McMoRan Exploration loss widens as exploration costs jump
(Reuters) - Oil and gas producer McMoRan Exploration Co (MMR.N), which has been hit by testing delays at its Gulf of Mexico wells, posted a bigger-than-expected quarterly loss as its exploration costs rose.
The third quarter saw a sharp jump in exploration costs to $48.9 million from $18.1 million a year earlier.
The company also raised its estimate for capital spending this year by $50 million to $550 million. Half the amount will be spent on exploration activities, it said.
The company, with a market value of $2.07 billion as of Thursday, had cash and equivalents of $287.1 million at the end of June, according to Thomson Reuters data.
If it continues with the current capital expenditure rates, it would burn through the cash in the next quarter or two, Guggenheim Securities analyst Rob Cordray said. "So the question is, how will they finance future exploration and development?"
The Gulf of Mexico-focused company continued to suffer delays at its key Davy Jones No.1 well.
McMoRan, which holds a 63.4 percent working interest in the 20,000 acres Davy Jones property, had invested about $774.8 million in the area as of December 31, 2011.
But it is yet to see commercial production from the property.
McMoRan said operations to clear the well bore, which had held up the flow test, were pushed back during the third quarter due to Hurricane Isaac that hit the Gulf region in end-August.
As a result, flow tests at the ultra-deepwater well could not be conducted by September-end as expected. The company did not give a new date for the tests, which have now been delayed for more than a year due to technical problems.
Hurricane Isaac also disrupted third-quarter production, which fell 28 percent to 134 million cubic feet natural gas equivalent (mmcfe) per day. The company had forecast average production of 135 mmcfe per day for the quarter.
Hit by the high exploration costs, McMoRan's third-quarter loss widened to $64 million, or 40 cents per share, from $9.4 million, or 6 cents per share, a year earlier.
The company had a loss of 15 cents per share on an adjusted basis, higher than the 13 cents analysts had expected, according to Thomson Reuters I/B/E/S.
Revenue fell 34 percent to $91.8 million, but was higher than the average market estimate of $85.9 million.
Shares of the New Orleans, Louisiana company, which operates some of the deepest wells in the U.S. Gulf, were down 5 percent at $12.10 on the New York Stock Exchange on Friday.
(Reporting By Garima Goel in Bangalore; Editing by Sreejiraj Eluvangal)
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