McMoRan Does Not Strike Paydirt (MMR)

McMoRan Exploration Co. (NYSE:MMR) reported first quarter 2009 numbers this morning. The news was not good — an EPS loss of -$0.90, more than double analysts’ estimates of -$0.43, and down from EPS of $0.46 in the year ago quarter. Revenues came in at $97.38 million, below the $111.32 million analysts expected . In the same quarter a year ago, McMoRan posted revenues of $295.48 million, better than three times this quarters’ revenues.

The company posted a loss of $59.5 million including an impairment charge of $39 million on some of the company’s fields, and $16.2 million on two drilling projects that came up empty.

The company appears to be pinning its hopes on deep and ultra-deep prospects in the Gulf of Mexico. That’s fine, but pulling hydrocarbons to the surface from more than 15,000 feet below the sea floor is not exactly well-understood or cheap.

McMoRan is also still feeling the effects of the 2008 hurricane season, and production totaled 198 million cubic feet equivalent/day in the quarter, off nearly 100 million cubic feet/day compared with the year-ago quarter. Production for the current quarter is expected to fall to 180 million cubic feet equivalent/day. The company expects to produce an average of 215 million cubic feet equivalent/day for the whole of 2009. In order for that to happen, third-party facilities and pipelines need to be restored to pre-hurricane capabilities. That will happen, of course, but timing is everything.

McMoRan shares are down nearly 15% in pre-market trading. The 52-week range is $3.14-$35.52, and the current price is $5.03/share.

Paul Ausick
April 20, 2009