |       |
| 15.1    | Letter dated May 10, 2010 from Ernst & Young LLP regarding unaudited interim financial statements                                                                                        | X         |                      |      |       |
| 31.1    | Certification of Principal Executive Officer pursuant to Rule 13a–14(a)/15d-14(a)                                                                                                      | X         |                      |      |       |
| 31.2    | Certification of Principal Financial Officer pursuant to Rule 13a–14(a)/15d-14(a)                                                                                                      | X         |                      |      |       |
| 32.1    | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350                                                                                                              | X         |                      |      |       |
| 32.2    | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350                                                                                                              | X         |                      |      |       |

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