SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549

                     Form 10-K

       [X]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended December 31, 1996
                                       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 0-23870

                          McMoRan Oil & Gas Co.
         (Exact name of registrant as specified in its charter)
                 
                 DELAWARE                                 72-1266477
     (State or other jurisdiction of                   (I.R.S. Employer
      incorporation or organization)                 Identification No.)

           1615 Poydras Street
          New Orleans, Louisiana                            70112
 (Address of principal executive offices)                 (Zip Code)

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

      Securities registered pursuant to Section 12(b) of the  Act:

                                  None

      Securities registered pursuant to Section 12(g) of the  Act:

                              Common Stock
                    Preferred Stock Purchase Rights

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

      Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained  herein,  and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information  statements  incorporated by reference in Part III  of  this
Form 10-K or any amendment to this Form 10-K. [  ]

      The  aggregate  market   value   of   the  voting  stock  held  by
non-affiliates of the registrant was approximately  $49,350,000 on March
14, 1997.

      On  March  14, 1997, there were issued and outstanding  14,025,390
shares of the registrant's Common Stock, par value $0.01 per share.

                      DOCUMENTS INCORPORATED BY REFERENCE

      Portions of  the registrant's proxy statement to be filed with the
Securities and Exchange  Commission  in connection with the registrant's
1997 annual meeting of stockholders are  incorporated  by reference into
Part III hereof.

<PAGE>
                         McMoRan Oil & Gas Co.
                     Annual Report on Form 10-K for
                the Fiscal Year Ended December 31, 1996

                               TABLE OF CONTENTS
                                                                          Page

Part 1

Items 1. and 2. Business and Properties...................................  1
Item 3.  Legal Proceedings................................................ 12
Item 4.  Submission of Matters to a Vote of Security Holders.............. 12
         Executive Officers of the Registrant............................. 13

Part II

Item  5. Market for Registrant's Common Equity and Related Stockholder
         Matters.......................................................... 14
Item 6.  Selected Financial Data.......................................... 14
Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations............................................ 14
Item 8.  Financial Statements and Supplementary Data...................... 18
Item 9.  Changes in and disagreements with Accountants on Accounting and
         Financial Disclosure............................................. 26

Part III

Item 10.  Directors and Executive Officers of the Registrant............... 26
Item 11.  Executive Compensation........................................... 26
Item 12.  Security Ownership of Certain Beneficial Owners and Management... 26
Item 13.  Certain Relationships and Related Transactions................... 26

Part IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form
          8-K.............................................................. 26

Signatures.................................................................S-1

Exhibit Index..............................................................E-1

<PAGE>  1                                    

                                    PART I

Items 1 and 2.  Business and Properties.

                                    OVERVIEW

      McMoRan Oil & Gas  Co. (the "Company" or "MOXY") is an independent
oil  and  gas  company  engaged  in  the  exploration,  development  and
production of oil and natural  gas  offshore  in the Gulf of Mexico (the
"Gulf")  and  onshore  in  the Gulf Coast area.  The  Company  commenced
operations  in  May  1994 following  the  distribution  of  all  of  the
Company's common stock  to  the  stockholders  of  Freeport-McMoRan Inc.
("FTX") in order to carry on substantially all of the  oil  and  natural
gas  exploration  activities  previously  conducted  by  FTX for its own
account.   Prior  to distribution, FTX transferred to the Company  $35.4
million in cash, an inventory of oil and gas exploration prospects and a
significant amount  of  seismic and well log data.   The Company and its
predecessors  have conducted  exploration,  development  and  production
operations offshore  in  the Gulf and onshore in the Gulf Coast area for
more  than  25 years, which  have  provided  the  Company  an  extensive
geological  and   geophysical  database,  and  extensive  technical  and
operational expertise in this area.

      The Company's  business  strategy  is to increase its reserves and
production  through  the  exploration and development  of  oil  and  gas
properties by concentrating  its  efforts  in  the Gulf and onshore Gulf
Coast  areas  where  the  Company's  management  team   has  significant
exploration experience.  The Company evaluates substantially  all of its
exploratory prospects with 3-D seismic surveys prior to drilling.   MOXY
intends   to   continue  to  generate  prospects  and  evaluate  farm-in
opportunities by using 3-D seismic data, state of the art technology and
its geological and  geophysical  experience  and  expertise.   MOXY will
require  substantial  additional financing to continue  its  exploratory
drilling and development program.  See "Cautionary Statement," below.

      During 1995, the  Company  entered  into a $65 million exploration
and development program with affiliates of  MCN  Corporation  ("MCN"), a
natural  gas  holding  company based in Detroit, Michigan (the "MOXY/MCN
Program").  The Company  also  formed  a  joint  venture  with  Phillips
Petroleum  Company ("Phillips") to explore the East Fiddler's Lake/North
Bay Junop project  area  in  Terrebonne  Parish, Louisiana.  The Company
subsequently assigned a portion of its interest  in  the project area to
Freeport-McMoRan  Resource  Partners,  Limited  Partnership  ("FRP"),  a
publicly  traded limited partnership of which FTX  is  general  partner.
See "Oil and Gas Properties" and "Exploration and Development Programs,"
below.

                             OIL AND GAS PROPERTIES

      As of March 1, 1997, the Company owned interests in 30 oil and gas
leases in the  Gulf and onshore Louisiana covering approximately 106,000
gross acres (approximately  29,000  net  acres  to  the  Company).   The
Company's exploratory drilling has established estimated proved reserves
attributable  to  the  Company's interest in its leases of approximately
16.1  billion  cubic  feet  of  gas  and  168,000  barrels  ("Bbls")  of
condensate as of December 31, 1996 based on a reserve report prepared by
Crescent  Technology,  Inc.  ("Crescent"),  an  engineering  firm  whose
business activities principally involve services for MOXY, FRP and their
affiliated companies.

Proved Properties

      Vermilion Block 160  Field  Unit.  Gross production from the field
unit  averaged 14.9 million cubic feet  ("MMCF")  of natural gas and 687
Bbls of condensate per day during 1996.  The MOXY/MCN  Program has a 40%
working  interest  and  an approximate 28% net revenue interest  in  the
Vermilion Block 160 field  unit  which  is located offshore Louisiana in
approximately  90  feet of water.  In March  1997,  MOXY,  as  operator,
completed drilling a  development  well that encountered 262 feet of net
gas pay from eight sands.  MOXY immediately began drilling an additional
development  well.   Also,  in 1996 MOXY  completed  a  farm-in  of  the
adjacent portion of Vermilion  Block  159.  This prospect is intended to
be drilled at a location remote from the existing platform.  The current
working interest and the net revenue interest within the Vermilion Block
160  field  unit  are subject to re-determination  subsequent  to  final
development drilling.   In  Vermilion  Block 160, outside the field unit
area,  the  MOXY/MCN  Program  has  a  53.3%  working  interest  and  an
approximate 42.5% net revenue interest.  Also,  in  Vermilion Block 143,
outside the field unit area, the MOXY/MCN Program has  a  26.67% working
interest  and  an  approximate  19%  net  revenue interest. The MOXY/MCN
Program's  interest  in Vermilion Blocks 143  and  160,   including  the
portion of its interest  in  the  field  unit  resulting  from these two
blocks,  is  subject to a 30% net profits interest. The Vermilion  Block
160 field unit is comprised of portions of four leases (Vermilion Blocks
143, 144, 159, and 160) totaling 5,625 acres.  In addition, the MOXY/MCN
Program owns interests in, or exploration rights to, an additional 9,375
acres in the four  block  area,  including the farm-in of 3,125 acres on
Vermilion Block 159.

<PAGE>  2

      Vermilion Block 410 Field.   The  MOXY/MCN  Program  has  a  37.5%
working interest and 28% net revenue interest in the Vermilion Block 410
field which is located in 360 feet of water offshore Louisiana.  Ashland
Exploration, Inc., as operator, initiated production from four wells  at
one  platform  in late December 1996.  Production from four wells at the
second platform  began  in February 1997 and gross daily production from
both platforms combined currently  approximates  85  Mmcf  of  gas.  The
lease blocks cover a total of 11,015 acres.

Exploration Properties

      Grand  Isle  Block  65.   The MOXY/MCN Program has a 37.5% working
interest and 30.2% net revenue interest  in  Grand  Isle Block 65, where
Nippon  Oil  Exploration,  the operator, has drilled and  saved  the  #1
sidetrack discovery well. The  well  encountered  two  gas bearing zones
with  a  total  of  29  feet  of  net  pay.   Nippon Oil has obtained  a
suspension  of production for the initial well.   The  MOXY/MCN  Program
acquired the adjacent Grand Isle Blocks 58 and 59 in the Central Gulf of
Mexico lease  sale  in  1996.  MOXY has received a new 3-D survey over a
portion of the three blocks  which  may  result  in  future  exploratory
drilling in the second half of  1997.  The prospect is located  23 miles
offshore  Louisiana in a water depth of 135 feet and the blocks cover  a
total of 15,000 acres.

      West  Cameron  Block  616.  The MOXY/MCN Program has a 50% working
interest and 34.4% net revenue interest in West Cameron Block 616, where
MOXY, as operator, drilled the  #2  exploration  well  in  June 1996 and
discovered  190  feet  of  net gas pay in multiple sands.  The well  was
saved for future development.   A  second exploratory well, the #3 well,
is planned for mid-1997.  MOXY also  owns  an  interest  in the adjacent
West Cameron Block 617 lease where exploratory drilling is  contemplated
in  1997.   The  blocks  cover  a  total of 10,000 acres and are located
approximately 130 miles offshore Louisiana in 300 feet of water.

      West Cameron Block 503.  The MOXY/MCN  Program  has a 100% working
interest and 80% net revenue interest in West Cameron Block  503.  MOXY,
as  operator, drilled the #1 exploratory well which discovered  two  gas
reservoirs  with  71 feet of net gas pay.  The block is located 95 miles
offshore Louisiana  in a water depth of 150 feet and covers 5,000 acres.
The MOXY/MCN Program  has agreed, subject to certain conditions, to sell
its interest in this block  to  a  third  party  for  $7.2 million.  See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" included herein under Item 7.

      West  Cameron  Block  492.  The MOXY/MCN Program acquired  a  100%
working interest and 80% net  revenue interest in West Cameron Block 492
in the Central Gulf of Mexico lease sale in 1996. The block covers 5,000
acres and is located 90 miles offshore in 150 feet of water.

      Vermilion Block 391/392/408.   The  MOXY/MCN  Program  has  a  30%
working  interest  and  24.1%  net  revenue interest in Vermilion Blocks
392/408 and a 31.9% working interest  and  25.7% net revenue interest in
Vermilion Block 391.   Ashland Exploration,  Inc.,  as operator, drilled
an  unsuccessful  exploratory  well  in  the third quarter  of  1996  on
Vermilion Block 391. The MOXY/MCN Program  acquired  the Vermilion Block
392 lease in the Central Gulf of Mexico lease sale in  1996 and acquired
the shallow rights on Vermilion Block 408 by trading the  deep rights at
Vermilion  Block  392.   Vermilion Blocks 391/392/408 cover a  total  of
15,000 acres and are located  four  miles  from  the Vermilion Block 410
field,  which   is  approximately  115  miles  offshore   Louisiana,  in
approximately 360 feet of water.

<PAGE>  3

      East  Fiddler's  Lake/North  Bay  Junop.   MOXY has a 25%  working
interest and 18% net revenue interest in approximately  8,600  acres  of
leasehold  in  the  East Fiddler's Lake/North Bay Junop prospect area in
Terrebonne Parish, Louisiana,  and  owns  a proprietary 3-D seismic data
survey covering approximately 35,000 acres.   MOXY also has an option on
approximately  16,000 additional acres in the project  area.  Operations
are  being  undertaken   by  a  joint  venture  owned  50%  by  Phillips
(operator), 25% by FRP and  25%  by MOXY.  The first exploratory well at
East Fiddler's Lake was drilled to  19,177  feet in the third quarter of
1996.   Although  the  well was unsuccessful in  discovering  commercial
hydrocarbons, the geological  data  from this well is assisting drilling
activity in the prospect area.  During  the  fourth quarter of 1996, the
North  Bay  Junop  well  was spudded and the well  is  drilling  to  its
targeted total depth of 19,500  feet.    Additional leads in the project
area have identified other potential prospects.

      Lease Sale.  MOXY was high bidder on  seven  tracts at the Central
Gulf of Mexico lease sale held in March 1997 for high bids totaling $5.5
million. MOXY has entered into an agreement with FRP  whereby  FRP  will
bear  60%  of  the  acquisition  and exploration costs and acquire a 50%
working interest in these leases.

Oil and Gas Reserves

      Estimates  of  the Company's total  proved  developed  and  proved
undeveloped reserves of  oil and gas as of December 31, 1996 by Crescent
were as follows:

                   Gas(Mmcf)                          Oil(Bbls)
       ________________________________     ______________________________
         Proved              Proved           Proved             Proved
       Developed          Undeveloped       Developed         Undeveloped
       _________          ___________       _________         ___________

         7,530               8,524            58,000            110,000

      The  Company's  wells  at  the Vermilion Block 160 field unit  and
Vermilion Block 410 field have limited production history.  Estimates of
proved undeveloped reserves that may  be  developed  and produced in the
future  are  based  upon  volumetric  calculations and upon  analogy  to
similar types of reserves rather than upon  actual  production  history.
Estimates based on these methods are generally less reliable than  those
based  on  actual production history.  Subsequent evaluation of the same
reserves based  upon production history will result in variations, which
may be substantial,  in  the estimated reserves.  Further, the Company's
proved undeveloped reserves  will  require additional capital to develop
and  produce.   See  "Cautionary Statement,"  below,  and  "Management's
Discussion  and  Analysis   of   Financial   Condition  and  Results  of
Operations" included herein under Item 7.

      The  following  table  sets  forth as of December  31,  1996,  the
estimated future net cash flows before  income  taxes  and  the  present
value of estimated future net cash flows before income taxes, discounted
at  10%  per annum, from the production and sale of the proved developed
and undeveloped  reserves  attributable to the Company's interest in gas
and oil properties as of such date, as determined by Crescent.

                                      Proved        Proved     Total
                                    Developed    Undeveloped   Proved
                                    _________    ___________  _________

Estimated future net cash
   flows before income taxes (1)   $25,297,190   $20,283,640 $45,580,830
Present value of estimated
   future net cash flows before
   income taxes (1)                 21,174,780    14,166,630  35,341,410

__________________
(1)   In preparing such estimates,  Crescent  used  prices of $26.08 per
      barrel  of oil and $3.85 per Mcf of gas as of December  31,  1996,
      the weighted  average  prices  that the Company estimates it would
      have received, assuming production from all of its properties with
      proved reserves.
                           ______________________

      In accordance with applicable requirements  of  the Securities and
Exchange Commission (the "Commission"), the estimated discounted  future
net  revenues  from  estimated  proved  reserves are based on prices and
costs  at  fiscal  year end.  Actual future  prices  and  costs  may  be
materially higher or lower.  See "Cautionary Statement ," below.

<PAGE>  4

      In  accordance   with  methodology  approved  by  the  Commission,
specific assumptions were  applied  in  the  computation  of the reserve
evaluation estimates.  Under this methodology, future net cash flows are
determined by reducing estimated future gross cash flows to  the Company
for oil and gas sales by the estimated costs to develop and produce  the
underlying  reserves,  including  future capital expenditures, operating
costs,  transportation  costs,  net  profits   interests,   royalty  and
overriding  royalty  burdens  on  certain  of  the Company's properties.
Future  net cash flows were discounted at 10% per  annum  to  arrive  at
discounted  future net cash flows.  The present value of future net cash
flows shown above should not be construed as the current market value as
of December 31,  1996,  or  any prior date, of the estimated oil and gas
reserves  attributable to the  Company's  properties.   See  "Cautionary
Statement," below.

      The Company  is periodically required to file estimates of its oil
and gas reserve data  with  various  governmental regulatory authorities
and agencies.  In addition, estimates are from time to time furnished to
governmental agencies in connection with specific matters pending before
such agencies.  The basis for reporting  estimates  of reserves to these
agencies,  in  some  cases,  is  not comparable to that furnished  above
because  of  the  nature of the various  reports  required.   The  major
variations include  differences  in when such estimates are made, in the
definition of reserves, in the requirements  to report in some instances
on  a  gross,  net or total operator basis and in  the  requirements  to
report in terms of smaller geographical units.

Production, Unit Prices and Costs

      The following  table  sets forth certain information regarding the
production volumes of, average  sales  prices  received  for and average
production  costs  for  the Company's sale of oil and gas for  the  year
ended December 31, 1996:

      Net gas production (Mcf)..........................   631,000
      Net crude oil and condensate production (Bbls)....    29,000

      Sales price:
      Natural gas (per Mcf).............................   $  2.72
      Crude oil and condensate (per Bbl)................    $22.22
      Production (lifting) costs per Mcf equivalent(1)..   $  0.94

_____________________
(1)   Production costs were  converted to an Mcf equivalent on the basis
      of one barrel of oil being  equivalent  to six Mcf of natural gas.
      Production  costs  exclude  all  depreciation   and   amortization
      associated  with  property  and  equipment.   The  components   of
      production  costs  may vary substantially among wells depending on
      the  production  characteristics   of   the  particular  producing
      formation and method of recovery employed  and  other factors, but
      include  charges  under  transportation agreements and  all  lease
      operating expenses.
                              ____________________

      The  relationship  between the  Company's  sales  prices  and  its
production  (lifting)  costs   depicted   by  the  table  above  is  not
necessarily indicative of future results of  operations  expected by the
Company.  See "Cautionary Statement," below.

Acreage

      The  following table sets forth the oil and gas acreage  in  which
the Company held an interest as of December 31, 1996:

                                       Developed(1)        Undeveloped
                                       ________________   _______________
                                       Gross(2)  Net(3)   Gross(2)  Net(3)
                                       Acres     Acres     Acres    Acres
                                       _____     _____     _____    _____

Offshore (federal waters)             38,651    9,074      60,000  18,038
Onshore Louisiana                          -        -       6,860   1,715
                                      ______   _______    _______ ________
      Total                           38,651    9,074      66,860  19,753   
                                      ======   =======    ======= ========
______________________
<PAGE>  5
(1) "Developed" acreage includes acreage by lease, unit or offshore block
    in  which  there  are  one  or more producing wells or shut-in  wells
    capable  of commercial production  and/or  acreage  with  established
    reserves in quantities deemed sufficient to develop.
(2) The term "Gross"  refers to acres in which the Company owns a working
    interest and/or operating rights.
(3) The term "Net" refers to gross acres multiplied by the percentage of
    the working interest and/or operating rights owned therein.

                              ____________________

Oil and Gas Drilling Activity

      The following table  sets  forth  the  gross  and  net  number  of
productive,  dry  and total exploratory wells and development wells that
the Company drilled  in  each  of  the years ended December 31, 1995 and
1996:


                                                 1995             1996
                                            _____________      _____________
                                            Gross     Net      Gross    Net
                                            _____     ___      _____    ___
Exploratory
 Productive...............................  1.0      0.375      4.0     0.910
 Dry......................................    -          -      4.0     0.948
                                            ---      -----      ---     -----
    Total.................................  1.0      0.375      8.0     1.858
                                            ===      =====      ===     =====
Development
 Productive...............................  5.0      1.875        -         -
 Dry......................................    -          -        -         -
                                            ___      _____      ___      ____
    Total.................................  5.0      1.875        -         -
                                            ===      =====      ===      ==== 

Operating Hazards and Insurance

      The Company's operations are subject to the usual hazards incident
to  the  drilling  and  production of natural gas and crude oil, such as
blowouts, cratering, explosions,  uncontrollable  flows  of  oil, gas or
well   fluids,  fires,  pollution,  releases  of  toxic  gas  and  other
environmental  hazards  and  risks.  Offshore oil and gas operations are
subject  to  the  additional  hazards  of  marine  operations,  such  as
capsizing, collision and adverse  weather  and  sea  conditions.   These
hazards can cause personal injury and loss of life, severe damage to and
destruction   of  property  and  equipment,  environmental  damages  and
suspension of operations.

      Drilling  activities  are subject to numerous risks, including the
risk  that  no  commercially productive  hydrocarbon  reserves  will  be
encountered.  The  cost  of drilling, completing and operating wells and
installing production facilities  and pipelines is often uncertain.  The
Company's drilling operations may be curtailed, delayed or canceled as a
result of numerous factors, including,  weather  conditions,  compliance
with  governmental  requirements and shortages or delays in the delivery
of equipment.

      The Company maintains insurance of various types that it considers
to be adequate to cover  its  operations.   Such insurance is subject to
deductibles  that the Company considers reasonable  and  not  excessive.
Consistent with  insurance coverage generally available to the industry,
the Company's insurance  policies  do not provide coverage for losses or
liabilities  relating to pollution, except  for  sudden  and  accidental
occurrences.

Competition

      Competition in the oil and gas industry is intense.  In seeking to
obtain desirable new leases and exploration prospects, the Company faces
competition from both major and independent oil and gas companies.  Many
of these competitors have financial and other resources substantially in
excess of those available to the Company and may, accordingly, be better
positioned to  acquire  and exploit prospects, hire personnel and market
production.  In addition,  many  of the Company's larger competitors may
be better able to withstand the effect  of  changes  in  factors such as
worldwide oil and natural gas prices and levels of production,  the cost
and  availability of alternative fuels and the application of government
regulations,  which  affect demand for the Company's oil and natural gas
production and are beyond the control of the Company.

<PAGE>  6
Marketing

      The Company's gas  sales  are  currently made in the "spot market"
for  no  more  than two months at a time  at  then  currently  available
prices.  Prices on the spot market fluctuate with demand.  Crude oil and
condensate production is generally sold one month at a time at currently
available prices.

                      EXPLORATION AND DEVELOPMENT PROGRAMS

      In September  1995,  the Company and affiliates of MCN established
the MOXY/MCN Program to explore  and  develop  prospects  in  the  Gulf.
Pursuant  to  the  agreement,  the Company manages the MOXY/MCN Program,
selecting all prospects and drilling opportunities.  The Company and MCN
committed $65 million to the MOXY/MCN  Program,  with revenues and costs
being shared 40% by MOXY and 60% by MCN.  MCN is funding  its  60% share
of  expenditures  and  is loaning funds to MOXY for its 40% share.   The
Company  contributed  to  the  MOXY/MCN  Program  its  interest  in  the
Vermilion  Block  160  and  Vermilion   Block  410  fields  and  certain
undeveloped properties.  MCN reimbursed MOXY  $11.7  million  for  prior
expenditures on the contributed properties.  The Company's 40% share  of
future  revenues  from  the  MOXY/MCN  Program  is dedicated to repaying
amounts   loaned  to  the  Company  (exclusive  of  the  $11.7   million
reimbursement  of  prior  costs  and the $3 million overhead payment) by
MCN.  Funds advanced by MCN bear interest  at the prime rate plus 2% per
annum.  MCN also provided to the Company an  $0.8  million  non-interest
bearing  production  loan  that  was  repaid in 1996 from net production
revenues generated from the Vermilion Block  160  field.   The Company's
obligation to repay amounts financed by MCN is non-recourse  other  than
to the properties contributed to and developed by the MOXY/MCN Program.

      The   MOXY/MCN   Program   will   terminate  after  MCN's  initial
exploration program expenditures of $35 million  have  been committed or
December 31, 1997, whichever is earlier ($25.9 million had been spent at
December  31,  1996).   The MOXY/MCN Program's term can be  extended  at
MCN's option for up to an  additional  one  year  period,  subject  to a
further  exploration  expenditure  commitment  of  $32.5 million and the
continued availability of MOXY's line of credit from  MCN.  MOXY advised
MCN  that  MOXY  believed  it  was  necessary  to implement a  long-term
exploration  program  and  in  accordance with the recommendation,  MOXY
entered into a multi-year seismic  purchase agreement.  MCN advised MOXY
that  it  did  not wish to make such a  long-term  commitment,  did  not
participate in this  seismic purchase commitment and has no right to any
interest in leases acquired as a result of this new seismic data.   As a
result, MOXY believes that it is unlikely that the MOXY/MCN Program will
be extended beyond its initial term.

      In June 1995, the  Company  and  Phillips  entered  into  a  joint
venture  agreement  to  explore  a  project  area  in Terrebonne Parish,
Louisiana  containing  the  North  Bay  Junop  and  East Fiddler's  Lake
prospects.  Pursuant to the agreement, the Company conveyed  one-half of
its  interest  in  the area, with Phillips reimbursing the Company  $3.8
million for previously  incurred  costs related to the project.  In June
1996, the Company  sold one-half of  its  remaining  50% interest in the
area to FRP for $2.1 million.  This amount represented the reimbursement
for certain costs previously incurred by the Company in  connection with
this  project  area.   MOXY  sold  the  interest  to  FRP  on  the  same
proportionate basis as the sale of the interest to Phillips. The project
area,  with the exception of the North Bay Junop and East Fiddler's Lake
prospects,  is  subject  to  a  possible  25% participation by a mineral
rights owner.

                                   REGULATION

General

      The oil and gas industry is extensively  regulated  by federal and
state authorities in the United States.  Legislation affecting  the  oil
and  gas  industry  is  under constant review and, relevant statutes are
constantly  being  adopted,  expanded  or  amended.   Further,  numerous
departments and agencies,  both federal and state, have issued rules and
regulations binding on the oil  and  gas  industry  and  its  individual
members,  some  of which carry substantial penalties for the failure  to
comply.  The regulatory burden on the oil and gas industry increases its
cost of doing business and, consequently, affects its profitability.

<PAGE>  7

Exploration, Production and Development

      The exploration,  production  and  development  operations  of the
Company  are subject to regulation at both the federal and state levels.
Such regulation  includes requiring permits for the drilling of wells as
well as the maintenance of certain bonding and insurance requirements in
order to drill or  operate  wells.   Such  regulation  also controls the
location of wells, the method of drilling and casing wells,  the surface
use and restoration of properties upon which wells are drilled  and  the
plugging and abandoning of wells.  The Company's exploration, production
and development operations are also subject to various conservation laws
and  regulations.   These include the regulation of the size of drilling
and spacing units or  proration  units, the density of wells that may be
drilled, the levels of production, and the unitization or pooling of oil
and gas properties.

      The Company presently has interests  in  or  rights to 23 offshore
leases located in federal waters on the outer continental shelf ("OCS").
Federal  leases  are  administered  by  the  Mineral Management  Service
("MMS").  Individuals and entities must qualify  with  the  MMS prior to
owning  and operating any leasehold or right-of-way interest in  federal
waters.   Such  qualification  with  the  MMS  generally involves filing
certain  documents  with the MMS and obtaining performance  bonds.   For
offshore operations,  lessees  must  obtain MMS approval for exploration
plans and development and production plans  prior to the commencement of
such operations.  In addition to permits required  from  other  agencies
(such   as  the  Coast  Guard,  the  Army  Corp  of  Engineers  and  the
Environmental  Protection Agency), lessees must obtain a permit from the
MMS prior to the  commencement  of  drilling.   The  MMS has promulgated
regulations requiring offshore production facilities located  on the OCS
to meet stringent engineering and construction specifications,  and  has
recently   proposed   and/or   promulgated   additional   safety-related
regulations  concerning  the  design  and  operating procedures  of  OCS
production  platforms  and  pipelines.   The MMS  also  has  regulations
restricting  the flaring or venting of natural  gas,  and  has  proposed
amendments to such regulations that would prohibit the flaring of liquid
hydrocarbons and  oil  without  prior authorization.  Similarly, the MMS
has promulgated other regulations governing the plugging and abandonment
of offshore wells and the removal  of  all  production  facilities.   To
cover  the  various  obligations  of  an  OCS  lease,  the MMS generally
requires  that  lessees  post  substantial  bonds  or  other  acceptable
assurances that such obligations will be met.  The cost of such bonds or
other  security can be substantial and there is no assurance that  bonds
or  other   surety   can  be  obtained  in  all  cases.   Under  certain
circumstances, the MMS  may  require  all  Company operations on federal
leases  to  be  suspended  or  terminated.   Any  such   suspension   or
termination  would  materially  adversely affect the Company's financial
condition and operations.

      Certain  producing  states,  including  Louisiana,  have  recently
adopted or considered adopting measures  that  alter the methods used to
prorate  gas  production from wells located in these  states,  including
those located in their territorial waters.  These measures may limit the
rate at which gas  may  be  produced from the wells in which the Company
might  acquire  an  interest.   Congress   considered,   but   rejected,
legislation  that  would   have  limited the rights of states to prorate
production.  The Company cannot predict whether such legislation will be
reintroduced  or  what  effect the new  state  rules  may  have  on  gas
production in producing states.   At  the  present  time  there  are  no
regulatory  measures  which  would  limit  the  production of oil or gas
leases in which the Company presently owns an interest.

Environmental

      General.   The  Company's  operations  are  subject  to  extensive
federal,   state   and   local   regulatory  requirements  relating   to
environmental affairs, health, safety  and waste management and chemical
products.  These laws and regulations require the acquisition of permits
before   construction   or  drilling  commences,   limit   or   prohibit
construction and drilling  activities  on  certain  lands  lying  within
wilderness  or wetlands and other protected areas and impose substantial
liabilities for pollution resulting from the Company's operations.

      Moreover,   the   recent   trend   toward  stricter  standards  in
environmental legislation and regulations  is  likely  to continue.  For
instance, legislation has been proposed in Congress from time to time to
reclassify oil and gas production wastes as "hazardous waste."   If such
legislation  were  to be enacted, it could have a significant impact  on
the operating costs  of the Company, as well as the oil and gas industry
in general.  State initiatives  to  further regulate the disposal of oil
and gas wastes are also pending in certain  states,  and  these  various
initiatives  could  have  a  similar  impact  on the Company. Management
believes that compliance with current applicable  environmental laws and
regulations will not have a material adverse impact  on the Company.  To
the best of the Company's knowledge, its operations are  in  substantial
compliance,  and  are  expected  to  continue  to comply in all material
respects,   with   applicable   environmental   laws,  regulations   and
ordinances.

<PAGE>  8

      It  is  possible,  however,  that  future  developments,  such  as
stricter  environmental laws or regulations could affect  the  Company's
operations.   Moreover, some risk of environmental costs and liabilities
is inherent in  the  Company's  operations as it is with other companies
engaged in similar or related businesses,  and there can be no assurance
that  material  costs and liabilities, including  substantial  fines  or
criminal sanctions  for violation of environmental laws and regulations,
will not be incurred by the Company.

      Solid Waste.  The Company's operations may generate or involve the
transport of both hazardous  and  nonhazardous  solid  wastes  that  are
subject  to  the  requirements  of the Federal Resource Conservation and
Recovery  Act  and  comparable  state   statutes.    In   addition,  the
Environmental Protection  Agency ("EPA") is presently in the  process of
developing stricter disposal standards for nonhazardous waste.   Changes
in  these regulations may result in additional expenditures or operating
expenses by the Company.

      Hazardous  Substances.   The Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") and comparable state statutes,
also known as "Superfund" laws,  impose  liability on certain classes of
persons that contribute to the release of  a  "hazardous substance" into
the environment.  These persons include the owner or operator of a site,
and companies that transport, dispose of or arrange for the disposal of,
the hazardous substances found at the site.  CERCLA  also authorizes the
EPA,  and in some cases, third parties to take actions  in  response  to
threats  to  the  public  health or the environment and to recover their
costs from the responsible  classes  of persons.  Despite the "petroleum
exclusion  "  of  Section  101(14)  of CERCLA  that  encompasses  wastes
directly associated with crude oil and  gas  production, the Company may
generate  or  transport  "hazardous substances" within  the  meaning  of
CERCLA or comparable state  statutes  in  the  course  of  its  ordinary
operations.  Thus,  the  Company may be responsible under CERCLA or  the
state equivalents for all  or  part  of  the  costs required to clean up
sites where a release has occurred.

      Air.  The Company's operations may also be  subject  to  the Clean
Air  Act  ("CAA") and comparable state statutes.  Amendments to the  CAA
were adopted  in  1990  and  contain  provisions  that may result in the
gradual  imposition  of  certain  pollution  control  requirements  with
respect to air emissions from operations.  The EPA has  been  developing
regulations  to  implement  these  requirements.   The  Company  may  be
required to incur certain capital expenditures in the next several years
for  air  pollution  control equipment in connection with maintaining or
obtaining  operating  permits   and   approvals   addressing  other  air
emission-related issues.

      Water.  The Federal Water Pollution Control Act ("FWPCA") strictly
regulates the unauthorized discharge of produced waters  and  other  oil
and  gas wastes into navigable waters.  The FWPCA provides for civil and
criminal  penalties  for  any  unauthorized  discharges of oil and other
hazardous substances in reportable quantities  and  imposes  substantial
potential  liability for the costs of removal, remediation and  damages.
Similarly, the  Oil  Pollution Act of 1990 (the "OPA") imposes liability
for the discharge of oil  into  or  upon  navigable  waters or adjoining
shorelines. Among other things, the OPA raises liability limits, narrows
defenses to liability and provides more instances in which a responsible
party is subject to unlimited liability.  State laws for  the control of
water  pollution  also provide varying civil and criminal penalties  and
liabilities in the case of an unauthorized discharge of petroleum or its
derivatives into state waters.  Further, the Coastal Zone Management Act
authorizes  state  implementation   and   development   of  programs  or
management measures for nonpoint source pollution to restore and protect
coastal waters.

      Endangered  Species.   Several  federal  laws  impose  regulations
designed  to  ensure  that  endangered  or  threatened  plant and animal
species  are  not  jeopardized  and their critical habitats are  neither
destroyed  nor  modified.   These  laws   may   restrict  the  Company's
exploration, development and production operations  and  impose civil or
criminal penalties for non-compliance.

Safety and Health Regulations

      The  Company  is  also subject to laws and regulations  concerning
occupational safety and health.   It is not anticipated that the Company
will be required in the near future  to expend amounts that are material
in  the  aggregate  to the Company's overall  operations  by  reason  of
occupational safety and  health  laws  and  regulations, but inasmuch as
such laws and regulations are frequently changed,  the Company is unable
to predict the ultimate cost of compliance.

<PAGE>  9
                               
                               EMPLOYEES

      At February 28, 1997, the Company had 14 employees.   All  of  the
Company's   employees   are   devoted  primarily  to  managerial,  land,
geological  and  administrative  functions.    The  Company  intends  to
continue its policy of limiting its number of permanent  employees  and,
to  that end, generally utilizes the services of independent consultants
and contractors  to  perform various professional services, particularly
in  the  areas  of construction,  design,  well  site  surveillance  and
environmental  assessment.    Field  and  on-site  production  operation
services  such  as  pumping, maintenance,  dispatching,  inspection  and
testing,  are  also  generally   provided  by  independent  contractors.
Currently, a major portion of the  Company's  geological and geophysical
services  are  performed  by  CLK  Company, L.L.C. ("CLK").   Under  the
Company's agreement with CLK,  the Company  pays  CLK  an  annual fee of
$2.4  million,  with  $0.5  million  of this fee paid in Company  common
stock, and reimburses CLK's direct expenses  incidental  to its work for
the  Company and for its office space.  In addition, CLK receives  a  3%
overriding  royalty  interest  on all new domestic prospects accepted by
the Company.  For the year ended December 31, 1996, the Company incurred
$3.1 million of expenses under its agreement with CLK.

                         RELATIONSHIP WITH FTX

      Other than those functions  performed  by  the Company's employees
and those provided under third party contracts since  January  1,  1996,
substantially  all  of  the  services  necessary  for  the  business and
operations  of  the  Company,  including  certain  executive, technical,
administrative, accounting, financial, tax and other  services have been
performed  by FM Services Company ("FMS"), a 50%/50% subsidiary  of  FTX
and  Freeport-McMoRan  Copper  &  Gold  Inc.,  pursuant  to  a  services
agreement between FMS and the Company (the "Services Agreement").  Prior
to 1996,  substantially  the  same services were provided by FTX.  Since
September 1995 these services have  been provided for a fixed annual fee
of $1.0 million, subject to annual cost of living increases beginning in
the first quarter of 1997.  Prior to  September  1995,  the cost of such
services was provided by FTX as determined and allocated  by  FTX.   For
the  year  ended December 31, 1996, the Company incurred $1.0 million of
expenses under  its  agreement  with  FMS.   The  Services  Agreement is
terminable by the Company at any time upon 90 days notice.


                              CAUTIONARY STATEMENT

      This  report  includes  "forward-looking  statements"  within  the
meaning of Section 27A of the Securities Act of 1933 and Section  21E of
the  Securities  Exchange  Act  of  1934.   All  statements  other  than
statements  of  historical  fact  included  in  this  report, including,
without  limitation,  the  statements  under the headings "Business  and
Properties,"  "Market  for  Registrant's  Common   Equity   and  Related
Stockholder  Matters,"  and  "Management's  Discussion  and Analysis  of
Financial   Condition  and  Results  of  Operations"  regarding   MOXY's
financial position and liquidity, payment of dividends, MOXY's strategic
alternatives, future capital needs, development and capital expenditures
(including the  amount  and  nature  thereof),  the  drilling  of wells,
reserve estimates and future net revenues attributable thereto, business
strategies, and other plans and objectives of management of the  Company
for  future  operations  and activities, are forward-looking statements.
Although MOXY believes that  the expectations reflected in such forward-
looking statements are reasonable,  it  can  give no assurance that such
expectations will prove to have been correct.   Important  factors  that
could cause actual results to differ materially from MOXY's expectations
are   disclosed   in  this  report  including,  without  limitation,  in
conjunction with the forward-looking statements included in this report.
These statements are  based  on certain assumptions and analyses made by
the Company in light of its experience  and its perception of historical
trends,  current  conditions,  expected future  developments  and  other
factors  it  believes are appropriate  under  the  circumstances.   Such
statements  are   subject   to   a  number  of  assumptions,  risks  and
uncertainties, including the risk  factors  discussed  below, and in the
Company's  other  filings  with  the  Commission,  general economic  and
business conditions, the business opportunities that may be presented to
and  pursued  by  the Company, changes in law or regulations  and  other
factors, many of which  are  beyond the control of the Company.  Readers
are cautioned that any such statements  are  not  guarantees  of  future
performance and the actual results or developments may differ materially
from  those projected in the forward-looking statements.  All subsequent
written  and  oral  forward-looking  statements  attributable to MOXY or
persons  acting on its behalf are expressly qualified  in their entirety
by these cautionary statements.

<PAGE>  10

Limited Operating History, Significant Historical
Operating Losses and Need for Additional Financing

      The  Company  commenced  operations  in  1994.   In addition,  the
Company has only two producing fields, which have been on production for
only a short period of time, making proved reserves and levels of future
production attributable to these fields less susceptible  to estimation.
Also,  as  a  result  of operating losses from the Company's exploratory
drilling program, the Company  has incurred significant operating losses
to date.  The Company's viability  must  be  considered  in light of the
risks  and difficulties frequently encountered by companies  engaged  in
the early  stages  of  their  oil  and  gas exploration, development and
production activities.

      The development of the Company's business will continue to require
substantial  expenditures.   The  Company's   ability  to  continue  its
exploratory drilling program depends on obtaining  additional financing.
There  can  be  no  assurance  that  the  Company will be successful  in
obtaining any additional financing or the terms  on which such financing
can  be  obtained.  The Company's future financial results  will  depend
primarily on its ability  to  obtain  additional financing, economically
locate hydrocarbons in commercial quantities  and  on  the market prices
for  oil  and  gas.   There  can  be no assurance that the Company  will
achieve or sustain profitability or  positive  cash flows from operating
activities in the future.

Volatility of Oil and Gas Prices

        The Company's revenues substantially depend  on  the  prevailing
prices for  oil  and  natural gas.  In recent years, oil and natural gas
prices and, therefore,  the  level of drilling, exploration, development
and production, have been extremely  volatile.   Prices  are affected by
market supply and demand factors as well as actions of state  and  local
agencies,  U.S.  and foreign governments and international cartels.  All
of these factors are beyond the control of the Company.  Any significant
or extended decline  in  oil  and/or  natural  gas  prices  will  have a
material  adverse  effect  on  the  Company's  financial  condition  and
operations and could impair access to sources of capital.

Exploration and Development Risks

      Exploration  and development of natural gas and oil involve a high
degree of risk that  no  commercial  production will be obtained or that
the production will be insufficient to  recover  drilling and completion
costs.  The cost of drilling, completing and operating  wells  is  often
uncertain, and cost overruns in offshore operations can adversely affect
the  economics  of  a project.  The Company's drilling operations may be
curtailed,  delayed  or  canceled  as  a  result  of  numerous  factors,
including   title  problems,   weather   conditions,   compliance   with
governmental  requirements  and  shortages  or delays in the delivery of
equipment.  Furthermore, completion of a well  does  not ensure a profit
on  the investment or a recovery of drilling, completion  and  operating
costs.

Replacement of Reserves

      MOXY's  future  performance  depends  in  part upon its ability to
acquire,  find  and develop oil and gas reserves that  are  economically
recoverable.  Without  successful exploration or development activities,
MOXY's reserves will decline.  No assurances can be given that MOXY will
be able to find and develop additional reserves on an economic basis.

      MOXY's business is  capital  intensive  and  to maintain its asset
base of proved oil and gas reserves a significant amount  of  cash  flow
from  operations  must  be  reinvested  in  development  or  exploration
activities.   To  the  extent  cash flow from operations is reduced  and
external sources of capital are  limited  or unavailable, MOXY's ability
to  make the necessary capital investments to  maintain  or  expand  its
asset  base  will  be impaired.  Without such investment, MOXY's oil and
gas reserves will decline.

      In order to increase  reserves  and production, MOXY must continue
its  exploratory  drilling  program  or  undertake   other   replacement
activities.  MOXY's operations may be curtailed, delayed or canceled  as
a  result  of lack of the ability to obtain additional capital and other
factors, such  as  title problems, weather, compliance with governmental
regulations or price  controls,  mechanical difficulties or shortages or
delays in the delivery of equipment.  Furthermore, while MOXY's revenues
may  increase if prevailing gas prices  increase  significantly,  MOXY's
finding costs for additional reserves could also increase.  In addition,
the costs  of  exploration and development may materially exceed initial
estimates.  For  a  discussion  of  MOXY's  reserves,  see "Business and
Properties - Reserves."

<PAGE>  11

Reserves and Future Net Cash Flow

      Information  relating  to  MOXY's proved oil and gas  reserves  is
based upon engineering estimates.   Reserve  engineering is a subjective
process of estimating the recovery from underground accumulations of oil
and  natural gas that cannot be measured in an  exact  manner,  and  the
accuracy  of  any  reserve  estimate  is  a  function  of the quality of
available  data  and  of  engineering and geological interpretation  and
judgment.  Estimates of economically  recoverable  oil  and gas reserves
and  of  future  net  cash  flows  necessarily  depend upon a number  of
variable factors and assumptions, such as historical production from the
area compared with production from other producing  areas,  the  assumed
effects   of   regulations  by  governmental  agencies  and  assumptions
concerning future  oil and gas prices, future operating costs, severance
and excise taxes, development costs and workover and remedial costs, all
of which may in fact vary considerably from actual results.  Because all
reserve estimates are  to some degree speculative, the quantities of oil
and natural gas that are  ultimately recovered, production and operation
costs, the amount and timing  of  future  development  expenditures  and
future  oil and natural gas sales prices may all vary from those assumed
in these  estimates  and  such  variances may be material.  In addition,
different  reserve engineers may make  different  estimates  of  reserve
quantities and  cash  flows  based  upon  the  same available data.  See
"Business and Properties - Reserves."

      The present values of estimated future net  cash flows referred to
in this report should not be construed as the current  market  value  of
the  estimated  proved  oil  and  gas  reserves  attributable  to MOXY's
properties.    In   accordance   with  applicable  requirements  of  the
Commission, the estimated discounted  future  net cash flows from proved
reserves are generally based on prices and costs  as  of the date of the
estimate, while actual future prices and costs may be materially  higher
or lower.  Actual future net cash flows also will be affected by factors
such  as  the  amount and timing of actual production, supply and demand
for  oil and gas,  curtailments  or  increases  in  consumption  by  gas
purchasers  and  changes  in  governmental regulations or taxation.  The
timing of actual future net cash  flows  from  proved reserves, and thus
their actual present value, will be affected by  the  timing of both the
production and the incurrence of expenses in connection with development
and production of oil and gas properties.  In addition, the 10% discount
factor,  which  is  required by the Commission to be used  to  calculate
discounted  future  net  cash  flows  for  reporting  purposes,  is  not
necessarily the most appropriate discount factor based on interest rates
in effect from time to time and risks associated with MOXY's business or
the oil and gas industry in general.

Operating Hazards; Limited Insurance Coverage

      MOXY's operations  are  subject  to  hazards and risks inherent in
drilling for and production and transportation  of  gas and oil, such as
fires,  natural  disasters,  explosions,  encountering  formations  with
abnormal pressures, blowouts, cratering, pipeline ruptures  and  spills,
any   of  which  can  result  in  loss  of  hydrocarbons,  environmental
pollution,  personal  injury  claims,  and other damage to properties of
MOXY and others.  These risks could result in substantial losses to MOXY
due  to injury and loss of life, severe damage  to  and  destruction  of
property  and  equipment,  pollution  and other environmental damage and
suspension of operations.  Moreover, MOXY's  operations  in the Gulf are
subject  to  a  variety  of  operating  risks  peculiar  to  the  marine
environment,  such as to hurricanes or other adverse weather conditions,
to more extensive  governmental  regulation,  including regulations that
may,  in  certain circumstances, impose strict liability  for  pollution
damage, and to interruption or termination of operations by governmental
authorities based on environmental or other considerations.

      As protection  against operating hazards, MOXY maintains insurance
coverage against some,  but not all, potential losses.  MOXY's coverages
include, but are not limited  to,  operator's  extra  expense,  physical
damage  on  certain  assets, employer's liability, comprehensive general
liability, automobile,  workers'  compensation  and  loss  of production
income insurance and limited coverage for sudden environmental  damages,
but  MOXY  does  not  believe  that insurance coverage for environmental
damages  that  occur  over  time is  available  at  a  reasonable  cost.
Moreover, MOXY does not believe  that  insurance  coverage  for the full
potential liability that could be caused by sudden environmental damages
is available at a reasonable cost.  Accordingly, MOXY may be  subject to
liability  or  may  lose  substantial portions of its properties in  the
event of environmental damages.   The occurrence of an event that is not
fully  covered  by insurance could have  an  adverse  impact  on  MOXY's
financial condition and results of operations.

<PAGE>  12

Governmental Regulation

      MOXY's operations  are  affected  from  time  to  time  in varying
degrees  by  political  developments  and  federal  and  state  laws and
regulations.   In particular, oil and natural gas production, operations
and economics are  or  have  been  affected by price controls, taxes and
other laws relating to the oil and natural  gas  industry, by changes in
such  laws  and by changes in administrative regulations.   MOXY  cannot
predict  how  existing  laws  and  regulations  may  be  interpreted  by
enforcement agencies  or  court  rulings,  whether  additional  laws and
regulations will be adopted, or the effect such changes may have  on its
business or financial condition.

      MOXY's  operations  are  subject  to numerous laws and regulations
governing the discharge of materials into  the  environment or otherwise
relating  to  environmental  protection.   These  laws  and  regulations
require the acquisition of a permit before drilling  commences, restrict
the types, quantities and concentration of various substances  that  can
be  released  into  the  environment  in  connection  with  drilling and
production activities, limit or prohibit drilling activities  on certain
lands  lying within wilderness, wetlands and other protected areas,  and
impose substantial  liabilities  for  pollution  which might result from
MOXY's operations.  Moreover, the recent trend toward stricter standards
in environmental legislation and regulation is likely to continue.  MOXY
could  incur  substantial  costs to comply with environmental  laws  and
regulations.  In addition to  compliance  costs, government entities and
other third parties may assert substantial  liabilities  against  owners
and  operators  of oil and gas properties for oil spills, discharges  of
hazardous  materials,   remediation   and   cleanup   costs   and  other
environmental  damages,  including  damages  caused by previous property
owners.  The imposition of any such liabilities  on  MOXY  could  have a
material  adverse  effect  on  MOXY's financial condition and results of
operations.

Shortages of Supplies and Equipment

      The Company's ability to conduct  its  operations  in a timely and
cost  effective  manner  is subject to the availability of oil  and  gas
field supplies, equipment  and service crews.  The industry is currently
experiencing a shortage of certain types of drilling rigs and work boats
in the Gulf .  This shortage  could  result  in  delays in the Company's
operations as well as higher operating and capital  costs.  Shortages of
other  drilling  equipment,  tubular goods, drilling service  crews  and
seismic  crews could occur from  time  to  time  further  hindering  the
Company's ability to conduct its operations as planned.

Competition

      MOXY  operates  in the highly competitive areas of natural gas and
oil  production,  development  and  exploration  with  other  companies.
Factors affecting MOXY's  ability  to compete in the marketplace include
the availability of funds and information  relating  to  a property, the
standards  established  by  MOXY  for  the  minimum projected return  on
investment,  the  availability  of  alternate  fuel   sources   and  the
intermediate  transportation  of  gas.  MOXY's competitors include major
integrated oil companies and a substantial  number of independent energy
companies,  many  of  which  may  have  substantially  larger  financial
resources, staffs and facilities than MOXY.


Item 3.  Legal Proceedings

      Although the Company may from time  to time be involved in various
legal  proceedings  of  a character normally incident  to  the  ordinary
course of its businesses,  the Company believes that potential liability
from any such pending or threatened proceedings will not have a material
adverse effect on the financial  condition  or  results of operations of
the Company.  The Company maintains liability insurance  to  cover some,
but  not  all,  of  the  potential liabilities normally incident to  the
ordinary course of its businesses  as  well as other insurance coverages
customary in its business, with such coverage limits as management deems
prudent.

Item 4.  Submission of Matters to a Vote of Security Holders

      Not applicable.

<PAGE>  13

Executive Officers of the Registrant

      Listed below are the names and ages,  as  of March 1, 1997, of the
present executive officers of the Company together  with  the  principal
positions  and  offices with the Company held by each.  All officers  of
the Company serve  at  the  pleasure  of  the  Board of Directors of the
Company.

      Name                        Age     Position or Office
      ____                        ___     __________________

      James R. Moffett            58      Co-Chairman of the Board

      Richard C. Adkerson         50      Co-Chairman  of  the Board and
                                          Chief Executive Officer

      C. Howard Murrish           56      President and Chief  Operating
                                          Officer

      John G. Amato               53      General Counsel

      Glenn A. Kleinert           54      Senior Vice President

      James H. Lee                39      Senior Vice President

      James  R.  Moffett  has served as Co-Chairman of the Board of  the
Company since 1994.  Mr. Moffett  is  Chairman of the Board of FTX.  Mr.
Moffett is also Chairman of the Board and  Chief  Executive  Officer  of
Freeport-McMoRan Copper & Gold Inc. ("FCX").

      Richard  C.  Adkerson  has  served as Co-Chairman of the Board and
Chief Executive Officer of the Company since 1994.  Mr. Adkerson is Vice
Chairman of the Board of FTX and has  held  that  position  since August
1995.   In  addition,  Mr.  Adkerson is Chairman of the Board and  Chief
Executive  Officer  of FM Properties  Inc.  ("FMPO").   He  is  also  an
Executive Vice President of FCX.  From 1992 to August 1995, Mr. Adkerson
was a Senior Vice President  of FTX and a Vice President of FTX prior to
1992.

      C. Howard Murrish has served  as  President  and  Chief  Operating
Officer  of  the  Company  since  1994.   He  was a partner in CLK until
September 1994.  He was a Senior Executive Vice President of the oil and
gas division of FTX from 1986 until February 1992.  Prior thereto, since
July 1977, Mr. Murrish served as an officer of various FTX affiliates.

      John G. Amato has served as General Counsel  of  the Company since
1994.  Mr. Amato is the General Counsel of FMPO.  Prior  to August 1995,
Mr. Amato served as General Counsel of FTX and FCX.  Mr. Amato currently
provides  legal  and business advisory services to FTX and FCX  under  a
consulting arrangement.

      Glenn A. Kleinert  has  served  as  Senior  Vice  President of the
Company since 1994.  Mr. Kleinert is a Senior Vice President  of the oil
and gas division of FTX and has held that position since December 1990.

      James  H.  Lee  has served as Senior Vice President of the Company
since November 1996.  Mr.  Lee  has  been  a  Director  of  Finance  and
Business  Development  for FTX since August 1993 and a Vice President of
the oil and gas division of FTX since 1994.

<PAGE>  15
                                PART II

Item 5.  Market for Registrant's  Common  Equity and Related Stockholder
Matters

                PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

      The Common Stock is listed on the Nasdaq National Market under the
symbol  "MOXY."   The  following  table  sets  forth,  for  the  periods
indicated, the range of high and low closing bid  prices, as reported by
the Nasdaq National Market.  The quotes represent "inter-dealer"  prices
without  adjustment  or  mark-ups, mark-downs or commissions and may not
represent actual transactions.

                                      High         Low
                                     ------      -------
                  1995
                  ----
                  First Quarter      $3 1/8      $2 1/2
                  Second Quarter      4 1/8       2 3/8
                  Third Quarter       3 5/8       2 5/16
                  Fourth Quarter      3 7/16      2 9/16

                  1996
                  ----
                  First Quarter      $3 3/4      $2 13/16
                  Second Quarter      3 7/8       2 1/2
                  Third Quarter       2 15/16     1 3/4
                  Fourth Quarter      3 1/16      1 1/2

                  1997
                  ----
                  First Quarter     $3 15/16    $2 1/16
                   (through March 14, 1997)

       As of March 14, 1997  there  were  11,954  record  holders of the
Company's Common Stock.

      The  Company has not in the past, and does not anticipate  in  the
future,  paying  cash  dividends  on  its  Common  Stock.   The  Company
currently  intends to reinvest its available cash in the identification,
exploration  and  development of additional oil and gas properties.  The
decision whether or  not  to pay dividends and in what amounts is solely
within the discretion of the Company's board of directors.

Item 6.  Selected Financial Data

      Information regarding  the  selected  financial data called for by
this item is included under Item 8 and reference is made thereto.

Item 7.  Management's Discussion and Analysis of Financial Condition and
Results of Operations

OVERVIEW

      McMoRan Oil & Gas Co. (MOXY) is an independent oil and gas company
engaged  in  the  exploration,  development and production  of  oil  and
natural  gas.   MOXY commenced operations  in  May  1994  following  the
distribution of its common stock to the stockholders of Freeport-McMoRan
Inc. (FTX) in order  to  carry  on  substantially all of the oil and gas
exploration activities previously conducted  by FTX for its own account.
Prior to distribution, FTX transferred to MOXY  $35  million in cash, an
inventory of oil and gas exploration prospects and a significant  amount
of  seismic  and  well  log  data.   MOXY  intends  to  concentrate  its
activities  primarily  in  the Gulf of Mexico and the onshore Gulf Coast
region.

      During  1995,  MOXY  established   two   separate   joint  venture
arrangements (Note 3) through which substantially all of its  operations
have  taken  place.   MOXY's activities in the Gulf of Mexico have  been
conducted  primarily  through  its  40  percent  owned  exploration  and
development program with  MCN  Corporation  (MCN).    During  1996,  the
MOXY/MCN program had the following operational activities:

      *     Daily gross production at the Vermilion Block 160 field unit
            averaged  14.9  million  cubic  feet  (Mmcf)  of gas and 687
            barrels  of  condensate  during  1996.   During  the  fourth
            quarter of 1996, a development well discovered new  reserves
            (Note 7) from eight gas sands with approximately 215 feet of
            net  pay.  Drilling on this well was completed in the  first
            quarter  of  1997,  discovering an additional 47 feet of net
            pay.  MOXY immediately  began drilling an additional well to
            develop the shallower reserves which were discovered.  After
            completion of all drilling  activity  from the platform, the
            wells will be completed and could be on  stream  as early as
            mid-1997,  depending  on  the number of wells drilled.   The
            MOXY/MCN program has a 28 percent  revenue  interest in this
            field  unit which is subject to re-determination  subsequent
            to final  development  drilling.   In addition, the MOXY/MCN
            program's  interest  in two of the four  blocks  within  the
            Vermilion Block 160 field  unit  is  subject to a 30 percent
            net profits interest.

      *     Installation  of  the  platforms  and  facilities   at   the
            Vermilion Block 410 field was completed and production began
            in  late  December  1996  from  one  of  the  two platforms.
            Production from the second platform began in early  1997 and
            daily   gross   production   from  both  platforms  combined
            currently approximates 85 Mmcf of gas.  The MOXY/MCN program
            has a 28 percent revenue interest in this field.

      *     An exploratory well discovered gas on West Cameron Block 616
            during  the year.  Drilling is  scheduled  on  West  Cameron
            Blocks 616  and 617 during 1997.  Gas was also discovered on
            West Cameron  Block 503 and Grand Isle Block 65 during 1996.
            In March 1997,  the  MOXY/MCN  program  agreed  to  sell its
            interest  in  West Cameron Block 503 for $7.2 million,  $2.9
            million net to  MOXY.   MOXY  would recognize a $2.3 million
            gain upon the completion of the  sale and the proceeds would
            be  used to repay borrowings from MCN.   MOXY  is  currently
            evaluating options for future activities at Grand Isle Block
            65.

      *     Drilling  on  the East Cameron Block 119 and Vermilion Block
            391  prospects  during  the  year  did  not  result  in  the
            discovery of commercial hydrocarbons.

      MOXY's activities in the  onshore  Gulf  Coast  region  have taken
place through its 25 percent owned joint venture with Phillips Petroleum
Company  (Phillips), which covers a project area in south Louisiana,  as
follows:

      *     Drilling  operations  on  the  North Bay Junop prospect were
            initiated during the fourth quarter.   The  well is expected
            to  reach  its  total  depth  of  19,500 feet in the  second
            quarter of 1997.

      *     MOXY  completed  its  first exploratory  well  at  the  East
            Fiddler's Lake prospect.  Although the well was unsuccessful
            in discovering commercial  hydrocarbons, the geological data
            from this well is assisting drilling activity in the project
            area.

      *     Interpretation of the 3-D seismic  survey performed over the
            project area continues and has identified  additional  leads
            that may develop into potential prospects.

      Activity  outside  of  the  joint venture arrangements during 1996
included MOXY drilling an exploratory well at its West Cameron Block 519
prospect which did not encounter commercial  hydrocarbons.  In addition,
MOXY relinquished its interest in the Tungkal  prospect,  a  1.7 million
acre  concession area in Indonesia, where previous drilling results  had
not discovered hydrocarbons in commercial quantities.

RESULTS OF OPERATIONS

      MOXY  reported  a  net  loss of $9.9 million ($0.71 per share) for
1996 compared with losses of $14.6  million  ($1.06  per share) for 1995
and $15.2 million ($1.10 per share) for the eight-month  period of 1994.
MOXY's 1996 revenues, totaling $4.1 million, consisted of  $2.4  million
from  its  40  percent  share  of  the  MOXY/MCN  program's  interest in
production from the Vermilion Block 160 and 410 fields and $1.6  million
from   administrative   fees   earned  on  the  MOXY/MCN  program.   The
commencement of production at the  Vermilion  Block 410 field, discussed
earlier, will benefit MOXY's future revenue levels.

<PAGE>  16      

      Exploration expenses consist of the following (in millions):

                                            1996     1995    1994
                                            ----     ----    ----
Geological and geophysical                  $6.3     $9.8   $ 6.0
Exploratory drilling and leasehold costs     5.6      2.0     9.5
Reimbursement of previously expensed
costs (Note 3)                              (2.1)       -      -
                                            -----   ------  -----
                                            $9.8    $11.8   $15.5
                                            =====   ======  =====

      General and administrative expenses totaled  $2.6  million in 1996
compared  with  $3.7  million  in  1995  and $2.3 million in 1994.   The
decline from 1995 resulted from steps taken in the third quarter of 1995
to  reduce  costs.  These  actions  included reducing  MOXY's  staff  of
employees,  the  costs  of  consulting arrangements  and  the  costs  of
administrative and managerial services (Note 4).

      Because  of  anticipated  future  exploration  expenditures,  MOXY
expects to report losses for at least the near future.

CAPITAL RESOURCES AND LIQUIDITY

      The MCN and Phillips  joint  ventures resulted in MOXY receiving a
significant inflow of funds, as well  as  achieving important reductions
to its future capital commitments, which enabled  MOXY to secure funding
for its contemplated exploration and development activities for 1996 and
1997.    These  agreements  also  enabled  MOXY  to  assess   additional
prospects,  thereby  increasing its opportunities for success.  However,
with  the anticipated conclusion  of  the  exploration  portion  of  the
MOXY/MCN  program, discussed below, MOXY must secure alternative sources
of funding  to  finance  its  future exploration activities.  Management
believes the opportunities for  MOXY  to discover meaningful oil and gas
reserves  are  significant  and that these  opportunities  can  best  be
achieved through the use of advanced  3-D seismic technology, applied in
conjunction with a larger, longer-term  exploration  program.  As  such,
MOXY  entered  into  an  agreement  with  a geophysical services company
pursuant  to  which  MOXY  committed  to purchase  3-D  seismic  surveys
covering a significant number of lease  blocks over a multi-year period.
Management is currently evaluating options  to  obtain  additional long-
term  funding,  none  of  which  can  be  considered  assured, including
entering  into  one  or  more  new  exploration joint ventures,  issuing
additional  equity or undertaking a business  combination  with  another
entity.

      The $35  million  exploration  portion  of  the MOXY/MCN program's
funding is expected to be completed in mid-1997 ($25.9  million had been
spent at December 31, 1996).  The MOXY/MCN program agreement contains an
option  for  MCN  to extend the program by joining in for an  additional
commitment  of  $32.5   million  in  exploration  expenditures  and  the
continued availability of  MOXY's  line of credit.  However, MCN did not
participate in the new 3-D seismic program discussed above and will have
no right to any of the leases acquired  as  a result of this new seismic
data.  Furthermore, MCN did not wish to enter into the type of long-term
agreement  MOXY  believes  is  necessary  to  best   pursue  its  future
exploration activities.  MCN will continue to provide funding for future
development  costs  on  the  MOXY/MCN program's properties  without  any
extension of the program agreement.   At  December  31,  1996,  MOXY had
$12.8  million  of  borrowings  outstanding from MCN, with an additional
$6.6 million of borrowings available  from  MCN  for  past expenditures.
MOXY's  share  of  net  revenues  from  the program's properties,  which
includes Vermilion Blocks 160 and 410, is  dedicated to the repayment of
the loan from MCN.

      MOXY was high bidder on seven of the eight  leases on which it bid
at the OCS Lease Sale 166, held in March 1997.  Awarding  of  the leases
is  subject to approval, and is expected to commence by March 31,  1997.
MOXY's  seven  high bids totaled $5.5 million. Freeport-McMoRan Resource
Partners, Limited  Partnership  (FRP), a 51.6 percent owned affiliate of
FTX, entered into an agreement with  MOXY  pursuant  to  which  FRP will
acquire a 50 percent working interest ownership in these leases and will
bear  60  percent  of  the associated acquisition and exploration costs.
MCN will have no interest in any of these new leases.

      Although MOXY has  sufficient  resources  to  fund its commitments
through  1997, MOXY's future viability depends on a number  of  factors,
primarily  its  ability to secure additional funding, the success of its
exploration and development  activities,  the  production  of its proved
reserves  and  the  prices of oil and gas, none of which can be  assured
because  of  the  uncertainties  and  risks  inherent  in  oil  and  gas
operations.  MOXY's  ability  to  continue  its  operations  beyond  the
funding provided by the current MOXY/MCN program and its present working
capital  depends on securing additional funding and achieving success in
its operations.   No  payment  of  dividends  to  MOXY  shareholders  is
presently contemplated.

<PAGE>  17

      MOXY  incurred  $20.7  million of cash exploration and development
expenditures during 1996, consisting  principally  of  $7.0  million for
development  at  Vermilion  Block  410,  $2.8  million  for  capitalized
drilling  costs,  $5.7  million of geological and geophysical costs  and
$5.0  million  in  expensed   drilling   and   leasehold   costs.   Cash
expenditures for 1995 totaled $21.0 million and consisted principally of
$6.7  million  for development at Vermilion Block 410, $1.8 million  for
development at Vermilion  Block  160  and $9.8 million of geological and
geophysical  costs.  MOXY has committed  expenditures  of  approximately
$8.7 million for  1997  which  will be funded by the remaining available
borrowings under the MOXY/MCN program and MOXY's working capital.

ENVIRONMENTAL

      Although MOXY has no known  environmental liabilities,  increasing
emphasis  on environmental matters could  result  in  additional  costs,
which would  be  charged  against  MOXY's  operations in future periods.
Present  and  future  environmental laws and regulations  applicable  to
MOXY's operations could  require  substantial  capital  expenditures  or
could  adversely  affect  its  operations  in  other ways that cannot be
accurately predicted at this time.

CAUTIONARY STATEMENT

      Management's  discussion  and analysis contains  certain  forward-
looking statements.  Important factors  that  might cause future results
to  differ from these projections are described  in  more  detail  under
Items 1 and 2 above.
                            -----------------------


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

                              REPORT OF MANAGEMENT

      McMoRan Oil & Gas Co. (MOXY) is responsible for the preparation of
the financial statements  and  all  other  information contained in this
Annual  Report.   The  financial  statements  have   been   prepared  in
conformity  with  generally  accepted accounting principles and  include
amounts that are based on management's informed judgments and estimates.

      MOXY maintains a system  of  internal accounting controls designed
to  provide reasonable assurance at reasonable  costs  that  assets  are
safeguarded  against  loss  or  unauthorized  use, that transactions are
executed  in  accordance  with  management's  authorization   and   that
transactions are recorded and summarized properly.  The system is tested
and  evaluated  on  a  regular  basis by MOXY's internal auditors, Price
Waterhouse  LLP.   In  accordance  with   generally   accepted  auditing
standards, MOXY's independent public accountants, Arthur  Andersen  LLP,
have  developed an overall understanding of our accounting and financial
controls  and  have  conducted other tests as they consider necessary to
support their opinion on the financial statements.

      The  Board of Directors,  through  its  Audit  Committee  composed
solely of non-employee  directors,  is  responsible  for  overseeing the
integrity  and reliability of MOXY's accounting and financial  reporting
practices and  the  effectiveness  of  its  system of internal controls.
Arthur Andersen LLP and Price Waterhouse LLP  meet  regularly  with, and
have access to, this committee, with and without management present,  to
discuss the results of their audit work.

James R. Moffett                              Richard C. Adkerson
Co-Chairman of the Board                      Co-Chairman of the Board and
                                              Chief Executive Officer

<PAGE>  18

                         McMoRan OIL & GAS CO.
                             BALANCE SHEETS

                                                            December 31,
                                                       _______________________
                                                          1996         1995
                                                       ___________  __________
                                                            (In Thousands)

ASSETS
  Current assets:
  Cash and cash equivalents                               $10,500     $10,323
  Accounts receivable and other                            2,249        1,432
                                                       ___________  __________
     Total current assets                                 12,749       11,755
                                                       ___________  __________
  Oil and gas properties - successful efforts method:
     Unevaluated                                           2,173        1,869
     Proved                                               17,341        8,661
                                                       ___________  __________
                                                          19,514       10,530
  Less accumulated depreciation and amortization           1,283          652
                                                       ___________  __________
     Net oil and gas properties                           18,231        9,878
                                                       ___________  __________
  Total assets                                            $30,980     $21,633
                                                       ===========  ==========
  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
  Accounts payable and accrued liabilities                $9,411      $ 3,405
  Current portion of production loan                         366           93
                                                       ___________  __________
     Total current liabilities                             9,777        3,498
  Production loan, less current portion                   12,391          530
  Other liabilities                                          566           -    
  Stockholders' equity:
  Preferred stock, par value $0.01, 50,000,000 shares
  authorized and unissued                                  -               -    
  Common stock, par value $0.01, 150,000,000 shares
  authorized, 13,989,317 shares and 13,798,784 shares        140          138
  issued and outstanding
  Capital in excess of par value of common stock          47,803       47,302
  Accumulated deficit                                    (39,697)     (29,835)
                                                       ___________  __________
                                                           8,246       17,605
                                                       ___________  __________
  Total liabilities and stockholders' equity              $30,980     $21,633
                                                       ===========  ==========

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

<PAGE>  19
                         McMoRan OIL & GAS CO.
                        STATEMENTS OF OPERATIONS

                                                             
                                           Years Ended        Inception
                                           December 31,        through
                                       _____________________ December 31,
                                         1996        1995         1994
                                       _________   _________   __________
                                     (In Thousands, Except Per Share Amounts)
  Revenues:
  Oil and gas sales                    $ 2,434     $ 2,722     $    174
  Management fees                        1,636         545           -    
                                      ___________ ___________ ___________
     Total revenues                      4,070       3,267          174
                                      ___________ ___________ ___________
  Costs and expenses:
  Production and delivery, including
  depreciation and amortization          1,500       2,623        -    
  Exploration expenses                   9,818      11,756       15,518
  General and administrative expenses    2,635       3,687        2,338
                                      ___________ ___________ ___________
     Total costs and expenses           13,953      18,066       17,856
                                      ___________ ___________ ___________  
  Operating loss                        (9,883)    (14,799)     (17,682)
  Other income, net                         21         164        2,482
                                      ___________ ___________ ___________
  Net loss                             $(9,862)   $(14,635)    $(15,200)
                                      =========== =========== ===========
  Net loss per share                   $ (0.71)   $  (1.06)    $  (1.10)
                                      =========== =========== ===========
  Average shares outstanding            13,898      13,772       13,770
                                      =========== =========== ===========

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

<PAGE>  20

                         McMoRan OIL & GAS CO.
                        STATEMENTS OF CASH FLOW

                                           Years Ended      Inception
                                           December 31,      through
                                       _____________________ December 31,
                                         1996        1995       1994
                                       _________   _________ __________
                                                (In Thousands)

Cash flow from operating activities:
  Net loss                             $ (9,862)  $(14,635)   $(15,200)
  Adjustments to reconcile net loss to
  net cash provided by (used in)
  operating activities:
     Depreciation and amortization           741     1,525        -    
     Exploration expenses                  9,818    11,756      15,518
     Gain on sale of Canadian oil and   
     gas interests                            -        -        (1,691)
     (Increase) decrease in working
     capital:
       Accounts receivable and other        (988)   (1,347)       -    
       Accounts payable and accrued  
       liabilities                         6,954     1,555         340
                                       __________  __________ __________  
  Net cash provided by (used in) 
  operating activities                     6,663    (1,146)     (1,033)
                                       __________  __________ __________  
  Cash flow from investing activities:
  Exploration and development
  expenditures                           (20,678)  (20,957)    (18,768)
  Proceeds from joint venture         
  arrangements                             2,059    14,472         -    
  Proceeds from sale of Canadian oil         -        -          1,691
  and gas interests
                                       __________  __________ __________    
  Net cash used in investing activities  (18,619)   (6,485)    (17,077)
                                       __________  __________ __________    
  Cash flow from financing activities:
  Proceeds from production loan           12,927       750         -    
  Payments on production loan               (794)     (127)        -    
  Cash transferred from Freeport-          
  McMoRan Inc.                               -          -       35,441
                                       __________  __________ __________    
  Net cash provided by financing       
  activities                              12,133       623      35,441
                                       __________  __________ __________    
  Net increase (decrease) in cash and
  cash equivalents                           177    (7,008)     17,331
  Cash and cash equivalents at     
  beginning of year                       10,323    17,331        -    
                                       __________ __________ __________    
  Cash and cash equivalents at end of
  year                                   $10,500   $10,323     $17,331
                                       ========== ========== ==========
  Interest paid                           $  304   $   -       $  -    
                                       ========== ========== ==========

The accompanying notes, which include information in Notes 1, 3, 4 and 5
regarding noncash transactions,  are an integral part of these financial
statements.

<PAGE> 21

1.  ORGANIZATION
McMoRan  Oil & Gas Co. (MOXY) was formed  in  1994  as  a  wholly  owned
subsidiary of Freeport-McMoRan Inc. (FTX).  In May 1994, FTX distributed
one MOXY common  share  for  each ten FTX common shares.  The net assets
transferred, at FTX's historical cost, follow (in thousands):

Cash and cash equivalents                       $35,441
  Property, plant and equipment                 13,052
  Current liabilities                           (1,138)
                                                _______
                                                $47,355
                                                =======

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates.  The preparation of financial statements in conformity
with generally accepted accounting  principles  requires  management  to
make  estimates  and  assumptions  that  affect  the reported amounts of
assets  and  liabilities  and  disclosure  of  contingent   assets   and
liabilities  at  the  date  of the financial statements and the reported
amounts of revenues and expenses  during  the  reporting period.  Actual
results could differ from those estimates.

Cash and Cash Equivalents.  Highly liquid investments  purchased  with a
maturity of three months or less are considered cash equivalents.

Exploration  and Development Costs.  MOXY follows the successful efforts
method  of  accounting  for  its  oil  and  gas  operations.   Costs  of
exploratory wells  are  capitalized pending determination of whether the
wells find proved reserves.   Costs  of  leases,  productive exploratory
wells   and   development   activities  are  also  capitalized.    Other
exploration  costs  are  expensed.   Depreciation  and  amortization  is
determined  on  a  field-by-field  basis  using  the  unit-of-production
method.  Gains or losses  are  included  in earnings when properties are
sold.

  In 1995, the Financial Accounting Standards Board issued Statement No.
121 (FAS 121) which requires a reduction of the carrying amount of long-
lived assets to fair value when events indicate that the carrying amount
may not be recoverable.  Measurement of the  impairment loss is based on
the  fair  value of the asset.  Generally, MOXY  determines  fair  value
using valuation  techniques  such  as  expected future cash flows.  MOXY
adopted FAS 121 effective January 1, 1995,  and  since that time has not
incurred any impairment losses.

Financial  Instruments.   The  carrying  amounts  of receivables,  other
current  assets  and  accounts  payable  reported in the  balance  sheet
approximate fair value.  The production loan's interest rate is variable
(Note 3) and thus approximates fair value.

3.  EXPLORATION AGREEMENTS
In September 1995, MOXY entered into an agreement  with MCN establishing
a  $65 million oil and gas exploration and development  program  in  the
offshore  Gulf of Mexico area.  Revenues and costs are shared 40 percent
by MOXY and  60  percent by MCN.  MCN is funding its 60 percent share of
the expenditures and  is  loaning  funds  for MOXY's 40 percent share at
prime  plus  two  percent.   MOXY's share of future  net  revenues  from
program  properties is dedicated  to  repay  borrowings.   MOXY  is  not
otherwise obligated to repay these borrowings.  As of December 31, 1996,
MOXY had $12.8  million  of  borrowings  outstanding  from  MCN, with an
additional $6.6 million of borrowings available for past expenditures.

  In  June 1995, MOXY and Phillips Petroleum Company (Phillips)  entered
into an  exploration agreement covering a project area in south Louisiana.  
MOXY conveyed one-half of  its interest in the area to Phillips  for $3.8 
million.  In June 1996, MOXY  sold  one-half  of  its remaining 50 percent  
leasehold interest to Freeport-McMoRan Resource Partners, Limited Partnership 
(FRP), an affiliate  of  MOXY,  for  $2.1 million.  This amount represented  
the reimbursement for certain costs previously incurred by MOXY in connection 
with this project area and was recorded as a reduction to exploration 
expenses.  MOXY sold the interest to FRP on the same proportionate basis  
as the prior Phillips sale.  The project area, with the exception of the 
North  Bay  Junop  and  the East Fiddler's  Lake  prospects (discussed 
earlier), is subject to a possible 25 percent participation by a mineral 
rights owner.

<PAGE>  22

4.  TRANSACTIONS WITH FTX AND EMPLOYEE BENEFITS
Management Services.  FTX provides certain management and administrative
services  for MOXY.   During  1995,  MOXY  restructured  its  management
services agreement  with FTX to provide specified services for an annual
fee of $1.0 million.   Costs  of  services  provided by FTX, included in
general and administrative expenses, totaled  $1.0 million in 1996, $1.3
million in 1995 and $1.2 million in the 1994 period.

  MOXY's  contract  for  geological and geophysical  services  with  CLK
Company (CLK) was amended  during 1997 to provide for an annual retainer
fee of $2.4 million ($0.5 million  of the annual fee paid in MOXY common
stock),  plus certain expenses and an  overriding  royalty  interest  in
prospects accepted by MOXY.  Costs of services provided by CLK, included
in exploration  expenses,  totaled $3.1 million in 1996, $3.5 million in
1995 and $3.9 million in 1994.

Stock Options.  MOXY's Stock  Option Plan and Stock Option Plan for Non-
Employee Directors (the Plans)  authorize MOXY to grant stock options to
purchase up to 1.25 million shares  of MOXY stock at no less than market
value at time of grant.  Generally, stock  options are exercisable in 25
percent annual increments beginning one year  from the date of grant and
expire 10 years after the date of grant.  Also,  in  connection with the
FTX distribution of MOXY shares, stock options were granted to employees
and directors of FTX.  A summary of stock options outstanding follows:

                                         1996               1995

                                 ___________________ _____________________
                                  Number    Average    Number    Average
                                    of      Option       of       Option
                                  Options    Price    Options     Price
                                __________ _________ __________ __________

Beginning of year               2,257,828    $3.92    1,829,867    $4.26
  Granted                          24,904     2.54      529,028     2.85
  Exercised                          (581)    3.03       -          -   
  Expired/forfeited              (142,457)    4.33     (101,067)    4.39
                               ___________           ___________
  End of year                   2,139,694     3.88    2,257,828     3.92
                               ===========           ===========

  At  December 31, 1996, options for approximately 550,000  shares  were
available  for new grants under the Plans.  Summary information of fixed
stock options outstanding at December 31, 1996 follows:

                              Options Outstanding       Options Exercisable
                         ______________________________ ___________________ 
                                    Weighted  Weighted           Weighted
                           Number   Average   Average    Number   Average
                             of    Remaining   Option      of     Option
Range of Exercise Prices   Options    Life     Price    Options    Price
________________________ __________ _________ ________ _________ __________
    $1.94 to $2.81         515,000   9 years   $2.80     126,250  $2.81  
    $2.94 to $3.88         214,394   8 years    3.58      98,718   3.66  
    $4.66 to $5.50       1,410,300   7 years    4.32   1,300,305   4.67  
                         _________                     _________
                         2,139,694                     1,525,273
                         =========                     =========

  MOXY  has adopted  the  disclosure-only  provisions  of  FAS  123  and
continues  to  apply  APB  Opinion No. 25 and related interpretations in
accounting  for its stock-based  compensation  plans.   Accordingly,  no
compensation  cost  has  been  recognized  for MOXY's fixed stock option
grants.  Had compensation cost for MOXY's fixed stock option grants been
determined based on the fair value at the grant  dates  for awards under
those  plans  consistent with FAS 123, MOXY's pro forma net  loss  would
have been $10.1  million  ($0.73  per  share)  in 1996 and $14.7 million
($1.06  per  share) in 1995.  For the pro forma computations,  the  fair
values of the  fixed  option grants were estimated on the dates of grant
using the Black-Scholes option pricing model.  The weighted average fair
value for fixed stock option  grants  was  $1.69  per option in 1996 and
$2.15 per option in 1995.  The weighted average assumptions used include
a  risk-free  interest rate of 6.6 percent in 1996 and  6.4  percent  in
1995, expected  volatility  of 45 percent in 1996 and 60 percent in 1995
and expected lives of 10 years.  The pro forma effects on net income for
1996 and 1995 are not representative of future years because they do not
take into consideration grants  made  prior to 1995.  No other discounts
or restrictions related to vesting or the likelihood of vesting of fixed
stock options were applied.

<PAGE>  23

5.  INCOME TAXES
MOXY has $26.5 million of net deferred  tax  assets  as  of December 31,
1996  resulting  from  temporary differences related to MOXY's  and  its
predecessor  entities' exploration  activities.   MOXY  has  provided  a
valuation allowance equal to these tax assets because of the expectation
of incurring tax losses for at least the near future.

6.  COMMITMENTS AND CONTINGENCIES
Commitments.   MOXY  has  expenditure  commitments of approximately $8.7
million in 1997.

Environmental.   Although MOXY has no known  environmental  liabilities,
increasing emphasis  on environmental matters could result in additional
costs,  which would be  charged  against  MOXY's  operations  in  future
periods.    Present   and  future  environmental  laws  and  regulations
applicable  to  MOXY's  operations  could  require  substantial  capital
expenditures or could adversely affect its operations in other ways that
cannot be accurately predicted at this time.

7.  SUPPLEMENTARY OIL AND GAS INFORMATION (Unaudited)
The supplementary information  presented below is prepared in accordance
with  requirements  prescribed by  the  Financial  Accounting  Standards
Board.

Proved Oil and Gas Reserves.   Proved  oil  and gas reserves at December
31,  1996,  have been estimated by independent  petroleum  engineers  in
accordance with  guidelines  established  by the Securities and Exchange
Commission (SEC).  Thus, the following reserve  estimates are based upon
existing economic and operating conditions; they  are only estimates and
should not be construed as being exact.  MOXY's 1996 proved reserves are
located in offshore United States waters.  Oil, including condensate and
plant products, is stated in thousands of barrels and  natural gas is in
millions of cubic feet.

                                        Oil           Gas
                                    __________   _____________
                                    1996  1995   1996     1995
                                    ____  ____   ____     ____
  Proved reserves:
     Beginning of year               94    262   8,521   9,714
     Revisions of previous      
     estimates                       31     54   1,155      88
     Discoveries and extensions      72     -    7,009   4,999
     Production                     (29)   (45)   (631) (1,093)
     Transfer to MCN                  -   (177)     -   (5,187)
                                   ______ _____ _______ ______
     End of year                    168     94   16,054  8,521
                                   ====== ===== ======= ======
  Proved developed reserves:
     End of year                     58     20    7,530    779
                                   ====== ===== ======= =======

<PAGE>  24

Standardized Measure of Discounted Future Net Cash Flows From Proved Oil
and Gas Reserves.
MOXY's  standardized  measure  of discounted future net cash  flows  and
changes therein relating to proved  oil  and  gas reserves were computed
using  reserve valuations based on regulations prescribed  by  the  SEC.
These regulations  provide  for  the  use  of current oil and gas prices
(escalated only when known and determinable  price  changes are provided
by contract and law) in the projection of future net cash flows.

                                                        December 31,
                                                      ________________
                                                       1996      1995
                                                      _______  _______
                                                       (In Thousands)
  
  Future cash flows                                   $66,260  $22,397
  Future costs applicable to future cash flows:
     Production costs                                  (7,805)  (3,834)
     Development and abandonment costs                (12,874)  (7,155)
                                                      ________ ________
  Future net cash flows before income taxes            45,581   11,408
  Future income taxes                                     -        -
                                                      ________ ________  
  Future net cash flows                                45,581   11,408
  Discount for estimated timing of net cash flows  
  (10% discount rate)                                 (10,240)  (3,078)
                                                      ________ ________
                                                      $35,341  $ 8,330
                                                      ======== ========

The   reserve   and   cash  flow  information  above  includes   amounts
attributable to MOXY's interest in West Cameron Block 503, which in March 
1997 MOXY agreed to sell for $2.9 million.  Proved  undeveloped  reserves  
applicable to MOXY's interest in this field totaled approximately 16 
thousand barrels of oil and 3,300 million cubic feet of gas with estimated 
discounted net cash flows of $3.4 million. MOXY would recognize a gain of 
approximately $2.3 million upon completion of this sale.

Changes in Standardized Measure of Discounted Future Net Cash Flows From
Proved Oil and Gas Reserves.

                                                  Years Ended December 31,
                                                  _________________________
                                                       1996       1995
                                                     ________   ________
                                                          (In Thousands)

  Beginning of year                                   $ 8,330    $ 6,413
  Discoveries and extensions, less related costs       10,837      3,368
  Development costs incurred during the year            6,985      1,750
  Revisions:
     Changes in prices                                 12,894      7,815
     Accretion of discount                                833        641
     Other changes, including revised estimates of
     development costs and rates of production         (2,863)    (3,083)
  Revenues, less production costs                      (1,675)    (1,589)
  Transfer to MCN                                       -         (6,985)
                                                      _________ __________
  End of year                                         $35,341    $ 8,330
                                                      ========= ==========

<PAGE>  25

8.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
                                                                   Net
                                        Operating      Net        Income
                                          Income      Income      (Loss)
                             Revenues     (Loss)      (Loss)     Per Share
                             __________ ___________ __________  ___________
                               (In Thousands, Except Per Share Amounts)
  1996
     1st Quarter              $ 1,073     $(4,453)    $(4,330)     $(0.31)
     2nd Quarter                  949         418a        525a       0.04a
     3rd Quarter                  919      (2,087)     (2,148)      (0.15)
     4th Quarter                1,129      (3,761)     (3,909)      (0.28)
                              _________  __________  __________  
                              $ 4,070     $(9,883)b   $(9,862)      (0.71)
                              =========  ==========  ==========  
  1995
     1st Quarter              $    55     $(4,051)    $(3,764)     $(0.27)
     2nd Quarter                1,351      (6,134)     (6,251)      (0.45)
     3rd Quarter                1,029      (2,439)c    (2,621)c     (0.19)c
     4th Quarter                  832      (2,175)     (1,999)      (0.15)
                              _________  __________  __________  
                              $ 3,267    $(14,799)b  $(14,635)      (1.06)
                              =========  ==========  ==========

a.Includes a reduction to exploration expense of $2.1 million ($0.15 per
  share) resulting from the reimbursement of previously expensed costs.
b.Foreign  exploration  costs  totaled  $0.4  million  in  1996 and $0.5
  million in 1995.
c.Includes  $0.4  million ($0.03 per share) for personnel severance  and
  other costs.


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF McMoRan OIL & GAS CO.:

      We have audited the accompanying balance sheets of McMoRan  Oil  &
Gas  Co.  (a  Delaware Corporation) as of December 31, 1996 and 1995 and
the related statements  of  operations and cash flow for the years ended
December 31, 1996 and 1995 and  for  the  period  from inception through
December 31, 1994.  These financial statements are the responsibility of
the Company's management.  Our responsibility is to  express  an opinion
on these financial statements based on our audits.

      We  conducted  our  audits  in  accordance with generally accepted
auditing standards.  Those standards require  that  we  plan and perform
the  audit  to  obtain reasonable assurance about whether the  financial
statements  are  free  of  material  misstatement.   An  audit  includes
examining,  on  a  test  basis,  evidence  supporting  the  amounts  and
disclosures  in  the  financial  statements.   An  audit  also  includes
assessing the accounting  principles used and significant estimates made
by management, as well as evaluating  the  overall  financial  statement
presentation.  We believe that our audits provide a reasonable basis for
our opinion.

      In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of McMoRan  Oil
&  Gas  Co.  as  of  December  31,  1996 and 1995 and the results of its
operations and its cash flow for the  years  ended December 31, 1996 and
1995  and for the period from inception through  December  31,  1994  in
conformity with generally accepted accounting principles.

New Orleans, Louisiana,                       Arthur Andersen LLP
  January 21, 1997


<PAGE>  26

Item 9.  Changes in and disagreements with Accountants on Accounting and
Financial Disclosure

      Not applicable.

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

      Information concerning the Company's directors and officers called
for  by  this  item  will  be included in the Company's definitive Proxy
Statement  prepared  in connection  with  the  1997  Annual  Meeting  of
Stockholders and is incorporated herein by reference.

Item 11.  Executive Compensation

      Information  concerning   the   compensation   of   the  Company's
executives  called  for  by this item will be included in the  Company's
definitive Proxy Statement  prepared  in connection with the 1997 Annual
Meeting of Stockholders and is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

      Information concerning security ownership  of  certain  beneficial
owners  and management called for by this item will be included  in  the
Company's  definitive  Proxy  Statement  prepared in connection with the
1997  Annual  Meeting  of  Stockholders and is  incorporated  herein  by
reference.

Item 13.  Certain Relationships and Related Transactions

      Information   concerning   certain   relationships   and   related
transactions called for  by  this item will be included in the Company's
definitive Proxy Statement prepared  in  connection with the 1997 Annual
Meeting of Stockholders and is incorporated herein by reference.

                                PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

      (a)(1).Financial Statements.  Reference is made to Item 8 hereof.

      (a)(2).Financial  Statement  Schedules.  Schedules have  not  been
included  because  they  are  not  required,   not   applicable  or  the
information required has been included elsewhere herein.

      (a)(3).Exhibits.  Reference is made to the Exhibit Index beginning
on page E-1 hereof.

      (b).  Reports on Form 8-K.   The Company filed a current report on
Form 8-K under Item 5 dated as of December 20, 1996.

<PAGE>  S-1
                               SIGNATURES

      Pursuant to the  requirements  of  Section  13  of  the Securities
Exchange Act of 1934, the registrant has duly caused this report  to  be
signed  on  its behalf by the undersigned, thereunto duly authorized, on
March 19, 1997.

                                    McMoRan OIL & GAS Co.


                                    By:     /s/ Richard C. Adkerson
                                         ______________________________
                                                Richard C. Adkerson
                                              Co-Chairman of the Board and
                                                Chief Executive Officer

      Pursuant  to  the  requirements of the Securities Exchange Act  of
1934, this report has been  signed  below  by  the  following persons on
behalf of the registrant and in the capacities indicated,  on  March 19,
1997.


                 *                     Co-Chairman of the Board and Director
       __________________________    
           James R. Moffett
       
       /s/ Richard C. Adkerson          Co-Chairman of the Board, Chief 
       __________________________         Executive Officer and Director
         Richard C. Adkerson               (Principal Executive Officer) 
                                            (Principal Financial Officer)
                                                      
                 *                                     Controller
       ___________________________         (Principal Accounting Officer)
         William J. Blackwell                      
         
                 *
        __________________________                     Director
          Robert W. Bruce III
                                                       
                                                       
                 *                                      Director
        __________________________    
            Robert A. Day
                                                       
                 *                                      Director
       ___________________________
        William B. Harrison, Jr.
                                                       
                 *                                      Director
        __________________________   
           Bobby Lee Lackey
                                                       
                 *                                      Director
        __________________________
         Gabrielle K. McDonald
                                                       
                 *                                      Director
        ___________________________    
            George Putnam

                 *                                      Director
        ___________________________  
          R. M. Rankin, Jr.
                                                       
                 *                                      Director
        ___________________________  
          J. Taylor Wharton


*By:    /s/ Richard C. Adkerson
       ____________________________  
            Richard C. Adkerson
             Attorney-in-Fact


                             McMoRan OIL & GAS CO.

                                 EXHIBIT INDEX
           
 Exhibit   
Number     

 2.1        Distribution  Agreement  dated  as  of  May  1, 1994 between
            Freeport  McMoRan  Inc.  and  the Company.  Incorporated  by
            reference to Exhibit 2.1 to Amendment  No.  2  to Form 10 as
            filed  with  the Commission on May 16, 1994 ("Amendment  No.
            2").

 3.1        Amended and Restated  Certificate  of  Incorporation  of the
            Company.   Incorporated  by  reference to Exhibit 3.1 to the
            Company's Annual Report for the year ended December 31, 1994
            on Form 10-K (the "1994 10-K").

 3.2        Bylaws of the Company.  Incorporated by reference to Exhibit
            3.2 to the Company's 1994 10-K.

 4.1        Form of the Company's Certificate of Designation of Series A
            Participating Cumulative Preferred  Stock.   Incorporated by
            reference to Exhibit 4.1 to Amendment No. 2.

 4.2        Rights  Agreement  dated  as  of  May  19, 1994 between  the
            Company  and  Mellon  Securities  Trust Company,  as  Rights
            Agent.   Incorporated by reference to  Exhibit  4.2  to  the
            Company's 1994 10-K.

 10.1       Amended and Restated Services Agreement, dated as of January
            1, 1997, between FM Services Company and the Company.


            Executive Compensation Plans and Arrangements
            (Exhibits 10.2 through 10.6)

 10.2       McMoRan Oil & Gas Co. Adjusted Stock Award Plan, as amended.

 10.3       McMoRan Oil & Gas Co. 1994 Stock Option Plan, as amended.

 10.4       McMoRan   Oil   &   Gas  Co.  1994  Stock  Option  Plan  for
            Non-Employee  Directors, as amended. 

 10.5       McMoRan Oil & Gas Co. Performance Incentive  Awards Program,
            as amended.  Incoporated by reference to Exhibit 10.5 to the
            Company's 1995 10-K.

 10.6       Financial   Counseling   and  Tax  Return  Preparation   and
            Certification Program of McMoRan Oil & Gas Co.  Incorporated
            by reference to Exhibit 10.6 to the Company's 1995 10-K.

 10.7       MOXY Participation & Exploration  Program Agreement dated as
            of  July  1,  1995 between McMoRan Oil  &  Gas  Co.  (MOXY),
            CoEnergy  Central   Exploration,   Inc.  (Central)  and  MCN
            Investment Corporation (MCNIC).  Incorporated  by  reference
            to  Exhibit 2.1 to the Company's Current Report on Form  8-K
            dated as of September 19, 1995.

 10.8       Security  Agreement  and  Conveyance  of  Production Payment
            dated  as  of  September  27, 1995 between MOXY  and  MCNIC.
            Incorporated by reference to  Exhibit  2.2  to the Company's
            Current Report on Form 8-K dated as of September 19, 1995.

 10.9       Exploration  Agreement  dated  as of June 13, 1995,  between
            MOXY  and  Phillips  Petroleum  Company.    Incorporated  by
            reference to the Company's Quarterly Report on Form 10-Q for
            the quarter ending June 30, 1995.

   10.10    Exploration Agreement effective July 1, 1996,  between  MOXY
            and  Freeport-McMoRan Resource Partners, Limited Partnership
            ("FRP").    Incorporated   by  reference  to  the  Company's
            Quarterly Report on Form 10-Q  for  the  quarter ending June
            30, 1996.

  10.11     Letter  Agreement dated February 28, 1997 between  MOXY  and
            FRP.

 23.1       Consent of Arthur Andersen LLP.

 23.2       Consent of Crescent Technology, Inc.

 24.1       Certified  resolution  of  the  Board  of  Directors  of the
            Company  authorizing  this report to be signed on behalf  of
            any officer or director pursuant to a Power of Attorney.

 24.2       Powers of Attorney pursuant  to  which  this report has been
            signed on behalf of certain officers and  directors  of  the
            Company.

 27.1       Financial Data Schedule.