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`
end
</PDF>Exhibit 10.13

    
      

    

    EXECUTION
      COPY

    First
      Amendment

     

    to

     

    Credit
      Agreement

     

    Among

     

    McMoRan
      Oil & Gas, LLC,

    as
      Borrower,

    

    JPMorgan
      Chase Bank, N.A.,

    as
      Administrative Agent,

    

    Toronto-Dominion
      (Texas) LLC,

    as
      Syndication Agent,

     

    and

     

    The
      Lenders Signatory Hereto

     

    Effective
      as of January 19, 2007

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    First
      Amendment to Credit Agreement

    

    This
      First
      Amendment to Credit Agreement
      (this
“First
      Amendment”)
      executed effective as of the 19th
      of
      January, 2007 (the “First
      Amendment Effective Date”)
      is
      among McMoRan
      Oil & Gas, LLC, a
      limited
      liability company formed under the laws of the State of Delaware (the
“Borrower”);
      each
      of the undersigned guarantors (the “Guarantors”,
      and
      together with the Borrower, the “Obligors”);
      each
      of the Lenders that is a signatory hereto; JPMorgan
      Chase Bank, N.A.,
      as
      administrative agent for the Lenders (in such capacity, together with its
      successors, the “Administrative
      Agent”);
      and
Toronto-Dominion
      (Texas) LLC,
      as
      syndication agent for the Lenders (in such capacity, together with its
      successors in such capacity, the “Syndication
      Agent”).

     

    Recitals

     

    A. The
      Borrower, the Administrative Agent, the Syndication Agent and the Lenders are
      parties to that certain Credit Agreement dated as of April 19, 2006 (the
“Credit
      Agreement”),
      pursuant to which the Lenders have made certain credit available to and on
      behalf of the Borrower.

     

    B. The
      Borrower has requested and the Administrative Agent and the Lenders have agreed
      to amend certain provisions of the Credit Agreement.

     

    C. NOW,
      THEREFORE, in consideration of the premises and the mutual covenants herein
      contained, for good and valuable consideration, the receipt and sufficiency
      of
      which are hereby acknowledged, the parties hereto agree as follows:

     

    Section
      1.  Defined
      Terms.
      Each
      capitalized term which is defined in the Credit Agreement, but which is not
      defined in this First Amendment, shall have the meaning ascribed such term
      in
      the Credit Agreement. Unless otherwise indicated, all section references in
      this
      First Amendment refer to the Credit Agreement.

     

    Section
      2.  Amendments
      to Credit Agreement.

     

    2.1  Section
      1.02.
      The
      following definitions are hereby added or amended and restated in its entirety
      as follows:

     

    “Agreed
      Pricing”
      means:

     

    (i) for
      anticipated sales of Hydrocarbons that are fixed in a firm fixed price sales
      contract, the fixed price or prices provided for in such sales contract during
      the term thereof; and

     

    (ii) for
      anticipated sales of Hydrocarbons that are hedged by a fixed price Swap
      Agreement, the fixed price or prices provided for in such Swap Agreement during
      the term thereof, as modified by any necessary adjustment for quality and
      geographical differentials; and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (iii) for
      anticipated sales of Hydrocarbons that are hedged by a Swap Agreement which
      Swap
      Agreement provides for a range of prices between a floor and a ceiling, the
      prices provided for in subsection (iv) below, provided that during the term
      of
      such Swap Agreement such prices shall in no event be less than such floor or
      exceed such ceiling, as such floor and ceiling are modified by any necessary
      adjustment specified by the Administrative Agent for quality and geographical
      differentials; and

     

    (iv) for
      anticipated sales of Hydrocarbons, if such sales are not hedged by a Swap
      Agreement or sales contract that is described in paragraphs (i), (ii), or (iii)
      above, for the date of calculation (or, if such date is not a Business Day,
      for
      the first Business Day thereafter), and with any necessary adjustment specified
      by the Administrative Agent for quality and geographical differentials, the
      “strip” price under Henry Hub Natural Gas futures contracts and Light, Sweet
      Crude Oil futures contracts for the five year period following such calculation
      date, in each case as published by New York Mercantile Exchange (NYMEX) on
      its
      website currently located at www.nymex.com,
      or any
      successor thereto (as such price may be corrected or revised from time to time
      by the NYMEX in accordance with its rules and regulations), as of the settlement
      of the last trading day for the contract month coincident with the effective
      date of the then most recent Reserve Report, and thereafter the price in effect
      at the end of such five year period.

     

    “Agreement”
means
      this Credit Agreement, as amended by the First Amendment to Credit Agreement,
      dated as of January 19, 2007, as the same may from time to time be further
      amended, modified, supplemented or restated.

     

    “Cash
      Equivalents”
means
      (a) marketable direct obligations issued by, or unconditionally guaranteed
      by,
      the United States Government or issued by any agency thereof and backed
      by the
      full faith and credit of the United States, in each case maturing within one
      year from the date of acquisition; (b) certificates of deposit, time deposits,
      eurodollar time deposits or overnight bank deposits having maturities of six
      months or less from the date of acquisition issued by any Lender or by any
      commercial bank or trust company organized under the laws of the United States
      or any state thereof having combined capital and surplus of not less than
      $250,000,000; (c) commercial paper of an issuer rated at least A-1 by Standard
      S&P or P-1 by Moody’s, or carrying an equivalent rating by a nationally
      recognized rating agency, if both of the two named rating agencies cease
      publishing ratings of commercial paper issuers generally, and maturing within
      six months from the date of acquisition; (d) repurchase obligations of any
      Lender or of any commercial bank satisfying the requirements of clause (b)
      of
      this definition, having a term of not more than 30 days, with respect to
      securities issued or fully guaranteed or insured by the United States
      government; (e) securities with maturities of one year or less from the date
      of
      acquisition issued or fully guaranteed by any state, commonwealth or territory
      of the United States, by any political subdivision or taxing authority of any
      such state, commonwealth or territory or by any foreign government, the
      securities of which state, 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    commonwealth,
      territory, political subdivision, taxing authority or foreign government (as
      the
      case may be) are rated at least A by S&P or A by Moody’s; (f) securities
      with maturities of six months or less from the date of acquisition backed by
      standby letters of credit issued by any Lender or any commercial bank satisfying
      the requirements of clause (b) of this definition; (g) money market mutual
      or
      similar funds that invest exclusively in assets satisfying the requirements
      of
      clauses (a) through (f) of this definition; or (h) money market funds that
      (i)
      comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company
      Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moody’s and
      (iii) have portfolio assets of at least $5,000,000,000.

     

    “Equity
      Issuance”
means
      the issuance, sale or other disposition after the Effective Date by the
      Borrower, any of its Subsidiaries or any other Credit Party other than the
      Parent of its Equity Interests.

     

    “First
      Amendment Effective Date”
means
      January 19, 2007.

     

    “Intercreditor
      Agreement”
means
      in respect of the Second Lien Term Loan Agreement, that certain Intercreditor
      Agreement
      dated as
      of the First Amendment Effective Date among the Administrative Agent, the
      Borrower and Guarantors and the agent on behalf of the Second Lien Lenders,
      as
      the same may from time to time be amended, modified, supplemented or restated
      in
      accordance with the provisions thereof. 

     

    “Material
      Indebtedness”
means
      Debt (other than the Loans), or obligations in respect of one or more Swap
      Agreements, of any one or more of the Borrower and its Subsidiaries or any
      Guarantor in an aggregate principal amount exceeding $10,000,000.
      For
      purposes of determining Material Indebtedness, the “principal amount” of the
      obligations of the Borrower or any Subsidiary or Guarantor in respect of any
      Swap Agreement at any time shall be the Swap Termination Value.

     

    “Permitted
      Refinancing Debt”
means
      Debt (for purposes of this definition, “new
      Debt”)
      incurred in exchange for, or proceeds of which are used to refinance, all of
      any
      other Debt (the “Refinanced
      Debt”);
      provided that (a) such new Debt is in an aggregate principal amount not in
      excess of the sum of (i) the aggregate principal amount then outstanding of
      the Refinanced Debt (or, if the Refinanced Debt is exchanged or acquired for
      an
      amount less than the principal amount thereof to be due and payable upon a
      declaration of acceleration thereof, such lesser amount) and (ii) an amount
      necessary to pay any fees and expenses, including premiums, related to such
      exchange or refinancing; (b) such new Debt has a stated maturity no earlier
      than the stated maturity of the Refinanced Debt and an average life no shorter
      than the average life of the Refinanced Debt; (c) such new Debt does not
      have a stated interest rate in excess of the stated interest rate of the
      Refinanced Debt; (d) such new Debt does not contain any covenants which are
      more onerous to the Borrower and its Restricted Subsidiaries than those imposed
      by the Refinanced Debt, (e) such new Debt (and any guarantees thereof) is
      secured by 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    the
      same
      collateral which secured the Refinance Debt and (f) any Liens securing such
      new
      Debt are subordinated to the Liens securing the Indebtedness (or, if applicable,
      the Guaranty Agreement) to at least the same extent as the Liens securing the
      Refinanced Debt.

     

    “Probable
      Reserves”
means
      “Probable Reserves” as defined in the Definitions for Oil and Gas Reserves
      promulgated by the Society of Petroleum Engineers (or any generally recognized
      successor) as in effect at the time in question.

     

    “Proved
      Reserves”
means
      “Proved Reserves” determined in accordance with SEC requirements (with the
      exception that such reserves shall be calculated using the Agreed Pricing)
      in
      effect at
      the
      time in question
      which
      are categorized as “Proved Developed Reserves” and “Proved Undeveloped
      Reserves”. Proved Developed Reserves are further subcategorized as “Proved
      Developed Producing Reserves” and “Proved Developed Nonproducing Reserves” in
      the Definitions
      for Oil and Gas Reserves promulgated by the Society of Petroleum Engineers
      (or
      any generally recognized successor) as in effect at the time in
      question.

     

    “PV”
means
      the net present value, discounted at 10% per annum, of the future net revenues
      expected to accrue to the Borrower’s and its Subsidiaries’ collective interests
      in Proved Reserves and Probable Reserves (calculated separately) expected to
      be
      produced from Oil and Gas Properties during the remaining expected economic
      lives of such reserves. Each calculation of Total Proved Reserve Value shall
      be
      made in accordance with SEC requirements in effect at
      the
      time in question and each calculation of Total Probable
      Reserve Value shall be made in accordance with
      the then
      existing standards of the Society of Petroleum Engineers,
      provided that in any event (a) appropriate deductions shall be made for
      severance and ad valorem taxes, and for operating, gathering, transportation
      and
      marketing costs required for the production and sale of such reserves and (b)
      such calculations shall be made using the Agreed Pricing.

     

    “Reserve
      Report”
means
      the Initial Reserve Report and each other report setting forth, as of each
      January 1st
      or July
      1st
      (or such
      other date in the event of an Interim Redetermination), the oil and gas reserves
      attributable to the Oil and Gas Properties of the Borrower and the Subsidiaries,
      together with a projection of the rate of production and future net income,
      taxes, operating expenses and capital expenditures with respect thereto as
      of
      such date based upon the economic assumptions consistent with the Administrative
      Agent’s lending requirements at the time, and, while the Second Lien Notes are
      outstanding, the definition of PV. While the Second Lien Notes are outstanding,
      each such report must (a) separately report on Proved Developed Producing
      Reserves, Proved Developed Nonproducing Reserves, Proved Undeveloped Reserves
      and Probable Reserves and separately calculate the PV of each such category
      for
      the Borrower’s and the Subsidiaries’ interests, (b) take into account the
      Borrower’s actual experiences with leasehold operating expenses and other costs
      in determining projected leasehold operating expenses and other costs, (c)
      identify and take into account 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    any
      “over-produced” or “under-produced” status under gas balancing arrangements, and
      (d) contain information and analysis comparable in scope to that contained
      in
      the Initial Reserve Report.

     

    “Second
      Lien Agent”
means
      the Person acting as administrative agent, whether designated as such or
      functioning in a similar representative capacity, for the Second Lien
      Lenders.

     

    “Second
      Lien Lenders”
means
      each Person now or hereafter a party to the Second Lien Term Loan Agreement
      as a
      lender.

     

    “Second
      Lien Majority Lenders”
means
      Second Lien Lenders holding more than 50% of the then outstanding Second Lien
      Notes or such larger percentage as may be necessary to generally amend the
      Second Lien Term Loan Agreement pursuant to the terms thereof 

     

    “Second
      Lien Notes”
means
      the $100,000,000 Second Lien Term Notes issued pursuant to the Second Lien
      Term
      Loan Agreement, together with all amendments, modifications, extensions and
      rearrangements, including any Permitted Refinancing Debt in respect thereof,
      all
      to the extent permitted by Section 9.04. 

     

    “Second
      Lien Term Loan Agreement”
means
      that certain Second Lien Term Loan Credit Agreement dated as of the First
      Amendment Effective Date among the Borrower, JPMorgan Chase Bank, N.A., as
      administrative agent for the Second Lien Lenders, TD Securities (USA) LLC,
      as
      syndication agent for the Second Lien Lenders, and the Second Lien Lenders
      party
      thereto, together with all amendments, modifications and supplements, including
      any Permitted Refinancing Debt in respect thereof, all to the extent permitted
      by Section 9.04.

     

    “Second
      Lien Term Loan Documents”
means
      the Second Lien Term Loan Agreement, the Second Lien Notes and any “Loan
      Documents” (as defined therein), in each case, together with all amendments,
      modifications and supplements thereto permitted by Section 9.04.

     

    “Security
      Instruments”
means
      the Guaranty Agreement, the Intercreditor Agreement, mortgages, deeds of trust
      and other agreements, instruments or certificates described or referred to
      in
      Exhibit F-1, and any and all other agreements, instruments, consents or
      certificates now or hereafter executed
      and
      delivered by the Borrower or any other Person (other than Swap Agreements with
      the Lenders or any Affiliate of a Lender or participation or similar agreements
      between any Lender and any other lender or creditor with respect to any
      Indebtedness pursuant to this Agreement) in connection with, or as security
      for
      the payment or performance of the Indebtedness, the Notes, this Agreement,
      or
      reimbursement obligations under the Letters of Credit, as such agreements may
      be
      amended, modified, supplemented or restated from time to time. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Total
      Probable Reserve Value”
means
      at any time the PV attributable to Probable Reserves as most recently determined
      and certified to the Lenders in accordance with Section 8.12(h), as the same
      may
      be adjusted from time to time pursuant to Section 8.13(c) or Section
      9.01(e).

     

    “Total
      Proved Reserve Value”
means
      at any time the
      PV
      attributable to Proved Reserves as most recently determined and certified to
      the
      Lenders in accordance with Section 8.12(h), as the same may be adjusted from
      time to time pursuant to Section 8.13(c) or Section 9.01(e).

     

    2.2  Section
      8.12.
      Sections 8.12(d) through Section 8.12(h) are hereby inserted which read as
      follows:

     

    (d) Subject
      to interim adjustment under Section 8.13(c) and Section 9.01(e), the initial
      Total Proved Reserve Value shall be $387,600,000.

     

    (e) No
      later
      than March 1st and September 1st of each year, the Borrower shall deliver to
      the
      Administrative Agent two certificates, each in form reasonably satisfactory
      to
      the Administrative Agent, reflecting the Total Proved Reserve Value and the
      Total Probable Reserve Value, respectively, as of the immediately preceding
      January 1 and July 1, commencing March 1, 2007.

     

    (f) In
      addition, the Borrower may, by notifying the Administrative Agent thereof,
      elect
      to require the Total Proved Reserve Value to be determined two additional times
      on a specified “as of” date between such regular determinations (which shall be
      the first day of a calendar month following the date of such notice), in which
      event the Borrower shall deliver to the Administrative Agent a certificate,
      in
      form reasonably satisfactory to the Administrative Agent (which may be in the
      form of an updated Reserve Report), no later than three months after such
      specified date reflecting the Total Proved Reserve Value as of such specified
      date. 

     

    (g) The
      Borrower shall calculate the Total Proved Reserve Value and the Total Probable
      Reserve Value based upon the applicable definitions of this Agreement, and
      provide with each such certificate the Reserve Report and other information
      used
      by the Borrower in calculating the Total Proved Reserve Value and Total Probable
      Reserve Value.

     

    (h) Upon
      receipt of each such certificate, the Administrative Agent shall promptly review
      such certificate and, within five (5) Business Days, confirm to the Borrower
      and
      the Lenders that (i) the calculations used to determine the Total Proved Reserve
      Value were based upon the pricing and other requirements set forth in the
      definition of PV and (ii) no mathematical or other errors or omissions have
      been
      made in such calculation. If facts under (i) or (ii) are ascertained to exist,
      the Administrative Agent and the Borrower shall cooperate to promptly calculate
      the proper amount. Otherwise, upon confirmation of such 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    amount
      as
      the Total Proved Reserve Value, such amount will be the Total Proved Reserve
      Value until next adjusted or redetermined in accordance with the terms of this
      Agreement pursuant to Section 8.13(c) or Section 9.01(e).

     

    2.3  Section
      8.13.
      Section
      8.13(d) is hereby added which reads as follows:

     

    (d) For
      so
      long as the Second Lien Notes are outstanding, the reference to “85%” in
      Sections 8.13(a), (b) and (c) shall be “90%”.

     

    2.4  Section
      8.14.
      Section
      8.14(d) is hereby deleted and the following is inserted which reads as
      follows:

     

    Other
      than Liens granted to secure the Second Lien Notes as of the First Amendment
      Effective Date, the Borrower agrees that it will not, and will not permit any
      Subsidiary to, grant a Lien on any Property to secure the Second Lien Notes
      without first (i) giving fifteen (15) days’ prior written notice to the
      Administrative Agent thereof and (ii) granting to the Administrative Agent
      to
      secure the Indebtedness a first-priority, perfected Lien on this same Property
      pursuant to Security Instruments in form and substance reasonably satisfactory
      to the Administrative Agent. In connection therewith, the Borrower shall, or
      shall cause its Subsidiaries to, execute and deliver such other additional
      closing documents, certificates and legal opinions as shall reasonably be
      requested by the Administrative Agent.

     

    2.5  Section
      9.01.
      The
      following sentence is added to the end of Section 9.01(a):

     

    “For
      so
      long as the Second Lien Notes are outstanding, Total Debt for purposes of this
      Section 9.01(a) shall mean Total Debt as of any date of determination less
      all
      unencumbered cash and Cash Equivalents and Debt permitted pursuant to Section
      9.02(f) on the balance sheet of the Borrower and its Subsidiaries as of such
      date.”

     

    2.6  Section
      9.01.
      Section
      9.01(c), Section 9.01(d) and Section 9.01(e) are hereby inserted which read
      as
      follows:

     

    (c) Ratio
      of Total Proved Reserve Value to Net Debt.
      For so
      long as the Second Lien Notes are outstanding, the Borrower will not as of
      any
      date of determination permit the ratio of (i) Total Proved Reserve Value to
      (ii)
      (A) Total Debt less (B) the sum as of such date of (1) unencumbered cash and
      Cash Equivalents of the Borrower and its Subsidiaries and
      (2)
      Debt permitted pursuant to Section 9.02(f)
      to be
      less than (x) as of December 31, 2006 through December 30, 2007, 1.5 to
      1.0,
      (y) as
      of December 31, 2007 through December 30, 2008, 1.75 to 1.0 and (z) thereafter
      2.0
      to
      1.0.

     

    (d) Interest
      Coverage Ratio.
      For
      so
      long as the Second Lien Notes are outstanding, the
      Borrower will not permit the ratio, determined as of the end of any fiscal
      quarter, of (i) EBITDAX for the trailing four fiscal quarter period ending
      on
      such date, to (ii) Interest Expense for such four fiscal quarter period to
      

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    be
      less
      than (x) prior to December 31, 2007, 2.75 to 1.00, (y) on and after December
      31,
      2007 and prior to December 31, 2008, 3.25 to 1.00 and (z) thereafter 3.75 to
      1.00.

     

    (e) Adjustments
      to Total Proved Reserve Value.
      If the
      Borrower or any Subsidiary shall sell or otherwise dispose of any Oil and Gas
      Property included in the calculation of Total Proved Reserve Value, then until
      Total Proved Reserve Value is recalculated in accordance with the terms hereof,
      Total Proved Reserve Value as then in effect shall be reduced to reflect the
      Total Proved Reserve Value of the Oil and Gas Property so sold or disposed
      of.
      Total Proved Reserve Value may also be adjusted to reflect title defects as
      contemplated under Section 8.13(c).

     

    2.7  Section
      9.02.
      Section
      9.02(e) is hereby replaced and Section 9.02(k) is hereby inserted, each of
      which
      reads as follows:

     

    (e) Debt
      in
      respect of letters of credit, bank or completion guarantees, surety,
      performance, warranty, bid, appeal or other bonds or guarantees and similar
      instruments, in each case to the extent (x) required by Governmental
      Requirements or any third Person and (y) provided in the ordinary course of
      business in connection with the operation of the Oil and Gas
      Properties.

     

    (k) Debt
      under the Second Lien Notes and any guarantees thereof by a Guarantor, the
      principal amount of which Debt does not exceed $100,000,000 in the aggregate,
      and any Permitted Refinancing Debt thereof.

     

    2.8  Section
      9.03.
      Section
      9.03(d) is hereby redesignated as Section 9.03(e) and a new Section 9.03(d)
      is
      hereby inserted which reads as follows:

     

    (d) Liens
      on
      Property securing the Second Lien Notes and any guaranties thereof as permitted
      by Section 9.02(k); provided, however, that (i) such Liens securing such Debt
      are subordinate to the Liens securing the Indebtedness, this Agreement and
      the
      other Loan Documents pursuant to the Intercreditor Agreement and (ii) both
      before and after giving effect to the incurrence of any such Lien, the Borrower
      is in compliance with Section 8.14(d). 

     

    2.9  Section
      9.04.
      Section
      9.04 is hereby amended to add the following paragraph (b):

     

    (b) The
      Borrower will not, and will not permit any Subsidiary to: (1) prior to the
      date
      that is ninety-one (91) days after the Maturity Date, call, make or offer to
      make any optional or voluntary Redemption of or otherwise optionally or
      voluntarily Redeem (whether in whole or in part) the Second Lien Notes except
      with the proceeds of an Equity Issuance or with Permitted Refinancing Debt,
      provided that the Borrower may optionally prepay the Second Lien Notes, if
      (A)
      no Default or Event of Default has occurred and is continuing or would exist
      after giving effect to such prepayment or refinancing, and (B) after giving
      effect to such prepayment, the Borrower would have at least $15,000,000 of
      unused availability under the Commitments, or (2) amend, modify, waive or
      otherwise change, consent or agree to any amendment, 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    modification,
      waiver or other change to, any of the terms of any Second Lien Term Loan
      Document if (A) the effect thereof would be to shorten the maturity of the
      Second Lien Notes or shorten the average life or increase the amount of any
      scheduled repayment or mandatory prepayment of principal or increase the
      interest rate or increase any call, put or prepayment premiums or shorten any
      period for payment of interest thereon, (B) such action requires the
      payment of a consent fee (howsoever described), (C) such action adds additional
      Property as collateral to secure the Second Lien Notes unless the Borrower
      complies with Section 8.14(d) or (D) such action adds any covenants or defaults
      without this Agreement being contemporaneously amended to add substantially
      similar covenants or defaults, provided that the foregoing shall not prohibit
      the execution of supplemental agreements to add guarantors if required by the
      terms thereof provided that any such guarantor also guarantees the Indebtedness
      pursuant to the Guaranty Agreement and each of the Borrower and such guarantor
      otherwise complies with Section 8.14(b).

     

    2.10  Section
      10.01.
      Section
      10.01(o) is hereby added which reads as follows:

     

    (o) the
      Intercreditor Agreement, after delivery thereof shall for any reason, except
      to
      the extent permitted by the terms thereof, cease to be in full force and effect
      and valid, binding and enforceable in accordance with its terms against the
      Borrower or any party thereto or holder of the Debt subordinated thereby or
      shall be repudiated by any of them, or cause the Lien securing the payment
      of
      the obligations of the Second Lien Notes to be senior or pari passu with the
      Liens securing the payment of obligations of this Agreement, or any payment
      by
      the Borrower or any Guarantor in violation of the terms of the Intercreditor
      Agreement.

     

    2.11  Borrowing
      Base Adjustment.
      As of
      the First Amendment Effective Date, the Borrowing Base shall be adjusted to
      be
      $50,000,000.

     

    Section
      3.  Conditions
      Precedent.
      The
      effectiveness of this First Amendment is subject to the receipt by the
      Administrative Agent of the following documents and satisfaction of the other
      conditions provided in this Section 3, each of which shall be reasonably
      satisfactory to the Administrative Agent in form and substance:

     

    3.1  Payment
      of Outstanding Invoices.
      Payment
      by the Borrower to the Administrative Agent of all fees and other amounts due
      and payable on or prior to the First Amendment Effective Date, including, to
      the
      extent invoiced, reimbursement or payment of all out-of-pocket expenses required
      to be reimbursed or paid by the Borrower. 

     

    3.2  First
      Amendment.
      The
      Administrative Agent shall have received multiple counterparts as requested
      of
      this First Amendment from each Lender and multiple counterparts as requested
      of
      the Intercreditor Agreement from the Second Lien Lenders or their
      representative.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.3  No
      Default.
      No
      Default or Event of Default shall have occurred and be continuing as of the
      First Amendment Effective Date.

     

    3.4  Security
      Instruments.
      In
      connection with the execution and delivery of the Security Instruments, the
      Administrative Agent shall:

     

    (a)  be
      reasonably satisfied that the Security Instruments create first priority,
      perfected Liens (subject only to Excepted Liens identified in clauses (a) to
      (d)
      and (f) of the definition thereof, but subject to the provisos at the end of
      such definition) on at least 90% of the total value of the Proved Reserves
      evaluated in the Reserve Report most recently delivered prior to the First
      Amendment Effective Date; 

     

    (b)  be
      reasonably satisfied that all Property constituting security for the Second
      Lien
      Term Loan Agreement is subject to a first priority, perfected Lien in favor
      of
      the Administrative Agent under the Security Instruments; and

     

    (c)  be
      reasonably satisfied with title to any additional Oil and Gas Properties
      mortgaged in connection with clause (a) of this Section 3.4.

     

    3.5  Closing
      of Second Lien Term Loan Agreement.
      The
      Administrative Agent shall have received a certificate of a Responsible Officer
      of the Borrower certifying that (a) funding under the Second Lien Term Loan
      Agreement has occurred, or is occurring contemporaneously with the First
      Amendment Effective Date, which shall result in gross cash proceeds of
      $99,500,000
      and (b)
      that attached thereto are true and complete copies of the Second Lien Term
      Loan
      Documents as then in effect.

     

    3.6  Approval
      of Second Lien Term Loan Documents.
      The
      Second Lien Term Loan Documents shall be reasonably acceptable to the Majority
      Lenders.

     

    Section
      4.  Representations
      and Warranties; Etc.
      Each
      Obligor hereby affirms: (a) that as of the date of execution and delivery of
      this First Amendment, all of the representations and warranties contained in
      each Loan Document to which such Obligor is a party are true and correct in
      all
      material respects as though made on and as of the First Amendment Effective
      Date
      (unless made as of a specific earlier date, in which case, was true as of such
      date); and (b) that after giving effect to this First Amendment and to the
      transactions contemplated hereby, no Defaults exist under the Loan Documents
      or
      will exist under the Loan Documents.

     

    Section
      5.  Miscellaneous.

     

    5.1  Confirmation.
      The
      provisions of the Credit Agreement (as amended by this First Amendment) shall
      remain in full force and effect in accordance with its terms following the
      effectiveness of this First Amendment.

     

    5.2  Ratification
      and Affirmation of Obligors.
      Each of
      the Obligors hereby expressly (a) acknowledges the terms of this First
      Amendment, (b) ratifies and affirms its obligations under the Guarantee
      Agreement and the other Security Instruments to which it is a party, (c)
      acknowledges, renews and extends its continued liability under the Guarantee
      Agreement and the other Security Instruments to which it is a party and agrees
      that its guarantee under the Guarantee Agreement and the 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    other
      Security Instruments to which it is a party remains in full force and effect
      with respect to the Indebtedness as amended hereby.

     

    5.3  Counterparts.
      This
      First Amendment may be executed by one or more of the parties hereto in any
      number of separate counterparts, and all of such counterparts taken together
      shall be deemed to constitute one and the same instrument.

     

    5.4  No
      Oral Agreement.
      This
      written First Amendment, the Credit Agreement and the other Loan Documents
      executed in connection herewith and therewith represent the final agreement
      between the parties and may not be contradicted by evidence of prior,
      contemporaneous, or unwritten oral agreements of the parties. There are no
      subsequent oral agreements between the parties.

     

    5.5  Governing
      Law.
      This
      First Amendment (including, but not limited to, the validity and enforceability
      hereof) shall be governed by, and construed in accordance with, the laws of
      the
      State of Texas.

    

      
        
          
             

          

           

        

        
           

          
            

          

        

        
           

        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
      duly
      executed effective as of the date first written above.

     

    BORROWER:                                                                   
      MCMORAN
      OIL & GAS LLC

     

    By:
      ___________________________      

    Kathleen
      L. Quirk, Vice President

    

    GUARANTORS:                                                               
      MCMORAN
      EXPLORATION CO.

     

    By:
      _____________________________      

                          
      Kathleen L. Quirk, Senior Vice President & 

                                          
      Treasurer

    

    

    K-MC
      VENTURE I LLC

     

    By:         
      MCMORAN
      OIL & GAS LLC, 

    its
      sole
      member

    

    

    By: 
      _________________________     

    Kathleen
      L. Quirk, Vice President

    

    

    FREEPORT
      CANADIAN 

    EXPLORATION
      COMPANY

     

    By:             
      MCMORAN
      OIL & GAS LLC, 

    its
      sole
      member

    

    

    By:
      __________________________

    Kathleen
      L. Quirk, Vice President

    

    

    MCMORAN
      INTERNATIONAL INC.

     

    By:        
      MCMORAN
      OIL & GAS LLC, 

    its
      sole
      member

    

    

    By:
      ________________________     

      
      Kathleen L. Quirk, Vice President

    
      
        SIGNATURE
          PAGE 1

         

      

      
         

        
          

        

      

      
         

      

    

    ADMINISTRATIVE
      AGENT:                                          
JPMORGAN
      CHASE BANK, N.A.,

    as
      Administrative Agent

     

    

    By:
      ___________________________      

    Name:
       

    Title:
       

    

    
      
        SIGNATURE
          PAGE 2

         

      

      
         

        
          

        

      

      
         

      

    

    SYNDICATION
      AGENT:                                                 
TORONTO-DOMINION
      (TEXAS) LLC,

    as
      Syndication Agent

     

    

    By:
      _______________________      

    Name:
       

    Title:
       

    

    
      
        SIGNATURE
          PAGE 3

         

      

      
         

        
          

        

      

      
         

      

    

    LENDER:                                                                             
      JPMORGAN
      CHASE BANK, N.A.,
      

    as
      a
      Lender

    

    

    By:
      _________________________ 

    Name:
       

    Title:
       

    
      
        SIGNATURE
          PAGE 4

         

      

      
         

        
          

        

      

      
         

      

    

    LENDER:                                                                              TORONTO-DOMINION
      (TEXAS) LLC,
      

    as
      a
      Lender

    

    

    By:
      _____________________________      

    Name:
       

    Title:
       

    

    

    
      
        
          SIGNATURE
            PAGE 5

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