McMoRan Exploration Co. (MMR, Financial) filed Quarterly Report for the period ended 2010-09-30.
Mcmoran Exploration Co. has a market cap of $1.62 billion; its shares were traded at around $16.93 with and P/S ratio of 3.7. MMR is in the portfolios of T Boone Pickens of BP Capital, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates, Chuck Royce of Royce& Associates.
Our current production volume is comprised of approximately 75 percent natural gas and 25 percent oil. As a result, our revenues are generally more sensitive to changes in the market price of natural gas than to changes in the market price of oil. North American natural gas averaged $4.24 per MMbtu during the third quarter of 2010. The spot price for natural gas was $4.09 per MMbtu on November 8, 2010. The average oil price for the third quarter of 2010 was $76.09 per barrel and the spot price for oil was $87.06 per barrel on November 8, 2010. Future oil and natural gas prices are subject to change and these changes are not within our control (see Part 1, Item 1A. “Risk Factors” included in our 2009 Form 10-K).
Our operating loss of $57.4 million for the nine months ended September 30, 2010 reflects (a) impairment charges of $82.0 million for certain fields to reduce their net carrying value to fair value; and (b) $7.5 million in charges to exploration expense primarily related to the Blueberry Hill appraisal well. These charges are offset by (a) a $14.8 million gain associated with our share of a partial payment for insured losses related to the September 2008 hurricanes; (b) $4.2 million of net gains on oil and gas derivative contracts (Note 4); and (c) a $3.5 million gain on the sale of an oil and gas property.
Our operating loss for the nine months ended September 30, 2009 of $171.9 million reflects (a) impairment charges of $64.8 million for certain fields to reduce their net carrying value to fair value and (b) $61.7 million in charges to exploration expense primarily relating to exploration wells which were determined to be non-productive. These charges are offset by (a) an $18.7 million gain associated with our share of the initial receipt of insurance proceeds related to the September 2008 hurricanes and (b) $16.6 million of net gains on oil and gas derivative contracts (Note 4).
Our oil and natural gas sales volumes totaled 13.4 billion cubic feet of natural gas equivalent (Bcfe) in the third quarter of 2010, a 32 percent decrease from the 19.8 Bcfe of sales volume generated in the third quarter of 2009. The decrease in sales volume is primarily related to the declining production curve associated with maturing properties acquired in the 2007 property acquisition as well as timing delays for certain well recompletion and development activities. Average realizations received for both oil and natural gas sold during the third quarter of 2010 increased 13 percent for oil and 36 percent for natural gas compared to amounts received in 2009 (see “—North American Natural Gas and Oil Market Environment” above). Revenues from plant products totaled $9.8 million in the third quarter of 2010 compared with $8.6 million in the prior year period. Our service revenues totaled $4.1 million in the third quarter of 2010 and $3.7 million in the same period for 2009.
Insurance premium rates associated with our operations in the Gulf of Mexico have increased in recent years. We renewed our property insurance program for coverage through May 2011 and purchased similar coverage to the previous year for a nominal increase in costs. The policy includes coverage of our ownership interest for damages caused by Named Windstorms subject to recovery of 50 percent of any loss up to an annual aggregate limit of $100 million, in excess of a $50 million deductible. We also purchased operational risk coverage for losses resulting from perils other than Named Windstorms such as well blowouts, fires and explosions with limits and deductibles scaled to our working interest in the covered property. The control of well coverage, subject to a $5 million deductible, has a limit of $150 million for all wells except ultra-deep wells which have a $250 million limit. We also renewed our Oil Spill Financial Responsibility policy coverage which has a $150 million limit. For additional information related to risks associated with our insurance coverage, see Item 1A. “Risk Factors” included in our 2009 Form 10-K.
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Mcmoran Exploration Co. has a market cap of $1.62 billion; its shares were traded at around $16.93 with and P/S ratio of 3.7. MMR is in the portfolios of T Boone Pickens of BP Capital, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates, Chuck Royce of Royce& Associates.
Highlight of Business Operations:
During the nine months ended September 30, 2010, we invested $160.3 million on capital-related projects primarily associated with our exploration activities. Our exploration, development and other capital expenditures for 2010 are expected to approximate $220 million, including approximately $140 million in exploration costs and $80 million in development costs. During the nine months ended September 30, 2010, we incurred $70.8 million of abandonment expenditures, net of prepayments by third parties. We plan to spend approximately $110 million in 2010 for the abandonment and removal of oil and gas structures in the Gulf of Mexico, including $50 million associated with hurricane damage reclamation for which we expect reimbursement under our insurance program.Our current production volume is comprised of approximately 75 percent natural gas and 25 percent oil. As a result, our revenues are generally more sensitive to changes in the market price of natural gas than to changes in the market price of oil. North American natural gas averaged $4.24 per MMbtu during the third quarter of 2010. The spot price for natural gas was $4.09 per MMbtu on November 8, 2010. The average oil price for the third quarter of 2010 was $76.09 per barrel and the spot price for oil was $87.06 per barrel on November 8, 2010. Future oil and natural gas prices are subject to change and these changes are not within our control (see Part 1, Item 1A. “Risk Factors” included in our 2009 Form 10-K).
Our operating loss of $57.4 million for the nine months ended September 30, 2010 reflects (a) impairment charges of $82.0 million for certain fields to reduce their net carrying value to fair value; and (b) $7.5 million in charges to exploration expense primarily related to the Blueberry Hill appraisal well. These charges are offset by (a) a $14.8 million gain associated with our share of a partial payment for insured losses related to the September 2008 hurricanes; (b) $4.2 million of net gains on oil and gas derivative contracts (Note 4); and (c) a $3.5 million gain on the sale of an oil and gas property.
Our operating loss for the nine months ended September 30, 2009 of $171.9 million reflects (a) impairment charges of $64.8 million for certain fields to reduce their net carrying value to fair value and (b) $61.7 million in charges to exploration expense primarily relating to exploration wells which were determined to be non-productive. These charges are offset by (a) an $18.7 million gain associated with our share of the initial receipt of insurance proceeds related to the September 2008 hurricanes and (b) $16.6 million of net gains on oil and gas derivative contracts (Note 4).
Our oil and natural gas sales volumes totaled 13.4 billion cubic feet of natural gas equivalent (Bcfe) in the third quarter of 2010, a 32 percent decrease from the 19.8 Bcfe of sales volume generated in the third quarter of 2009. The decrease in sales volume is primarily related to the declining production curve associated with maturing properties acquired in the 2007 property acquisition as well as timing delays for certain well recompletion and development activities. Average realizations received for both oil and natural gas sold during the third quarter of 2010 increased 13 percent for oil and 36 percent for natural gas compared to amounts received in 2009 (see “—North American Natural Gas and Oil Market Environment” above). Revenues from plant products totaled $9.8 million in the third quarter of 2010 compared with $8.6 million in the prior year period. Our service revenues totaled $4.1 million in the third quarter of 2010 and $3.7 million in the same period for 2009.
Insurance premium rates associated with our operations in the Gulf of Mexico have increased in recent years. We renewed our property insurance program for coverage through May 2011 and purchased similar coverage to the previous year for a nominal increase in costs. The policy includes coverage of our ownership interest for damages caused by Named Windstorms subject to recovery of 50 percent of any loss up to an annual aggregate limit of $100 million, in excess of a $50 million deductible. We also purchased operational risk coverage for losses resulting from perils other than Named Windstorms such as well blowouts, fires and explosions with limits and deductibles scaled to our working interest in the covered property. The control of well coverage, subject to a $5 million deductible, has a limit of $150 million for all wells except ultra-deep wells which have a $250 million limit. We also renewed our Oil Spill Financial Responsibility policy coverage which has a $150 million limit. For additional information related to risks associated with our insurance coverage, see Item 1A. “Risk Factors” included in our 2009 Form 10-K.
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