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March 17, 2010

Central Gulf lease sale draws $949 million in high bids

Central Gulf of Mexico Oil and Gas Lease Sale 213, held today in New Orleans, attracted $949,265,959 in high bids. The sale was conducted by the Department of the Interior's Minerals Management Service (MMS) and had 77 companies submitting 642 bids on 468 tracts comprising over 2.4 million acres offshore Louisiana, Mississippi and Alabama. The sum of all bids received totaled $ 1,300,075,693.

"The results of this sale reconfirm that industry is committed to domestic oil and natural gas production and is willing to heavily invest in the latest technology and practices to safely develop these resources," commented National Ocean Industries Association (NOIA) President Randall Luthi.

Mr. Luthi, who became President of NOIA on March 1, was himself Director of MMS from July 2007 through January 2009.

"Companies continue to snap up deep water tracts, where the resources are harder to recover, and of course, more expensive to develop," said Mr. Luthi. "However, bidding in shallow water was also rigorous, despite shorter initial lease periods for the shallowest tracts included in this sale. This may be a nod to the large shallow water natural gas discovery in January of this year by NOIA member companies McMoRan Exploration Company, Plains Exploration & Production Company and Energy XXI."

One of those companies --McMoRan Exploration Co.-- said today that it had submitted apparent high bids on 17 of 19 blocks on the Shelf totaling $9.4 million. It said that, if granted, the lease acquisitions would add approximately 75,000 gross acres to McMoRan's leasehold inventory, which currently approximates one million gross acres, including 140,000 gross acres associated with the ultra-deep gas play.

James R. Moffett, McMoRan's Co-Chairman, said, "We are pleased with the results of this important lease sale which significantly expands our leading ultra-deep acreage position and enables us to build upon our recent success. The 59 percent increase in bids for Shelf tracts compared with the year-ago lease sale is consistent with our view that there is significant hydrocarbon potential in shallow water at deeper depths. After giving effect to McMoRan's apparent high bids, our ultra-deep acreage exceeds 200,000 gross acres and encompasses multiple prospects with multi-trillion cubic feet of hydrocarbon potential. We look forward to future activities on this acreage as McMoRan leads the way to redefine the geologic potential of the Shelf and this promising new exploration frontier."

"The bidding activity at today's sale speaks to the future of deepwater Gulf in providing vital energy production for the nation," said Lars Herbst, MMS Gulf of Mexico regional director. "There was also an increase in interest in shallower waters that offers deep gas potential, which is encouraging."

A total of 151 tracts in water depths less than 656 feet received bids. This represents 32 percent of all tracts receiving bids, an increase of five percent from last year's Central Gulf lease sale.

The highest bid received on a tract was $ 52,560,000 submitted by Anadarko E & P Company LP and Mariner Energy, Inc. for Walker Ridge, Block 793.

Each high bid on a tract will go through an evaluation process within MMS to ensure the public receives fair market value before a lease is awarded.

Sale statistics for Central Sale 213 are posted on the MMS website at http://www.gomr.mms.gov/homepg/lsesale/213/cgom213.html.

National Ocean Industries Association (NOIA) President Randall Luthi today issued the following statement on Central Gulf of Mexico Lease Sale 213:

"MMS estimates today's sale could result in production of up to 1.3 billion barrels of oil and up to 5.4 trillion cubic feet of natural gas," noted NOIA President Luthi. "Production from these leases will bring more jobs to Americans and more revenue to the Federal government and some Gulf States. Imagine the benefits to the nation if sales could take place in more areas of the Outer Continental Shelf."

"This sale is important because it will likely be the last conducted before the Department of the Interior announces plans for future energy development on the Outer Continental Shelf," said Mr. Luthi. "We are hopeful this plan will accelerate, not delay, the ability of our industry to create jobs, and set a course for reliable energy at a reasonable price for American citizens."

Mr. Luthi said that NOIA member companies rely upon a consistent and fair leasing program. He added that member companies need the opportunity to explore and develop oil and gas, not only in the Gulf of Mexico, but also in the areas along the eastern seaboard and in areas that other states, such as Virginia, have declared ready for energy development.

"The United States must promote energy development, both conventional -- such as oil and gas -- and unconventional --such as wind, wave and current--off our shores. Other countries get it! If we walk in place rather than strive forward, more companies will have to take their business elsewhere. We have already seen that trend, with more drilling rigs leaving the Gulf of Mexico for Brazil."


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