MCMORAN EXPLORATION CO /DE/ - 10-Q Quarterly Report



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2005
OR
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from		to
Commission File Number: 001-07791


McMoRan Exploration Co.
(Exact name of registrant as specified in its charter)

Delaware	72-1424200
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

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


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

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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes X No __

On March 31, 2005, there were issued and outstanding 24,453,084 shares of the registrant’s Common Stock, par value $0.01 per share.


McMoRan Exploration Co.
TABLE OF CONTENTS

	Page

Part I. Financial Information

Financial Statements:

Condensed Consolidated Balance Sheets (Unaudited)	3

Consolidated Statements of Operations (Unaudited)	4

Consolidated Statements of Cash Flow (Unaudited)	5

Notes to Consolidated Financial Statements	6

Remarks	10

Report of Independent Registered Public Accounting Firm	11

Management's Discussion and Analysis of Financial Condition and Results of Operations	12

Quantitative and Qualitative Disclosures about Market Risks	20

Controls and Procedures	21

Part II. Other Information	21

Signature	22

Exhibit Index	E-1

McMoRan Exploration Co.

Part I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

McMoRan EXPLORATION CO.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

	March 31,			December 31,
	2005			2004
	(In Thousands)
ASSETS
Cash and cash equivalents:
Continuing operations, includes restricted cash of $3.2 million at
March 31, 2005 and $3.7 million at December 31, 2004	$	194,901		$	203,035
Discontinued operations, all restricted		984			980
Restricted investments		15,150			15,150
Accounts receivable		22,790			27,403
Prepaid expenses and product inventories		2,083			1,976
Current assets from discontinued operations, excluding cash		2,855			2,563
Total current assets		238,763			251,107
Property, plant and equipment, net		134,805			97,262
Discontinued sulphur business assets		312			312
Restricted investments and cash		21,033			24,779
Other assets		9,986			10,460
Total assets	$	404,899		$	383,920

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Accounts payable	$	50,867		$	33,997
Accrued liabilities		31,456			28,197
Accrued interest		5,523			5,635
Current portion of accrued oil and gas reclamation costs		238			238
Current portion of accrued sulphur reclamation cost		2,550			2,550
Current liabilities from discontinued operations		4,658			4,601
Total current liabilities		95,292			75,218
6% convertible senior notes		130,000			130,000
5¼% convertible senior notes		140,000			140,000
Accrued oil and gas reclamation costs		20,172			14,191
Accrued sulphur reclamation costs		12,326			12,086
Contractual postretirement obligation		15,526			15,695
Other long-term liabilities		15,717			16,711
5% mandatorily redeemable convertible preferred stock		29,588			29,565
Stockholders' deficit		(53,722	)		(49,546	)
Total liabilities and stockholders' deficit	$	404,899		$	383,920

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

McMoRan EXPLORATION CO.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended March 31,
	2005			2004
	(In Thousands, Except Per Share Amounts)
Revenues:
Oil & Gas	$	11,380		$	3,591
Service		3,287			519
Total revenues		14,667			4,110
Costs and expenses:
Production and delivery costs		3,700			1,538
Depletion, depreciation and amortization		3,916			1,376
Exploration expenses		7,536			3,326
General and administrative expenses		4,390			2,665
Insurance recovery		(5,043	)		-
Start-up costs for Main Pass Energy Hub™		2,284			4,283
Total costs and expenses		16,783			13,188
Operating loss		(2,116	)		(9,078	)
Interest expense		(3,787	)		(2,232	)
Other income, net		1,599			183
Loss from continuing operations		(4,304	)		(11,127	)
Loss from discontinued operations		(1,029	)		(1,717	)
Net loss		(5,333	)		(12,844	)
Preferred dividends and amortization of convertible preferred stock
issuance costs		(411	)		(412	)
Net loss applicable to common stock	$	(5,744	)	$	(13,256	)

Basic and diluted net loss per share of common stock:
Continuing operations		$ (0.20	)		$ (0.68	)
Discontinued operations		(0.04	)		(0.10	)
Net loss per share of common stock		$ (0.24	)		$ (0.78	)

Basic and diluted average shares outstanding		24,385			17,035

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

McMoRan EXPLORATION CO.

CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)

	Three Months Ended
	March 31,
	2005			2004
	(In Thousands)
Cash flow from operating activities:
Net loss	$	(5,333	)	$	(12,844	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss from discontinued operations		1,029			1,717
Depreciation and amortization		3,916			1,376
Exploration drilling and related expenditures		2,938			733
Compensation expense associated with stock-based awards		263			240
Reclamation and mine shutdown expenditures		(4	)		(45	)
Amortization of deferred financing costs		557			352
Other		(202