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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 September 30, 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 o (Do not check if a smaller | Smaller reporting company o |
| reporting company)                                 |                        |

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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 (Unaudited)                         | 6 |
|                                                                           |   |
|   Report of Independent Registered Public Accounting Firm            | 23 |
|                                                                           |   |
| Item 2.  Management's Discussion and Analysis                        |   |
| of Financial Condition and Results of Operations                               | 24 |
|                                                                           |   |
| Item 3.  Quantitative and Qualitative Disclosures about Market Risks | 37 |
|                                                                           |   |
| Item 4.  Controls and Procedures                                     | 37 |
|                                                                           |   |
| Part II.  Other Information                                          | 37 |
|                                                                           |   |
| Item 1.  Legal Proceedings                                           | 37 |
|                                                                           |   |
| Item 1A.  Risk Factors                                               | 37 |
|                                                                           |   |
| Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds | 38 |
|                                                                           |   |
| Item 6.  Exhibits                                                    | 38 |
|                                                                           |   |
| Signature                                                                      | 39 |
|                                                                           |   |
| Exhibit Index                                                                  | E-1 |

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TABLE OF CONTENTS

Part I.  FINANCIAL INFORMATION

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

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

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

|                                                                   |   | September 30,  |      | December 31, |   |
|------------------------------------------------------------------------|--------|----------------|-----------|--------------|--------|
|                                                                   |   | 2010           |      | 2009         |   |
|                                                                   |   | (In Thousands) |      |
| ASSETS                                                                 |   |           |      |         |   |   |   |
| Cash and cash equivalents                                              |   | $              | 180,193   |         | $      | 241,418 |   |
| Accounts receivable                                                    |   |           | 72,707    |         |   | 79,681 |   |
| Inventories                                                            |   |           | 39,277    |         |   | 47,818 |   |
| Prepaid expenses                                                       |   |           | 23,931    |         |   | 14,457 |   |
| Fair value of oil and gas derivative contracts                         |   |           | 3,114     |         |   | 8,693 |   |
| Current assets from discontinued operations, including restricted cash |   |           |      |         |   |   |   |
| of $470                                                                |   |           | 965       |         |   | 825 |   |
| Total current assets                                                   |   |           | 320,187   |         |   | 392,892 |   |
| Property, plant and equipment, net                                     |   |           | 749,391   |         |   | 796,223 |   |
| Restricted cash                                                        |   |           | 52,718    |         |   | 41,677 |   |
| Deferred financing costs and other assets                              |   |           | 12,946    |         |   | 11,931 |   |
| Long-term assets from discontinued operations                          |   |           | 2,989     |         |   | 6,159 |   |
| Total assets                                                           |   | $              | 1,138,231 |         | $      | 1,248,882 |   |
|                                                                   |   |           |      |         |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                             |   |           |      |         |   |   |   |
| Accounts payable                                                       |   | $              | 82,275    |         | $      | 66,544 |   |
| Accrued liabilities                                                    |   |           | 91,812    |         |   | 51,945 |   |
| Accrued interest and dividends payable                                 |   |           | 17,773    |         |   | 8,535 |   |
| Current portion of accrued oil and gas reclamation costs               |   |           | 146,661   |         |   | 106,791 |   |
| Fair value of oil and gas derivative contracts                         |   |           | 198       |         |   | 1,237 |   |
| Current portion of accrued sulphur reclamation costs (discontinued     |   |           |      |         |   |   |   |
| operations)                                                            |   |           | 11,300    |         |   | 8,300 |   |
| Current liabilities from discontinued operations                       |   |           | 2,172     |         |   | 1,183 |   |
| Total current liabilities                                              |   |           | 352,191   |         |   | 244,535 |   |
| 5¼% convertible senior notes                                      |   |           | 74,720    |         |   | 74,720 |   |
| 11.875% senior notes                                                   |   |           | 300,000   |         |   | 300,000 |   |
| Accrued oil and gas reclamation costs                                  |   |           | 203,809   |         |   | 321,920 |   |
| Other long-term liabilities                                            |   |           | 17,031    |         |   | 16,602 |   |
| Accrued sulphur reclamation costs (discontinued operations)            |   |           | 15,832    |         |   | 19,152 |   |
| Other long-term liabilities from discontinued operations               |   |           | 6,149     |         |   | 6,145 |   |
| Total liabilities                                                      |   |           | 969,732   |         |   | 983,074 |   |
| Stockholders' equity                                                   |   |           | 168,499   |         |   | 265,808 |   |
| Total liabilities and stockholders' equity                             |   | $              | 1,138,231 |         | $      | 1,248,882 |   |
|                                                                   |   |           |      |         |   |   |   |

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TABLE OF CONTENTS
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

|                                                  | Three Months Ended                       |    | Nine Months Ended |   |
|-------------------------------------------------------|------------------------------------------|---------|-------------------|--------|
|                                                  | September 30,                            |    | September 30,     |   |
|                                                  | 2010                                     |    | 2009              |   | 2010 |   | 2009 |   |
|                                                  | (In Thousands, Except Per Share Amounts) |    |
| Revenues:                                             |                                     |    |              |   |   |   |   |   |   |   |   |   |
| Oil and natural gas                                   | $                                        | 90,778  |              | $      | 105,822 |   | $ | 323,727 |   | $ | 294,969 |   |
| Service                                               |                                     | 4,062   |              |   | 3,713 |   |   | 11,642 |   |   | 8,494 |   |
| Total revenues                                        |                                     | 94,840  |              |   | 109,535 |   |   | 335,369 |   |   | 303,463 |   |
| Costs and expenses:                                   |                                     |    |              |   |   |   |   |   |   |   |   |   |
| Production and delivery costs                         |                                     | 47,071  |              |   | 49,087 |   |   | 136,295 |   |   | 146,933 |   |
| Depletion, depreciation and amortization expense      |                                     | 48,588  |              |   | 75,980 |   |   | 214,720 |   |   | 243,347 |   |
| Exploration expenses                                  |                                     | 5,256   |              |   | 10,802 |   |   | 28,099 |   |   | 86,064 |   |
| Gain on oil and gas derivative contracts              |                                     | (942    | )                 |   | (738 | ) |   | (4,210 | ) |   | (16,624 | ) |
| General and administrative expenses                   |                                     | 11,148  |              |   | 9,621 |   |   | 35,267 |   |   | 32,983 |   |
| Main Pass Energy Hub™ costs                     |                                     | 230     |              |   | 297 |   |   | 805 |   |   | 1,413 |   |
| Insurance recoveries                                  |                                     | (5,584  | )                 |   | - |   |   | (14,755 | ) |   | (18,742 | ) |
| Gain on sale of oil and gas property                  |                                     | -       |              |   | - |   |   | (3,455 | ) |   | - |   |
| Total costs and expenses                              |                                     | 105,767 |              |   | 145,049 |   |   | 392,766 |   |   | 475,374 |   |
| Operating loss                                        |                                     | (10,927 | )                 |   | (35,514 | ) |   | (57,397 | ) |   | (171,911 | ) |
| Interest expense, net                                 |                                     | (8,690  | )                 |   | (10,930 | ) |   | (29,096 | ) |   | (31,871 | ) |
| Other income, net                                     |                                     | 72      |              |   | 298 |   |   | 177 |   |   | 3,470 |   |
| Loss from continuing operations before income taxes   |                                     | (19,545 | )                 |   | (46,146 | ) |   | (86,316 | ) |   | (200,312 | ) |
| Income tax benefit                                    |                                     | -       |              |   | 177 |   |   | - |   |   | 144 |   |
| Loss from continuing operations                       |                                     | (19,545 | )                 |   | (45,969 | ) |   | (86,316 | ) |   | (200,168 | ) |
| Loss from discontinued operations                     |                                     | (1,184  | )                 |   | (1,575 | ) |   | (4,260 | ) |   | (5,692 | ) |
| Net loss                                              |                                     | (20,729 | )                 |   | (47,544 | ) |   | (90,576 | ) |   | (205,860 | ) |
| Preferred dividends and inducement payments for early |                                     |    |              |   |   |   |   |   |   |   |   |   |
| conversion of convertible preferred stock             |                                     | (4,524  | )                 |   | (4,388 | ) |   | (22,583 | ) |   | (9,925 | ) |
| Net loss applicable to common stock                   | $                                        | (25,253 | )                 | $      | (51,932 | ) | $ | (113,159 | ) | $ | (215,785 | ) |
|                                                  |                                     |    |              |   |   |   |   |   |   |   |   |   |
| Basic and diluted net loss per share of common        |                                     |    |              |   |   |   |   |   |   |   |   |   |
| stock:                                                |                                     |    |              |   |   |   |   |   |   |   |   |   |
| Continuing operations                                 |                                     | $(0.25  | )                 |   | $(0.58 | ) |   | $(1.17 | ) |   | $(2.76 | ) |
| Discontinued operations                               |                                     | (0.01   | )                 |   | (0.02 | ) |   | (0.05 | ) |   | (0.07 | ) |
| Net loss per share of common stock                    |                                     | $(0.26  | )                 |   | $(0.60 | ) |   | $(1.22 | ) |   | $(2.83 | ) |
|                                                  |                                     |    |              |   |   |   |   |   |   |   |   |   |
| Average common shares outstanding:                    |                                     |    |              |   |   |   |   |   |   |   |   |   |
| Basic and diluted                                     |                                     | 95,469  |              |   | 86,038 |   |   | 92,789 |   |   | 76,152 |   |

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CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)

|                                                          |   | Nine Months Ended |     |
|---------------------------------------------------------------|--------|-------------------|----------|
|                                                          |   | September 30,     |     |
|                                                          |   | 2010              |     | 2009 |   |
|                                                          |   | (In Thousands)    |     |
| Cash flow from operating activities:                          |   |              |     |   |   |   |   |
| Net loss                                                      |   | $                 | (90,576  | ) | $ | (205,860 | ) |
| Adjustments to reconcile net loss to net cash provided by     |   |              |     |   |   |   |   |
| operating activities:                                         |   |              |     |   |   |   |   |
| Loss from discontinued operations                             |   |              | 4,260    |   |   | 5,692 |   |
| Depletion, depreciation and amortization expense              |   |              | 214,720  |   |   | 243,347 |   |
| Exploration drilling and related expenditures                 |   |              | 7,522    |   |   | 61,707 |   |
| Compensation expense associated with stock-based awards       |   |              | 15,701   |   |   | 11,966 |   |
| Amortization of deferred financing costs                      |   |              | 2,796    |   |   | 2,793 |   |
| Change in fair value of oil and gas derivative contracts      |   |              | 4,065    |   |   | 23,586 |   |
| Reclamation expenditures, net of prepayments by third parties |   |              | (70,786  | ) |   | (39,625 | ) |
| Increase in restricted cash                                   |   |              | (11,041  | ) |   | (11,293 | ) |
| Gain on sale of oil and gas property                          |   |              | (3,455   | ) |   | - |   |
| Other                                                         |   |              | 295      |   |   | (316 | ) |
| (Increase) decrease in working capital:                       |   |              |     |   |   |   |   |
| Accounts receivable                                           |   |              | 16,340   |   |   | 32,914 |   |
| Accounts payable and accrued liabilities                      |   |              | 30,929   |   |   | (14,219 | ) |
| Prepaid expenses and inventories                              |   |              | (459     | ) |   | (20,861 | ) |
| Net cash provided by continuing operations                    |   |              | 120,311  |   |   | 89,831 |   |
| Net cash used in discontinued operations                      |   |              | (606     | ) |   | (4,373 | ) |
| Net cash provided by operating activities                     |   |              | 119,705  |   |   | 85,458 |   |
|                                                          |   |              |     |   |   |   |   |
| Cash flow from investing activities:                          |   |              |     |   |   |   |   |
| Exploration, development and other capital expenditures       |   |              | (160,259 | ) |   | (113,375 | ) |
| Proceeds from sale of oil and gas property                    |   |              | 2,920    |   |   | - |   |
| Net cash used in continuing operations                        |   |              | (157,339 | ) |   | (113,375 | ) |
| Net cash from discontinued operations                         |   |              | -        |   |   | - |   |
| Net cash used in investing activities                         |   |              | (157,339 | ) |   | (113,375 | ) |
|                                                          |   |              |     |   |   |   |   |
| Cash flow from financing activities:                          |   |              |     |   |   |   |   |
| Dividends paid and inducement payments on early conversion of |   |              |     |   |   |   |   |
| convertible preferred stock                                   |   |              | (23,136  | ) |   | (9,062 | ) |
| Proceeds from exercise of stock options                       |   |              | 197      |   |   | - |   |
| Other                                                         |   |              | (652     | ) |   | - |   |
| Net proceeds from the sale of common stock                    |   |              | -        |   |   | 84,929 |   |
| Net proceeds from the sale of 8% convertible perpetual        |   |              |     |   |   |   |   |
| preferred stock                                               |   |              | -        |   |   | 83,228 |   |
| Net cash (used in) provided by continuing operations          |   |              | (23,591  | ) |   | 159,095 |   |
| Net cash from discontinued operations                         |   |              | -        |   |   | - |   |
| Net cash (used in) provided by financing activities           |   |              | (23,591  | ) |   | 159,095 |   |
| Net (decrease) increase in cash and cash equivalents          |   |              | (61,225  | ) |   | 131,178 |   |
| Cash and cash equivalents at beginning of year                |   |              | 241,418  |   |   | 93,486 |   |
| Cash and cash equivalents at end of period                    |   | $                 | 180,193  |   | $ | 224,664 |   |

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

|                                               | September 30, |    | December 31, |   |
|----------------------------------------------------|---------------|---------|--------------|--------|
|                                               | 2010          |    | 2009         |   |
| Senior secured revolving credit facility           | $             | -       |         | $      | - |   |
| 11.875% senior notes due November 2014             |          | 300,000 |         |   | 300,000 |   |
| 5¼% convertible senior notes due October 2011 |          | 74,720  |         |   | 74,720 |   |
| Total debt                                         |          | 374,720 |         |   | 374,720 |   |
| Less current maturities                            |          | -       |         |   | - |   |
| Long-term debt                                     | $             | 374,720 |         | $      | 374,720 |   |

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|                              | September 30, |    | December 31, |   |
|-----------------------------------|---------------|---------|--------------|--------|
|                              | 2010          |    | 2009         |   |
| 5¼% convertible senior notes | $             | 85,827  |         | $      | 70,302 |   |
| 11.875% senior notes              |          | 330,000 |         |   | 307,125 |   |

|                             |   | Third Quarter |   |   | Nine Months |   |
|----------------------------------|--------|---------------|--------|--------|-------------|--------|
|                             |   | 2010          |   |   | 2009        |   |   | 2010 |   |   | 2009 |   |
| Stock options a                  |   |          | 1,337  |   |        |   | - |   |   |   | 1,262 |   |   |   | - |   |
| Shares issuable upon assumed     |   |          |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
| conversion of:                   |   |          |   |   |        |   |   |   |   |   |   |   |   |   |   |   |
| 6¾% preferred stock b       |   |          | 10,681 |   |        |   | 12,817 |   |   |   | 10,681 |   |   |   | 12,817 |   |
|   8% preferred stock b |   |          | 3,247  |   |        |   | 12,605 |   |   |   | 4,800 |   |   |   | 4,617 |   |
| 5¼% notes c                 |   |          | 4,508  |   |        |   | 4,508 |   |   |   | 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 amount represents stock options with an exercise price less than the average market price for McMoRan’s common stock for the periods presented. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | McMoRan induced conversion of approximately 7,000 shares and 64,200 shares of its 8% preferred stock in the third quarter and nine months ended September 30, 2010, respectively (Note 7). Preferred dividends and inducement payments for the early conversion of shares of McMoRan’s convertible preferred stock totaled $4.5 million and $4.4 million for the quarters ended September 30, 2010 and 2009, respectively, and $22.6 million and $9.9 million for the nine months ended September 30, 2010 and 2009, respectively.  See Note 8 of the 2009 Form 10-K for additional information regarding McMoRan’s 8% and 6¾% preferred stock. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | Net interest expense on the 5¼% notes totaled $0.8 million and $1.0 million during the third quarters of 2010 and 2009, respectively, and $2.7 million and $3.0 million for the nine months ended September 30, 2010 and 2009, respectively. Additional information regarding McMoRan’s 5¼% notes is disclosed in Note 6 of the 2009 Form 10-K. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                               |   | Third Quarter |   |   | Nine Months |   |
|------------------------------------|--------|---------------|--------|--------|-------------|--------|
|                               |   | 2010          |   |   | 2009        |   |   | 2010 |   |   | 2009 |   |
| Outstanding options (in thousands) |   |          | 7,814  |   |        |   | 8,457 |   |   |   | 7,821 |   |   |   | 8,457 |   |
| Average exercise price             |   | $             | 16.52  |   |        | $      | 15.36 |   |   | $ | 16.52 |   |   | $ | 15.36 |   |

|                                  | Open Swap Positions a |   | Put Options b |   |
|---------------------------------------|-----------------------|--------|---------------|--------|
|                                  |                  |   | Average       |   |   |   | Average |   |
|                                  | Volumes               |   | Swap Price    |   | Volumes |   | Floor Price |   |
|                                  |                  |   |          |   |   |   |   |   |   |   |
| Natural gas positions (million MMbtu) | 0.5                   |   | $             | 8.61   | c | 0.3 |   | $ | 6.00 | c |
|                                  |                  |   |          |   |   |   |   |   |   |   |
| Oil positions (thousand bbls)         | 18                    |   | $             | 70.64  | d | 12 |   | $ | 50.00 | d |

| a.   | Covering the November-December 2010 period. |
|----------------|---------------------------------------------|

| b.   | Covering the October 2010 period. |
|----------------|-----------------------------------|

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

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

|                                     | Third Quarter |   | Nine Months |   |
|------------------------------------------|---------------|--------|-------------|--------|
|                                     | 2010          |   | 2009        |   | 2010 |   | 2009 |   |
| Realized (gain) loss                     |          |   |        |   |   |   |   |   |   |   |   |   |
| Gas puts                                 | $             | (989   | )           | $      | (5,521 | ) | $ | (989 | ) | $ | (5,521 | ) |
| Oil puts                                 |          | 92     |        |   | 183 |   |   | 92 |   |   | 183 |   |
| Gas swaps                                |          | -      |        |   | - |   |   | (8,134 | ) |   | (28,887 | ) |
| Oil swaps                                |          | -      |        |   | - |   |   | 756 |   |   | (5,985 | ) |
| Total realized gain                      |          | (897   | )           |   | (5,338 | ) |   | (8,275 | ) |   | (40,210 | ) |
|                                     |          |   |        |   |   |   |   |   |   |   |   |   |
| Unrealized (gain) loss                   |          |   |        |   |   |   |   |   |   |   |   |   |
| Gas puts                                 |          | 583    |        |   | 4,568 |   |   | 117 |   |   | 101 |   |
| Oil puts                                 |          | (89    | )           |   | (157 | ) |   | (47 | ) |   | 893 |   |
| Gas swaps                                |          | (609   | )           |   | 405 |   |   | 5,033 |   |   | 14,979 |   |
| Oil swaps                                |          | 70     |        |   | (216 | ) |   | (1,038 | ) |   | 7,613 |   |
| Total unrealized (gain) loss             |          | (45    | )           |   | 4,600 |   |   | 4,065 |   |   | 23,586 |   |
| Gain on oil and gas derivative contracts | $             | (942   | )           | $      | (738 | ) | $ | (4,210 | ) | $ | (16,624 | ) |

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|                    | September 30, 2010 |   |
|-------------------------|--------------------|--------|
|                    | Puts               |   | Swaps |   |   |   |   |
|                    | Gas                |   | Oil |   | Gas |   | Oil |   | Total |   |
| Current assets          | $                  | 614    |   | $ | - |   | $ | 2,500 |   | $ | - |   | $ | 3,114 |   |
| Current liabilities     |               | -      |   |   | - |   |   | - |   |   | (198 | ) |   | (198 | ) |
| Fair value of contracts | $                  | 614    |   | $ | - |   | $ | 2,500 |   | $ | (198 | ) | $ | 2,916 |   |

|                    | 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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|                                               | Oil and     |    |    |   |
|----------------------------------------------------|-------------|---------|---------|--------|
|                                               | Natural Gas |    | Sulphur |   |
| Asset retirement obligation at beginning of year   | $           | 428,711 |    | $      | 27,452 |   |
| Liabilities settled                                |        | (96,032 | )       |   | (1,381 | ) |
| Accretion expense                                  |        | 12,826  |    |   | 1,061 |   |
| Reclamation costs assumed from third parties       |        | 2,613   |    |   | - |   |
| Incurred liabilities                               |        | -       |    |   | - |   |
| Revision for changes in estimates and other        |        | 2,352   |    |   | - |   |
| Asset retirement obligations at September 30, 2010 | $           | 350,470 |    | $      | 27,132 |   |

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|                             | Preferred stock |    | Common stock |   | Capital  in excess of par value |   | Accumulated deficit |      | Accumulated other comprehensive loss |   | Common stock held in treasury |   | Total Stockholders’ Equity |   |
|----------------------------------|-----------------|---------|--------------|--------|-------------------------------------------|--------|---------------------|-----------|-------------------------------------------|--------|-------------------------------|--------|----------------------------------|--------|
| Balance as of January 1, 2010    | $               | 245,184 |         | $      | 885                                       |   | $                   | 1,053,684 |                                      | $      | (987,139                      | )      | $                                | (346   | ) | $ | (46,460 | ) | $ | 265,808 |   |
| Stock-based compensation         |            |    |         |   |                                      |   |                |      |                                      |   |                          |   |                             |   |   |   |   |   |   |   |   |
|    expense        |            | -       |         |   | -                                         |   |                | 15,701    |                                      |   | -                             |   |                             | -      |   |   | - |   |   | 15,701 |   |
| Preferred stock dividends and    |            |    |         |   |                                      |   |                |      |                                      |   |                          |   |                             |   |   |   |   |   |   |   |   |
| related costs                    |            | -       |         |   | -                                         |   |                | (22,583   | )                                         |   | -                             |   |                             | -      |   |   | - |   |   | (22,583 | ) |
| Preferred stock conversions      |            | (64,187 | )            |   | 94                                        |   |                | 64,093    |                                      |   |                          |   |                             | -      |   |   |   |   |   | - |   |
| Stock option exercises           |            | -       |         |   | -                                         |   |                | 197       |                                      |   | -                             |   |                             | -      |   |   | - |   |   | 197 |   |
| Net loss                         |            | -       |         |   | -                                         |   |                | -         |                                      |   | (90,576                       | )      |                             | -      |   |   | - |   |   | (90,576 | ) |
| Stock tendered for taxes         |            | -       |         |   | -                                         |   |                | -         |                                      |   | -                             |   |                             | -      |   |   | (21 | ) |   | (21 | ) |
| Other comprehensive loss         |            | -       |         |   | -                                         |   |                | -         |                                      |   | -                             |   |                             | (27    | ) |   | - |   |   | (27 | ) |
| Balance as of September 30, 2010 | $               | 180,997 |         | $      | 979                                       |   | $                   | 1,111,092 |                                      | $      | (1,077,715                    | )      | $                                | (373   | ) | $ | (46,481 | ) | $ | 168,499 |   |

|                                | Third Quarter |   | Nine Months |   |
|-------------------------------------|---------------|--------|-------------|--------|
|                                | 2010          |   | 2009        |   | 2010 |   | 2009 |   |
| Service cost                        | $             | 17     |        | $      | 13 |   | $ | 50 |   | $ | 38 |   |
| Interest cost                       |          | 60     |        |   | 72 |   |   | 180 |   |   | 215 |   |
| Return on plan assets               |          | -      |        |   | - |   |   | - |   |   | - |   |
| Amortization of prior service costs |          |   |        |   |   |   |   |   |   |   |   |   |
| and actuarial gains                 |          | (9     | )           |   | (10 | ) |   | (27 | ) |   | (30 | ) |
| Net periodic benefit expense        | $             | 68     |        | $      | 75 |   | $ | 203 |   | $ | 223 |   |

|                                            | Third Quarter |   |   | Nine Months |   |
|-------------------------------------------------|---------------|--------|--------|-------------|--------|
|                                            | 2010          |   | 2009   |        |   | 2010 |   | 2009 |   |
| Cost of options awarded to employees (including |          |   |   |        |   |   |   |   |   |   |   |   |   |
| directors)                                      | $             | 2,757  |   | $           | 2,553  |   |   | $ | 14,704 |   | $ | 11,168 |   |
| Cost of options awarded to non-employees        |          | 180    |   |        | 143    |   |   |   | 690 |   |   | 543 |   |
| Cost of restricted stock units                  |          | 107    |   |        | 90     |   |   |   | 307 |   |   | 255 |   |
| Total compensation cost                         | $             | 3,044  |   | $           | 2,786  |   |   | $ | 15,701 |   | $ | 11,966 |   |

----

TABLE OF CONTENTS

|                                            | Third Quarter |    |   | Nine Months |    |
|-------------------------------------------------|---------------|---------|--------|-------------|---------|
|                                            | 2010          |    | 2009   |        |    | 2010 |   | 2009 |   |
| Net loss                                        | $             | (25,253 | )      | $           | (51,932 | ) |   | $ | (113,159 | ) | $ | (215,785 | ) |
| Other comprehensive loss:                       |          |    |   |        |    |   |   |   |   |   |   |   |   |
| Amortization of previously unrecognized pension |          |    |   |        |    |   |   |   |   |   |   |   |   |
| components, net                                 |          | (9      | )      |        | (10     | ) |   |   | (27 | ) |   | (30 | ) |
| Comprehensive loss                              | $             | (25,262 | )      | $           | (51,942 | ) |   | $ | (113,186 | ) | $ | (215,815 | ) |

----

TABLE OF CONTENTS

|                                             |   |           |    |   |   | Freeport  |   |         |    | Consolidated |   |
|--------------------------------------------------|--------|----------------|---------|--------|--------|-----------|--------|--------------|---------|--------------|--------|
|                                             |   | Parent         |    | MOXY   |   | Energy    |   | Eliminations |    | McMoRan      |   |
|                                             |   | (In Thousands) |    |
| ASSETS                                           |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Current assets:                                  |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Cash and cash equivalents                        |   | $              | 1,045   |   | $      | 178,978   |   | $            | 170     |         | $      | - |   | $ | 180,193 |   |
| Accounts receivable                              |   |           | 3       |   |   | 72,704    |   |         | -       |         |   | - |   |   | 72,707 |   |
| Inventories                                      |   |           | -       |   |   | 39,277    |   |         | -       |         |   | - |   |   | 39,277 |   |
| Prepaid expenses                                 |   |           | 2,461   |   |   | 21,470    |   |         | -       |         |   | - |   |   | 23,931 |   |
| Fair value of derivative contracts               |   |           | -       |   |   | 3,114     |   |         | -       |         |   | - |   |   | 3,114 |   |
| Current assets from discontinued                 |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| operations                                       |   |           | -       |   |   | -         |   |         | 965     |         |   | - |   |   | 965 |   |
| Total current assets                             |   |           | 3,509   |   |   | 315,543   |   |         | 1,135   |         |   | - |   |   | 320,187 |   |
| Property, plant and equipment, net               |   |           | -       |   |   | 749,360   |   |         | 31      |         |   | - |   |   | 749,391 |   |
| Investment in subsidiaries                       |   |           | 656,910 |   |   | -         |   |         | -       |         |   | (656,910 | ) |   | - |   |
| Amounts due from affiliates                      |   |           | -       |   |   | 99,309    |   |         | -       |         |   | (99,309 | ) |   | - |   |
| Deferred financing costs and other assets        |   |           | 8,994   |   |   | 56,670    |   |         | -       |         |   | - |   |   | 65,664 |   |
| Discontinued sulphur assets                      |   |           | -       |   |   | -         |   |         | 2,989   |         |   | - |   |   | 2,989 |   |
| Total assets                                     |   | $              | 669,413 |   | $      | 1,220,882 |   | $            | 4,155   |         | $      | (756,219 | ) | $ | 1,138,231 |   |
|                                             |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY       |   |           |    |   |   |      |   |         |    |         |
| Currentliabilities:                              |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Accounts payable                                 |   | $              | 251     |   | $      | 81,504    |   | $            | 520     |         | $      | - |   | $ | 82,275 |   |
| Accrued liabilities                              |   |           | 5,305   |   |   | 86,935    |   |         | (428    | )            |   | - |   |   | 91,812 |   |
| Current portion of oil and gas                   |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| accrued reclamation costs                        |   |           | -       |   |   | 146,661   |   |         | -       |         |   | - |   |   | 146,661 |   |
| Other current liabilities                        |   |           | 16,942  |   |   | 1,029     |   |         | -       |         |   | - |   |   | 17,971 |   |
| Current liabilities from discontinued            |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| operations                                       |   |           | -       |   |   | -         |   |         | 13,472  |         |   | - |   |   | 13,472 |   |
| Total current liabilities                        |   |           | 22,498  |   |   | 316,129   |   |         | 13,564  |         |   | - |   |   | 352,191 |   |
| Long-term debt                                   |   |           | 374,720 |   |   | -         |   |         | -       |         |   | - |   |   | 374,720 |   |
| Amounts due to affiliates                        |   |           | 97,150  |   |   | -         |   |         | 2,159   |         |   | (99,309 | ) |   | - |   |
| Accrued oil and gas reclamation costs            |   |           | -       |   |   | 203,809   |   |         | -       |         |   | - |   |   | 203,809 |   |
| Other long-term liabilities                      |   |           | 6,546   |   |   | 8,870     |   |         | 1,615   |         |   | - |   |   | 17,031 |   |
| Long-term liabilities from discontinued          |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
|   operations                           |   |           | -       |   |   | -         |   |         | 21,981  |         |   | - |   |   | 21,981 |   |
| Total liabilities                                |   |           | 500,914 |   |   | 528,808   |   |         | 39,319  |         |   | (99,309 | ) |   | 969,732 |   |
| Commitments and contingencies                    |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| Stockholders’ equity (deficit)             |   |           | 168,499 |   |   | 692,074   |   |         | (35,164 | )            |   | (656,910 | ) |   | 168,499 |   |
| Total liabilities and stockholders’ equity |   |           |    |   |   |      |   |         |    |         |   |   |   |   |   |   |
| (deficit)                                        |   | $              | 669,413 |   | $      | 1,220,882 |   | $            | 4,155   |         | $      | (756,219 | ) | $ | 1,138,231 |   |

----

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                      |   | $              | -       |   | $      | 90,778   |   | $            | -      |         | $      | - |   | $ | 90,778 |   |
| Service                                  |   |           | -       |   |   | 4,062    |   |         | -      |         |   | - |   |   | 4,062 |   |
| Total revenues                           |   |           | -       |   |   | 94,840   |   |         | -      |         |   | - |   |   | 94,840 |   |
| Costs and expenses:                      |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Production and delivery costs            |   |           | -       |   |   | 47,085   |   |         | (14    | )            |   | - |   |   | 47,071 |   |
| Depletion, depreciation and amortization |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| expense                                  |   |           | -       |   |   | 48,588   |   |         | -      |         |   | - |   |   | 48,588 |   |
| Exploration expenses                     |   |           | -       |   |   | 5,256    |   |         | -      |         |   | - |   |   | 5,256 |   |
| Gain on oil and gas derivative contracts |   |           | -       |   |   | (942     | )      |         | -      |         |   | - |   |   | (942 | ) |
| General and administrative expenses      |   |           | 2,654   |   |   | 8,494    |   |         | -      |         |   | - |   |   | 11,148 |   |
| Main Pass Energy HubTM costs             |   |           | -       |   |   | -        |   |         | 230    |         |   | - |   |   | 230 |   |
| Insurance recoveries                     |   |           | -       |   |   | (5,584   | )      |         | -      |         |   | - |   |   | (5,584 | ) |
| Gain on sale of oil and gas property     |   |           | -       |   |   | -        |   |         | -      |         |   | - |   |   | - |   |
| Total costs and expenses                 |   |           | 2,654   |   |   | 102,897  |   |         | 216    |         |   | - |   |   | 105,767 |   |
| Operating loss                           |   |           | (2,654  | )      |   | (8,057   | )      |         | (216   | )            |   | - |   |   | (10,927 | ) |
| Interest expense, net                    |   |           | (8,670  | )      |   | (20      | )      |         | -      |         |   | - |   |   | (8,690 | ) |
| Equity in losses of consolidated         |   |           |    |   |   |     |   |         |   |         |   |   |   |   | - |   |
| subsidiaries                             |   |           | (9,399  | )      |   | -        |   |         | -      |         |   | 9,399 |   |   | - |   |
| Other income (expense), net              |   |           | (6      | )      |   | 78       |   |         | -      |         |   | - |   |   | 72 |   |
| Loss from continuing operations before   |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| income taxes                             |   |           | (20,729 | )      |   | (7,999   | )      |         | (216   | )            |   | 9,399 |   |   | (19,545 | ) |
| Income tax benefit                       |   |           | -       |   |   | -        |   |         | -      |         |   | - |   |   | - |   |
| Loss from continuing operations          |   |           | (20,729 | )      |   | (7,999   | )      |         | (216   | )            |   | 9,399 |   |   | (19,545 | ) |
| Loss from discontinued operations        |   |           | -       |   |   | -        |   |         | (1,184 | )            |   | - |   |   | (1,184 | ) |
| Net loss                                 |   |           | (20,729 | )      |   | (7,999   | )      |         | (1,400 | )            |   | 9,399 |   |   | (20,729 | ) |
| Preferred dividends and other related    |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| preferred stock costs                    |   |           | (4,524  | )      |   | -        |   |         | -      |         |   | - |   |   | (4,524 | ) |
| Net loss applicable to common stock      |   | $              | (25,253 | )      | $      | (7,999   | )      | $            | (1,400 | )            | $      | 9,399 |   | $ | (25,253 | ) |
|                                     |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |

----

TABLE OF CONTENTS

|                                     |   |           |     |   |   | Freeport |   |         |   | Consolidated |   |
|------------------------------------------|--------|----------------|----------|--------|--------|----------|--------|--------------|--------|--------------|--------|
|                                     |   | Parent         |     | MOXY   |   | Energy   |   | Eliminations |   | McMoRan      |   |
|                                     |   | (In Thousands) |     |
| Revenues:                                |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Oil and natural gas                      |   | $              | -        |   | $      | 323,727  |   | $            | -      |         | $      | - |   | $ | 323,727 |   |
| Service                                  |   |           | -        |   |   | 11,642   |   |         | -      |         |   | - |   |   | 11,642 |   |
| Total revenues                           |   |           | -        |   |   | 335,369  |   |         | -      |         |   | - |   |   | 335,369 |   |
| Costs and expenses:                      |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Production and delivery costs            |   |           | -        |   |   | 136,334  |   |         | (39    | )            |   | - |   |   | 136,295 |   |
| Depletion, depreciation and amortization |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| expense                                  |   |           | -        |   |   | 214,720  |   |         | -      |         |   | - |   |   | 214,720 |   |
| Exploration expenses                     |   |           | -        |   |   | 28,099   |   |         | -      |         |   | - |   |   | 28,099 |   |
| Gain on oil and gas derivative contracts |   |           | -        |   |   | (4,210   | )      |         | -      |         |   | - |   |   | (4,210 | ) |
| General and administrative expenses      |   |           | 5,565    |   |   | 29,702   |   |         | -      |         |   | - |   |   | 35,267 |   |
| Main Pass Energy HubTM costs             |   |           | -        |   |   | -        |   |         | 805    |         |   | - |   |   | 805 |   |
| Insurance recoveries                     |   |           | -        |   |   | (14,755  | )      |         | -      |         |   | - |   |   | (14,755 | ) |
| Gain on sale of oil and gas property     |   |           | -        |   |   | (3,455   | )      |         | -      |         |   | - |   |   | (3,455 | ) |
| Total costs and expenses                 |   |           | 5,565    |   |   | 386,435  |   |         | 766    |         |   | - |   |   | 392,766 |   |
| Operating loss                           |   |           | (5,565   | )      |   | (51,066  | )      |         | (766   | )            |   | - |   |   | (57,397 | ) |
| Interest expense, net                    |   |           | (29,076  | )      |   | (20      | )      |         | -      |         |   | - |   |   | (29,096 | ) |
| Equity in losses of consolidated         |   |           |     |   |   |     |   |         |   |         |   |   |   |   | - |   |
| subsidiaries                             |   |           | (55,928  | )      |   | -        |   |         | -      |         |   | 55,928 |   |   | - |   |
| Other income (expense), net              |   |           | (7       | )      |   | 184      |   |         | -      |         |   | - |   |   | 177 |   |
| Loss from continuing operations before   |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| income taxes                             |   |           | (90,576  | )      |   | (50,902  | )      |         | (766   | )            |   | 55,928 |   |   | (86,316 | ) |
| Income tax benefit                       |   |           | -        |   |   | -        |   |         | -      |         |   | - |   |   | - |   |
| Loss from continuing operations          |   |           | (90,576  | )      |   | (50,902  | )      |         | (766   | )            |   | 55,928 |   |   | (86,316 | ) |
| Loss from discontinued operations        |   |           | -        |   |   | -        |   |         | (4,260 | )            |   | - |   |   | (4,260 | ) |
| Net loss                                 |   |           | (90,576  | )      |   | (50,902  | )      |         | (5,026 | )            |   | 55,928 |   |   | (90,576 | ) |
| Preferred dividends and other related    |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| preferred stock costs                    |   |           | (22,583  | )      |   | -        |   |         | -      |         |   | - |   |   | (22,583 | ) |
| Net loss applicable to common stock      |   | $              | (113,159 | )      | $      | (50,902  | )      | $            | (5,026 | )            | $      | 55,928 |   | $ | (113,159 | ) |
|                                     |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |

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TABLE OF CONTENTS

|                                     |   |           |    |   |   | Freeport |   |         |   | Consolidated |   |
|------------------------------------------|--------|----------------|---------|--------|--------|----------|--------|--------------|--------|--------------|--------|
|                                     |   | Parent         |    | MOXY   |   | Energy   |   | Eliminations |   | McMoRan      |   |
|                                     |   | (In Thousands) |    |
| Revenues:                                |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Oil and natural gas                      |   | $              | -       |   | $      | 105,822  |   | $            | -      |         | $      | - |   | $ | 105,822 |   |
| Service                                  |   |           | -       |   |   | 3,713    |   |         | -      |         |   | - |   |   | 3,713 |   |
| Total revenues                           |   |           | -       |   |   | 109,535  |   |         | -      |         |   | - |   |   | 109,535 |   |
| Costs and expenses:                      |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Production and delivery costs            |   |           | -       |   |   | 49,104   |   |         | (17    | )            |   | - |   |   | 49,087 |   |
| Depletion, depreciation and              |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| amortization expense                     |   |           | -       |   |   | 75,980   |   |         | -      |         |   | - |   |   | 75,980 |   |
| Exploration expenses                     |   |           | -       |   |   | 10,802   |   |         | -      |         |   | - |   |   | 10,802 |   |
| Gain on oil and gas derivative contracts |   |           | -       |   |   | (738     | )      |         | -      |         |   | - |   |   | (738 | ) |
| General and administrative expenses      |   |           | 1,189   |   |   | 8,435    |   |         | (3     | )            |   | - |   |   | 9,621 |   |
| Main Pass Energy Hub™ costs        |   |           | -       |   |   | -        |   |         | 297    |         |   | - |   |   | 297 |   |
| Insurance recoveries                     |   |           | -       |   |   | -        |   |         | -      |         |   | - |   |   | - |   |
| Total costs and expenses                 |   |           | 1,189   |   |   | 143,583  |   |         | 277    |         |   | - |   |   | 145,049 |   |
| Operating loss                           |   |           | (1,189  | )      |   | (34,048  | )      |         | (277   | )            |   | - |   |   | (35,514 | ) |
| Interest expense, net                    |   |           | (10,283 | )      |   | (647     | )      |         | -      |         |   | - |   |   | (10,930 | ) |
| Equity in losses of consolidated         |   |           |    |   |   |     |   |         |   |         |   |   |   |   | - |   |
| subsidiaries                             |   |           | (36,243 | )      |   | -        |   |         | -      |         |   | 36,243 |   |   | - |   |
| Other income (expense), net              |   |           | (6      | )      |   | 304      |   |         | -      |         |   | - |   |   | 298 |   |
| Loss from continuing operations before   |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| income taxes                             |   |           | (47,721 | )      |   | (34,391  | )      |         | (277   | )            |   | 36,243 |   |   | (46,146 | ) |
| Income tax benefit                       |   |           | 177     |   |   | -        |   |         | -      |         |   | - |   |   | 177 |   |
| Loss from continuing operations          |   |           | (47,544 | )      |   | (34,391  | )      |         | (277   | )            |   | 36,243 |   |   | (45,969 | ) |
| Loss from discontinued operations        |   |           | -       |   |   | -        |   |         | (1,575 | )            |   | - |   |   | (1,575 | ) |
| Net loss                                 |   |           | (47,544 | )      |   | (34,391  | )      |         | (1,852 | )            |   | 36,243 |   |   | (47,544 | ) |
| Preferred dividends and other related    |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |
| costs                                    |   |           | (4,388  | )      |   | -        |   |         | -      |         |   | - |   |   | (4,388 | ) |
| Net loss applicable to common stock      |   | $              | (51,932 | )      | $      | (34,391  | )      | $            | (1,852 | )            | $      | 36,243 |   | $ | (51,932 | ) |
|                                     |   |           |    |   |   |     |   |         |   |         |   |   |   |   |   |   |

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|                                     |   |           |     |   |   | Freeport |   |         |   | Consolidated |   |
|------------------------------------------|--------|----------------|----------|--------|--------|----------|--------|--------------|--------|--------------|--------|
|                                     |   | Parent         |     | MOXY   |   | Energy   |   | Eliminations |   | McMoRan      |   |
|                                     |   | (In Thousands) |     |
| Revenues:                                |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Oil and natural gas                      |   | $              | -        |   | $      | 294,969  |   | $            | -      |         | $      | - |   | $ | 294,969 |   |
| Service                                  |   |           | -        |   |   | 8,494    |   |         | -      |         |   | - |   |   | 8,494 |   |
| Total revenues                           |   |           | -        |   |   | 303,463  |   |         | -      |         |   | - |   |   | 303,463 |   |
| Costs and expenses:                      |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| Production and delivery costs            |   |           | -        |   |   | 146,977  |   |         | (44    | )            |   | - |   |   | 146,933 |   |
| Depletion, depreciation and              |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| amortization expense                     |   |           | -        |   |   | 243,347  |   |         | -      |         |   | - |   |   | 243,347 |   |
| Exploration expenses                     |   |           | -        |   |   | 86,064   |   |         | -      |         |   | - |   |   | 86,064 |   |
| Gain on oil and gas derivative contracts |   |           | -        |   |   | (16,624  | )      |         | -      |         |   | - |   |   | (16,624 | ) |
| General and administrative expenses      |   |           | 4,474    |   |   | 28,484   |   |         | 25     |         |   | - |   |   | 32,983 |   |
| Main Pass Energy Hub™ costs        |   |           | -        |   |   | -        |   |         | 1,413  |         |   | - |   |   | 1,413 |   |
| Insurance recoveries                     |   |           | -        |   |   | (18,742  | )      |         | -      |         |   | - |   |   | (18,742 | ) |
| Total costs and expenses                 |   |           | 4,474    |   |   | 469,506  |   |         | 1,394  |         |   | - |   |   | 475,374 |   |
| Operating loss                           |   |           | (4,474   | )      |   | (166,043 | )      |         | (1,394 | )            |   | - |   |   | (171,911 | ) |
| Interest expense                         |   |           | (30,851  | )      |   | (1,020   | )      |         | -      |         |   | - |   |   | (31,871 | ) |
| Equity in losses of consolidated         |   |           |     |   |   |     |   |         |   |         |   |   |   |   | - |   |
| subsidiaries                             |   |           | (170,656 | )      |   | -        |   |         | -      |         |   | 170,656 |   |   | - |   |
| Other income (expense), net              |   |           | (23      | )      |   | 3,493    |   |         | -      |         |   | - |   |   | 3,470 |   |
| Loss from continuing operations before   |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| income taxes                             |   |           | (206,004 | )      |   | (163,570 | )      |         | (1,394 | )            |   | 170,656 |   |   | (200,312 | ) |
| Income tax benefit                       |   |           | 144      |   |   | -        |   |         | -      |         |   | - |   |   | 144 |   |
| Loss from continuing operations          |   |           | (205,860 | )      |   | (163,570 | )      |         | (1,394 | )            |   | 170,656 |   |   | (200,168 | ) |
| Loss from discontinued operations        |   |           | -        |   |   | -        |   |         | (5,692 | )            |   | - |   |   | (5,692 | ) |
| Net loss                                 |   |           | (205,860 | )      |   | (163,570 | )      |         | (7,086 | )            |   | 170,656 |   |   | (205,860 | ) |
| Preferred dividends and other related    |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |
| preferred stock costs                    |   |           | (9,925   | )      |   | -        |   |         | -      |         |   | - |   |   | (9,925 | ) |
| Net loss applicable to common stock      |   | $              | (215,785 | )      | $      | (163,570 | )      | $            | (7,086 | )            | $      | 170,656 |   | $ | (215,785 | ) |
|                                     |   |           |     |   |   |     |   |         |   |         |   |   |   |   |   |   |

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TABLE OF CONTENTS

|                                      |   |           |    |   |   | Freeport |   | Consolidated |   |
|-------------------------------------------|--------|----------------|---------|--------|--------|----------|--------|--------------|--------|
|                                      |   | Parent         |    | MOXY   |   | Energy   |   | McMoRan      |   |
|                                      |   | (In Thousands) |    |
|                                      |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Cash flow from operating activities:      |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Net cash provided by (used in) continuing |   |           |    |   |   |     |   |         |   |   |   |   |   |
| operations                                |   | $              | 27,970  |   | $      | 94,917   |   | $            | (2,576 | ) | $ | 120,311 |   |
| Net cash used in discontinued operations  |   |           | -       |   |   | -        |   |         | (606   | ) |   | (606 | ) |
| Net cash provided by (used in) operating  |   |           |    |   |   |     |   |         |   |   |   |   |   |
| activities                                |   |           | 27,970  |   |   | 94,917   |   |         | (3,182 | ) |   | 119,705 |   |
|                                      |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Cash flow from investing activities:      |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Exploration, development and other        |   |           |    |   |   |     |   |         |   |   |   |   |   |
| capital expenditures                      |   |           | -       |   |   | (160,259 | )      |         | -      |   |   | (160,259 | ) |
| Gain on sale of oil and gas property      |   |           | -       |   |   | 2,920    |   |         | -      |   |   | 2,920 |   |
| Net cash used in investing activities     |   |           | -       |   |   | (157,339 | )      |         | -      |   |   | (157,339 | ) |
|                                      |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Cash flow from financing activities:      |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Dividends paid and conversion inducement  |   |           | (23,136 | )      |   | -        |   |         | -      |   |   | (23,136 | ) |
| payments on convertible preferred stock   |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Proceeds from exercise of stock options   |   |           | 197     |   |   | -        |   |         | -      |   |   | 197 |   |
| Other                                     |   |           | (652    | )      |   | -        |   |         | -      |   |   | (652 | ) |
| Investment from parent                    |   |           | (3,350  | )      |   | -        |   |         | 3,350  |   |   | - |   |
| Net cash (used in) provided by financing  |   |           |    |   |   |     |   |         |   |   |   |   |   |
|      activities  |   |           | (26,941 | )      |   | -        |   |         | 3,350  |   |   | (23,591 | ) |
|                                      |   |           |    |   |   |     |   |         |   |   |   |   |   |
| Net increase (decrease) in cash and cash  |   |           |    |   |   |     |   |         |   |   |   |   |   |
| equivalents                               |   |           | 1,029   |   |   | (62,422  | )      |         | 168    |   |   | (61,225 | ) |
| Cash and cash equivalents at beginning    |   |           |    |   |   |     |   |         |   |   |   |   |   |
| of year                                   |   |           | 16      |   |   | 241,400  |   |         | 2      |   |   | 241,418 |   |
| Cash and cash equivalents at end of year  |   | $              | 1,045   |   | $      | 178,978  |   | $            | 170    |   | $ | 180,193 |   |
|                                      |   |           |    |   |   |     |   |         |   |   |   |   |   |

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|                                          |   |           |     |   |   | Freeport |   | Consolidated |   |
|-----------------------------------------------|--------|----------------|----------|--------|--------|----------|--------|--------------|--------|
|                                          |   | Parent         |     | MOXY   |   | Energy   |   | McMoRan      |   |
|                                          |   | (In Thousands) |     |
|                                          |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Cash flow from operating activities:          |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Net cash provided by (used in) continuing     |   |           |     |   |   |     |   |         |   |   |   |   |   |
| operations                                    |   | $              | (154,182 | )      | $      | 244,568  |   | $            | (555   | ) | $ | 89,831 |   |
| Net cash used in discontinued operations      |   |           | -        |   |   | -        |   |         | (4,373 | ) |   | (4,373 | ) |
| Net cash provided by (used in) operating      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| activities                                    |   |           | (154,182 | )      |   | 244,568  |   |         | (4,928 | ) |   | 85,458 |   |
|                                          |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Cash flow from investing activities:          |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Exploration, development and other            |   |           |     |   |   |     |   |         |   |   |   |   |   |
| capital expenditures                          |   |           | -        |   |   | (113,375 | )      |         | -      |   |   | (113,375 | ) |
| Net cash used in investing activities         |   |           | -        |   |   | (113,375 | )      |         | -      |   |   | (113,375 | ) |
|                                          |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Cash flow from financing activities:          |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Dividends paid on convertible preferred stock |   |           | (9,062   | )      |   | -        |   |         | -      |   |   | (9,062 | ) |
| Proceeds from the sale of common stock        |   |           | 84,929   |   |   | -        |   |         | -      |   |   | 84,929 |   |
| Proceeds from the sale of 8% preferred stock  |   |           | 83,228   |   |   | -        |   |         | -      |   |   | 83,228 |   |
| Investment from parent                        |   |           | (4,925   | )      |   | -        |   |         | 4,925  |   |   | - |   |
| Net cash provided by financing activities     |   |           | 154,170  |   |   | -        |   |         | 4,925  |   |   | 159,095 |   |
|                                          |   |           |     |   |   |     |   |         |   |   |   |   |   |
| Net increase (decrease) in cash and cash      |   |           |     |   |   |     |   |         |   |   |   |   |   |
| equivalents                                   |   |           | (12      | )      |   | 131,193  |   |         | (3     | ) |   | 131,178 |   |
| Cash and cash equivalents at beginning        |   |           |     |   |   |     |   |         |   |   |   |   |   |
| of year                                       |   |           | 35       |   |   | 93,442   |   |         | 9      |   |   | 93,486 |   |
| Cash and cash equivalents at end of year      |   | $              | 23       |   | $      | 224,635  |   | $            | 6      |   | $ | 224,664 |   |
|                                          |   |           |     |   |   |     |   |         |   |   |   |   |   |

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

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|                              | Third Quarter |   | Nine Months |   |
|-----------------------------------|---------------|--------|-------------|--------|
|                              | 2010          |   | 2009        |   | 2010 |   | 2009 |   |
| Sales volumes:                    |          |   |        |   |   |   |   |   |
| Gas (thousand cubic feet, or Mcf) | 8,754,300     |   | 13,619,300  |   | 29,795,900 |   | 36,990,900 |   |
| Oil (barrels)                     | 534,000       |   | 761,600     |   | 1,851,900 |   | 2,262,300 |   |
| Plant products (Mcf equivalent) a | 1,484,700     |   | 1,568,300   |   | 4,681,300 |   | 3,988,100 |   |
| Average realizations b            |          |   |        |   |   |   |   |   |
| Gas (per Mcf)                     | $ 4.61        |   | $ 3.39      |   | $ 4.97 |   | $ 4.04 |   |
| Oil (per barrel)                  | 75.78         |   | 66.81       |   | 76.13 |   | 55.39 |   |

| a.   | Results include approximately $9.8 million and $34.3 million of revenues associated with plant products (ethane, propane, butane, etc.) during the third quarter and nine months ended September 30, 2010, respectively.  Plant product revenues for the comparable prior year periods totaled $8.6 million and $19.8 million.  One Mcf equivalent is determined using the ratio of six Mcf of natural gas to one barrel of crude oil, condensate or natural gas liquids. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|                                                     | Third   |    |   | Nine   |    |
|----------------------------------------------------------|---------|---------|--------|--------|---------|
|                                                     | Quarter |    |   | Months |    |
| Oil and natural gas revenues – prior year period   | $       | 105,822 |   | $      | 294,969 |   |
| Increase (decrease)                                      |    |    |   |   |    |   |
| Price realizations:                                      |    |    |   |   |    |   |
| Natural gas                                              |    | 10,680  |   |   | 27,710  |   |
| Oil and condensate                                       |    | 4,790   |   |   | 38,408  |   |
| Sales volumes:                                           |    |    |   |   |    |   |
| Natural gas                                              |    | (16,492 | )      |   | (29,068 | ) |
| Oil and condensate                                       |    | (15,206 | )      |   | (22,732 | ) |
| Plant products revenues                                  |    | 1,216   |   |   | 14,518  |   |
| Other                                                    |    | (32     | )      |   | (78     | ) |
| Oil and natural gas revenues – current year period | $       | 90,778  |   | $      | 323,727 |   |

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|                                | Third Quarter |   | Nine Months |   |
|-------------------------------------|---------------|--------|-------------|--------|
|                                |          |   | Per         |   |   |   | Per |   |   |   | Per |   |   |   | Per |   |
|                                | 2010          |   | Mcfe        |   | 2009 |   | Mcfe |   | 2010 |   | Mcfe |   | 2009 |   | Mcfe |   |
| Lease operating expense             | $25.2         |   | $1.87       |   | $31.5 |   | $1.59 |   | $78.9 |   | $1.73 |   | $87.4 |   | $1.59 |   |
| Workover costs                      | 9.6           |   | 0.71        |   | 5.5 |   | 0.27 |   | 17.3 |   | 0.38 |   | 12.5 |   | 0.23 |   |
| Hurricane related expenses          | 1.2           |   | 0.09        |   | (0.5 | ) | (0.02 | ) | 3.9 |   | 0.09 |   | 14.2 |   | 0.26 |   |
| Insurance                           | 6.5           |   | 0.48        |   | 6.5 |   | 0.33 |   | 19.7 |   | 0.43 |   | 17.8 |   | 0.33 |   |
| Transportation and production taxes | 4.8           |   | 0.36        |   | 5.8 |   | 0.29 |   | 16.5 |   | 0.36 |   | 15.1 |   | 0.28 |   |
| Other                               | (0.2          | )      | (0.01       | )      | 0.3 |   | 0.02 |   | - |   | - |   | (0.1 | ) | - |   |
| Total production and delivery costs | $47.1         |   | $3.50       |   | $49.1 |   | $2.48 |   | $136.3 |   | $2.99 |   | $146.9 |   | $2.69 |   |

|                               | Third Quarter |   | Nine Months |
|------------------------------------|---------------|--------|-------------|
|                               |          |   | Per         |   |   |   | Per |   |   |   | Per |   |   |   | Per |
|                               | 2010          |   | Mcfe        |   | 2009 |   | Mcfe |   | 2010 |   | Mcfe |   | 2009 |   | Mcfe |
| Depletion and depreciation expense | $30.7         |   | $2.28       |   | $56.4 |   | $2.86 |   | $117.1 |   | $2.57 |   | $153.6 |   | $2.82 |
| Accretion expense                  | 6.6           |   | 0.49        |   | 8.4 |   | 0.42 |   | 15.6 |   | 0.34 |   | 24.9 |   | 0.45 |
| Impairment charges/losses          | 11.3          |   | 0.84        |   | 11.2 |   | 0.57 |   | 82.0 |   | 1.80 |   | 64.8 |   | 1.19 |
| Total                              | $48.6         |   | $3.61       |   | $76.0 |   | $3.85 |   | $214.7 |   | $4.71 |   | $243.3 |   | $4.46 |

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|                                        | Third Quarter |   | Nine Months |   |
|---------------------------------------------|---------------|--------|-------------|--------|
|                                        | 2010          |   | 2009        |   | 2010 |   | 2009 |   |
| Geological and geophysical                  |          |   |        |   |   |   |   |   |   |   |   |   |
| including 3-D seismic purchases a           | $             | 4.9    |        | $      | 2.6 |   | $ | 13.9 |   | $ | 19.4 |   |
| Non-productive exploratory costs, including |          |   |        |   |   |   |   |   |   |   |   |   |
| related lease costs                         |          | 0.1    |        |   | 7.3 | b |   | 7.5 | c |   | 61.7 | d |
| Other                                       |          | 0.3    |        |   | 0.9 |   |   | 6.7 |   |   | 5.0 |   |
|                                        | $             | 5.3    |        | $      | 10.8 |   | $ | 28.1 |   | $ | 86.1 |   |

| a.   | Includes compensation costs associated with outstanding stock-based awards totaling $1.4 million in the third quarter of 2010 and $7.3 million in the nine months ended September 30, 2010 compared with $1.3 million and $5.6 million of compensation costs during comparable periods in 2009 (see “Stock-Based Compensation” below).   The nine months ended September 30, 2010 amounts includes reimbursements of seismic data from our partners totaling $1.8 million. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Includes non-productive well costs of $6.3 million related to the Sherwood well. |
|----------------|----------------------------------------------------------------------------------|

| c.   | Includes costs of the Blueberry Hill offset appraisal well incurred below 19,000 feet.  Results below 19,000 feet were determined to be non-commercial, and we commenced sidetracking efforts in April 2010 to a location southwest of the pay sands seen in 2009. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d.   | Includes non-productive well costs of $6.3 million related to the Sherwood well, $25.5 million related to the Ammazzo well, $11.0 million related to the Cordage well, $11.1 million related to the Tom Sauk well and $6.2 million related to the Gladstone East well. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                       | Third Quarter |   | Nine Months |   |
|--------------------------------------------|---------------|--------|-------------|--------|
|                                       | 2010          |   | 2009        |   | 2010 |   | 2009 |   |
| General and administrative expenses        | $             | 1,629  |        | $      | 1,432 |   | $ | 8,153 |   | $ | 5,998 |   |
| Exploration expenses                       |          | 1,363  |        |   | 1,278 |   |   | 7,282 |   |   | 5,633 |   |
| Main Pass Energy Hub™ start-up costs |          | 52     |        |   | 76 |   |   | 266 |   |   | 335 |   |
| Total stock-based compensation cost        | $             | 3,044  |        | $      | 2,786 |   | $ | 15,701 |   | $ | 11,966 |   |
|                                       |          |   |        |   |   |   |   |   |   |   |   |   |

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|                  | Nine Months Ended |   |
|-----------------------|-------------------|--------|
|                  | September 30,     |   |
|                  | 2010              |   | 2009 |   |
| Continuing operations |              |   |   |   |   |   |
| Operating             | $                 | 120.3  |   | $ | 89.8 |   |
| Investing             |              | (157.3 | ) |   | (113.4 | ) |
| Financing             |              | (23.6  | ) |   | 159.1 |   |

| Discontinued operations |   |                                        |   |   |                                        |   |
|-------------------------|--------|---------------------------------------------|--------|--------|---------------------------------------------|--------|
| Operating               |   | (0.6                                        | )      |   | (4.4                                        | )      |
| Investing               |   |        - |   |   |        - |   |
| Financing               |   |       -       |   |   |       -       |   |
|                    |   |                                        |   |   |                                        |   |
| Total cash flow         |   |                                        |   |   |                                        |   |
| Operating               |   | 119.7                                       |   |   | 85.4                                        |   |
| Investing               |   | (157.3                                      | )      |   | (113.4                                      | )      |
| Financing               |   | (23.6                                       | )      |   | 159.1                                       |   |

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Quantitative and Qualitative Disclosures about Market Risk

Controls and Procedures

PART II.  OTHER INFORMATION

 

Legal Proceedings

Risk Factors

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Unregistered Sales of Equity Securities and Use of Proceeds.

| Period               | (a)  Total Number of SharesPurchased        | (b)  Average Price Paid Per Share               | (c)  Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | (d)  Maximum Number of Shares That May Yet Be Purchased Under  the Plans or Programsa |
|----------------------|------------------------------------------------------------------------------------------|----------------------------------------------------------------|-------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------|
|                 |                                                                                     |                                                           |                                                                                            |                                                                                                      |
| July 1-31, 2010      | -                                                                                        | $          - | -                                                                                               | 300,000                                                                                                   |
| August 1-31, 2010    | -                                                                                        | -                                                              | -                                                                                               | 300,000                                                                                                   |
| September 1-30, 2010 | -                                                                                        | -                                                              | -                                                                                               | 300,000                                                                                                   |
|                 |                                                                                     |                                                           |                                                                                            |                                                                                                      |
| Total                | -                                                                                        | $         -       | -                                                                                               | 300,000                                                                                                   |

| a. | Our Board of Directors has approved an open market share purchase program for up to 2.5 million shares.  The program does not have an expiration date.  No shares were purchased during the three-month period ended September 30, 2010, and 0.3 million shares remain available for purchase. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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:  November 9, 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 |
|         2.1       | Agreement and Plan of Merger dated September 19, 2010, by and among McMoRan Exploration Co., McMoRan Oil & Gas LLC, McMoRan GOM, LLC and McMoRan Offshore LLC, and Plains Exploration & Production Company, PXP Gulf Properties LLC and PXP Offshore LLC | X         |                      |      |       |
|          3.1 | Composite Certificate of Incorporation of McMoRan                                                                                                                                                                                                                |      | 10-Q                      | 001-07791 | 05/10/2010 |
| 3.2                                                  | Amended and Restated By-Laws of McMoRan as amended effective February 1, 2010                                                                                                                                                                                    |      | 8-K                       | 001-07791 | 02/03/2010 |
| 4.1                                                  | Form of Registration Rights Agreement by and among McMoRan Exploration Co. and Plains Exploration & Production Company.                                                                                                                                 | X         |                      |      |       |
| 10.1                                                 | Stock Purchase Agreement dated September 19, 2010 by and among McMoRan Exploration Co., Freeport-McMoRan Preferred LLC and Freeport-McMoRan Copper & Gold Inc.                                                                                               | X         |                      |      |       |
| 10.2                                                 | Form of 4% Convertible Senior Notes Securities Purchase Agreement dated September 16, 2010, by investors and accepted by McMoRan Exploration Co.                                                                                                                 | X         |                      |      |       |
| 10.3                                                 | Form of 5¾% Convertible Perpetual Preferred Stock Securities Purchase Agreement dated September 16, 2010, by investors and accepted by McMoRan Exploration Co.                                                                                              | X         |                      |      |       |
| 10.4                                                 | Form of Stockholder Agreement by and among McMoRan Exploration Co. and Plains Exploration & Production Company.                                                                                                                                              | X         |                      |      |       |
| 15.1                                                 | Letter dated November 9, 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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