SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1998
Commission File Number: 0-23870
McMoRan Oil & Gas Co.
Incorporated in Delaware 72-1266477
(IRS Employer Identification No.)
1615 Poydras Street, New Orleans, Louisiana 70112
Registrant's telephone number, including area code: (504) 582-4000
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
On March 31, 1998, there were issued and outstanding 42,795,538 shares of the
registrant's Common Stock, par value $0.01 per share.
<PAGE> 1
McMoRan Oil & Gas Co.
TABLE OF CONTENTS
Page
Part I. Financial Information
Financial Statements:
Condensed Balance Sheets 3
Statements of Operations 4
Statements of Cash Flow 5
Notes to Financial Statements 6
Remarks 6
Report of Independent Public Accountants 7
Management's Discussion and Analysis
of Financial Condition and Results of Operations 8
Part II. Other Information 11
Signature 12
Exhibit Index E-1
<PAGE> 2
McMoRan Oil & Gas Co.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
McMoRan OIL & GAS CO.
CONDENSED BALANCE SHEETS (Unaudited)
<TABLE>
March 31, December 31,
1998 1997
---------- ----------
(In Thousands)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 11,803 $ 29,149
Accounts receivable and other 35,835 14,065
---------- ----------
Total current assets 47,638 43,214
Property, plant and equipment, net 66,195 57,705
Other assets 167 169
---------- ----------
Total assets $ 114,000 $ 101,088
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 27,795 $ 9,465
Other long-term liabilities 2,332 925
Stockholders' equity 83,873 90,698
---------- ----------
Total liabilities and stockholders'
equity $ 114,000 $ 101,088
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 3
McMoRan OIL & GAS CO.
STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
Three Months Ended
March 31,
------------------------
1998 1997
---------- ----------
(In Thousands, Except Per
Share Amounts)
<S> <C> <C>
Revenues:
Oil and gas sales $ 5,779 $ 2,364
Other - 409
---------- ----------
Total revenues 5,779 2,773
---------- ----------
Costs and expenses:
Depreciation and amortization 5,207 1,857
Production and delivery costs 979 103
Exploration expenses 6,084 2,362
General and administrative expenses 930 711
---------- ----------
Total costs and expenses 13,200 5,033
---------- ----------
Operating loss (7,421) (2,260)
Interest expense - (360)
Other income, net 401 131
---------- ----------
Net loss $ (7,020) $ (2,489)
========== ==========
Basic and diluted net loss per share $(0.16) $(0.18)
======= ======
Basic and diluted average shares
outstanding 42,771 14,025
====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
McMoRan OIL & GAS CO.
STATEMENTS OF CASH FLOW (Unaudited)
<TABLE>
Three Months Ended
March 31,
-------------------------
1998 1997
---------- ----------
(In Thousands)
<S> <C> <C>
Cash flow from operating activities:
Net loss $ (7,020) $ (2,489)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 5,207 1,857
Exploration expenses 6,084 2,362
Increase in working capital and other (8,259) (427)
---------- ----------
Net cash provided by (used in) operating activities (3,988) 1,303
---------- ----------
Cash flow from investing activities:
Exploration and development expenditures (13,358) (4,995)
---------- ----------
Net cash used in investing activities (13,358) (4,995)
---------- ----------
Cash flow from financing activities:
Proceeds from production loan - 1,511
Payments on production loan - (246)
---------- ----------
Net cash provided by financing activities - 1,265
---------- ----------
Net decrease in cash and cash equivalents (17,346) (2,427)
Cash and cash equivalents at beginning of year 29,149 10,500
---------- ----------
Cash and cash equivalents at end of period $ 11,803 $ 8,073
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
McMoRan OIL & GAS CO.
NOTE TO FINANCIAL STATEMENTS
1. NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") 128,
"Earnings Per Share," which simplifies the computation of earnings
per share ("EPS"). McMoRan Oil & Gas Co. ("MOXY") adopted SFAS 128
in the fourth quarter of 1997 and restated prior years' EPS data as
required by SFAS 128.
Basic net loss per share of common stock was calculated by
dividing net loss applicable to common stock by the weighted-average
number of common shares outstanding during the period. MOXY had
approximately 787,000 and 80,000 options outstanding in the first
quarter of 1998 and 1997, respectively, that would otherwise be
included in the calculation of diluted earning per share but were
excluded as anti-dilutive considering the losses incurred during the
periods presented.
Outstanding options to purchase 25,500 and 2,002,400 shares of
common stock at average exercise prices of $4.08 and $4.24 per share
during the first quarters of 1998 and 1997, respectively, were not
included in the computation of diluted EPS because the exercise
prices were greater than the average market price during the periods
presented.
In June 1997, FASB issued SFAS 130, "Reporting Comprehensive
Income," which establishes standards for reporting and display of
comprehensive income in the financial statements. Comprehensive
income is the total of net income and all of the nonowner changes in
equity, of which MOXY has none. SFAS 130 is effective for 1998 and
adoption of this standard had no effect on MOXY's financial position
or results of operations.
-----------------
Remarks
The information furnished herein should be read in conjunction with
MOXY's financial statements contained in its 1997 Annual Report to
stockholders and included in its Annual Report on Form 10-K.
The information furnished herein reflects all adjustments which are,
in the opinion of management, necessary for a fair statement of the
results for the periods. All such adjustments are, in the opinion
of management, of a normal recurring nature.
<PAGE> 6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of McMoRan Oil & Gas Co.:
We have reviewed the accompanying condensed balance sheet of McMoRan Oil & Gas
Co. a (Delaware corporation) as of March 31, 1998, and the related statements
of operations and cash flow for the. three-month periods ended March 31, 1998
and 1997. These financial statements are the responsibility of the company's
management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of McMoRan Oil & Gas Co. as of December 31, 1997,
and the related statements of operations, shareholders equity and cash flow
for the year then ended (not presented herein), and, in our report dated
January 20, 1998, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
condensed balance sheet as of December 31, 1997, is fairly stated, in all
material respects, in relation to the balance sheet from which it
has been derived.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
New Orleans, Louisiana
April 21, 1998
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
OVERVIEW
McMoRan Oil & Gas Co. ("MOXY") is engaged in the exploration,
development and production of oil and natural gas. MOXY and its
predecessors have conducted exploration, development and production
operations offshore in the Gulf of Mexico and onshore in the Gulf
Coast region and other areas for more than 25 years, which has
provided MOXY an extensive geological and geophysical database and
significant technical and operational expertise. MOXY expects to
continue to concentrate its efforts in this selected geographic area
where its management team has significant exploration experience.
MOXY's business strategy is to create value for its
stockholders through the discovery of oil and gas reserves in its
exploration and development activities. Management believes MOXY's
significant opportunities to discover meaningful oil and gas
reserves can best be achieved through the use of advanced 3-D
seismic technology, applied in conjunction with a multi-year
exploration program (see "Capital Resources and Liquidity" below).
Moreover, MOXY believes that its acquisitions of 3-D seismic data
will continue to improve its ability to interpret subsurface geology
and allow it to continue to develop an inventory of high-quality
prospects which it can pursue at lease sales and through farm-in
opportunities offshore in the Gulf of Mexico and onshore in the Gulf
Coast area.
OPERATIONAL ACTIVITIES
The following significant operational activities occurred during 1998.
* MOXY's net daily production at the Vermilion Block 160 field
unit averaged approximately 14 million cubic feet (Mmcf) of gas and
386 barrels of oil per day during the first quarter of 1998. Final
redetermination of MOXY's interest in this field unit was completed
during the first quarter and MOXY now has a 25.5 percent net revenue
interest subject to an approximate 2.6 percent net profits interest.
Production facilities and a platform are being fabricated for the
Vermilion Block # 4 sidetrack development well, which is located
outside the field unit area. MOXY has a 58 percent net revenue
interest in the #4 sidetrack well, subject to a 12.7 percent net
profits interest. The Vermilion Block 160 field unit is located
approximately 155 miles west southwest of New Orleans, Louisiana,
approximately 42 miles offshore in 100 feet of water.
* In March 1998, MOXY completed drilling the West Cameron Block
616 #5 development well, to develop reserves discovered by the West
Cameron Block 616 #2 well drilled in 1996. The #5 well encountered
three gas sands not seen in the #2 well resulting in a total of 324
feet of net gas pay in eight sands. MOXY is completing fabrication
of a platform and has contracted for the installation of a
connecting pipeline for this block, with production scheduled to
begin from three wells during the fourth quarter of 1998. MOXY has
an approximate 38 percent net revenue interest in this block, which
is located approximately 130 miles offshore Louisiana in
approximately 300 feet of water.
* MOXY's average net daily production at the Vermilion Block 410
was approximately 15 Mmcf of gas during the first quarter of 1998.
The Vermilion Block 410 field encompasses 11,015 acres and is
located in 360 feet of water offshore Louisiana.
* In April 1998, the West Cameron Block 617 #1 exploratory well
encountered 306 feet of net gas pay in eight sands. MOXY, as
operator, has set protective pipe and the well has been temporarily
abandoned. MOXY has commenced a second exploratory well which is
currently drilling. MOXY has a 24 percent working interest in West
Cameron Block 617, which encompasses 5,000 acres located in 300 feet
of water in the Gulf of Mexico, approximately 130 miles offshore
Louisiana.
* MOXY announced in April 1998 that the Brazos Block A-19 #2 well
encountered hydrocarbons in a separate reservoir compartment within
the larger Picaroon Field area. The field extension was defined by
a recent 3-D seismic survey and efforts are currently under way to
assess development plans. The #2 well will continue to drill
towards a proposed total depth of 19,000 feet. MOXY has a 16.8
percent working interest and a 13.3 percent net revenue interest in
this prospect and MOXY has a 48 percent working interest in the
adjacent Brazos Block A-26. The two blocks cover 11,250 acres
located in approximately 135 feet of water, 35 miles offshore Texas.
* MOXY commenced drilling an exploratory well having a proposed
depth of 18,250 feet at the Atchafalaya Bay Prospect in March 1998.
MOXY is operator of this project, which covers 3,600 acres located
onshore in St. Mary Parish, Louisiana. If MOXY establishes
production, it would earn a 48 percent working interest subject to
certain reversionary interests.
<PAGE> 8
* During the first quarter of 1998, MOXY entered into a joint
venture arrangement whereby it can earn a 24 percent working
interest in Grand Isle Blocks 53/54. The operator initiated drilling
the Grand Isle Block 54 #1 exploratory well to a proposed depth of
17,500 feet in March 1998. This well was determined to be
unsuccessful in May, 1998 and will be plugged and abandoned. The two
blocks cover a total of 7,500 acres and are located approximately
20 miles offshore Louisiana in approximately 125 feet of water.
* In April 1998, the Vermilion Block 159 #3 exploratory well
began drilling. On May 7, 1998, MOXY announced that the #3 well had
encountered approximately 80 true vertical feet of net hydrocarbon
pay in two sands. MOXY, as operator, is setting protective pipe and
will continue drilling deeper in order to test additional
objectives. MOXY has the right to earn a 48 percent working
interest in certain rights in Vermilion Block 159, located
approximately 42 miles offshore Louisiana in approximately 90 feet
of water.
* MOXY, as operator, drilled and abandoned an unsuccessful
exploratory well at West Cameron Block 157 during the first quarter
of 1998.
RESULTS OF OPERATIONS
<TABLE>
First Quarter
------------------------
1998a 1997
---------- ----------
<S> <C> <C>
Production quantities:
Gas (Mcf or thousand cubic feet) 2,581,300 792,300
Oil (barrels) 34,700 5,600
Average realization:
Gas (per Mcf) $ 2.14 $ 2.78
Oil (per barrel) 16.08 23.43
</TABLE>
a. MOXY's net ownership interest in Vermilion Block 160 field unit
revenues was reduced during the 1998 first quarter as a result of a
redetermination of participants' interest in the unit. First
quarter 1998 production quantities shown above reflect MOXY's
adjusted net revenue interest for the period. Additionally, first-
quarter 1998 revenues include reductions to MOXY's share of
production volumes recorded prior to 1998 (150,400 mcf of gas and
6,200 barrels of oil). These volume adjustments are not reflected
in the table above.
MOXY's revenues for the first quarter of 1998 increased to $5.8
million from $2.8 million for the first quarter of 1997. The
significant increase is primarily because MOXY purchased additional
net revenue interests in Vermilion Blocks 160 and 410 (see "Capital
Resources and Liquidity" below) and Vermilion Block 160 production
of natural gas and oil increased substantially over last year
because of three additional wells being on production during the
fourth quarter of 1997. The increase in revenues were partially
offset by declining natural gas and oil market prices during the
quarter, as well as recording the cumulative adjustment for
production prior to 1998 for the redetermination of ownership
interest in Vermilion Block 160, which reduced combined revenues
from gas and oil by approximately $486,000 during the first quarter
of 1998.
Depreciation and amortization expense for the quarter ended
March 31, 1998 increased to $5.2 million from $1.9 million for the
quarter ended March 31, 1997. The increase is consistent with the
increased production volumes discussed above, together with
increased depreciable capitalized costs incurred since the 1997
first quarter.
Production and delivery cost for the quarter ended March 31,
1998 increased to $0.9 million from $0.1 million for the quarter
ended March 31, 1997. The increase is because of the increases in
production volumes discussed above, as well as increased market
rates for drilling equipment, supplies and services.
MOXY's exploration expenses fluctuate from period to period
based on the level of drilling activity, its results and the costs
involved in projects. MOXY charged to expense $4.5 million of
exploratory drilling and leasehold costs associated with the West
Cameron Block 157 # 1 exploratory well during the first quarter of
1998, compared with $0.9 million of exploratory drilling and
leasehold costs charged to expense in the first quarter of 1997.
<PAGE> 9
MOXY's interest expense decreased from $0.4 million for the
first quarter of 1997 to zero in the first quarter of 1998, reflecting
the repayment of the outstanding debt upon completion of a Rights
Offering in November 1997.
As a result of anticipated future exploration expenditures, MOXY
expects to continue to report operating losses for at least the near
future.
CAPITAL RESOURCES AND LIQUIDITY
Upon completion of the Rights Offering in November 1997, MOXY
realized net proceeds of $92.5 million from the sale of 28.6 million
common shares, of which 3.8 million were purchased by Phosphate
Resource Partners Limited Partnership ("PLP"). MOXY has used these
proceeds to retire all of the debt it incurred in the MOXY/MCN
Program ($20 million) and to purchase interests in the Vermilion
Blocks 160 and 410 fields ($24.5 million). The remaining proceeds
provided MOXY with a portion of the funding necessary to participate
in the multi-year $210 million MOXY Exploration Program. MOXY serves
as operator and selects all prospects and drilling opportunities
associated with the MOXY Exploration Program. Most of the
exploration expenses related to the MOXY Exploration Program will be
shared 37.6 percent by MOXY, 56.4 percent by PLP and 6 percent by an
individual investor, who is also a director of MOXY. All revenues
and other costs are shared 48 percent by MOXY, 47 percent by PLP and
5 percent by the individual investor.
Cash from operating activities used $4.0 million during the
quarter ended March 31, 1998, reflecting significant drilling
activity during the quarter and an increase in accounts receivable
from MOXY's joint interest partners. These accounts receivable were
reimbursed subsequent to March 31, 1998. These uses of cash were
offset in part by increased production quantities as discussed above
in "Results of Operations."
MOXY incurred $13.8 million of cash exploration and development
expenditures during the first quarter of 1998, principally
consisting of $7.7 million for capitalized drilling costs primarily
for the West Cameron Block 616 #5 development well and the facility
costs associated with West Cameron Block 616, $4.9 million in
drilling and leasehold costs charged to expense, primarily for the
West Cameron 157 #1 exploratory well; and $1.2 million of geological
and geophysical costs. MOXY has remaining committed exploration and
development expenditures of approximately $22 million as of March
31, 1998, which are expected to be funded by available cash, cash
from operating activities and by bank financing as necessary (see
discussion below).
MOXY is assessing various bank financing alternatives for the
development costs associated with recent discoveries. Based on
preliminary indications, MOXY believes a bank line of credit secured
by proved reserves would provide adequate funding for any portion of
these development costs in excess of available cash and cash from
operating activities.
CAUTIONARY STATEMENT
Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements regarding
plans and objectives of MOXY's management for future operations and
MOXY's exploration and development activities. Important factors
that may cause actual results to differ materially from MOXY's
expectations include, exploratory drilling results, economic and
business conditions, general development risks and hazards and risks
inherent with the production of oil and gas, such as fires, natural
disasters, blowouts and the encountering of formations with abnormal
pressures, changes in laws or regulations and other factors, many of
which are beyond the control of MOXY and other factors as described
in more detail under the heading "Cautionary Statements" in MOXY's
Form 10-K for the year ended December 31, 1997.
_________________________
The results of operations reported and summarized above are not
necessarily indicative of future operating results.
<PAGE> 10
PART II--OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a. The exhibits to this report are listed in the Exhibit Index
appearing on page E-1 hereof.
b. One Current Report on Form 8-K, under Item 5, was filed by the
registrant on February 3, 1998.
<PAGE> 11
McMoRan Oil & Gas Co.
SIGNATURE
Pursuant to the requirements 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.
McMoRan Oil & Gas Co.
By: /s/ C. Donald Whitmire,Jr.
_________________________
C. Donald Whitmire, Jr.
Controller
(authorized signatory and
Principal Accounting Officer)
Date: May 8, 1998
<PAGE> 12
McMoRan OIL & GAS CO.
EXHIBIT INDEX
Exhibit Number
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.
4.3 Amendment No. 1 dated July 14, 1997 to the Rights
Agreement dated as of May 19, 1994 between McMoRan Oil & Gas Co.
and Mellon Securities Trust Company, as Rights Agent. Incorporated by
reference to Exhibit 10.7 to the Company's Current Report on Form
8-K dated as of July 14, 1997 (the "July 14, 1997 8-K").
10.1 Master Agreement dated July 14, 1997 between McMoRan
Oil & Gas Co. and Freeport-McMoRan Resource Partners, Limited
Partnership, now named Phosphate Resource Partners Limited
Partnership ("PLP"). Incorporated by reference to Exhibit 10.1
to the July 14, 1997 8-K.
10.2 Purchase and Sale Agreement dated July 11, 1997 by and
among PLP, MCNIC Oil & Gas Properties, Inc., MCN Investment
Corporation and MOXY. Incorporated by reference to Exhibit
10.4 to the July 14, 1997 8-K.
10.3 Agreement for Purchase and Sale dated as of August 1, 1997
between FM Properties Operating Co. and McMoRan Oil & Gas Co.
Incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K dated as of September 2, 1997.
10.4 Participation Agreement between McMoRan Oil & Gas Co.
and PLP dated as of April 1, 1997. Incorporated by reference to
Exhibit 10.4 to the Company's 1997 Form 10-K.
10.5 Amendment to Participation Agreement between McMoRan
Oil & Gas Co. and PLP dated December 15, 1997. Incorporated by
reference to Exhibit 10.5 to the Company's 1997 Form 10-K.
10.6 Participation Agreement between McMoRan Oil & Gas Co.
and Gerald J. Ford dated as of December 15, 1997. Incorporated by
reference to Exhibit 10.6 to the Company's 1997 Form 10-K.
10.7 Amended and Restated Services Agreement, dated as of
December 23, 1997, between FM Services Company and the Company.
Incorporated by reference to Exhibit 10.7 to the Company's 1997
Form 10-K.
<PAGE> E-1
Exhibit Number
10.8 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.
10.9 Exploration Agreement effective July 1, 1996, between
MOXY and PLP. Incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ending June 30, 1996.
Executive Compensation Plans and Arrangements
(Exhibits 10.10 through 10.14)
10.10 McMoRan Oil & Gas Co. Adjusted Stock Award Plan, as amended.
Incorporated by reference to Exhibit 10.10 to the Company's
1997 Form 10-K.
10.11 McMoRan Oil & Gas Co. 1994 Stock Option Plan, as amended.
Incorporated by reference to Exhibit 10.11 to the Company's
1997 Form 10-K.
10.12 McMoRan Oil & Gas Co. 1994 Stock Option Plan for
Non-Employee Directors, as amended. Incorporated by reference to
Exhibit 10.12 to the Company's 1997 Form 10-K.
10.13 McMoRan Oil & Gas Co. Performance Incentive Awards Program, as
amended. Incorporated by reference to Exhibit 10.5 to the
Company's 1995 10-K.
10.14 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.
15.1 Letter dated April 21, 1998 from Arthur Andersen LLP
regarding unaudited interim financial statements.
27.1 MOXY Financial Data Schedule.
27.2 MOXY Restated Financial Data Schedule.
27.3 MOXY Restated Financial Data Schedule.
<PAGE> E-2
Exhibit 15.1
April 21, 1998
McMoRan Oil & Gas Co.
1615 Poydras St.
New Orleans, LA 70112
Gentlemen:
We are aware that McMoRan Oil & Gas Co. Inc. has
incorporated by reference in its Registration Statements
(File Nos. 33-82866, 33-80369, 33-80371, and 333-44561)
its Form 10-Q for the quarter ended March 31,1998, which
includes our report dated April 21, 1998 covering the
unaudited interim financial information contained there-
in. Pursuant to Regulation C of the Securities Act of
1933 (the Act), this report is not considered a part
of the registration statements prepared or certified
by our firm or a report prepared or certified by our
firm within the meaning of Sections 7 and 11 of the Act.
Very truly yours,
/s/ Arthur Andersen LLP
Arthur Andersen LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from McMoRan Oil
& Gas financial statements at March 31,1998 and the three months then ended, and
is qualified in its entirety by reference to such statements. The earning per
share (EPS) data shown was prepared in accordance with Statement of Financial
Accounting Standard No. 128 "Earning Per Share," basic and diluted EPS have
been entered in place of primary and fully-diluted, respectively.
</LEGEND>
<CIK> 0000921941
<NAME> MCMORAN OIL & GAS
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 11,803
<SECURITIES> 0
<RECEIVABLES> 4,659
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 47,638
<PP&E> 81,873
<DEPRECIATION> 15,678
<TOTAL-ASSETS> 114,000
<CURRENT-LIABILITIES> 27,795
<BONDS> 0
0
0
<COMMON> 428
<OTHER-SE> 83,445
<TOTAL-LIABILITY-AND-EQUITY> 114,000
<SALES> 5,779
<TOTAL-REVENUES> 5,779
<CGS> 979
<TOTAL-COSTS> 979
<OTHER-EXPENSES> 6,084
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (7,020)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,020)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,020)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
McMoRan Oil & Gas adopted Statement of Financial Accounting Standards No. 128,
"Earning Per Share," (SFAS 128) in the fourth quarter of 1997 and restated prior
years' earnings per share (EPS) as required by SFAS 128. Presented below are the
restated finacial data schedules amounts for the 3-month period ended March 31,
1997, the 6-month period ended June 30, 1997 and the 9-month period ended
September 30, 1997. Basic and diluted EPS have been entered in place of primary
and fully-diluted,respectively.
</LEGEND>
<RESTATED>
<CIK> 0000921941
<NAME> MCMORAN OIL & GAS
<MULTIPLIER> 1000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 8,073 7,142 10,132
<SECURITIES> 0 0 0
<RECEIVABLES> 1,861 1,965 1,008
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 12,498 11,305 13,929
<PP&E> 21,551 25,226 30,116
<DEPRECIATION> 3,059 5,904 7,536
<TOTAL-ASSETS> 30,990 30,627 36,963
<CURRENT-LIABILITIES> 12,919 14,381 22,187
<BONDS> 11,718 10,980 15,851
0 0 0
0 0 0
<COMMON> 140 141 141
<OTHER-SE> 5,752 4,484 (1,927)
<TOTAL-LIABILITY-AND-EQUITY> 30,990 30,627 36,963
<SALES> 2,773 5,021 7,709
<TOTAL-REVENUES> 2,773 5,021 7,709
<CGS> 1,960 5,312 7,369
<TOTAL-COSTS> 1,960 5,312 7,369
<OTHER-EXPENSES> 2,362 4,097 10,510
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 360 681 1,040
<INCOME-PRETAX> (2,489) (3,884) (10,429)
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> (2,489) (3,884) (10,429)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (2,489) (3,884) (10,429)
<EPS-PRIMARY> (.18) (.27) (.74)
<EPS-DILUTED> (.18) (.27) (.74)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
McMoRan Oil & Gas adopted Statement of Financial Accounting Standards No. 128,
"Earnings Per Share," (SFAS 128) in the fourth quarter of 1997 and restated
prior years' earnings per share (EPS) as required by SFAS 128. Presented below
are the restated finacial data schedules amounts for the 6-month period ending
June 30,1996, the 9-month period ending September 30, 1996 and the year ended
December 31, 1996. Basic and diluted EPS have been entered in place of primary
and fully-diluted,respectively.
</LEGEND>
<RESTATED>
<CIK> 0000921941
<NAME> MCMORAN OIL & GAS
<MULTIPLIER> 1000
<S> <C> <C> <C>
<PERIOD-TYPE> 6-MOS 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996
<PERIOD-END> JUN-30-1996 SEP-30-1996 DEC-31-1996
<CASH> 3,829 7,757 10,500
<SECURITIES> 0 0 0
<RECEIVABLES> 0 882 1,244
<ALLOWANCES> 0 0 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 7,841 10,527 12,749
<PP&E> 15,032 18,542 19,514
<DEPRECIATION> 907 1,060 1,283
<TOTAL-ASSETS> 21,966 28,009 30,980
<CURRENT-LIABILITIES> 5,473 6,871 9,777
<BONDS> 2,000 8,566 12,391
0 0 0
0 0 0
<COMMON> 139 139 140
<OTHER-SE> 13,913 11,890 8,106
<TOTAL-LIABILITY-AND-EQUITY> 21,966 28,009 30,980
<SALES> 1,204 2,941 4,070
<TOTAL-REVENUES> 2,022 2,941 4,070
<CGS> 802 1,115 1,500
<TOTAL-COSTS> 802 1,115 1,500
<OTHER-EXPENSES> 3,871 5,875 9,818
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 7 134 403
<INCOME-PRETAX> (3,805) (5,953) (9,862)
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> (3,805) (5,953) (9,862)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (3,805) (5,953) (9,862)
<EPS-PRIMARY> (.27) (.43) (.71)
<EPS-DILUTED> (.27) (.43) (.71)
</TABLE>