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|                                            | Page         |
|-------------------------------------------------|--------------|
| ARTICLE 1 SEPARATION AND MERGER                 | 2            |
|                                            |         |   |   |
|                                            | Section 1.1  | Separation and Mergers | 2 |
|                                            | Section 1.2  | Certain Definitions | 2 |
|                                            | Section 1.3  | The Separation | 10 |
|                                            | Section 1.4  | The Mergers | 11 |
|                                            | Section 1.5  | Conversion of Securities | 11 |
|                                            | Section 1.6  | Effects of the Mergers | 12 |
|                                            | Section 1.7  | Certificate of Formation | 12 |
|                                            | Section 1.8  | Merger Effective Time | 12 |
|                                            | Section 1.9  | Effective Time; Proration of Costs and Revenues | 12 |
|                                            |         |   |   |
| ARTICLE 2 PURCHASE PRICE                        | 13           |
|                                            |         |   |   |
|                                            | Section 2.1  | Assumed Obligations and Excluded Obligations | 13 |
|                                            | Section 2.2  | Purchase Price | 15 |
|                                            | Section 2.3  | Working Capital Calculation. | 15 |
|                                            | Section 2.4  | Purchase Price Adjustments | 17 |
|                                            | Section 2.5  | Manner and Effect of Working Capital Calculations and Purchase Price Adjustments |  17 |
|                                            |         |   |   |
| ARTICLE 3 TITLE AND ENVIRONMENTAL MATTERS       | 18           |
|                                            |         |   |   |
|                                            | Section 3.1  | Title | 18 |
|                                            | Section 3.2  | Definition of Defensible Title | 19 |
|                                            | Section 3.3  | Definition of Permitted Encumbrances | 20 |
|                                            | Section 3.4  | Notice of Title Defects; Defect Adjustments | 21 |
|                                            | Section 3.5  | Consents to Assignment | 25 |
|                                            | Section 3.6  | Casualty or Condemnation Loss | 26 |
|                                            |         |   |   |
| ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PXP | 26           |
|                                            |         |   |   |
|                                            | Section 4.1  | Disclaimers | 26 |
|                                            | Section 4.2  | Existence and Qualification | 27 |
|                                            | Section 4.3  | Power | 27 |
|                                            | Section 4.4  | Authorization, Execution and Enforceability | 27 |
|                                            | Section 4.5  | No Conflicts | 28 |
|                                            | Section 4.6  | Brokers’ Fees | 28 |
|                                            | Section 4.7  | Consents, Approvals and Waivers | 28 |
|                                            | Section 4.8  | Litigation | 29 |
|                                            | Section 4.9  | Taxes and Assessments | 29 |
|                                            | Section 4.10 | Outstanding Capital Commitments | 29 |
|                                            | Section 4.11 | Contracts | 29 |
|                                            | Section 4.12 | Governmental Authorizations | 30 |

----

|                                                | Section 4.13 | Equipment and Personal Property       | 30     |
|-----------------------------------------------------|--------------|---------------------------------------|--------|
|                                                | Section 4.14 | Hedges                                | 30     |
|                                                | Section 4.15 | Condemnation                          | 30     |
|                                                | Section 4.16 | Qualification                         | 30     |
|                                                | Section 4.17 | No Material Adverse Effect            | 31     |
|                                                | Section 4.18 | Board Approval                        | 31     |
|                                                | Section 4.19 | Payments for Production               | 31     |
|                                                | Section 4.20 | Production Imbalances                 | 31     |
|                                                | Section 4.21 | Non-Consent Operations                | 31     |
|                                                | Section 4.22 | PXP Gulf and PXP Offshore             | 31     |
|                                                | Section 4.23 | Investment Intent                     | 32     |
|                                                |         |                                  |   |
| ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF MCMORAN | 32           |
|                                                |         |                                  |   |
|                                                | Section 5.1  | Disclaimer                            | 32     |
|                                                | Section 5.2  | Existence and Qualification           | 32     |
|                                                | Section 5.3  | Power                                 | 32     |
|                                                | Section 5.4  | Authorization and Enforceability      | 33     |
|                                                | Section 5.5  | No Conflicts                          | 33     |
|                                                | Section 5.6  | Brokers’ Fees                   | 34     |
|                                                | Section 5.7  | Consents, Approvals or Waivers        | 34     |
|                                                | Section 5.8  | Litigation                            | 34     |
|                                                | Section 5.9  | Taxes                                 | 34     |
|                                                | Section 5.10 | Environmental Laws                    | 35     |
|                                                | Section 5.11 | Financing                             | 35     |
|                                                | Section 5.12 | Qualification                         | 35     |
|                                                | Section 5.13 | SEC Documents                         | 35     |
|                                                | Section 5.14 | Financial Statements; Reserve Reports | 36     |
|                                                | Section 5.15 | No Material Adverse Effect            | 37     |
|                                                | Section 5.16 | Capitalization; Shares.               | 37     |
|                                                | Section 5.17 | Title to Property                     | 37     |
|                                                | Section 5.18 | No Undisclosed Relationships          | 38     |
|                                                | Section 5.19 | Licenses and Permits                  | 38     |
|                                                | Section 5.20 | Compliance With ERISA                 | 38     |
|                                                | Section 5.21 | Insurance                             | 39     |
|                                                | Section 5.22 | No Unlawful Payments                  | 39     |
|                                                | Section 5.23 | No Restrictions on Subsidiaries       | 39     |
|                                                | Section 5.24 | No Registration Rights                | 39     |
|                                                | Section 5.25 | Board Approva                         | 39     |
|                                                | Section 5.26 | Vote Required.                        | 40     |
|                                                | Section 5.27 | Voting Debt                           | 40     |
|                                                | Section 5.28 | No General Solicitation               | 40     |
|                                                | Section 5.29 | Voting Agreements                     | 40     |
|                                                | Section 5.30 | McMoRan GOM and McMoRan Offshore      | 40     |
|                                                |         |                                  |   |
| ARTICLE 6 COVENANTS                                 | 41           |

----

|                                     |         |                                                        |   |
|------------------------------------------|--------------|-------------------------------------------------------------|--------|
|                                     | Section 6.1  | Proxy Statement                                             | 41     |
|                                     | Section 6.2  | Stockholders’ Meeting and Board Recommendation        | 41     |
|                                     | Section 6.3  | No Solicitation                                             | 42     |
|                                     | Section 6.4  | Access                                                      | 46     |
|                                     | Section 6.5  | Public Announcements                                        | 46     |
|                                     | Section 6.6  | Operation of Business                                       | 46     |
|                                     | Section 6.7  | Indemnity Regarding Access                                  | 49     |
|                                     | Section 6.8  | Commercially Reasonable Efforts; Best Efforts.              | 49     |
|                                     | Section 6.9  | Financial Statement Cooperation                             | 51     |
|                                     | Section 6.10 | Tax Matters and Allocation                                  | 51     |
|                                     | Section 6.11 | Further Assurances                                          | 53     |
|                                     | Section 6.12 | Recording                                                   | 53     |
|                                     | Section 6.13 | Filings with Governmental Authorities                       | 53     |
|                                     | Section 6.14 | Operatorship                                                | 53     |
|                                     | Section 6.15 | Re-Assignment Waivers                                       | 54     |
|                                     | Section 6.16 | Hurricane Deep Claim                                        | 54     |
|                                     | Section 6.17 | Seismic Data                                                | 54     |
|                                     | Section 6.18 | MMS Qualification Card                                      | 54     |
|                                     | Section 6.19 | Amendment or Termination of Financing Agreement             | 55     |
|                                     |         |                                                        |   |
| ARTICLE 7 CONDITIONS TO CLOSING          | 55           |
|                                     |         |                                                        |   |
|                                     | Section 7.1  | Conditions of Both Parties to Closing                       | 55     |
|                                     | Section 7.2  | Conditions of PXP to Closing                                | 55     |
|                                     | Section 7.3  | Conditions of McMoRan to Closing                            | 56     |
|                                     |         |                                                        |   |
| ARTICLE 8 CLOSING                        |         | 57                                                          |
|                                     |         |                                                        |   |
|                                     | Section 8.1  | Time and Place of Closing                                   | 57     |
|                                     | Section 8.2  | Obligations of PXP at Closing                               | 57     |
|                                     | Section 8.3  | Obligations of McMoRan at Closing                           | 58     |
|                                     | Section 8.4  | Closing Payment and Post-Closing Purchase Price Adjustments | 59     |
|                                     |         |                                                        |   |
| ARTICLE 9 TERMINATION AND AMENDMENT      | 60           |
|                                     |         |                                                        |   |
|                                     | Section 9.1  | Termination                                                 | 60     |
|                                     | Section 9.2  | Effect of Termination                                       | 62     |
|                                     | Section 9.3  | Fees and Expenses                                           | 62     |
|                                     | Section 9.4  | Amendment                                                   | 63     |
|                                     | Section 9.5  | Waiver                                                      | 63     |
|                                     |         |                                                        |   |
| ARTICLE 10 INDEMNIFICATIONS; LIMITATIONS | 63           |
|                                     |         |                                                        |   |
|                                     | Section 10.1 | Indemnification                                             | 63     |
|                                     | Section 10.2 | Indemnification Actions                                     | 65     |
|                                     | Section 10.3 | Limitations                                                 | 67     |
|                                     |         |                                                        |   |
| ARTICLE 11 MISCELLANEOUS                 | 69           |

----

|   |          |                                                        |   |
|--------|---------------|-------------------------------------------------------------|--------|
|   | Section 11.1  | Receipts                                                    | 69     |
|   | Section 11.2  | Expenses                                                    | 69     |
|   | Section 11.3  | Counterparts                                                | 70     |
|   | Section 11.4  | Notices                                                     | 70     |
|   | Section 11.5  | Sales or Use Tax, Recording Fees and Similar Taxes and Fees | 71     |
|   | Section 11.6  | Change of Name                                              | 71     |
|   | Section 11.7  | Replacement of Bonds, Letters of Credit and Guarantees      | 71     |
|   | Section 11.8  | Records                                                     | 71     |
|   | Section 11.9  | Governing Law                                               | 72     |
|   | Section 11.10 | Waiver of Jury Trial                                        | 72     |
|   | Section 11.11 | Captions; Headings                                          | 72     |
|   | Section 11.12 | Waivers                                                     | 72     |
|   | Section 11.13 | Assignment                                                  | 73     |
|   | Section 11.14 | Entire Agreement                                            | 73     |
|   | Section 11.15 | No Third Person Beneficiaries                               | 73     |
|   | Section 11.16 | References; Schedules                                       | 73     |
|   | Section 11.17 | Construction                                                | 74     |
|   | Section 11.18 | Specific Performance                                        | 74     |
|   | Section 11.19 | Severability                                                | 74     |

| EXHIBITS:          |   |                                     |
|--------------------|--------|------------------------------------------|
| Exhibit A          | -      | Leases                                   |
| Exhibit A-1        | -      | Wells and Units                          |
| Exhibit A-2        | -      | Easements                                |
| Exhibit B          | -      | Form of Conveyance                       |
| Exhibit C          | -      | Form of Stockholder Agreement            |
| Exhibit D          | -      | Form of Registration Rights Agreement    |
|               |   |                                     |
| SCHEDULES:         |   |                                     |
| Schedule 1.2(d)(x) | -      | Escrowed Funds for Plugging Wells        |
| Schedule 3.3(e)    | -      | Tax Liens                                |
| Schedule 3.3(j)    | -      | Calls on Production                      |
| Schedule 4.7       | -      | PXP Consents                             |
| Schedule 4.8       | -      | PXP Litigation                           |
| Schedule 4.9       | -      | PXP Taxes                                |
| Schedule 4.10      | -      | PXP Outstanding Capital Commitments      |
| Schedule 4.11      | -      | PXP Contracts                            |
| Schedule 4.12      | -      | PXP Governmental Authorization           |
| Schedule 4.19      | -      | Payments for Production                  |
| Schedule 4.20      | -      | PXP Production Imbalances                |
| Schedule 5.2       | -      | McMoRan Subsidiaries                     |
| Schedule 5.4       | -      | Approval of Business Combinations        |
| Schedule 5.7       | -      | McMoRan Consents and Preferential Rights |
| Schedule 5.8       | -      | McMoRan Litigation                       |
| Schedule 5.9       | -      | McMoRan Taxes                            |

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| Schedule 5.16(a) | - | McMoRan Capitalization                    |
|------------------|---|-------------------------------------------|
| Schedule 5.16(b) | - | McMoRan Pro Forma Capitalization          |
| Schedule 5.23    | - | McMoRan Dividend/Distribution Limitations |
| Schedule 5.26    | - | Certain Persons                           |
| Schedule 6.6(b)  | - | Operation of Business                     |
| Schedule 6.10    | - | Allocated Consideration                   |

----

| Defined Term                 | Section     |
|------------------------------|-------------|
|                         |        |
| Acquisition Proposal         | 6.3(e)      |
| Adjusted Purchase Price      | 1.2(a)      |
| Affiliate                    | 1.2(b)      |
| Affiliate Transaction        | 1.2(c)      |
| Aggregate Benefit Deductible | 3.4(j)      |
| Aggregate Title Deductible   | 3.4(i)      |
| Agreement                    | Preamble    |
| Allocated Consideration      | 6.10(b)     |
| Assets                       | 1.2(d)      |
| Assumed Obligations          | 2.1(b)      |
| Business Day                 | 1.2(e)      |
| Casualty Value               | 3.6         |
| Claim                        | 10.2(b)     |
| Claim Notice                 | 10.2(b)     |
| Closing                      | 8.1         |
| Closing Date                 | 8.1         |
| Closing Payment              | 8.4(a)      |
| Code                         | 4.9         |
| Confidentiality Agreement    | 6.4         |
| Contracts                    | 1.2(d)(iv)  |
| Conveyances                  | 8.2(a)      |
| Conveyance 1                 | 8.2(a)      |
| Conveyance 2                 | 8.2(a)      |
| COPAS                        | 1.2(f)      |
| Damages                      | 10.1(d)     |
| Defensible Title             | 3.2         |
| DLLCA                        | 1.4(a)      |
| Effective Time               | 1.9(a)      |
| Encumbrance                  | 3.2(c)      |
| Environmental Defect         | 1.2(g)      |
| Environmental Law            | 1.2(h)      |
| Environmental Permit         | 1.2(i)      |
| Equipment                    | 1.2(d)(vi)  |
| ERISA                        | 1.2(j)      |
| Exchange Act                 | 1.2(k)      |
| Excluded Obligations         | 2.1(c)      |
| Excluded Records             | 1.2(d)(xii) |
| FCX Financing Agreement      | 6.19        |
| Final Settlement Date        | 8.4(b)      |
| Financing Agreements         | Recitals    |
| Financing Securities         | Recitals    |
| GAAP                         | 1.2(l)      |
| Governmental Authority       | 1.2(m)      |

----

| Governmental Authorizations           | 4.12      |
|---------------------------------------|-----------|
| Gulf Allocated Consideration          | 6.10(b)   |
| Gulf Assets                           | 1.2(n)    |
| Gulf Assumed Obligations              | 2.1(a)    |
| Gulf Interests                        | 1.5       |
| Gulf Merger                           | Recitals  |
| Gulf Separation                       | 1.2(o)    |
| Gulf Surviving Entity                 | 1.4(a)    |
| Hazardous Substances                  | 1.2(p)    |
| Hurricane Deep Claim                  | 6.16      |
| Hurricane Deep Well                   | 6.6(a)    |
| HSR Act                               | 6.8(a)    |
| Hydrocarbons                          | 1.2(q)    |
| Indemnified Person                    | 10.2(a)   |
| Indemnifying Person                   | 10.2(a)   |
| Individual Title Threshold            | 3.4(i)    |
| Indenture                             | 1.2(r)    |
| Intervening Event                     | 1.2(s)    |
| Investment Consideration              | 2.2(b)    |
| Lands                                 | 1.2(d)(i) |
| Laws                                  | 1.2(t)    |
| Leases                                | 1.2(d)(i) |
| Loss Payee Portion                    | 6.16      |
| Marketing Contracts                   | 4.11      |
| Material Consent                      | 1.2(u)    |
| McMoRan                               | Preamble  |
| McMoRan Adverse Recommendation Change | 6.3(d)    |
| McMoRan Common Stock                  | 1.2(v)    |
| McMoRan Holdco                        | Preamble  |
| McMoRan GOM                           | Preamble  |
| McMoRan Material Adverse Effect       | 1.2(w)    |
| McMoRan Non-Operated Properties       | 1.2(x)    |
| McMoRan Offshore                      | Preamble  |
| McMoRan Operated Properties           | 1.2(y)    |
| McMoRan Recommendation                | 6.2       |
| McMoRan SEC Documents                 | 5.13(a)   |
| McMoRan Shares                        | 2.2(b)    |
| McMoRan Stockholders Meeting          | 6.2       |
| Mergers                               | Recitals  |
| Merger Effective Time                 | 1.8       |
| MMS                                   | 1.2(z)    |
| Net Working Capital                   | 2.3(c)    |
| Notice of Superior Proposal           | 6.3(d)(1) |
| Offshore Allocated Consideration      | 6.10(b)   |
| Offshore Assets                       | 1.2(aa)   |
| Offshore Assumed Obligations          | 2.1(b)    |

----

| Offshore Interests             | 1.5(b)      |
|--------------------------------|-------------|
| Offshore Merger                | Recitals    |
| Offshore Separation            | 1.2(bb)     |
| Offshore Surviving Entity      | 1.4(b)      |
| Outside Date                   | 9.1(b)(i)   |
| Party; Parties                 | Preamble    |
| Permitted Encumbrances         | 3.3         |
| Person                         | 1.2(cc)     |
| Plan                           | 5.20        |
| Preferred Stockholder Approval | 5.26(a)     |
| Properties                     | 1.2(d)(iii) |
| Property Costs                 | 1.2(dd)     |
| Property Taxes                 | 1.2(ee)     |
| Proxy Statement                | 1.2(ff)     |
| Purchase Consideration         | 2.2         |
| Purchase Price                 | 2.2         |
| PXP                            | Preamble    |
| PXP Employee Liabilities       | 1.2(gg)     |
| PXP Gulf                       | Preamble    |
| PXP Material Adverse Effect    | 1.2(hh)     |
| PXP Offshore                   | Preamble    |
| PXP Production                 | 1.9(c)      |
| PXP Properties                 | 1.2(ii)     |
| PXP’s Credit Agreement   | 4.7(b)      |
| Records                        | 1.2(d)(xii) |
| Registration Rights Agreement  | 1.2(jj)     |
| Release                        | 1.2(kk)     |
| Required Financing Approval    | 5.26(b)     |
| Required McMoRan Approvals     | 5.26(b)     |
| Sarbanes-Oxley Act             | 1.2(ll)     |
| SEC                            | 1. 2(mm)    |
| Securities Act                 | 1.2(nn)     |
| Separation                     | 1.2(oo)     |
| Security Issuance              | 5.3         |
| Stockholder Approval           | 5.26(a)     |
| Stockholder Agreement          | 1.2(pp)     |
| Subsidiary                     | 1.2(qq)     |
| Superior Proposal              | 6.3(f)      |
| Support Agreement              | Recitals    |
| Surviving Entities             | 1.4(b)      |
| Tax; Taxes                     | 1.2(rr)     |
| Tax Adjustment                 | 6.10(a)     |
| Tax Allocation                 | 6.10(c)     |
| Tax Benefit                    | 10.3(k)     |
| Tax Return                     | 1.2(ss)     |
| Title Arbitrator               | 3.4(k)      |

----

| Title Benefit         | 3.2(c)      |
|-----------------------|-------------|
| Title Benefit Amount  | 3.4(f)      |
| Title Claim Date      | 3.4(a)      |
| Title Defect          | 3.2(c)      |
| Title Defect Amount   | 3.4(d)      |
| Transaction Documents | 1.2(tt)     |
| Units                 | 1.2(d)(iii) |
| Wells                 | 1.2(d)(ii)  |

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| (1)   | defects based solely on (i) lack of information in PXP’s files, or (ii) references to an unrecorded document(s) if such document(s) is not in PXP’s files; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | defects arising out of lack of corporate or other entity authorization, unless McMoRan provides affirmative evidence that the action was not authorized and results in a third-party’s actual and superior claim of title to the relevant Property; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | defects based on failure to record Leases issued by any Governmental Authority, or any assignments of record title or operating rights in such Leases, in the real property, conveyance or other records of the county or parish in which such Property is located; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | defects based on a gap in PXP’s chain of title in the county or parish records as to fee Leases, unless such gap is affirmatively |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------|

----

| (5)   | defects based on lack of assignments of McMoRan Operated Properties and McMoRan Non-Operated Properties to PXP or where McMoRan holds title for the benefit of PXP or the failure of McMoRan or its Affiliates (for any reason) to provide assignments of record title or operating rights in such Properties, or other appropriate transfer documentation relating to such Properties, to PXP; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6)   | defects that have been cured by applicable Laws of limitations or prescription; and |
|-----------------|-------------------------------------------------------------------------------------|

| (7)   | defects (i) on any Property in which McMoRan (or an Affiliate of McMoRan) also owns an interest and which defect burdens McMoRan’s (or such Affiliate’s) interest in the Property to the same extent or (ii) arising out of any action taken by PXP in conjunction with McMoRan (or an Affiliate of McMoRan) or at the direction or request of McMoRan (or an Affiliate of McMoRan). |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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