Why I Continue to be Long McMoran Exploration

I recently wrote about why I'm long McMoran Exploration (MMR). MMR's recent quarterly conference call only convinced further of the correctness of my long position in this stock.

Perhaps the most pleasant aspect of the call was the continuing ramp from exploration to production. MMR has always been a little "blue sky story" of plumbing the deep hitherto unexplored and unproduced natural gas in the Gulf of Mexico. For the first time, the hard numbers began to show some long term promise.

Highlights include:

- Management's commitment to an increasing rate of exploration and production. Production will grow to 100m mmcfe/per day in Q3. Five new wells will be bought on line in 2H 2006. CAPEX for 2006 continues to ramp at $260M - not due to inflation in drilling costs but as a real increase.

-Management continues to buy acreage around existing discoveries.

-Management has no intention of hedging commodity price - allowing investors a "pure play" on natural gas in the Gulf of Mexico.

-Main Pass LNG terminal should have a decision determined by the end of 2006.

-MMR disclosed that a total of 1.7 trillion net cubic feet of potential resources and that number excluded JB Mountain Deep and Blueberry Hill which could be huge. While the market ignores the growth in potential resources - it continues to climb and MMR remains determine to convert them from potential to proven.

MMR 1-yr chart: