Why McMoRan Exploration’s Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of McMoRan Exploration (NYSE: MMR  ) have dropped as much as 25% today after the company announced another delay at an important oil well.

So what: The company said it plans to test the flow of the Davy Jones No. 1 well once it unclogs the well with a solvent injection. This is another in a long string of delays by McMoRan, which had originally planned on testing the well's flow a year ago.

Now what: Losses have piled up the last two quarters so another well in production is really needed by the company. The long delay is just adding to uncertainty for investors -- there's even concern the company may have to abandon the well completely. I see no reason to buy the news today and would take a cautious approach until we see some solid data about the well going forward.

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  • Report this Comment On November 27, 2012, at 4:30 PM, nongolfer wrote:

    I believe the point right now is to learn and refine the technology to drill, complete and produce at these depths and if it can be done on this well, it can be done with more wells both onshore and offshore. It may have been more prudent to prove the technology with a well that has a larger borehole however that is hindsight.

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