McMoRan Exploration Co. (MMR) shares plunged on Monday after the company reported more mechanical issues with the hopefully prolific Davey Jones No. 1 well. Investors had expected results from this well over a year ago, but problems continue to frustrate all involved in this historic drilling effort.
The company is attempting to lead the world in ultra-deep drilling in shallow waters off the Gulf of Mexico. It has numerous exploratory and development wells in the sub-25,000-feet zones. Investors interested in the stock should heed warnings from the CEO, Jim Bob Moffett, who was quoted in a recent Bloomberg article as saying:
"People call us pioneers. Well, that's great, I guess, (though) some people say pioneers end up with arrows in their back."
The huge expense to drill the Davey Jones and the shrinking liquidity levels have naturally made investors concerned about a potentially predatory financing to complete the ultra-deep drilling program. The concern was large enough for legendary investor Lee Cooperman, Chairman and CEO of Omega Advisors, to join the GOM update call to ask numerous questions based on his large investment in the company.
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