McMoran Exploration (MMR) SC 13E3 Going private transaction

Fairness Opinion Discussion Materials

December 4, 2012

Presentation to the Special Committee of

the Board of Directors of McMoRan Exploration Co.

Exhibit (c)-4

These materials have been prepared by Evercore Group L.L.C. (“Evercore”) for the Special Committee of the Board of Directors (the “Special Committee”) of

McMoRan Exploration Co. (the “Company” or “McMoRan” or “MMR”) to whom such materials are directly addressed and delivered and may not be used or relied

upon for any purpose other than as specifically contemplated by a written agreement with Evercore. These materials are based on information provided by or on behalf of

the Company, from public sources or otherwise reviewed by Evercore. Evercore assumes no responsibility for independent investigation or verification of such information

and has relied on such information being complete and accurate in all material respects. To the extent such information includes estimates and forecasts of future financial

performance prepared by or reviewed with the management of the Company or obtained from public sources, Evercore has assumed that such estimates and forecasts have

been reasonably prepared on bases reflecting the best currently available estimates and judgments of such management (or, with respect to estimates and forecasts obtained

from public sources, represent reasonable estimates). No representation or warranty, express or implied, is made as to the accuracy or completeness of such information and

nothing contained herein is, or shall be relied upon as, a representation, whether as to the past, the present or the future. These materials were designed for use by specific

persons familiar with the business and affairs of the Company. These materials are not intended to provide the sole basis for evaluating, and should not be considered a

recommendation with respect to, any transaction or other matter. These materials have been developed by and are proprietary to Evercore and were prepared exclusively for

the benefit and internal use of the Special Committee.

These materials were compiled on a confidential basis for use of the Special Committee in evaluating the potential transaction described herein and not with a view to

public disclosure or filing thereof under state or federal securities laws, and may not be reproduced, disseminated, quoted or referred to, in whole or in part, without the prio

written consent of Evercore.

These materials do not constitute an offer or solicitation to sell or purchase any securities and are not a commitment by Evercore (or any affiliate) to provide or arrange any

financing for any transaction or to purchase any security in connection therewith. Evercore assumes no obligation to update or otherwise revise these materials. These

materials may not reflect information known to other professionals in other business areas of Evercore and its affiliates.

Evercore and its affiliates do not provide legal, accounting or tax advice. Accordingly, any statements contained herein as to tax matters were neither written nor intended

by Evercore or its affiliates to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on such taxpayer. Each person

should seek legal, accounting and tax advice based on his, her or its particular circumstances from independent advisors regarding the impact of the transactions or matters

described herein.

Confidential

Table of Contents

Transaction Overview

Situation Analysis

Financial Analysis

Appendix

Section

I

II

III

I.

Transaction Overview

Confidential

1

Summary

Transaction Overview

Offer Price

Premium

Analysis

(EV based on Risked Value)

I/B/E/S

Multiple

MMR Estimates

Multiple

EV/2012E EBITDAX

$159.0

25.8x

$175.4

23.4x

EV/2013E EBITDAX

$162.6

25.2x

$175.1

23.4x

Offer Price/2012E CFPS

$0.62

27.7x

$0.57

30.2x

Offer Price/2013E CFPS

$0.56

30.7x

$0.51

33.5x

EV/Proved Reserves

209 Bcfe

$19.65 / Mcfe

209 Bcfe

$19.65 / Mcfe

EV/3P Reserves + Risked Resource

18,236 Bcfe

$0.22 / Mcfe

18,236 Bcfe

$0.22 / Mcfe

EV/3Q Production

133,809 Mcfed

$30,613 / Mcfed

133,809 Mcfed

$30,613 / Mcfed

EV/2013E Production

153,600 Mcfed

$26,668 / Mcfed

150,259 Mcfed

$27,261 / Mcfed

(Based on Risked Value)

Trading Days

Period of Time

52-Week

Type of Average

Current

1-Day

5-Day

10-Day

30-Day

90-Day

180-Day

1-Year

2-Year

High

Low

VWAP

--

$8.47

$8.23

$9.13

$10.23

$11.49

$10.90

$11.54

$13.23

--

--

Implied Premium

--

103.0%

108.9%

88.5%

68.2%

49.7%

57.8%

49.0%

30.0%

--

--

Simple Average

$8.72

$8.72

$8.50

$10.21

$11.52

$12.29

$11.32

$12.00

$13.74

$16.57

$7.25

Implied Premium

97.3%

97.3%

102.3%

68.4%

49.4%

40.0%

51.9%

43.4%

25.2%

3.8%

137.3%

Implied

Multiples

(1)

ORRI Trust unit value based on the midpoint of the per unit value of the ORRI Trust at a 10% discount rate and an 11% discount rate using the NAV Assumptions under NYMEX Strip pricing as of December 3, 2012 assuming a

$16.90 offer value for purposes of calculating make-whole and fully diluted shares assuming a December 31, 2012 closing date

Proposed Merger Consideration

$14.75 in cash and 1.15 units in a newly formed royalty trust representing

a 5.0% overriding royalty interest in McMoRan's ultra-deep acreage

for each common share of McMoRan

Risked

(1)

Unrisked

(1)

Cash Consideration

$14.7500

$14.7500

Implied Value of Trust Units Per Share

$2.4528

$4.6002

Total Consideration Per Common Share

$17.2028

$19.3502

Implied Transaction Equity Value

$3,988

$4,485

Implied Transaction Enterprise Value

$4,096

$4,593

Merger

Consideration

Scope of

Assignment:

Evercore Group L.L.C. (“Evercore”) has been asked by McMoRan’s Special Committee of the Board of Directors

whether, in Evercore’s opinion, the consideration to be received by holders of common stock of McMoRan in the

Proposed Transaction is fair, from a financial point of view, to such holders entitled to receive such consideration

($ in millions, except per share and unit amounts)

Confidential

Summary of Selected Proposed Merger Agreement Terms

2

Valuation /

Consideration:

$14.75 in cash, without interest, and 1.15 units of the newly formed royalty trust (the “ORRI Trust”)

Each ORRI Trust unit will entitle the Unitholder to an equal share of the 5.0% overriding royalty interest (“ORRI”) in McMoRan

Exploration Co.’s (“McMoRan”, “MMR”, or the “Company”) subsalt ultra-deep assets (the “Ultra-Deep Assets”)

Common Stock and Preferred Stock owned by Freeport-McMoRan Copper & Gold Inc. (“Freeport”) or Merger Sub, or any of their

respective Subsidiaries, shall no longer be outstanding and shall automatically be cancelled and shall cease to exist (the “Cancelled Shares”)

Freeport owns 500,000 shares of convertible perpetual preferred stock with an initial conversion price of $16.00 which would

equate

to

33,164,664

common

shares

upon

conversion,

or

14.3%

of

the

fully

diluted

shares

outstanding.

(1)

All

of

these

shares

would be cancelled in the merger

Convertible preferred stock and convertible notes not owned by Freeport will remain outstanding and will receive the merger consideration

upon conversion in accordance with the applicable terms of each convertible preferred share series

Transaction

Structure:

Merger

Sub,

a

direct

wholly

owned

subsidiary

of

Freeport,

shall

merge

with

and

into

McMoRan

and

the

separate

corporate

existence

of

Merger Sub shall cease and McMoRan shall be the surviving corporation in the merger

Financing:

Freeport has delivered to McMoRan a true and complete copy of the executed debt commitment letter by and among the financing sources

and Freeport providing for debt financing

Key

Conditions to

Closing:

Stockholder approval shall have been obtained by a vote of the majority of MMR excluding Freeport and Plains E&P

No injunction by any court or other tribunal of competent jurisdiction shall have been entered

All waiting periods applicable to the Merger under the HSR Act shall have expired or been terminated

The Form S-4 shall have been declared effective by the SEC

No Shop/

Fiduciary Out:

“No

Shop”

provision

for

McMoRan

subject

to

fiduciary

exception,

including

right

for

McMoRan

to

respond

to

a

bona

fide

written

proposal

that

could

reasonably

be

expected

to

lead

to

a

proposal

that

is

more

favorable

to

McMoRan

shareholders

than

the

merger

transaction with Freeport

No ability to terminate Merger Agreement in event a superior proposal is received

Termination

Fees:

3% of equity value payable by Freeport in the event of a change in recommendation by Freeport

3% of equity value payable by McMoRan in the event of a change in recommendation by McMoRan

Transaction expenses will also be reimbursed

Timing:

Expected closing in Q1 2013

Transaction Overview

Related Party

Transaction:

Freeport is also contemplating a concurrent acquisition of Plains Exploration and Production Company (“Plains

E&P”), which currently owns 31.5% (basic) of the voting shares of the Company. Consummation of the Proposed

Transaction is not contingent upon Freeport’s contemplated acquisition of Plains E&P

(1)

Assumes

an

implied

offer

value

of

$16.90

per

share

and

a

closing

date

of

December

31,

2012

for

purposes

of

calculating

the

applicable

make-whole

Confidential

Summary of Selected ORRI Trust Proposed Terms

3

Overriding Royalty

Percentage:

5.0% gross overriding royalty interest in and to the hydrocarbons produced from McMoRan’s Ultra-Deep Assets

(leases below 18,000 feet)

Term:

20 years

Call Option:

Non-callable for five years

Callable at $10.00 per unit after year five

Termination

Clauses:

After

five

years,

if

the

volume-weighted

average

price

for

any

nine

month

period

is

below

$0.25

per

unit,

Freeport

can

buy all (but not less than all) outstanding units for $0.25 per unit

Freeport

has

the

right

to

terminate

the

trust

upon

a

vote

of

the

holders

of

80%

of

the

publicly

traded

units

not

owned

by Freeport.  After five years, the 80% required vote drops to 66-2/3%

Drilling, Operating

and Development

Costs:

Free and clear of any and all drilling, development and operating costs and expenses

Shall be subject to and bear transportation and marketing fees and production and other like taxes

Drilling Obligation:

The

ORRI

Trust

will

have

no

ability

to

influence

the

exploration

or

development

of

the

Ultra-Deep

Assets

Trust Expenses:

Freeport will fund the administrative and reporting obligations of the ORRI Trust, subject to an expense ceiling

Transaction Overview

Confidential

Evercore Evaluation Process

4

In connection with its review of the Proposed Transaction, Evercore has, among other things:

–

Reviewed

certain

publicly

available

business

and

financial

information

relating

to

the

Company

that

Evercore

deemed

to

be

relevant,

including

publicly

available

research

analysts’

estimates;

–

Reviewed and discussed with the Company’s management certain non-public projected financial and operating data

relating

to

the

Company

prepared

and

furnished

to

Evercore

by

management

of

the

Company;

–

Discussed

past

and

current

operations,

financial

projections

and

current

financial

condition

of

the

Company

with management

of the Company (including their views on the risks and uncertainties of achieving such projections);

–

Reviewed

a

report

regarding

the

Company’s

proved,

probable

and

possible

reserves

prepared

by

Ryder

Scott

Company, L.P.

(“Ryder Scott”) dated as of July 1, 2012 (the “Reserve Report”) with representatives from Ryder Scott;

–

Reviewed the impact of different commodity price assumptions on the net asset value of the Company’s proved, probable and

possible reserves, as well as the resources potential of the Ultra-Deep Assets, using customary adjustments to reflect an

October 1, 2012 effective date for this analysis;

–

Reviewed

and

discussed

with

MMR

technical

personnel

the

Company’s

resource

potential

from

its

Ultra-Deep

Assets

prepared

and

furnished

to

Evercore

by

management

of

the

Company;

–

Evercore developed risking assumptions of the Company’s resource potential from the Company’s Ultra-Deep Assets utilizing

Evercore’s technical team, which Evercore discussed with the Company’s technical personnel, who deemed the assumptions

reasonable;

–

Reviewed

the

reported

prices

and

the

historical

trading

activity

of

the

Company’s

common

stock;

–

Compared the financial performance of the Company and its stock market trading multiples with those of certain other

publicly-traded companies that Evercore deemed relevant;

–

Compared the financial performance of the Company and the valuation multiples implied by the Proposed Transaction with

those of certain other transactions that Evercore deemed relevant;

–

Reviewed

a

draft

of

the

Merger

Agreement

dated

December

4,

2012;

and

–

Performed such other analyses and examinations and considered such other factors that Evercore deemed appropriate.

Transaction Overview

II.

Situation

Analysis

Confidential

Share Price (December 3, 2012)

$8.72

Fully Diluted Shares Outstanding

(1)

164.5

Market Capitalization

$1,434

Plus: 5.75% Convertible Perpetual Preferred Stock

700

Plus: 11.875% Senior Notes Due 2016

300

Plus: 4.00% Convertible Senior Notes Due 2017

200

Plus: 5.25% Convertible Notes Due 2013

68

Less: Cash

(192)

Total Enterprise Value

$2,510

Estimates and Implied Metrics

McMoRan

Data

(2)

Metric

Price / Cash Flow per share

2012E

$0.62

14.1x

2013E

$0.56

15.6x

EV / EBITDAX

2012E

$159.0

15.8x

2013E

$162.6

15.4x

EV / Proved Reserves ($/Mcfe)

208.5

$12.04

EV / Production ($/Mcfed)

Current

133,809

$18,760

2013E

153,600

$16,343

Net Debt + Pref. / Net Book Capitalization

2,674.4

40.2%

Net Debt + Pref. / 2012E EBITDAX

$159.0

6.8x

Net Debt + Pref / Proved Reserves ($/Mcfe)

208.5

$5.16

Net Debt + Pref / Proved Developed Reserves ($/Mcfe)

170.6

$6.31

Key Company Data & Implied Metrics

(1)

Includes

conversion

of

12.118

million

8.0%

convertible

perpetual

preferred

shares

(164.95

shares

per

preferred

share)

into

2.0

million

shares

(2)

Based on I/B/E/S estimates

(3)

Peer Group includes Cobalt, Energy XXI, EPL Oil & Gas, Stone Energy and W&T Offshore

5

Situation Analysis

(3)

Overview

($

in

millions,

except

per

share

amounts)

0%

50%

100%

150%

200%

12/6/10

4/30/11

9/23/11

2/15/12

7/10/12

12/3/12

McMoRan Exploration Co.

Peer Group

Natural Gas

55%

80%

127%

Current Price

$8.72

Max

18.74

Mean

13.76

Median

13.51

Min

7.99

Simple Average Price -

Trading

5-Day

$8.50

30-Day

11.52

90-Day

12.29

180-Day

11.32

1 Year

12.00

2 Year

13.74

Two Year Price Performance (12/6/10 - 12/3/12)

Confidential

Historical Share Trading Performance

6

1/17/12:

Announced

2011 year-end results

1/31/12:

Exploration

and Development

Update

3/7/12:

Letter

to

shareholders

7/17/12:

Announced

2Q 2012 Results

4/19/12:

Announced

Davy Jones update

8/15/12:

Commenced

offer

to

exchange 5 ¼% convertible

senior notes due 2012

9/13/12:

Completes

exchange offer

10/19/12:

Announced

third-quarter 2012 results

7/30/12:

Announced

updated

activity at Davy Jones No. 1,

which included the delay of

planned flow test

9/4/12:

Announced

operations update

11/26/12:

Announced

a

delay

in

flow testing operations at Davy

Jones No. 1 and  the discovery of

hydrocarbon bearing porous sands

from the Lineham Creek well

6/22/12:

Announced

that

the Company was the

apparent high bidder on 14

lease blocks in GOM Shelf

4/17/12:

Announced

first-quarter 2012

results

Situation Analysis

0

5,000

10,000

15,000

20,000

25,000

30,000

$--

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

$20.00

$22.00

$24.00

12/5/11

1/14/12

2/23/12

4/4/12

5/14/12

6/24/12

8/3/12

9/13/12

10/23/12

12/3/12

Volume

Price

3/26/12: Announced flare at

Davy Jones No. 1, however

flow rates were not

determinable

Confidential

7

The following financial projections summarize McMoRan’s operating model (the “MMR Operating Model”) as provided by

McMoRan management

The projections incorporate all activity associated with McMoRan’s conventional Gulf Coast onshore and Gulf of Mexico

Shelf assets (the “Conventional Assets”)

In addition, the projections incorporate the development of MMR’s Ultra-Deep Assets utilizing the following assumptions:

–

100% success rate on exploration wells (no dry hole costs)

–

Gross prospect size of 2 Tcfe

–

To develop a 2 Tcfe discovery requires 3 development wells drilled per year following an initial discovery well up to 10

total successful wells

–

200 Bcfe gross reserves per well (95% natural gas, 5% condensate)

–

Drilling cost per well of $100 million

–

Completion cost per well of $100 million

–

Facilities cost of $43 million per well

–

1 year drilling duration per well and 6 months to complete per well

–

Wells commence 18 months following spud date

NYMEX strip pricing as of December 3, 2012 through 2017E and held flat thereafter

Assumed 35% U.S. Federal corporate tax rate

Financing for free cash flow shortfall assumed to come from a revolving credit facility with a 4.0% annualized interest rate

Situation Analysis

Summary Financial Projections – Assumptions

Confidential

Summary Financial Projections

8

Summary Financial Projections

($ in millions)

Situation Analysis

2012E

2013E

2014E

2015E

2016E

2017E

2018E

2019E

Production

Natural Gas (Bcf)

32.4

40.5

95.4

145.6

187.5

228.7

262.9

281.8

Oil (MMBbls)

2.1

2.0

2.2

3.0

3.1

2.7

3.1

3.0

Plant Products (Bcfe)

5.4

2.5

1.7

1.3

0.8

3.1

3.4

1.2

Total (Bcfe)

50.5

54.8

110.6

164.6

207.2

248.1

285.0

301.0

Daily (Bcfed)

138

150

303

451

568

680

781

825

Realized Prices

Natural Gas ($/Mcf)

$3.42

$3.73

$4.10

$4.27

$4.42

$4.60

$4.60

$4.60

Crude Oil ($/Bbl)

88.43

91.32

91.36

89.43

87.67

86.46

86.46

86.46

Oil and Natural Gas Revenue

$381

$351

$610

$894

$1,110

$1,310

$1,504

$1,565

Less: LOE

($155)

($127)

($127)

($126)

($122)

($120)

($121)

($115)

Less: G&A

(51)

(49)

(49)

(49)

(49)

(49)

(49)

(49)

Adjusted EBITDAX

$175

$175

$434

$719

$939

$1,142

$1,334

$1,401

Less: Interest Expense

($2)

($15)

($26)

($32)

($24)

($12)

($37)

($36)

Less: Preferred Dividends

(41)

(41)

(41)

(41)

(41)

(41)

(41)

(41)

Less: Cash Taxes

--

--

(1)

(6)

(68)

(232)

(316)

(380)

Discretionary Cash Flow

$132

$119

$365

$640

$806

$856

$940

$943

Less: Capex

($550)

($500)

($749)

($551)

($489)

($493)

($443)

($437)

Free Cash Flow

($417)

($381)

($384)

$89

$317

$364

$497

$506

III.

Financial Analysis

Confidential

Valuation Methodologies

In analyzing the Proposed Transaction, Evercore utilized the following methodologies for its preliminary valuation of McMoRan:

9

Methodology

Description

Assumptions

Net Asset Valuation

(“NAV”) Analysis

Valuation based on the present value of the future after-tax cash

flows expected to be generated from MMR’s proved and non-

proved reserves and resources

Cash flows based on the Reserve Report and the

Company’s resource estimates for its Ultra-Deep Assets

Peer Group Trading

Analysis

Valuation based on public trading metrics of E&P companies with

similar assets

Proved reserves based on the Reserve Report

Financial projections based on I/B/E/S estimates

Reviewed trading multiples for selected GOM and

onshore Gulf Coast companies

Reviewed resource trading multiples for Cobalt

International Energy, Inc. (“Cobalt”)

Precedent Transactions

Analysis

Valuation based on metrics of transaction value to cash flow,

EBITDAX, proved reserves and current production for corporate

M&A transactions and premiums paid in corporate transactions

with all cash consideration in 2012 YTD

Valuation based on metrics of transaction value to proved

reserves, current production and risked resources for asset

transactions involving acquisitions of similar assets

Proved reserves based on the Reserve Report

Cash flow and EBITDAX based on the MMR

Operating Model

Reviewed selected transactions that included assets in

the Gulf of Mexico shelf and onshore Gulf Coast since

2009 with a transaction value greater than $20 million

Reviewed selected transactions that included assets in

the Gulf of Mexico Deepwater and Ultra-Deep Shelf

Research Analyst

Price Target

Valuation based on current Wall Street analyst price targets

Discounted back Wall Street analyst 12-month price

targets to present value using a 13.3% discount rate

representing MMR’s equity cost of capital

Risked NAV Analysis

Assuming Hypothetical

Joint Venture

Valuation based on the present value of the future after-tax cash

flows expected to be generated from MMR’s proved and non-

proved reserves and resources assuming the Company enters into

a hypothetical joint venture agreement

Cash flows based on the Reserve Report and the

Company’s resource estimates for its Ultra-Deep Assets

Company would sell a 25.0% working interest in the

Ultra-Deep Assets for $800 million in the form of a

combination of cash and drilling capex carry

Financial Analysis

Confidential

Risked NAV Analysis

Peer Group

Research Analyst

Assuming Hypothetical

Risked NAV Analysis

Trading Analysis

Precedent Transactions

Price Target

Joint Venture

NYMEX Strip (12/3/12)

$75.00 Oil / $3.00 Gas

$90.00 Oil / $4.00 Gas

$105.00 Oil / $5.00 Gas

Conventional:

Precedent Asset

Precendent Corporate

Takeover Premiums

Present Value of

NYMEX Strip (12/3/12)

Proved Reserves

Conventional:

Conventional:

20.0% - 40.0%

12-Month Price Target

$2.50 - $3.25 / Mcfe

Gulf of Mexico Shelf

Proved Reserves

Discounted at 13.3%

Joint Venture Terms:

LQ Production

Proved Reserves

$8.00 - $12.00 / Mcfe

(MMR's equity cost of capital)

$800 million

$6,500 - $7,000 / Mcfed

$2.50 - $3.50 / Mcfe

LQ Production

of total consideration

2012E EBITDAX

LQ Production

$20,000 - $25,000 / Mcfed

comprised of

3.5x - 4.2x

$5,000 - $7,000 / Mcfed

2012E EBITDAX

$500 million of upfront cash

14.5x - 17.0x

and

Ultra-Deep

Gulf Coast Onshore

2013E EBITDAX

$300 million of drilling carry

Net Risked Resource

Proved Reserves

12.0x - 15.5x

for a

$0.10 - $0.18 / Mcfe

$2.50 - $4.00 / Mcfe

25% working interest

LQ Production

in MMR's Ultra-Deep Assets

$3,500 - $5,000 / Mcfed

Ultra-Deep

Net Risked Resource

Various

$12.61

-$2.72

$8.33

$17.59

$7.68

$13.49

$8.66

$10.23

$8.83

$12.46

$17.25

$0.26

$13.14

$22.35

$16.33

$20.83

$11.67

$16.98

$18.53

$16.13

-$10.00

-$5.00

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

Summary Valuation

10

Cash

consideration:

$14.75

Financial Analysis

(1)

ORRI Trust unit value based on the midpoint of the per unit value of the ORRI Trust at a 10% discount rate and an 11% discount rate using the NAV Assumptions under NYMEX Strip pricing as of December 3, 2012, assuming a

$16.90 offer value for purposes of calculating make-whole and fully diluted shares assuming a December 31, 2012 closing date

Cash plus 1.15 

ORRI Trust units 

(Unrisked): $19.35

(1)

Cash plus 1.15 ORRI

Trust units (Risked):

$17.20

(1)

Confidential

11

The

following

represents

the

assumptions

utilized

by

Evercore

in

its

net

asset

value

analysis

(the

“NAV

Assumptions”

)

Projections of proved, probable and possible production, operating costs, and capital expenditures based on the

Reserve Report rolled forward to October 1, 2012

Volumes and risking for specific Ultra-Deep prospects and discoveries (as per MMR estimates)

–

Geologic and mechanical risking was estimated by Evercore and reviewed by MMR’s technical team with

Evercore

–

Utilized an expected value analysis based on the assumed geologic and mechanical risking

–

Each well has a 200 Bcfe EUR

–

Developed using a continuous four rig program through 2014, going to a six rig program in 2015 and finally an

eight rig program by 2016, held constant thereafter

–

Lineham

Creek

Yegua

wells

begin

drilling

in

January

2014

with

an

incremental

non-operated

drilling

rig

–

Production for each well of 70 MMcfed held flat for six years, then exponential decline (as per MMR estimates)

–

Condensate is 5% of well stream (8.8 bbl/MMcf)

Gross well costs of $243.0 million per well (as per MMR estimates) comprised of:

–

$100.0 million and 1 year to drill

–

$100.0 million and 6 months to complete

–

$43.0 million to equip and tie-in

–

First production after 18 months

Financial Analysis

Net Asset Value Analysis – Assumptions

Confidential

12

Lineham Creek Yegua wells assumed to cost $60.0 million to drill, $40.0 million to complete, $43.0 million to equip

and tie-in and have a condensate ratio of 50.0 bbl/MMcf

Operating costs are $150,000 per well per month plus $0.15 per Mcfe of transportation costs (as per MMR estimates)

NYMEX strip pricing as of December 3, 2012 through 2017E and then held flat thereafter

–

Three sensitivity cases: $75.00/Bbl oil, $3.00/MMBtu gas; $90.00/Bbl oil, $4.00/MMBtu gas; $105.00/Bbl oil,

$5.00/MMBtu gas held flat

Effective date of October 1, 2012

G&A expense of $40.0 million per year plus an incremental $30.0 million per year of ultra-deep G&A beginning in

2014E

Insurance cost of $15.0 million per year plus an incremental insurance cost for the ultra-deep of 25% of ultra-deep

lease operating expense

Included sulphur reclamation expense at a PV-10 value of $18.6 million

Capital expenditures allocated 80% to intangible drilling costs (“IDCs”) and 20% to tangible drilling costs (“TDCs”)

–

IDCs are expensed as incurred and TDCs are depreciated using a 7-year MACRS schedule

Utilization of estimated U.S. Federal net operating loss carry forwards of $717.0 million as of December 31, 2011

U.S. Federal income tax rate of 35.0%

Escrow

funding

payments

of

$5.0

million

per

year

through

2017

to

support

the

funding

requirements

related

to

the

2007 oil and gas acquisition property reclamation obligations

Financial Analysis

Net Asset Value Analysis – Assumptions (cont’d)

Confidential

Ryder Scott prepared an estimate of the proved, probable and possible reserves, future

production and income attributable to MMR

–

The effective date of the Reserve Report is July 1, 2012

Evercore’s technical team has mechanically rolled the Reserve Report forward (to reflect only

actual production) to an effective date of October 1, 2012 and has updated the benchmark price

deck to a NYMEX strip as of December 3, 2012

Evercore

has

also

adjusted

the

Reserve

Report

for

asset

sales

at

West

Delta, Mississippi Canyon

and Eugene Island (sold 22.6 Bcfe of proved reserves) based on data received

from MMR

Reserve Report –

Summary

Reserve Category

Ryder Scott Reserves

(December 3, 2012 NYMEX Strip; Effective October 1, 2012)

Operated Status

Onshore vs. Offshore

13

Product Mix

Offshore

85%

Onshore

15%

PDP

14%

PDBP

35%

PUD

11%

PROB

20%

POSS

20%

Gas

65%

Oil

26%

NGL

9%

Operated

45%

Non-Op

55%

Financial Analysis

Gulf of Mexico Shelf

Oil

NGL

Gas

Equiv.

PV-10

Reserve Category

(Mbbl)

(Mbbl)

(MMcf)

(MMcfe)

($MM)

PDP

3,210

335

14,631

35,905

$1.1

PDBP

6,477

1,698

66,864

115,914

$534.5

PDSI

0

--

5

6

$0.0

PUD

834

658

23,058

32,008

$46.5

Total Proved Reserves

10,521

2,691

104,558

183,833

$582.1

Probable

2,330

917

34,365

53,850

$159.3

Total 2P Reserves

12,852

3,608

138,923

237,683

$741.4

Possible

1,299

1,352

41,359

57,263

$158.1

Total 3P Reserves

14,150

4,960

180,282

294,946

$899.5

Gulf Coast Onshore

Oil

NGL

Gas

Equiv.

PV-10

Reserve Category

(Mbbl)

(Mbbl)

(MMcf)

(MMcfe)

($MM)

PDP

307

199

11,025

14,063

$39.4

PDBP

95

36

3,924

4,710

$15.7

PDSI

--

--

--

--

$0.0

PUD

143

--

5,038

5,898

$15.3

Total Proved Reserves

545

235

19,987

24,671

$70.4

Probable

322

18

13,120

15,156

$47.7

Total 2P Reserves

867

253

33,107

39,827

$118.1

Possible

131

10

12,957

13,802

$36.6

Total 3P Reserves

998

263

46,064

53,629

$154.7

Total Conventional Assets

Oil

NGL

Gas

Equiv.

PV-10

Reserve Category

(Mbbl)

(Mbbl)

(MMcf)

(MMcfe)

($MM)

PDP

3,518

534

25,657

49,969

$40.5

PDBP

6,572

1,734

70,788

120,623

$550.2

PDSI

0

--

5

6

$0.0

PUD

977

658

28,095

37,906

$61.8

Total Proved Reserves

11,067

2,927

124,545

208,504

$652.5

Probable

2,652

935

47,485

69,006

$207.0

Total 2P Reserves

13,719

3,861

172,030

277,510

$859.5

Possible

1,430

1,362

54,316

71,065

$194.7

Total 3P Reserves

15,148

5,223

226,346

348,575

$1,054.2

Confidential

Ultra-Deep Assets Overview

Risked Volume Potential for MMR’s Ultra-Deep Assets

14

Financial Analysis

Gross Unrisked

Net Unrisked

Geologic

Mechanical

Gross Risked

Net Risked

Prospect

Category

WI

NRI

Resource Potential

Resource Potential

COS

COS

Resource Potential

Resource Potential

%

%

Bcfe

Bcfe

%

%

Bcfe

Bcfe

Offshore

Davy Jones

Discovery

63.4%

50.2%

3,248

1,631

80.0%

90.0%

2,321

1,165

Blackbeard East

Discovery

72.0%

57.4%

1,040

597

80.0%

90.0%

737

423

Lafitte

Discovery

72.0%

58.3%

2,342

1,365

80.0%

90.0%

1,601

933

Blackbeard West

Discovery

69.4%

53.1%

804

427

80.0%

90.0%

592

315

Offshore Discoveries Total

7,434

4,020

5,252

2,836

England

Prospect

36.0%

28.8%

27,300

7,862

30.5%

90.0%

7,487

2,156

Barbosa

Prospect

72.0%

57.6%

2,588

1,491

30.5%

90.0%

721

415

Morgan

Prospect

72.0%

57.6%

1,000

576

30.5%

90.0%

281

162

Barataria

Prospect

72.0%

57.6%

2,820

1,624

30.5%

90.0%

776

447

Blackbeard West #3

Prospect

69.4%

55.5%

498

276

30.5%

90.0%

288

160

Drake

Prospect

72.0%

57.6%

14,580

8,398

28.9%

90.0%

3,765

2,169

Davy Jones West

Prospect

36.0%

28.8%

1,400

403

30.5%

90.0%

391

113

Hurricane

Prospect

72.0%

57.6%

1,575

907

30.5%

90.0%

446

257

Hook

Prospect

72.0%

57.6%

4,890

2,817

28.9%

90.0%

1,257

724

Captain Blood

Prospect

72.0%

57.6%

18,000

10,368

30.5%

90.0%

4,957

2,855

Bonnet

Prospect

72.0%

57.6%

3,150

1,814

28.9%

90.0%

788

454

Queen Anne's Revenge

Prospect

72.0%

57.6%

1,296

746

30.5%

90.0%

336

194

Calico Jack

Prospect

36.0%

28.8%

7,000

2,016

30.5%

90.0%

1,931

556

Offshore Prospects Total

86,097

39,300

23,424

10,661

Onshore

Lineham Creek -

Yegua

Discovery

36.0%

28.8%

3,000

864

80.0%

90.0%

2,176

627

Onshore Discoveries Total

3,000

864

2,176

627

Highlander

Near Term Drill

72.0%

57.6%

13,300

7,661

30.5%

90.0%

3,578

2,061

Lineham Creek

Drilling

36.0%

28.8%

10,800

3,110

30.5%

90.0%

2,976

857

Tortuga

Prospect

72.0%

57.6%

5,590

3,220

28.9%

90.0%

1,465

844

Onshore Prospects Total

29,690

13,991

8,020

3,762

Total Ultra-Deep

126,221

58,175

-

-

38,872

17,887

Confidential

15

NAV Summary

Discount

Commodity Prices

Rate

NYMEX Strip (12/3/12)

$75.00 Oil / $3.00 Gas

$90.00 Oil / $4.00 Gas

$105.00 Oil / $5.00 Gas

Low

High

Low

High

Low

High

Low

High

Proved Developed Producing

8% - 10%

$253

$258

$181

$185

$258

$264

$335

$342

Proved Developed Behind-Pipe

10% - 12%

513

550

381

409

507

544

633

678

Proved Undeveloped

15% - 20%

39

48

14

20

38

46

61

73

Proved Reserves

$805

$857

$577

$614

$803

$853

$1,028

$1,093

Probable

20% - 30%

90

128

62

90

87

124

112

159

Proved plus Probable Reserves

$895

$985

$639

$704

$890

$978

$1,140

$1,252

Possible

30% - 40%

80

102

50

65

78

99

105

132

3P Reserves

$975

$1,087

$689

$769

$967

$1,076

$1,245

$1,384

Ultra Deep Upside (Risked)

10% - 12%

4,087

5,519

1,184

1,917

3,167

4,373

5,150

6,830

P&A (Developed Properties)

8% - 10%

(212)

(224)

(212)

(224)

(212)

(224)

(212)

(224)

Gross Asset Value

$4,849

$6,383

$1,660

$2,461

$3,922

$5,225

$6,183

$7,989

Less: G&A

12% - 15%

(463)

(575)

(463)

(575)

(463)

(575)

(463)

(575)

Less: Insurance

8% - 10%

(295)

(371)

(295)

(371)

(295)

(371)

(295)

(371)

Less: Sulphur Reclaimation Expense

10% - 10%

(19)

(19)

(19)

(19)

(19)

(19)

(19)

(19)

Pre-Tax Net Asset Value

$4,073

$5,417

$884

$1,496

$3,145

$4,260

$5,406

$7,024

Less: Cash Taxes

12% - 15%

(914)

(1,311)

(236)

(365)

(699)

(1,014)

(1,220)

(1,721)

After-Tax Net Asset Value

$3,158

$4,106

$648

$1,131

$2,445

$3,247

$4,186

$5,303

Add: Cash

192

192

192

192

192

192

192

192

Less: Debt

(568)

(300)

(568)

(568)

(568)

(568)

(300)

(300)

Less: Preferred Shares

(700)

0

(712)

(712)

(700)

(700)

0

0

Equity Value

$2,082

$3,998

($440)

$43

$1,370

$2,171

$4,078

$5,195

Fully Diluted Shares

165.1

231.8

162.0

162.0

164.4

165.2

231.8

232.4

$/Share

$12.61

$17.25

($2.72)

$0.26

$8.33

$13.14

$17.59

$22.35

Financial Analysis

Net Asset Value Analysis –

Price Sensitivity 

($ in millions)

Confidential

Peer Group Trading Analysis

($ in millions)

16

Source: FactSet

Note: Proved reserves as of latest published reserve report, adjusted for subsequent acquisitions and divestitures

Enterprise Value /

Price /

Price

Equity

Enterprise

Proved

Production

EBITDAX

CFPS

Reserve & Production Statistics

Company

12/3/12

Value

Value

Reserves

Current

2013E

2012E

2013E

2012E

2013E

Proved Res

% Gas

% Dev.

LQ Prod.

2012E

2013E

R/P

($/share)

($MM)

($MM)

($/Mcfe)

($/Mcfed)

($/Mcfed)

(x)

(x)

(x)

(x)

(Bcfe)

(%)

(%)

(Mcfed)

(Mcfed)

(Mcfed)

(Years)

Energy XXI (Bermuda) Limited

$31.32

$2,766

$3,772

$5.26

$16,864

$10,721

4.2x

3.5x

3.4x

2.6x

718

29.1%

68.3%

223,700

287,646

351,872

8.8

W&T Offshore, Inc.

$16.40

$1,260

$1,972

$2.81

$8,123

$6,094

3.8x

3.3x

2.6x

2.3x

701

41.3%

65.5%

242,750

285,740

323,543

7.9

Stone Energy Corporation

$19.91

$999

$1,634

$2.68

$6,516

$5,883

2.6x

2.6x

1.7x

1.7x

609

54.6%

59.8%

250,837

251,066

277,840

6.7

EPL Oil & Gas, Inc.

$21.05

$834

$1,032

$2.24

$15,883

$7,586

3.7x

2.2x

3.3x

2.0x

460

40.0%

74.0%

64,964

80,710

136,023

19.4

Mean

$1,465

$2,103

$3.25

$11,846

$7,571

3.6x

2.9x

2.7x

2.1x

622

41.3%

66.9%

195,563

226,291

272,319

10.7

Median

$1,129

$1,803

$2.75

$12,003

$6,840

3.8x

2.9x

3.0x

2.1x

655

40.7%

66.9%

233,225

268,403

300,692

8.4

McMoRan Exploration Co.

$8.72

$1,434

$2,510

$12.04

$18,760

$16,343

15.8x

15.4x

14.1x

15.6x

209

59.7%

81.8%

133,809

137,400

153,600

4.3

Conventional Assets Trading Peers

Ultra-Deep Assets Trading Peers

Adj. Enterprise Value

(4)

/

Price

Equity

Enterprise

Resource

(2)(3)

Risked

Unrisked

Company

Area

12/3/12

Value

Value

(1)

Risked

Unrisked

% Gas

Resource

Resource

($/share)

($MM)

($MM)

(Bcfe)

(Bcfe)

(%)

($/Mcfe)

($/Mcfe)

Cobalt

Total Company (GOM, Angola and Gabon)

$23.60

$9,795

$9,553

96,439

321,638

0%

$0.10

$0.03

GOM (Miocene and Lower Tertiary)

--

--

$2,979

14,935

63,104

0%

$0.20

$0.05

GOM (Miocene Only)

--

--

$1,450

6,498

19,808

0%

$0.22

$0.07

GOM (Lower Tertiary Only)

--

--

$1,529

8,436

43,295

0%

$0.18

$0.04

Africa (Angola and Gabon)

--

--

$6,574

81,504

258,535

0%

$0.08

$0.03

McMoRan Exploration Co.

$8.72

$1,434

$2,510

17,887

58,175

95%

$0.11

$0.03

(1)

Cobalt value allocated by area based on the value attributed to each area by street research as a percentage of total NAV

(2)

Cobalt

resource

numbers

represent

the

average

of

street

research

estimates

(3)

Oil

converted

to

gas

equivalent

on

an

economic

equivalents

basis

using

the

average

NYMEX

forward

strip

pricing

for

WTI

Oil

and

HHUB

gas

for

the

next

60

months

as

of

December

3,

2012

(21.13:1)

(4)

Enterprise value adjusted to remove the value of McMoRan’s Conventional Assets

Financial Analysis

Confidential

17

(1)

Based on Company provided reserve and I/B/E/S estimates

Relevant Multiples

Value Range ($MM)

Metric

Data

(1)

Low

High

Low

High

Conventional Assets

Proved Reserves (Bcfe)

208.5

$2.50 / Mcfe

$3.25 / Mcfe

$521

$678

LQ Production (Mcfed)

133,809

$6,500 / Mcfed

$7,000 / Mcfed

$870

$937

2012E EBITDAX ($MM)

159.0

3.5x

4.2x

$557

$668

Selected Conventional Asset Value Range

$550

$675

Ultra-Deep Assets

Net Risked Resources (Bcfe)

17,887

$0.10 / Mcfe

$0.18 / Mcfe

$1,789

$3,220

Implied Enterprise Value Range

$2,339

$3,895

Add: Cash

192

192

Less: Debt

(568)

(300)

Less: Preferred Shares

(700)

0

Implied Equity Value

$1,263

$3,787

Diluted Shares Outstanding

164.3

231.8

Implied Equity Value per Share

$7.68

$16.33

Financial Analysis

Peer Group Trading Analysis – Valuation Summary

Peer Group Trading Analysis – Valuation Summary

Confidential

18

Selected Precedent Gulf of Mexico Shelf M&A Transactions

Source: IHS Herold

(1) Represents 19% of the total transaction value which is the share McMoRan allocated to proved reserves

Trans.

Reserves

Production

Implied Value /

HHUB

WTI

Date

Buyer

Seller

Value

Proved Res.

% Gas

% Dev.

Prod.

% Gas

R/P

Proved Res.

Production

12-Mo Strip

12-Mo Strip

($MM)

(Bcfe)

(%)

(%)

(Mcfed)

(%)

(Years)

($/Mcfe)

($/Mcfed)

($/bbl)

18-Oct-12

NGP/Northstar

Undisclosed Private

$160

44.4

--

--

12,600

--

9.7

$3.60

$12,698

$3.91

$94.01

26-Sep-12

Arena Energy

McMoRan

$37

15.2

78%

22%

10,000

70%

4.2

$2.42

$3,680

$3.49

$92.50

17-Sep-12

EPL

Hilcorp

$550

217.8

46%

42%

60,000

50%

9.9

$2.53

$9,167

$3.42

$99.87

7-Sep-12

Renaissance

McMoRan

$28

7.4

23%

--

--

--

--

$3.81

--

$3.26

$96.84

15-May-12

EPL

W&T

$32

6.0

49%

84%

5,760

48%

2.9

$5.40

$5,621

$3.02

$95.94

2-Feb-12

SandRidge

Dynamic/Riverstone

$1,256

375.0

50%

50%

150,000

50%

6.8

$3.35

$8,371

$2.89

$99.10

1-Dec-11

KNOC/SCL/STX/Samchully

NGP/Northstar

$201

64.8

30%

--

28,200

30%

6.3

$3.10

$7,128

$3.75

$99.69

1-Nov-11

Apache

Stone

$38

7.8

4%

100%

2,460

1%

8.7

$4.92

$15,610

$4.09

$92.81

1-Nov-11

EPL

Stone

$38

7.8

4%

100%

2,460

1%

8.7

$4.92

$15,610

$4.09

$92.81

25-Aug-11

Dynamic Offshore

Moreno/SPN

$68

21.3

35%

92%

8,214

35%

7.1

$3.19

$8,279

$4.20

$87.47

29-Jul-11

Dynamic Offshore

Exxon Mobil

$183

81.0

61%

72%

42,000

60%

5.3

$2.25

$4,345

$4.52

$99.76

1-May-11

Dynamic Offshore

Gryphon/Woodside

$28

12.6

88%

100%

--

--

--

$2.18

--

$4.98

$114.41

7-Apr-11

TRT/Tana

Maritech/TETRA

$150

54.6

37%

89%

--

--

--

$2.75

--

$4.57

$110.21

9-Mar-11

Undisclosed

National Fuel/Seneca

$70

34.4

74%

75%

28,793

76%

3.3

$2.03

$2,431

$4.28

$106.32

13-Jan-11

EPL

Anglo-Suisse

$201

48.6

16%

76%

18,000

8%

7.4

$4.13

$11,150

$4.72

$94.89

21-Nov-10

Energy XXI (Bermuda)

Exxon Mobil

$1,012

296.7

39%

68%

120,000

47%

6.8

$3.41

$8,433

$4.37

$83.60

20-Sep-10

McMoRan

Plains

$158

(1)

60.0

85%

--

45,000

85%

3.7

$2.63

$3,501

$4.44

$79.08

3-Nov-10

W&T

Shell

$37

54.4

72%

--

26,700

73%

5.6

$0.67

$1,375

$4.21

$86.18

Maximum

$1,256

375.0

88%

100%

150,000

85%

9.9

$5.40

$15,610

$4.98

$114.41

Minimum

$28

6.0

4%

22%

2,460

1%

2.9

$0.67

$1,375

$2.89

$79.08

Mean

$240

78.3

47%

75%

37,346

45%

6.4

$3.18

$7,827

$4.01

$95.86

Median

$70

46.5

46%

76%

26,700

49%

6.8

$3.15

$8,279

$4.15

$95.41

Financial Analysis

Precedent Transactions – Gulf of Mexico Shelf

Confidential

Source:  IHS Herolds

19

Selected Precedent Gulf Coast Onshore M&A Transactions

Financial Analysis

Trans.

Reserves

Production

Implied Value /

HHUB

WTI

Date

Buyer

Seller

Value

Proved Res.

% Gas

% Dev.

Prod.

% Gas

R/P

Proved Res.

Production

12-Mo Strip

12-Mo Strip

($MM)

(Bcfe)

(%)

(%)

(Mcfed)

(%)

(Years)

($/Mcfe)

($/Mcfed)

($/MMBtu)

($/bbl)

12-Oct-12

Texas Petr.

Forest

$220

45.0

38%

--

20,000

35%

6.2

$4.89

$11,000

$3.97

$93.91

4-Oct-12

Undisclosed

Carrizo

$20

--

--

--

5,720

87%

--

--

$3,409

$3.77

$89.73

19-Mar-12

Undisclosed

Comstock

$123

63.2

84%

--

11,296

81%

15.3

$1.95

$10,889

$2.92

$108.62

4-Nov-11

Undisclosed

Plains

$185

120.0

100%

--

39,000

100%

8.4

$1.54

$4,744

$3.96

$93.30

31-Aug-11

Encore Energy Part.

Undisclosed

$48

12.6

17%

100%

2,580

17%

13.4

$3.78

$18,450

$4.29

$90.64

17-Aug-11

EnergyQuest II

Swift

$54

92.2

65%

19%

10,600

65%

23.8

$0.58

$5,047

$4.31

$88.50

6-Jun-11

Linc Energy Ltd.

ERG

$236

123.0

6%

--

18,600

6%

18.1

$1.92

$12,688

$4.93

$102.35

13-May-11

Undisclosed Private

Energy XXI (Bermuda)

$41

--

--

--

9,710

82%

--

--

$4,222

$4.57

$100.07

3-Mar-11

Legend Nat. Gas

Smith

$99

--

--

--

8,800

65%

--

--

$11,273

$4.25

$104.61

18-Jan-11

Gulf Coast Energy

Cypress

$95

--

--

--

11,020

91%

--

--

$8,621

$4.73

$94.51

17-Jan-11

Undisclosed

Strike

$22

8.3

--

--

--

--

--

$2.63

--

$4.71

$95.10

Maximum

$236

123.0

100%

100%

39,000

100%

23.8

$4.89

$18,450

$4.93

$108.62

Minimum

$20

8.3

6%

19%

2,580

6%

6.2

$0.58

$3,409

$2.92

$88.50

Mean

$104

66.3

52%

59%

13,733

63%

14.2

$2.47

$9,034

$4.22

$96.48

Median

$95

63.2

52%

59%

10,810

73%

14.4

$1.95

$9,755

$4.29

$94.51

Precedent Transactions – Gulf Coast Onshore

Confidential

Source:  IHS Herolds

(1) Represents 81% of the total transaction value which is the share McMoRan allocated to unevaluated oil and gas property

GOM Deepwater (Net Recoverable Resources)

Ultra-

Deep Shelf (Net Unrisked Potential)

Trans.

Ultra-Deep Net

Transaction Value /

HHUB

WTI

Date

Buyer

Seller

Value

Unrisked Potential

Ultra-Deep Net Unrisked Potential

12-Mo Strip

12-Mo Strip

($MM)

(Tcfe)

($/Mcfe)

($/MMBtu)

($/bbl)

20-Sep-10

McMoRan

Plains

$672

(1)

6.6

$0.10

$4.44

$79.08

8-Sep-11

McMoRan

Whitney

$49

0.1

$0.57

$4.33

$90.18

20

Financial Analysis

Trans.

Net Recoverable

Implied Value /

HHUB

WTI

Date

Buyer

Seller

Value

Resources

Net Recoverable Resources

12-Mo Strip

12-Mo Strip

($MM)

(Bcfe)

($/Mcfe)

($/MMBtu)

($/bbl)

2-Jul-12

INPEX

Anadarko

$556

129.6

$4.29

$3.29

$87.14

1-Oct-10

Hess

BP

$40

144.0

$0.28

$4.28

$83.28

22-Dec-09

Maersk/Various

Devon

$1,300

1,645.0

$0.79

$5.90

$76.43

Maximum

$1,300

1,645.0

$4.29

$5.90

$87.14

Minimum

$40

129.6

$0.28

$3.29

$76.43

Mean

$632

639.5

$1.79

$4.49

$82.28

Median

$556

144.0

$0.79

$4.28

$83.28

Precedent Transactions – GOM Deepwater (Non-Proved) and Ultra-Deep Shelf

Confidential

Gross Unrisked

Net Unrisked

Gross Risked

Net Risked

Prospect

Category

WI

NRI

Resource Potential

Resource Potential

Resource Potential

Resource Potential

Low

High

Low

High

%

%

Bcfe

Bcfe

Bcfe

Bcfe

$/Mcfe

$/Mcfe

$MM

$MM

Offshore

Davy Jones

Discovery

63.4%

50.2%

3,248

1,631

2,321

1,165

0.50

$      

0.60

$      

$583

$699

Blackbeard East

Discovery

72.0%

57.4%

1,040

597

737

423

0.25

$      

0.50

$      

106

211

Lafitte

Discovery

72.0%

58.3%

2,342

1,365

1,601

933

0.25

$      

0.50

$      

233

467

Blackbeard West

Discovery

69.4%

53.1%

804

427

592

315

0.25

$      

0.50

$      

79

157

Offshore Discoveries Total

7,434

4,020

5,252

2,836

$1,000

$1,535

England

Prospect

36.0%

28.8%

27,300

7,862

7,487

2,156

0.10

$      

0.15

$      

$216

$323

Barbosa

Prospect

72.0%

57.6%

2,588

1,491

721

415

0.10

$      

0.15

$      

42

62

Morgan

Prospect

72.0%

57.6%

1,000

576

281

162

0.10

$      

0.15

$      

16

24

Barataria

Prospect

72.0%

57.6%

2,820

1,624

776

447

0.10

$      

0.15

$      

45

67

Blackbeard West #3

Prospect

69.4%

55.5%

498

276

288

160

0.10

$      

0.15

$      

16

24

Drake

Prospect

72.0%

57.6%

14,580

8,398

3,765

2,169

0.10

$      

0.15

$      

217

325

Davy Jones West

Prospect

36.0%

28.8%

1,400

403

391

113

0.10

$      

0.15

$      

11

17

Hurricane

Prospect

72.0%

57.6%

1,575

907

446

257

0.10

$      

0.15

$      

26

39

Hook

Prospect

72.0%

57.6%

4,890

2,817

1,257

724

0.10

$      

0.15

$      

72

109

Captain Blood

Prospect

72.0%

57.6%

18,000

10,368

4,957

2,855

0.10

$      

0.15

$      

286

428

Bonnet

Prospect

72.0%

57.6%

3,150

1,814

           ��             

788

     ��                      

454

0.10

$      

0.15

$      

45

68

Queen Anne's Revenge

Prospect

72.0%

57.6%

1,296

746

336

194

0.10

$      

0.15

$      

19

29

Calico Jack

Prospect

36.0%

28.8%

7,000

2,016

1,931

556

0.10

$      

0.15

$      

56

83

Offshore Prospects Total

86,097

39,300

23,424

10,661

$1,066

$1,599

Onshore

Lineham Creek - Yegua

Discovery

36.0%

28.8%

3,000

864

2,176

627

0.50

$      

0.75

$      

314

470

Onshore Discoveries Total

3,000

864

2,176

627

$314

$470

Highlander

Near Term Drill

72.0%

57.6%

13,300

7,661

3,578

2,061

0.10

$      

0.15

$      

$206

$309

Lineham

Drilling

36.0%

28.8%

10,800

3,110

2,976

857

0.10

$      

0.15

$      

86

129

Tortuga

Prospect

72.0%

57.6%

5,590

3,220

1,465

844

0.10

$      

0.15

$      

84

127

Onshore Prospects Total

29,690

13,991

8,020

3,762

$376

$564

Total Ultra-Deep

126,221

58,175

38,872

17,887

$2,756

$4,168

Metric Used

Implied Valuation

Ultra-Deep Shelf Valuation Precedent Transactions

21

Financial Analysis

Precedent Transactions – Ultra-Deep Shelf Value

Confidential

22

Relevant Multiples

Value Range ($MM)

Metric

Data

Low

High

Low

High

Gulf of Mexico Shelf

Proved Reserves (Bcfe)

183.8

$2.50 / Mcfe

$3.50 / Mcfe

$460

$643

Current Production (Mcfed)

103,211

$5,000 / Mcfed

$7,000 / Mcfed

$516

$722

Selected Gulf of Mexico Shelf Value Range

$475

$650

Gulf Coast Onshore

Proved Reserves (Bcfe)

24.7

$2.50 / Mcfe

$4.00 / Mcfe

$62

$99

Current Production (Mcfed)

30,598

$3,500 / Mcfed

$5,000 / Mcfed

$107

$153

Selected Gulf Coast Onshore Value Range

$75

$125

Total Conventional Asset Value Range

$550

$775

Ultra-Deep Assets

Net Risked Resources (Bcfe)

17,887

Various (See Previous Page)

$2,756

$4,168

Implied Enterprise Value Range

$3,306

$4,943

Add: Cash

192

192

Less: Debt

(568)

(300)

Less: Preferred Shares

(700)

0

Implied Equity Value

$2,230

$4,835

Diluted Shares Outstanding

165.3

232.1

Implied Equity Value per Share

$13.49

$20.83

Financial Analysis

Precedent Transactions – Valuation Summary

Precedent Asset Transactions – Valuation Summary

Confidential

23

Source: IHS Herold, FactSet

Note: Only includes transactions greater than $100 million

Trans.

Equity

Equity Value /

Transaction Value /

Premium

Reserve & Production Statistics

HHUB

WTI

Date

Buyer

Seller

Value

Value

Cash Flow

Cash Flow

EBITDA

EBITDA

Proved Res.

Prod.

1 Day

1-Mo.

2-Mo.

Proved Res.

% Gas

% Dev.

R/P

Spot Price

Spot Price

($MM)

($MM)

Current

Forward

Current

Forward

($/Mcfe)

($/Mcfed)

(%)

(%)

(%)

(Bcfe)

(%)

(%)

(Years)

($/MMBtu)

($/bbl)

25-Apr-12

Halcon

GeoResources

$945

$973

7.8x

6.1x

6.8x

5.2x

$4.97

$18,175

23%

12%

26%

190.2

36%

70%

12.4

$1.97

$103.16

17-Oct-11

Statoil ASA

Brigham Exploration

$4,822

$4,468

14.7x

7.7x

14.5x

8.0x

$12.03

$47,837

20%

26%

11%

400.8

22%

35%

10.9

3.49

86.80

15-Jul-11

BHP Billiton

Petrohawk

$15,223

$12,085

10.1x

7.3x

10.3x

7.6x

$2.75

$11,274

65%

49%

46%

3,391.5

92%

35%

11.2

4.42

95.69

9-Nov-10

Chevron

Atlas Energy

$4,315

$3,215

18.1x

15.2x

17.1x

15.6x

$1.73

$17,608

37%

62%

49%

847.0

99%

44%

27.9

3.49

87.06

2-Jun-10

SandRidge Energy

Arena Resources

$1,287

$1,394

8.4x

6.4x

7.9x

6.1x

$3.05

$25,728

7%

(6%)

2%

415.5

14%

37%

23.1

4.39

72.58

15-Apr-10

Apache

Mariner Energy

$4,685

$2,770

5.3x

4.0x

7.6x

5.7x

$3.13

$10,944

45%

68%

92%

1,087.1

53%

66%

9.6

4.15

85.84

14-Dec-09

Exxon Mobil

XTO

$40,496

$31,254

5.3x

5.8x

5.9x

6.6x

$1.92

$9,797

25%

24%

20%

14,827.3

84%

61%

14.0

5.21

69.87

1-Nov-09

Denbury Resources

Encore Acquisition Co.

$4,465

$2,864

6.8x

6.9x

10.7x

8.8x

$2.72

$13,256

35%

34%

38%

1,321.7

33%

80%

13.4

4.11

77.00

27-Apr-09

Atlas Energy, Inc.

Atlas Energy Resources

$1,015

$482

2.4x

2.4x

3.3x

3.2x

$1.46

$14,827

0%

60%

(5%)

517.6

99%

60%

27.9

3.31

50.80

30-Apr-08

Stone Energy

Bois d'Arc Energy

$1,750

$1,736

5.4x

5.0x

5.6x

4.9x

$4.48

$13,068

(4%)

21%

32%

335.0

57%

74%

8.0

10.94

115.63

17-Jul-07

Plains E&P

Pogo Producing Co.

$3,749

$3,594

5.5x

6.2x

5.5x

5.2x

$2.48

$11,095

18%

11%

19%

1,314.0

65%

73%

12.2

6.32

74.15

7-Jan-07

Forest Oil

Houston Exploration

$1,827

$1,574

4.2x

3.6x

4.1x

3.8x

$2.42

$7,844

8%

(7%)

(4%)

699.3

96%

67%

8.9

5.52

56.31

23-Jun-06

Anadarko

Western Gas Res.

$5,385

$4,800

10.7x

9.9x

10.6x

9.0x

$2.90

$13,563

49%

9%

24%

920.8

97%

43%

12.8

6.51

70.49

23-Jun-06

Anadarko

Kerr-McGee

$19,623

$16,500

7.1x

5.7x

7.3x

5.7x

$3.14

$11,450

40%

27%

51%

5,388.0

62%

60%

10.0

6.51

70.49

21-Apr-06

Petrohawk

KCS Energy

$2,008

$1,630

5.5x

4.7x

5.8x

4.9x

$3.54

$10,822

10%

46%

15%

463.0

88%

73%

8.4

7.93

71.95

23-Jan-06

Helix

Remington

$1,312

$1,385

6.5x

4.7x

6.0x

4.4x

$4.29

$14,622

22%

23%

27%

278.9

60%

57%

9.3

8.78

68.35

12-Dec-05

ConocoPhillips

Burlington Resources

$36,400

$34,639

7.7x

6.6x

6.4x

5.3x

$2.58

$11,173

19%

26%

20%

12,484.2

68%

73%

11.8

15.02

59.39

13-Oct-05

Occidental Petroleu

Vintage Petroleum

$4,119

$3,539

7.9x

7.4x

7.0x

6.1x

$1.38

$7,929

32%

31%

53%

2,623.2

32%

67%

15.7

13.68

64.12

19-Sep-05

Norsk Hydro ASA

Spinnaker Exploration

$2,592

$2,596

8.2x

6.8x

7.9x

6.0x

$6.04

$15,847

49%

43%

36%

373.6

49%

34%

7.2

11.24

63.00

Max

$40,496

18.1x

15.2x

17.1x

15.6x

$12.03

$47,837

65%

68%

92%

14,827

99%

80%

27.9

$15.02

$115.63

Mean

$8,212

7.8x

6.4x

7.9x

6.4x

$3.53

$15,098

26%

29%

29%

2,520

63%

58%

13.4

6.68

75.93

Median

$4,119

7.1x

6.2x

7.0x

5.7x

$2.90

$13,068

23%

26%

26%

847

62%

61%

11.8

5.52

71.95

Min

$945

2.4x

2.4x

3.3x

3.2x

$1.38

$7,844

(4%)

(7%)

(5%)

190

14%

34%

7.2

1.97

50.80

Financial Analysis

Precedent M&A Transactions – Corporate

Confidential

24

(1)

Estimates as per MMR Operating Model

Financial Analysis

Relevant Multiples

Value Range ($MM)

Metric

Data

Low

High

Low

High

2012E Cash Flow ($MM)

132.2

14.5x

18.0x

$3,028

$3,532

2013E Cash Flow ($MM)

119.1

10.0x

15.0x

$2,284

$2,894

2012E EBITDAX ($MM)

175.4

14.5x

17.0x

$2,543

$2,982

2013E EBITDAX ($MM)

175.1

12.0x

15.5x

$2,101

$2,714

Proved Reserves (Bcfe)

208.5

$8.00 / Mcfe

$12.00 / Mcfe

$1,668

$2,502

LQ Production (Mcfed)

133,809

$20,000 / Mcfed

$25,000 / Mcfed

$2,676

$3,345

Selected Enterprise Value Range

$2,500

$3,000

Add: Cash

192

192

Less: Debt

(568)

(568)

Less: Preferred Shares

(700)

(700)

Implied Equity Value

$1,424

$1,924

Diluted Shares Outstanding

164.5

164.9

Implied Equity Value per Share

$8.66

$11.67

Precedent M&A Transactions – Valuation Summary

Precedent Corporate Transactions – Valuation Summary

Confidential

25

Source: Capital IQ

Note: Includes public corporate takeover transactions announced or closed in 2012 YTD between $1.0 billion and $10.0 billion

Selected Valuation Range

Relevant Multiples

Value Range ($MM)

Metric

Metric

Low

High

Low

High

1 Day Premium

$8.72

20.0%

30.0%

$10.46

$11.34

5 Day Premium

$8.18

25.0%

35.0%

$10.23

$11.04

1 Month Premium

$12.13

30.0%

40.0%

$15.77

$16.98

Implied Equity Value Range

$10.23

$16.98

Financial Analysis

Announced

Transaction

Premiums

Date

Target/Issuer

Buyers/Investors

Value ($MM)

1 Day Prior

5 Day Prior

1 Month

11/27/12

Ralcorp Holdings Inc.

ConAgra Foods, Inc.

$7,045

28.2%

26.6%

24.2%

11/15/12

Schiff Nutrition International Inc.

Reckitt Benckiser LLC

1,453

23.9%

23.8%

72.7%

11/9/12

Titanium Metals Corporation

Precision Castparts Corp.

3,011

44.2%

38.7%

35.7%

11/1/12

JDA Software Group Inc.

RedPrairie Corporation

2,213

18.0%

32.6%

39.2%

10/25/12

PSS World Medical Inc.

McKesson Corporation

1,941

34.3%

31.3%

25.8%

10/22/12

Ancestry.com Inc.

Permira/Spectrum

1,609

9.7%

11.8%

3.3%

10/18/12

Orient-Express Hotels Ltd.

The Indian Hotels Company Limited

1,828

40.0%

46.0%

32.8%

10/11/12

Oshkosh Corporation

Carl C. Icahn

3,636

21.0%

15.7%

21.5%

10/8/12

TPC Group Inc

Innospec Inc.

1,093

16.8%

15.6%

12.2%

9/27/12

Sealy Corporation

Tempur-Pedic International Inc.

1,018

2.8%

7.8%

39.2%

9/13/12

Citizens Republic Bancorp, Inc

FirstMerit Corporation

1,025

18.3%

15.0%

17.8%

9/6/12

American Realty Capital Trust, Inc.

Realty Income Corp.

2,882

2.1%

3.8%

8.9%

9/3/12

Medicis Pharmaceutical Corp.

Valeant Pharmaceuticals International, Inc.

3,158

39.4%

34.5%

31.0%

8/27/12

Kenexa Corp.

IBM

1,397

42.0%

38.0%

86.7%

8/27/12

TPC Group Inc

First Reserve/SK Capital Partners

1,083

16.7%

14.9%

15.5%

8/22/12

Sunrise Senior Living Inc.

Health Care REIT, Inc.

1,469

62.4%

73.9%

117.7%

8/20/12

Coventry Health Care Inc.

Aetna Inc.

7,311

20.4%

30.3%

31.0%

8/13/12

Focus Media Holding Ltd.

The Carlyle Group

3,688

15.5%

28.1%

38.5%

8/9/12

Robbins & Myers Inc.

National Oilwell Varco, Inc.

2,570

28.2%

35.0%

43.7%

8/6/12

Best Buy Co., Inc.

Richard Schulze

9,875

47.4%

44.0%

20.4%

7/9/12

AMERIGROUP Corporation

WellPoint Inc.

5,104

43.0%

40.6%

47.2%

6/29/12

Elster Group SE

Melrose Industries PLC

2,881

5.8%

8.8%

46.0%

3/12/12

Pacific Capital Bancorp

UnionBanCal Corporation

1,525

60.3%

60.2%

61.3%

2/21/12

CH Energy Group Inc.

Fortis Inc.

1,500

10.6%

12.4%

15.5%

2/16/12

CVR Energy, Inc.

Icahn Enterprises Holdings L.P.

3,231

8.7%

6.7%

27.7%

Mean

26.4%

27.8%

36.6%

Median

21.0%

28.1%

31.0%

Precedent M&A Transactions – Corporate Takeover Premiums – 100% Cash Consideration

Confidential

Research Analyst Recommendations and Price Targets

26

Summary Price Targets

Analyst Recommendations

Buy

50.0%

Hold

30.0%

Sell

20.0%

(1) Analyst 12-month price target discounted back to present value at McMoRan’s equity cost of capital of 13.3% to estimate a current share price target

12-Month

Discounted

Firm Name

Analyst

Recommendation

Date

Price Target

Price Target

(1)

Susquehanna Financial Group

Duane Grubert

Positive

11/29/2012

$18.00

$15.89

Ladenburg Thalmann & Co

Noel A Parks

buy

11/28/2012

21.00

18.53

Capital One Southcoast, Inc.

Richard Tullis

add

11/28/2012

12.00

10.59

EVA Dimensions

Team Coverage

underweight

11/28/2012

--

--

JP Morgan

Joseph Allman

underweight

11/27/2012

--

--

RBC Capital Markets

Leo P Mariani

sector perform

11/27/2012

10.00

8.83

Howard Weil Inc

Joseph Bachmann

market perform

11/27/2012

15.00

13.24

Iberia

Patrick Rigamer

outperform

11/27/2012

--

--

Jefferies

Biju Z Perincheril

hold

11/27/2012

12.00

10.59

Guggenheim Securities LLC

Robert Cordray

buy

11/26/2012

20.00

17.65

Premium/(Discount)

Price Target

to Market

Max

$21.00

146.2%

Min

10.00

17.2%

Median

15.00

75.8%

Average

15.43

80.9%

Financial Analysis

Confidential

($ in millions)

27

Financial Analysis

Evercore also considered the risked net asset value

of MMR assuming the Company enters into a

hypothetical joint venture agreement

–

MMR would sell a 25.0% working interest in

the Ultra-Deep Assets for $800 million in the

form of a combination of cash and drilling

capex carry

$500 million of upfront cash

$300 million of drilling capex carry

–

NYMEX strip pricing as of December 3,

2012 through 2017E and then held flat

thereafter

–

Utilizes the NAV Assumptions

–

Partner pays its working interest share of

insurance and operating expenses, and after

the carry period, its working interest share of

capex

–

Partner tax basis step-up based on upfront

cash plus the present value of the capex carry

–

Taxable gain taxed at 35%

Discount

Commodity Price

Rate

NYMEX Strip (12/3/12)

Low

High

Proved Developed Producing

8% -

10%

$253

$258

Proved Developed Behind-Pipe

10% -

12%

513

550

Proved Undeveloped

15% -

20%

39

48

Proved Reserves

$805

$857

Probable

20% -

30%

90

128

Proved plus Probable Reserves

$895

$985

Possible

30% -

40%

80

102

3P Reserves

$975

$1,087

Ultra Deep Upside (Risked)

10% -

12%

3,333

4,412

P&A (Developed Properties)

8% -

10%

(212)

(224)

Gross Asset Value

$4,095

$5,275

Less: G&A

12% -

15%

(463)

(575)

Less: Insurance

8% -

10%

(260)

(327)

Less: Sulphur Reclaimation Expense

10% -

10%

(19)

(19)

Pre-Tax Net Asset Value

$3,352

$4,354

Less: Cash Taxes

12% -

15%

(649)

(933)

After-Tax Net Asset Value

$2,704

$3,421

Add: Cash

192

192

Add: Upfront Cash from Joint Venture

500

500

Less: Taxable Gain from Joint Venture

(72)

(72)

Less: Debt

(568)

(300)

Less: Preferred Shares

(700)

0

Equity Value

$2,056

$3,741

Fully Diluted Shares

165.1

231.9

$/Share

$12.46

$16.13

Net Asset Value Analysis – Potential Joint Venture Agreement

NAV Summary – Potential Joint Venture

Confidential

28

Volumes and risking for specific ultra-deep prospects and discoveries (as per MMR estimates)

–

Geologic and mechanical risking was estimated by Evercore and reviewed by MMR’s technical team with Evercore

–

Utilized an expected value analysis based on the assumed geologic and mechanical risking

–

Each well has a 200 Bcfe EUR

–

Developed using a continuous four rig program through 2014, going to a six rig program in 2015 and finally an eight rig program by 2016,

held constant thereafter

Lineham

Creek

Yegua

wells

begin

drilling

in

January

2014

with

an

incremental

non-operated

drilling

rig

–

Production for each well of 70 MMcfed held flat for six years, then exponential decline (as per MMR estimates)

–

Condensate is 5% of well stream (8.8 bbl/MMcf); Lineham Creek Yegua wells assumed a condensate ratio of 50.0 bbl/MMcf

–

Wells take 1 year to drill and 6 months to complete with first production after 18 months

NYMEX strip pricing as of December 3, 2012 through 2017E and then held flat thereafter

–

Natural gas prices of ($/Mcfe): 2013E: $3.73; 2014E: $4.10; 2015E: $4.27; 2016E: $4.42; Thereafter: $4.60 flat

$0.15

per

Mcfe

of

marketing

and

transportation

costs

(as

per

MMR

estimates)

ORRI Trust units based on fully-diluted shares as of December 31, 2012

Term of 20 years

5% ORRI

Financial Analysis

Overriding Royalty Interest Analysis – Assumptions

Confidential

Overriding Royalty Interest –

Risked

($ in millions, except per share values)

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

2021E

2022E

Risked

Ultra Deep Revenue

$--

$54.1

$278.1

$542.6

$929.1

$1,350.6

$1,821.9

$2,260.4

$2,406.8

$2,456.1

Marketing and Transportation Costs

--

(1.8)

(8.7)

(16.6)

(26.7)

(38.8)

(52.4)

(65.1)

(69.2)

(70.5)

Severance and Ad Valorem Taxes

--

--

(2.0)

(5.5)

(9.2)

(12.7)

(16.2)

(21.9)

(36.0)

(49.6)

Net Ultra Deep Revenue

$--

$52.3

$267.4

$520.4

$893.3

$1,299.1

$1,753.2

$2,173.4

$2,301.6

$2,336.0

Overriding Royalty Interest

5.0% of Revenue

$--

$2.6

$13.4

$26.0

$44.7

$65.0

$87.7

$108.7

$115.1

$116.8

29

Strip

$75/ $3

$90/ $4

$105/ $5

8.0%

$609.9

$417.2

$548.9

$680.6

9.0%

557.1

381.1

501.4

621.7

10.0%

509.9

348.9

459.0

569.2

11.0%

467.8

320.1

421.1

522.2

12.0%

430.0

294.2

387.2

480.1

15.0%

338.0

231.3

304.4

377.5

20.0%

234.3

160.5

211.2

262.0

Price Deck

Strip

$75/ $3

$90/ $4

$105/ $5

8.0%

$2.66

$1.82

$2.39

$2.97

9.0%

2.43

1.66

2.19

2.71

10.0%

2.22

1.52

2.00

2.48

11.0%

2.04

1.40

1.84

2.28

12.0%

1.88

1.28

1.69

2.09

15.0%

1.47

1.01

1.33

1.65

20.0%

1.02

0.70

0.92

1.14

Price Deck

Financial Analysis

(1)

Based on a $16.90 per share aggregate implied offer value and 229.2 million ORRI Trust units (based on 231.9 million fully diluted shares assuming a December 31, 2012 closing date, less converted options and RSUs that roll into

Freeport options and RSUs)

Overriding Royalty Interest Summary – Risked

Risked Sensitivity (20 Year Term, 5%) – Price (Total 

Value)

Risked Sensitivity (20 Year Term, 5%) – Price

($/unit)

(1)

Confidential

($ in millions, except per share values)

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

2021E

2022E

Unrisked

Ultra Deep Revenue

$--

$70.5

$372.8

$731.5

$1,260.1

$1,845.4

$2,491.9

$3,172.6

$3,736.9

$4,201.5

Marketing and Transportation Costs

--

(2.3)

(11.7)

(22.4)

(36.2)

(53.1)

(71.8)

(91.6)

(107.9)

(121.4)

Severance and Ad Valorem Taxes

--

--

(2.5)

(7.2)

(12.2)

(17.1)

(21.9)

(34.6)

(78.4)

(124.0)

Net Ultra Deep Revenue

$--

$68.2

$358.6

$701.9

$1,211.7

$1,775.3

$2,398.2

$3,046.4

$3,550.6

$3,956.0

Overriding Royalty Interest

5.0% of Revenue

$--

$3.4

$17.9

$35.1

$60.6

$88.8

$119.9

$152.3

$177.5

$197.8

30

Strip

$75/ $3

$90/ $4

$105/ $5

8.0%

$1,177.4

$801.2

$1,056.1

$1,311.0

9.0%

1,062.7

723.2

953.3

1,183.4

10.0%

961.6

654.5

862.7

1,070.9

11.0%

872.1

593.8

782.6

971.5

12.0%

792.9

539.9

711.6

883.4

15.0%

603.9

411.5

542.3

673.2

20.0%

399.7

272.7

359.4

446.0

Strip

$75/ $3

$90/ $4

$105/ $5

8.0%

$5.14

$3.50

$4.61

$5.72

9.0%

4.64

3.16

4.16

5.16

10.0%

4.20

2.86

3.76

4.67

11.0%

3.81

2.59

3.41

4.24

12.0%

3.46

2.36

3.10

3.85

15.0%

2.63

1.80

2.37

2.94

20.0%

1.74

1.19

1.57

1.95

Price Deck

Price Deck

Financial Analysis

(1)

Based on a $16.90 per share aggregate implied offer value and 229.2 million ORRI Trust units (based on 231.9 million fully diluted shares assuming a December 31, 2012 closing date, less converted options and RSUs that roll into

Freeport options and RSUs)

Unrisked Sensitivity (20 Year Term, 5%) – Price ($/unit)

(1)

Overriding Royalty Interest Summary – Unrisked

Overriding Royalty Interest – Unrisked

Unrisked Sensitivity (20 Year Term, 5%) – Price (Total Value)

Appendix

Confidential

Unrisked Discounted Cash Flow Analysis

31

Summary Results

EBITDA Multiple Sensitivity

Perpetuity Growth Rate Sensitivity

WACC

EBITDA Multiple

$4,101.1

4.0x

4.5x

5.0x

5.5x

6.0x

9.0%

$3,675

$4,010

$4,346

$4,681

$5,017

10.0%

3,467

3,784

4,101

4,418

4,735

11.0%

3,272

3,572

3,872

4,171

4,471

12.0%

3,088

3,372

3,656

3,940

4,223

13.0%

2,916

3,185

3,453

3,722

3,991

WACC

Perpetuity Growth Rate

$5,291.2

(0.5%)

0.0%

0.5%

1.0%

1.5%

9.0%

$5,559

$5,837

$6,148

$6,497

$6,893

10.0%

4,837

5,053

5,291

5,556

5,853

11.0%

4,246

4,417

4,604

4,810

5,038

12.0%

3,755

3,892

4,042

4,205

4,384

13.0%

3,341

3,453

3,575

3,706

3,849

Appendix

(1)

EBITDA and capex projections based on MMR Operating Model. Tax depreciation based on existing MMR tax basis and NOLs and a 7-year MACRS depreciation schedule.  Valuation date as of October 1, 2012

Terminal Value

For the Years Ending December 31,

EBITDA

Perpetuity

2013E

2014E

2015E

2016E

2017E

Exit Multiple

Growth Rate

Adjusted EBITDA

$175

$434

$719

$939

$1,142

$1,142

$1,142

Less: DD&A

(396)

(785)

(747)

(682)

(627)

--

EBIT

(221)

(352)

(27)

258

514

$1,141.7

Less: Taxes @ 35.0%

--

--

--

--

--

(399.6)

EBIAT

(221)

(352)

(27)

258

514

$742.1

Plus: DD&A

396

785

747

682

627

--

Less: Growth Capital Expenditures

(500)

(749)

(551)

(489)

(493)

--

Unlevered FCF

($324.9)

($315.3)

$168.4

$450.5

$649.2

$742.1

Terminal Value Multiple/Growth Rate

5.0x

0.5%

PV of Terminal Value @ 10.0%

$3,171

$4,362

Plus: Present Value of Unlevered FCF

778

Plus: PV of 0.5x 2017E NOL @ 10.0%

151

Implied Enterprise Value

$4,101

-

$5,291

Add: Cash

$192

$192

Less: Debt

($300)

($300)

Less: Preferred Shares

$--

$--

Implied Equity Value

$3,993

$5,183

Diluted Shares Outstanding

231.8

232.0

Implied Equity Value per Share

$17.22

$22.34