PARTICIPATION AGREEMENT McMoRan 1997 Exploration Program

                         PARTICIPATION AGREEMENT
                    McMoRan 1997 Exploration Program

                                                           PAGE
I.        DEFINITIONS                                       4

II.       PURPOSE; OPERATIONS                               7
          2.1  Purpose                                      7
          2.2  McMoRan's Efforts                            8
          2.3  Operator                                     9

III.      INTERESTS OF THE PARTIES                          9
          3.1  Sharing of Exploration Expenditures          9
          3.2  Ownership Interests                          10

IV.       EXPLORATION EXPENDITURES                          10
          4.1  Exploration Expenditures                     10

V.        ACQUISITION OF LEASEHOLD INTERESTS                13
          5.1  Acquisition of Additional Leasehold Interest 13
          5.2  Excluded Areas                                 13
          5.3  Obligation                                     14

VI.       EXPLORATION FUND                                  15
          6.1  General                                      15
          6.2  Limitations on McMoRan's Authority to Commit
               Exploration Fund                             15
          6.3  Budget Meetings and Reports                  16

VII.      SCIENTIFIC STUDIES AND INFORMATION                16

VIII.     PROSPECTS                                         18
          8.1  Prospects                                      18
8.2  Designation of Prospects After Program Term  20

IX.       DRILLING OF EXPLORATORY XXXXX                     20
          9.1  During Program Term                            20
9.2  After Program Term                           22

X.        FARMOUT OR PARTICIPATION AGREEMENTS               22
          10.1 Participation Agreements                     22
          10.2 Farmout Agreements                           23
          10.3 Trade Agreements                             24

XI.       BURDENS                                           24

XII.      OPERATING AGREEMENT                               25

XIII.     AREA OF MUTUAL INTEREST                           26
          13.1      Third Party Area of Mutual Interest
               Agreements                                   26
          13.2 Program Area of Mutual Interest Agreement    26

XIV.      OWNERSHIP OF PRODUCTION; GAS BALANCING AGREEMENT  28
          14.1 Ownership of Production                      28

XV.       RELATIONSHIP OF THE PARTIES                       29
          15.1 Tax Partnerships                             29

XVI.      BILLINGS; NOTICES                                 30

XVII.     SPECIAL NON-CONSENT ELECTIONS                     30
          17.1 Casing Point Election - Onshore Prospects    30
          17.2 Elections Prior to Platform Installation -
          Offshore Prospects                                31
          17.3      Time Period                               31
          17.4      Completion Attempt by Participant - Onshore    31

XVIII.    PROGRAM TERM                                      32
          18.1      Program Term                              32
18.2      Unfunded Prospects                           32

XIV.      OPERATIONS AFTER PROGRAM TERM                     33
          19.1      General                                   33
19.2      Exploratory Xxxxx                            33
19.3      Development Expenditures                     33
19.4      Provisions Which Do Not Survive the End of
               the Program Term                             34

XX.       CONFIDENTIALITY                                   34

XXI.      INSURANCE                                         35
          21.1 Insurance for Program                        35

XXII.     RECORD TITLE, ASSIGNMENT                          37
          22.1 Record Title                                 37
          22.2 Assignment                                   38

XXIII.    SUBSEQUENT INTERESTS                              39

XXIV.     GENERAL                                           40
          24.1 Records                                      40
          24.2 Access                                       41
          24.3 Claims & Litigation                          41
          24.4 Good Faith                                   42
          24.5 Governing Law                                42
          24.6 Failure to Respond                           42
          24.7 Conflicts                                    43
          25.8      Binding Effect                                 43



                                EXHIBITS

         I)    PROGRAM OPERATING AGREEMENT (OFFSHORE)
        II)    PROGRAM OPERATING AGREEMENT (ONSHORE)
       III)    CERTAIN EXCLUDED AREAS
        IV)    PROVISIONS CONCERNING TAXATION