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Last updated on April 19, 2014 at 21:20 EDT

PXP Announces 2011 Full-Year Results: Realizes Significant Net Income Growth Year-over-Year, Achieves Record Sales Volumes, Generates Double-Digit Cash Flow Growth, and Delivers Solid Reserve Replacement and Substantially Higher Reserve Value

February 23, 2012

HOUSTON, Feb. 23, 2012 /PRNewswire/ –

Fourth-Quarter Statistical Highlights:

  • Revenues were $517.5 million and net income attributable to common stockholders was $97.7 million, or $0.69 per diluted share.
  • Adjusted net income attributable to common stockholders was $28.6 million, or $0.20 per diluted share (a non-GAAP measure).
  • Oil/liquids sales accounted for approximately 81% of total oil and gas revenue.
  • Average daily sales volumes increased 13%, or 26% pro forma for asset sales, compared to fourth-quarter 2010.
  • Oil/liquids average daily sales volumes increased 12%, or 16% pro forma for asset sales, compared to fourth-quarter 2010.
  • Net cash provided by operating activities was $188.1 million and operating cash flow was $284.7 million, a 12% increase over fourth-quarter 2010 (a non-GAAP measure).
  • Gross margin per barrel of oil equivalent (BOE) was $15.33 and cash margin per BOE was $35.71, a 9% increase over fourth-quarter 2010 (a non-GAAP measure).

Full-Year Statistical Highlights:

  • Revenues were $2.0 billion and net income attributable to common stockholders was $205.3 million, or $1.44 per diluted share.
  • Adjusted net income attributable to common stockholders was $223.0 million, or $1.56 per diluted share (a non-GAAP measure).
  • Oil/liquids sales accounted for approximately 78% of total oil and gas revenue.
  • Average daily sales volumes increased 12%, or 23% pro forma for asset sales, compared to 2010.
  • Oil/liquids average daily sales volumes increased 7%, or 8% pro forma for asset sales, compared to 2010.
  • Net cash provided by operating activities was $1.11 billion, a 22% increase year-over-year.
  • Operating cash flow was $1.13 billion, a 16% increase year-over-year (a non-GAAP measure).
  • Gross margin per BOE was $20.95 and cash margin per BOE was $37.29 (a non-GAAP measure), an increase of 17% and 14% over 2010, respectively.

2011 Proved Reserves:

  • Total proved reserves, pro forma for asset sales, increased 16% to 410.9 million BOE.
  • Standardized measure of discounted net cash flows increased 66% to $5.1 billion from $3.1 billion in 2010.
  • PV-10 value increased 58% to $7.9 billion from $5.0 billion in 2010 (a non-GAAP measure).
  • Reserve replacement is 222%, or 290% pro forma for asset sales (a non-GAAP measure).
  • All-in finding and development costs were $23.48 per BOE, or $18.01 per BOE pro forma for asset sales (a non-GAAP measure).

2011 Oil/Liquids Proved Reserves:

  • Oil/liquids reserves, pro forma for asset sales, increased 18% to 244.0 million barrels.
  • Oil/liquids are 59% of total proved, up from 54% in 2010.
  • Oil/liquids reserve replacement is 280% (a non-GAAP measure).
  • Oil/liquids reserve-to-pro forma production ratio is 14 years.

Plains Exploration & Production Company (NYSE:PXP) (“PXP” or the “Company”) announces 2011 fourth-quarter and full-year financial and operating results.

PXP reported fourth-quarter revenues of $517.5 million and net income attributable to common stockholders of $97.7 million, or $0.69 per diluted share, compared to revenues of $408.1 million and a net loss of $19.5 million, or $0.14 per diluted share, for the fourth-quarter 2010. Quarterly income was reduced by approximately $0.07 per share due to higher stock-based compensation expense reflecting the impact of a 62% increase in PXP’s share price during the quarter and approximately $0.14 per share due to an increase in the depreciation, depletion and amortization rate.

Fourth-quarter net income attributable to common stockholders includes certain items affecting the comparability of operating results. Those items consist of realized and unrealized gains and losses on our mark-to-market derivative contracts, a $232.3 million unrealized gain on investment in McMoRan Exploration Co. (“McMoRan”) common stock, debt extinguishment costs, and other items. When considering these items, PXP reports net income attributable to common stockholders of $28.6 million, or $0.20 per diluted share (a non-GAAP measure).

PXP reported full-year revenues of $2.0 billion and net income attributable to common stockholders of $205.3 million, or $1.44 per diluted share, compared to revenues of $1.5 billion and net income of $103.3 million, or $0.73 per diluted share, for the full-year 2010.

Full-year 2011 net income attributable to common stockholders includes certain items affecting the comparability of operating results. Those items consist of realized and unrealized gains and losses on our mark-to-market derivative contracts, debt extinguishment costs, an unrealized loss on investment in McMoRan, a 2010 impairment of PXP’s relinquished Vietnam oil and gas properties, and other items. When considering these items, PXP reports net income attributable to common stockholders of $223.0 million, or $1.56 per diluted share (a non-GAAP measure).

A reconciliation of non-GAAP financial measures used in this release to comparable GAAP financial measures is included with the financial tables.

OPERATIONAL UPDATE

PXP’s 2011 fourth-quarter daily sales volumes averaged 105,396 BOE per day, a 13% increase over 92,994 BOE per day in the fourth quarter of 2010. Adjusting for the 2010 and 2011 asset divestments, the 13% sales volume increase would have been 26% and 2011 fourth-quarter daily sales volumes would have averaged 90,349 BOE per day.

PXP’s 2011 fourth-quarter oil/liquids daily sales volumes averaged 52,262 barrels per day, a 12% increase over 46,658 barrels per day in the fourth quarter of 2010. Adjusting for the 2010 and 2011 asset divestments, the 12% sales volume increase would have been 16% and 2011 fourth-quarter daily sales volumes would have averaged 47,464 barrels per day.

PXP’s 2011 full-year daily sales volumes averaged approximately 98,950 BOE per day, a 12% increase over full-year 2010 volumes of 88,451 BOE per day. Adjusting for the 2010 and 2011 asset divestments, the 12% sales volume increase would have been 23% and 2011 full-year daily sales volumes would have averaged 82,197 BOE per day.

PXP’s 2011 full-year oil/liquids daily sales volumes averaged 48,964 barrels per day, a 7% increase over 45,943 barrels per day in 2010. Adjusting for the 2010 and 2011 asset divestments, the 7% sales volume increase would have been 8% and 2011 daily sales volumes would have averaged 43,858 barrels per day.

The robust volume growth is driven primarily by strong performance in the Eagle Ford Shale and Haynesville Shale asset areas combined with steady, consistent performance in California.

In the Eagle Ford Shale, fourth-quarter daily sales volumes averaged approximately 9,123 BOE per day net to PXP, compared to approximately 1,500 BOE per day net to PXP from the November acquisition to the end of fourth-quarter 2010. January 2012 volumes averaged approximately 13,700 BOE per day compared to approximately 1,970 BOE per day net to PXP in January 2011. The Company had 6.9 net rigs operating on its acreage at the end of January. In California, fourth-quarter average daily sales volumes were 40,003 BOE per day, essentially flat compared to the fourth-quarter 2010; and in the Haynesville Shale, fourth-quarter average daily sales volumes were approximately 200 million cubic feet equivalent (MMcfe) net to PXP compared to approximately 146 MMcfe in the fourth-quarter 2010.

In the Gulf of Mexico, the operator of the Lucius discovery, Anadarko Petroleum Corporation, announced in December that it, along with its co-venturers, have sanctioned the development of the Lucius project, located in the Keathley Canyon area of the deepwater Gulf of Mexico. Lucius will be developed with a truss spar floating production facility with the capacity to produce in excess of 80,000 barrels of oil per day and 450 million cubic feet of natural gas per day. The spar is currently under construction at Technip’s facility in Pori, Finland and first production is anticipated in 2014.

MARKETING UPDATE

PXP’s crude oil realized price was 96% of NYMEX for the fourth-quarter of 2011 and 94% for full-year 2011. In January 2012 PXP’s crude oil realized price was 92% of Brent or 102% of NYMEX. This significant increase from 2011 is expected to strengthen crude oil revenue by over 40% compared to 2011 crude oil revenue using current commodity price forecasts. This positive result reflects the impact of higher estimated crude oil volumes and stronger pricing associated with the Company’s marketing contracts in California and the Eagle Ford Shale which became effective January 1, 2012.

PROVED RESERVES

Year-end estimated proved reserves of 410.9 million BOE, net of asset sales, were 59% oil, 55% developed and had a pre-tax PV-10 value of $7.9 billion, a 58% increase over 2010 PV-10 value. The robust increase in the PV-10 value is primarily attributable to a greater concentration of oil/liquids reserves, higher oil/liquids reference prices and stronger marketing contract terms for oil sales. Pro forma for asset sales, proved reserves increased 16% over 2010 proved reserves.

In 2011, PXP added total proved reserves of 81.0 million BOE. The Company reported a total of 75.2 million BOE of extensions and discoveries, including 22.5 million BOE in the Eagle Ford Shale, 19.3 million BOE in the Gulf of Mexico, and 25.5 million BOE in the Haynesville Shale. In addition, PXP reported 4.3 million BOE of acquisitions and 1.5 million BOE of revisions. These reserve additions replaced 222% of 2011 production at a cost of $23.48 per BOE. Pro forma for asset sales, PXP replaced 290% of 2011 production at a cost of $18.01 per BOE.

Oil/liquids proved reserves increased 9%, or 18% pro forma for asset sales, due primarily to the rapidly expanding Eagle Ford Shale asset area, project sanctioning of the Lucius development located in the Gulf of Mexico, and a higher oil reference price compared to 2010 resulting in positive price-related revisions in California.

Natural gas proved reserves decreased 13% due primarily to the 2011 asset sales. With persistent low natural gas prices and a corresponding assumed reduction in the pace of development in the Haynesville Shale, PXP classified 44 million BOE of its Haynesville undeveloped reserves as probable undeveloped. These reserves meet the reasonable certainty, economic and other conditions needed to be classified as proved undeveloped reserves but the slower pace of drilling extends the development of these reserves past five years.

PXP’s reserve estimate, the Standardized Measure and PV-10 calculations are based on the twelve-month average of first-day-of-the-month West Texas Intermediate spot oil price of $95.99 per barrel and Henry Hub spot natural gas price of $4.12 per million British thermal unit. All prices were adjusted for energy content, quality and basis differentials by area and were held constant throughout the lives of the properties, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. A summary of the Company’s proved reserve reconciliation and costs incurred for 2011 is included with the financial tables.

SHARE REPURCHASE

Pursuant to its share repurchase program, during the fourth quarter of 2011 and the first quarter of 2012, PXP repurchased 12.8 million common shares at an average price of $35.16 per share for a total cost of approximately $450 million. In January 2012, PXP’s Board of Directors increased the approval for purchases to $1.0 billion of PXP common stock and extended the program until January 2016.

SENIOR REVOLVING CREDIT FACILITY

The Company’s borrowing base was recently increased from $1.8 billion to $2.3 billion until the next redetermination date currently scheduled for May 1, 2013. The commitments remained unchanged at $1.4 billion.

MANAGEMENT COMMENT

James C. Flores, Chairman, President and CEO of PXP commented, “PXP finished the year strong as sales volumes, net income attributable to common stockholders and operating cash flow each recorded significant gains compared to fourth-quarter 2010. For the full year, the Company’s 2011 net income attributable to common stockholders was up nearly 100% compared to 2010 and PXP achieved record sales volumes. Oil/liquids sales revenue as a percentage of total revenue was 78% in 2011 and is expected to be approximately 90% in 2012. Along with double-digit growth in average daily sales volumes, PXP delivered stronger operating cash flow, improved cash margins, solid reserve replacement and substantially higher proved reserve value. These attributes are the building blocks for sustained value creation and align with our fundamental asset intensity philosophy. In late December and early January, PXP repurchased a sizeable number of its outstanding shares thereby compressing the share count exposed to the forecasted increase in oil volumes and corresponding cash flow. PXP’s focus remains on increasing its margins while targeting a strong organic oil/liquids growth rate, balancing its natural gas focused capital spending with natural gas generated operating cash flow, and preserving commodity price upside while protecting the downside risk for its shareholders.”

2012 FULL-YEAR GUIDANCE

PXP updated its 2012 full-year operational and financial guidance. Due to curtailment in drilling activity by operators in the Haynesville Shale, PXP plans to re-direct capital from the Haynesville Shale to the Eagle Ford Shale development. Total capital expenditures and the full-year total production sales volume range of 92 – 96 thousand BOE per day remain unchanged.

However, due to the shift in capital allocation, oil/liquids sales volumes, as a percentage of total volumes, are now expected to account for 58% to 61% of total volumes up from 55% estimated in previous guidance. PXP has revised its production costs per BOE to reflect higher forecasted oil/liquids volumes and lower forecasted natural gas prices. The new cost estimates are incorporated in the updated 2012 full-year operational and financial guidance included at the end of this release.

Full year guidance also reflects the following new information: depreciation, depletion and amortization expense per BOE, general and administrative expense, the current interest rate schedule for long-term debt, an effective tax rate and the weighted average equivalent shares outstanding.

CONFERENCE CALL

PXP will host a conference call today, Thursday, February 23, 2012 at 8:00 a.m. Central time. Investors wishing to participate in the conference call may dial 1-800-567-9836 or 1-973-935-8460. The conference call and replay ID is: 42174570. The replay can be accessed by dialing 1-855-859-2056 or 1-404-537-3406. A live webcast of the conference call and a slide presentation will be available in the Investor Information section of PXP’s website at www.pxp.com.

PXP is an independent oil and gas company primarily engaged in the activities of acquiring, developing, exploring and producing oil and gas in California, Texas, Louisiana, and the Gulf of Mexico. PXP is headquartered in Houston, Texas.

ADDITIONAL INFORMATION & FORWARD-LOOKING STATEMENTS

This press release contains forward-looking information regarding PXP that is intended to be covered by the safe harbor “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. All statements included in this press release that address activities, events or developments that PXP expects, believes or anticipates will or may occur in the future are forward-looking statements. These include statements regarding:

* reserve and production estimates,
* oil and gas prices,
* the impact of derivative positions,
* production expense estimates,
* cash flow estimates,
* future financial performance,
* capital and credit market conditions,
* planned capital expenditures, and
* other matters that are discussed in PXP’s filings with the SEC.

These statements are based on our current expectations and projections about future events and involve known and unknown risks, uncertainties, and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. Please refer to our filings with the SEC, including our Form 10-K, for a discussion of these risks.

References to quantities of oil or natural gas may include amounts that the Company believes will ultimately be produced, but that are not yet classified as “proved reserves” under SEC definitions.

All forward-looking statements in this press release are made as of the date hereof, and you should not place undue reliance on these statements without also considering the risks and uncertainties associated with these statements and our business that are discussed in this press release and our other filings with the SEC. Moreover, although we believe the expectations reflected in the forward-looking statements are based upon reasonable assumptions, we can give no assurance that we will attain these expectations or that any deviations will not be material. Except as required by law, we do not intend to update these forward-looking statements and information.


    Plains Exploration & Production Company
    Consolidated Statements of Income
    (in thousands, except per share data)

                                                Three Months
                                                   Ended                Twelve Months Ended
                                               December 31,                December 31,
                                               ------------                ------------
                                                2011           2010          2011            2010
                                                ----           ----          ----            ----
                                                 (Unaudited)
    Revenues
      Oil sales                             $418,428       $314,070    $1,528,656      $1,142,760
      Gas sales                               96,734         93,680       428,220         399,607
      Other
       operating
       revenues                                2,379            379         7,612           2,228
                                               -----            ---         -----           -----
                                             517,541        408,129     1,964,488       1,544,595
                                             -------        -------     ---------       ---------
    Costs and
     Expenses
      Lease
       operating
       expenses                              100,543         74,826       334,923         262,533
      Steam gas
       costs                                  15,841         14,283        65,482          66,449
      Electricity                             11,039         11,552        41,242          42,794
      Production and
       ad valorem
       taxes                                  16,141          8,089        55,225          29,446
      Gathering and
       transportation
       expenses                               17,278         13,038        62,103          50,680
      General and
       administrative                         39,080         34,468       134,044         136,437
      Depreciation,
       depletion and
       amortization                          211,284        154,006       664,478         533,416
      Impairment of
       oil and gas
       properties                                  -              -             -          59,475
      Accretion                                4,299          4,464        17,177          17,702
      Legal recovery                               -              -             -          (8,423)
      Other
       operating
       (income)
       expense                                   (78)           851          (735)         (4,130)
                                                 ---            ---          ----          ------
                                             415,427        315,577     1,373,939       1,186,379
                                             -------        -------     ---------       ---------

    Income from
     Operations                              102,114         92,552       590,549         358,216
    Other
     (Expense)
     Income
      Interest
       expense                               (48,175)       (31,107)     (161,316)       (106,713)
      Debt
       extinguishment
       costs                                (120,954)             -      (120,954)         (1,189)
      (Loss) gain on
       mark-to-
       market
       derivative
       contracts                             (11,486)    (83,935)    81,981      (60,695)
      Gain (loss) on
       investment
       measured at
       fair value                            232,254         (1,551)      (52,675)         (1,551)
      Other income                               407          1,697         3,356          15,942
                                                 ---          -----         -----          ------
    Income (Loss)
     Before Income
     Taxes                                   154,160        (22,344)      340,941         204,010
      Income tax
       (expense)
       benefit
        Current                                   (7)        25,331        25,952          93,090
        Deferred                             (55,049)       (22,473)     (160,214)       (193,835)
                                             -------        -------      --------        --------
    Net Income
     (Loss)                                  $99,104       $(19,486)     $206,679        $103,265
                                                           ========                      ========
      Net income
       attributable
       to
       noncontrolling
       interest                               (1,400)        (1,400)
         in the form of
          preferred
          stock of
          subsidiary                          ------                       ------
    Net Income
     Attributable
     to Common
     Stockholders                            $97,704                     $205,279
                                             =======                     ========

    Earnings
     (Loss) per
     Common Share
      Basic                                    $0.70         $(0.14)        $1.45           $0.74
      Diluted                                  $0.69         $(0.14)        $1.44           $0.73
    Weighted
     Average
     Common Shares
     Outstanding
      Basic                                  140,414        140,836       141,227         140,438
                                             =======        =======       =======         =======
      Diluted                                141,951        140,836       142,999         141,897
                                             =======        =======       =======         =======


    Plains Exploration & Production Company
    Operating Data
                                                    Three Months
                                                                                             Ended   Twelve Months Ended
                                                   December 31,                 December 31,
                                                   ------------                 ------------
                                                  2011          2010            2011            2010
                                                  ----          ----            ----            ----
                                                                  (Unaudited)
    Daily Average Volumes
      Oil and liquids sales (Bbls)            52,262        46,658          48,964          45,943
      Gas (Mcf)
        Production                           324,288       283,447         305,691         260,402
        Used as fuel                           5,481         5,428           5,776           5,353
        Sales                                318,807       278,019         299,915         255,049
      BOE
        Production                           106,310        93,899          99,912          89,343
        Sales                                105,396        92,994          98,950          88,451
    Unit Economics (in dollars)
      Average NYMEX Prices
        Oil                                   $94.06        $85.24          $95.11          $79.61
        Gas                                     3.57          3.81            4.04            4.38
      Average Realized Sales Price
       Before Derivative
       Transactions
        Oil (per Bbl)                         $87.02        $73.17          $85.53          $68.14
        Gas (per Mcf)                           3.30          3.66            3.91            4.29
        Per BOE                                53.13         47.66           54.18           47.77
      Cash Margin per BOE (1)
        Oil and gas revenues                  $53.13        $47.66          $54.18          $47.77
        Costs and expenses
           Lease operating expenses           (10.37)        (8.75)          (9.27)          (8.13)
           Steam gas costs                     (1.63)        (1.67)          (1.81)          (2.06)
           Electricity                         (1.14)        (1.35)          (1.14)          (1.33)
           Production and ad valorem
            taxes                              (1.66)        (0.95)          (1.53)          (0.91)
           Gathering and transportation        (1.78)        (1.52)          (1.72)          (1.57)
           Oil and gas related DD&A           (21.22)       (17.37)         (17.76)         (15.87)
                                              ------        ------          ------          ------
        Gross margin (GAAP)                    15.33         16.05           20.95           17.90
          Oil and gas related DD&A             21.22         17.37           17.76           15.87
          Realized loss on derivative
           instruments                         (0.84)        (0.77)          (1.42)          (1.02)
                                               -----         -----           -----           -----
        Cash margin (non-GAAP)                $35.71        $32.65          $37.29          $32.75
                                              ======        ======          ======          ======

    Oil and gas capital
     expenditures accrued ($ in
     thousands) (2)                         $492,235      $300,895      $1,856,377      $1,082,246
    (1)  Cash margin per BOE (a non-GAAP measure) is calculated by
    adjusting gross margin per BOE (a GAAP measure) to include the
    realized gain and loss on derivative instruments and to exclude
    DD&A.  Management believes this presentation may be helpful to
    investors as it represents the cash generated by our oil and gas
    production that is available for, among other things, capital
    expenditures and debt service.  PXP management uses this information
    to analyze operating trends for comparative purposes within the
    industry.  This measure is not intended to replace the GAAP
    statistic but rather to provide additional information that may be
    helpful in evaluating trends and performance.

    (2)  Additions to oil and gas properties reported in our consolidated
    statement of cash flows differ from the accrual basis amounts
    reflected above due to the timing of cash payments.  Excludes
    acquisitions.


    Plains Exploration & Production Company
    Reconciliation of GAAP to Non-GAAP Measure

                                                    Three Months Ended December
                                                             31, 2011
                                                   ----------------------------
                                                 Oil           Gas          BOE
                                                 ---           ---          ---
                                                 (per          (per
                                                 Bbl)          Mcf)
      Average Realized Sales Price

      Average realized price before
       derivative instruments (GAAP)
       (1)                                      $87.02         $3.30       $53.13
        Realized (loss) gain on
         derivative instruments                  (3.12)         0.23        (0.84)
                                                 -----          ----        -----

      Realized cash price including
       derivative settlements (non-
       GAAP)                                    $83.90         $3.53       $52.29
                                                ======         =====       ======

                                                 Three Months Ended December
                                                          31, 2010
                                                ----------------------------
                                                 Oil           Gas          BOE
                                                 ---           ---          ---
                                                 (per          (per
                                                 Bbl)          Mcf)
      Average Realized Sales Price

      Average realized price before
       derivative instruments (GAAP)
       (1)                                      $73.17         $3.66       $47.66
        Realized (loss) gain on
         derivative instruments                  (4.16)         0.44        (0.77)
                                                 -----          ----        -----

      Realized cash price including
       derivative settlements (non-
       GAAP)                                    $69.01         $4.10       $46.89
                                                ======         =====       ======

                                                Twelve Months Ended December
                                                          31, 2011
                                               -----------------------------
                                                 Oil           Gas          BOE
                                                 ---           ---          ---
                                                 (per          (per
                                                 Bbl)          Mcf)
      Average Realized Sales Price

      Average realized price before
       derivative instruments (GAAP)
       (1)                                      $85.53         $3.91       $54.18
        Realized (loss) gain on
         derivative instruments                  (3.31)         0.07        (1.42)
                                                 -----          ----        -----

      Realized cash price including
       derivative settlements (non-
       GAAP)                                    $82.22         $3.98       $52.76
                                                ======         =====       ======

                                                Twelve Months Ended December
                                                          31, 2010
                                               -----------------------------
                                                 Oil           Gas          BOE
                                                 ---           ---          ---
                                                 (per          (per
                                                 Bbl)          Mcf)
      Average Realized Sales Price

      Average realized price before
       derivative instruments (GAAP)
       (1)                                      $68.14         $4.29       $47.77
        Realized (loss) gain on
         derivative instruments                  (4.22)         0.41        (1.02)
                                                 -----          ----        -----

      Realized cash price including
       derivative settlements (non-
       GAAP)                                    $63.92         $4.70       $46.75
                                                ======         =====       ======
    (1)  Excludes the impact of production costs and expenses and DD&A.


    Plains Exploration & Production Company
    Consolidated Statements of Cash Flows
    (in thousands of dollars)
                                                  Twelve Months Ended
                                                     December 31,
                                                     ------------
                                                     2011              2010
                                                     ----              ----

    CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                   $206,679          $103,265
    Items not affecting cash flows from operating
     activities
      Depreciation, depletion, amortization
       and accretion                              681,655           551,118
      Impairment of oil and gas properties              -            59,475
      Deferred income tax expense                 160,214           193,835
      Debt extinguishment costs                     2,844             1,189
      (Gain) loss on mark-to-market
       derivative contracts                       (81,981)           60,695
      Loss on investment measured at fair
       value                                       52,675             1,551
      Non-cash compensation                        49,193            50,875
      Other non-cash items                         (5,559)            1,043
    Change in assets and liabilities from
     operating activities                          45,035          (110,576)
                                                   ------          --------
    Net cash provided by operating
     activities                                 1,110,755           912,470
                                                ---------           -------
    CASH FLOWS FROM INVESTING ACTIVITIES
    Additions to oil and gas properties        (1,783,304)       (1,048,858)
    Acquisition of oil and gas properties         (40,515)         (554,685)
    Proceeds from sales of oil and gas
     properties and related                       736,228            73,965
       assets, net of costs and expenses
    Derivative settlements                        (55,412)          (29,921)
    Additions to other property and
     equipment                                    (13,140)          (15,809)
    Other                                           1,552                 -
                                                    -----               ---
    Net cash used in investing activities      (1,154,591)       (1,575,308)
                                               ----------        ----------
    CASH FLOWS FROM FINANCING ACTIVITIES
    Borrowings from revolving credit
     facilities                                 6,305,300         3,332,610
    Repayments of revolving credit
     facilities                                (6,190,300)       (2,942,610)
    Principal payments of long-term debt       (1,295,737)                -
    Proceeds from issuance of Senior Notes      1,600,000           300,000
    Costs incurred in connection with
     financing arrangements                       (30,239)          (22,771)
    Purchase of treasury stock                   (361,729)                -
    Net proceeds from issuance of
     noncontrolling interest                      430,246                 -
       in the form of preferred stock of subsidiary
    Distributions to holders of
     noncontrolling interest in the                (1,050)                -
       form of preferred stock of subsidiary
    Other                                               9               184
                                                      ---               ---
    Net cash provided by financing
     activities                                   456,500           667,413
                                                  -------           -------
    Net increase in cash and cash
     equivalents                                  412,664             4,575
    Cash and cash equivalents, beginning of
     period                                         6,434             1,859
                                                    -----             -----
    Cash and cash equivalents, end of
     period                                      $419,098            $6,434
                                                 ========            ======


    Plains Exploration & Production Company
    Consolidated Balance Sheets
    (in thousands of dollars)
                                                        December    December
                                                           31,         31,
                                                              2011        2010
                                                              ----        ----
          ASSETS
    Current Assets
      Cash and cash equivalents                           $419,098      $6,434
      Accounts receivable                                  302,675     269,024
      Commodity derivative contracts                        50,964           -
      Inventories                                           20,173      24,406
      Investment                                           611,671           -
      Deferred income taxes                                 20,723      74,086
      Prepaid expenses and other current assets             16,073      28,937
                                                            ------      ------
                                                         1,441,377     402,887
                                                         ---------     -------
    Property and Equipment, at cost
      Oil and natural gas properties - full cost method
        Subject to amortization                         12,016,252   9,975,056
        Not subject to amortization                      2,409,449   3,304,554
      Other property and equipment                         145,959     137,150
                                                           -------     -------
                                                        14,571,660  13,416,760
      Less allowance for depreciation, depletion,
       amortization and impairment                      (6,846,365) (6,196,008)
                                                        ----------  ----------
                                                         7,725,295   7,220,752
                                                         ---------   ---------
    Goodwill                                               535,140     535,144
                                                           -------     -------
    Commodity Derivative Contracts                          12,678           -
                                                            ------         ---
    Investment                                                   -     664,346
                                                               ---     -------
    Other Assets                                            76,982      71,808
                                                            ------      ------
                                                        $9,791,472  $8,894,937
                                                        ==========  ==========

          LIABILITIES AND EQUITY
    Current Liabilities
      Accounts payable                                    $385,231    $284,628
      Commodity derivative contracts                         3,761      52,971
      Royalties and revenues payable                        97,095      70,990
      Interest payable                                      39,342      49,127
      Other current liabilities                            100,757      75,973
                                                           -------      ------
                                                           626,186     533,689
                                                           -------     -------
    Long-Term Debt                                       3,760,952   3,344,717
                                                         ---------   ---------

    Other Long-Term Liabilities
      Asset retirement obligation                          230,633     225,571
      Commodity derivative contracts                           823      24,740
      Other                                                 15,749      28,205
                                                            ------      ------
                                                           247,205     278,516
                                                           -------     -------
    Deferred Income Taxes                                1,461,897   1,355,050
                                                         ---------   ---------
    Equity
      Stockholders' equity
        Common stock                                         1,439       1,439
        Additional paid-in capital                       3,434,928   3,427,869
        Retained earnings                                  337,991     148,620
        Treasury stock, at cost                           (509,722)   (194,963)
                                                          --------    --------
                                                         3,264,636   3,382,965
      Noncontrolling interest
          Preferred stock of subsidiary                    430,596           -
                                                           -------         ---
                                                         3,695,232   3,382,965
                                                         ---------   ---------
                                                        $9,791,472  $8,894,937
                                                        ==========  ==========


    Plains Exploration & Production Company
    Summary of Open Derivative Positions
    At February 22, 2012

                                                                                                Average
                          Instrument           Daily                  Average                  Deferred
       Period (1)            Type             Volumes                Price (2)                  Premium     Index
    Sales of Crude Oil
     Production
    2012
                           Three-way
      Feb - Dec           collars (3)       40,000 Bbls $100.00 Floor with an $80.00 Limit                - Brent
                                                                           $120.00 Ceiling
    2013
      Jan - Dec        Put options (4)      17,000 Bbls   $90.00 Floor with a $70.00 Limit   $6.253 per Bbl Brent
      Jan - Dec        Put options (5)      13,000 Bbls $100.00 Floor with an $80.00 Limit   $6.800 per Bbl Brent
                           Three-way
      Jan - Dec           collars (6)       25,000 Bbls $100.00 Floor with an $80.00 Limit                - Brent
                                                                           $124.29 Ceiling
                           Three-way
      Jan - Dec           collars (7)       5,000 Bbls    $90.00 Floor with a $70.00 Limit                - Brent
                                                                           $126.08 Ceiling
    2014
      Jan - Dec        Put options (4)      20,000 Bbls   $90.00 Floor with a $70.00 Limit   $6.555 per Bbl Brent

    Sales of Natural
     Gas Production
    2012
                                               120,000                                                      Henry
      Feb - Dec        Put options (8)          MMBtu       $4.30 Floor with a $3.00 Limit $0.298 per MMBtu  Hub
                           Three-way           40,000                                                       Henry
      Feb - Dec           collars (9)           MMBtu       $4.30 Floor with a $3.00 Limit                -  Hub
                                                                             $4.86 Ceiling
    2013
                         Swap contracts        110,000                                                      Henry
      Jan - Dec               (10)              MMBtu                                $4.27                -  Hub

    2014
                        Swap contracts         70,000                                                       Henry
      Jan - Dec               (10)              MMBtu                                $4.16                -  Hub
    (1)  All of our derivatives are settled monthly.
    (2)  The average strike prices do not reflect any premiums to
    purchase the put options.
    (3)  If the index price is less than the $100 per barrel floor, we
    receive the difference between the $100 per barrel floor and the
    index price up to a maximum of $20 per barrel.  We pay the
    difference between the index price and $120 per barrel if the index
    price is greater than the $120 per barrel ceiling.  If the index
    price is at or above $100 per barrel but at or below $120 per
    barrel, no cash settlement is required.
    (4)  If the index price is less than the $90 per barrel floor, we
    receive the difference between the $90 per barrel floor and the
    index price up to a maximum of $20 per barrel less the option
    premium.  If the index price is at or above $90 per barrel, we pay
    only the option premium.
    (5)  If the index price is less than the $100 per barrel floor, we
    receive the difference between the $100 per barrel floor and the
    index price up to a maximum of $20 per barrel less the option
    premium.  If the index price is at or above $100 per barrel, we pay
    only the option premium.
    (6)  If the index price is less than the $100 per barrel floor, we
    receive the difference between the $100 per barrel floor and the
    index price up to a maximum of $20 per barrel.  We pay the
    difference between the index price and $124.29 per barrel if the
    index price is greater than the $124.29 per barrel ceiling.  If the
    index price is at or above $100 per barrel but at or below $124.29
    per barrel, no cash settlement is required.
    (7)  If the index price is less than the $90 per barrel floor, we
    receive the difference between the $90 per barrel floor and the
    index price up to a maximum of $20 per barrel.  We pay the
    difference between the index price and $126.08 per barrel if the
    index price is greater than the $126.08 per barrel ceiling.  If the
    index price is at or above $90 per barrel but at or below $126.08
    per barrel, no cash settlement is required.
    (8)  If the index price is less than the $4.30 per MMBtu floor, we
    receive the difference between the $4.30 per MMBtu floor and the
    index price up to a maximum of $1.30 per MMBtu less the option
    premium.  If the index price is at or above $4.30 per MMBtu, we pay
    only the option premium.
    (9)  If the index price is less than the $4.30 per MMBtu floor, we
    receive the difference between the $4.30 per MMBtu floor and the
    index price up to a maximum of $1.30 per MMBtu.  We pay the
    difference between the index price and $4.86 per MMBtu if the index
    price is greater than the $4.86 per MMBtu ceiling.  If the index
    price is at or above $4.30 per MMBtu but at or below $4.86 per
    MMBtu, no cash settlement is required.
    (10)  If the index price is less than the fixed price ($4.27 per
    MMBtu for the 2013 contracts and $4.16 per MMBtu for the 2014
    contracts), we receive the difference between the fixed price and
    the index price.  We pay the difference between the index price and
    the fixed price if the index price is greater than the fixed price.


     Derivative
     Settlements
     (in
     thousands
     of
     dollars)

    The following tables reflect cash
     (payments) receipts for derivatives
     attributable to the stated production
     periods.

                              Three Months Ended           Twelve Months Ended
                                 December 31,                 December 31,
                                 ------------                 ------------
                                2011                 2010        2011              2010
                                ----                 ----        ----              ----

    Oil sales               $(15,008)            $(17,854)   $(59,217)         $(70,834)
    Natural
     gas sales                 6,881               11,285       7,915            37,996
                               -----               ------       -----            ------
                             $(8,127)             $(6,569)   $(51,302)         $(32,838)
                             =======              =======    ========          ========


    Plains Exploration & Production Company
    Reconciliation of GAAP to Non-GAAP Measure

    The following tables reconcile net income (GAAP) to
     adjusted net income and adjusted net income attributable
     to common stockholders (non-GAAP) for the three and
     twelve months ended December 31, 2011 and 2010. Adjusted
     net income and adjusted net income attributable to common
     stockholders exclude certain items affecting the
     comparability of operating results and the related tax
     effects.  Management believes this presentation may be
     helpful to investors.  PXP management uses this
     information to analyze operating trends and for
     comparative purposes within the industry. This measure is
     not intended to replace the GAAP statistic but rather to
     provide additional information that may be helpful in
     evaluating the Company's operational trends and
     performance.
                                                                 Three Months
                                                                     Ended
                                                                 December 31,
                                                                 ------------
                                                                 2011         2010
                                                                 ----         ----
                                                                 (millions of
                                                                    dollars)

    Net income (loss) (GAAP)                                    $99.1       $(19.5)
      Unrealized loss on mark-to-market
       derivative contracts                                      11.5         83.9
      Realized loss on mark-to-market derivative
       contracts (1)                                             (8.0)        (6.6)
      Unrealized (gain) loss on investment
       measured at fair value                                  (232.3)         1.6
      Debt extinguishment costs                                 121.0            -
      Adjust income taxes (2)                                    38.7        (31.1)
                                                                 ----        -----

     Adjusted net income (non-GAAP)                             $30.0        $28.3

      Net income attributable to noncontrolling
       interest in the form of preferred stock of
       subsidiary                                                (1.4)
     Adjusted net income attributable to common
      stockholders (non-GAAP)                                   $28.6
                                                                =====

                                                                 Twelve Months
                                                                     Ended
                                                                 December 31,
                                                                 ------------
                                                                 2011         2010
                                                                 ----         ----
                                                                 (millions of
                                                                    dollars)

    Net income (GAAP)                                          $206.7       $103.3
      Unrealized (gain) loss on mark-to-market
       derivative contracts                                     (82.0)        60.7
      Realized loss on mark-to-market derivative
       contracts (1)                                            (51.3)       (32.8)
      Unrealized loss on investment measured at
       fair value                                                52.7          1.6
      Impairment of oil and gas properties                          -         59.5
      Debt extinguishment costs                                 121.0          1.2
      Legal recovery                                                -         (8.4)
      Other non-operating income                                    -         (9.3)
      Adjust income taxes (2)                                   (22.7)       (25.6)
                                                                -----        -----

     Adjusted net income (non-GAAP)                            $224.4       $150.2

      Net income attributable to noncontrolling
       interest in the form of preferred stock of
       subsidiary                                                (1.4)
     Adjusted net income attributable to common
      stockholders (non-GAAP)                                  $223.0
                                                               ======
    (1)  The amounts presented in the above tables differ from the
    adjustments reflected in the calculation of operating cash flow on
    the following page due to the accrued amounts reflected in the
    income statement versus the actual cash received or paid reflected
    in the consolidated statement of cash flows.

    (2)  Tax rates assumed based upon adjusted earnings are 36% and 50%
    for the three months ended December 31, 2011 and 2010, respectively.
    Tax rates assumed based upon adjusted earnings are 41% and 46% for
    the twelve months ended December 31, 2011 and 2010. Tax rates
    exclude the effects of nonrecurring tax related expenses and
    benefits.


    Plains Exploration & Production Company
    Reconciliation of GAAP to Non-GAAP Measure

    The following tables reconcile Net Cash Provided by Operating
     Activities (GAAP) to Operating Cash Flow (non-GAAP) for the three
     and twelve months ended December 31, 2011 and 2010.  Management
     believes this presentation may be useful to investors.  PXP
     management uses this information for comparative purposes within the
     industry and as a means of measuring the Company's ability to fund
     capital expenditures and service debt. This measure is not intended
     to replace the GAAP statistic but rather to provide additional
     information that may be helpful in evaluating the Company's
     operational trends and performance.

    Operating cash flow is calculated by adjusting net income to add back
     certain non-cash and non-operating items, including debt
     extinguishment costs, the unrealized gain and loss on mark-to-
     market derivative contracts, to include derivative cash settlements
     for the realized gain and loss on mark-to-market derivative
     contracts that are classified as investing activities for GAAP
     purposes, to exclude the unrealized gain and loss on the investment
     measured at fair value and to exclude certain other items.

                                                                                  Twelve Months
                                                     Three Months Ended                            Ended
                                                        December 31,              December 31,
                                                        ------------              ------------
                                                         2011         2010          2011          2010
                                                         ----         ----          ----          ----
                                                                (millions of dollars)
      Net income (loss)                                 $99.1       $(19.5)       $206.7        $103.3
      Items not affecting operating cash flows
          Depreciation, depletion,
           amortization and accretion                   215.6        158.5         681.7         551.1
          Impairment of oil and gas
           properties                                       -            -             -          59.5
          Deferred income tax expense                    55.0         22.5         160.2         193.8
          Debt extinguishment costs                     121.0            -         121.0           1.2
          Unrealized loss (gain) on mark-
           to-market derivative
           contracts                                     11.5         83.9         (82.0)         60.7
          Unrealized (gain) loss on
           investment measured at fair
           value                                       (232.3)         1.6          52.7           1.6
          Non-cash compensation                          22.0         14.5          49.2          50.9
          Other non-cash items                            0.8         (1.5)         (5.6)          1.0
      Realized loss on mark-to-
       market derivative contracts                       (8.0)        (6.4)        (55.4)        (29.9)
      Legal recovery and other                              -            -             -         (16.5)
                                                          ---          ---           ---         -----

      Operating cash flow (non-GAAP)                   $284.7       $253.6      $1,128.5        $976.7
                                                       ======       ======      ========        ======

      Reconciliation of non-GAAP to GAAP
       measure
        Operating cash flow (non-GAAP)                 $284.7       $253.6      $1,128.5        $976.7
        Cash portion of debt
         extinguishment costs                          (118.2)           -        (118.2)            -
        Legal recovery and other                            -            -             -          16.5
        Changes in assets and
         liabilities from operating
         activities                                      13.6        (24.7)         45.1        (110.6)
        Realized loss on mark-to-
         market derivative contracts                      8.0          6.4          55.4          29.9
                                                          ---          ---          ----          ----

      Net cash provided by operating
       activities (GAAP)                               $188.1       $235.3      $1,110.8        $912.5
                                                       ======       ======      ========        ======


    Plains Exploration & Production Company
    Proved Reserves, Reserve Replacement Ratio, PV-10 to
     Standardized Measure Reconciliation

    Estimated Proved Reserves (MMBOE):
    2010 Year-end proved reserves                                416.1
    2011 Extensions, discoveries and revisions and other
     additions                                                    81.0
    2011 Divestments                                             (49.7)
    2011 Production                                              (36.5)
                                                                 -----
    2011 Year-end proved reserves                                410.9
                                                                 =====

    Reserve Replacement Ratio (1)                                  222%
                                                                   ===

    Estimated Pro Forma Proved Reserves (MMBOE) (2)
    2010 Year-end proved reserves                                355.0
    2011 Extensions, discoveries and revisions and other
     additions                                                    88.1
    2011 Divestments                                              (1.8)
    2011 Pro forma production                                    (30.4)
                                                                 -----
    2011 Year-end proved reserves                                410.9
                                                                 =====

    Pro Forma Reserve Replacement Ratio (1)                        290%
                                                                   ===

    PV-10 to Standardized Measure Reconciliation (in
     millions)
    Estimated undiscounted future net cash flows before
     income taxes                                            $15,942.2
                                                             =========

    Present value of estimated future net cash flows
     before income taxes (PV-10) (3) (4)                      $7,884.5

    Discounted future income taxes                            (2,750.3)
                                                              --------
    Standardized measure of discounted net cash flows         $5,134.2
                                                              ========
    (1)  Calculation: reserve extensions, discoveries, revisions and
    other additions divided by production. The Reserve Replacement Ratio
    is an indicator of our ability to replace annual production volume
    and grow our reserves. It is important to economically find and
    develop new reserves that will offset produced volumes and provide
    for future production given the inherent decline of hydrocarbon
    reserves as they are produced.  Reserve Replacement Ratio is a
    statistical indicator which has limitations, including its
    predictive and comparative value.  As such, this metric should not
    be considered in isolation or as a substitute for an analysis of our
    performance as reported under GAAP.  Furthermore, this metric may
    not be comparable to similarly titled measurements used by other
    companies.

    (2)  Reflects the impact of fourth-quarter property divestments.

    (3)  PV-10 is PXP's estimate of the present value of future net
    revenues from proved oil and gas reserves after deducting estimated
    production and ad valorem taxes, future capital costs and operating
    expenses, but before deducting any estimates of future income taxes.
    PV-10 is a non-GAAP financial measure and generally differs from
    the Standardized Measure, the most directly comparable GAAP
    financial measure, because it does not include the effects of income
    taxes on future cash flows. PV-10 should not be considered as an
    alternative to the Standardized Measure as computed under GAAP.

    (4)  PXP believes PV-10 to be an important measure for evaluating
    the relative significance of its oil and gas properties and that the
    presentation of the non-GAAP financial measure of PV-10 provides
    useful information to investors because it is widely used by
    professional analysts and sophisticated investors in evaluating oil
    and gas companies. Because there are many unique factors that can
    impact an individual company when estimating the amount of future
    income taxes to be paid, PXP believes the use of a pre-tax measure
    is valuable for evaluating its company. PXP believes that most other
    companies in the oil and gas industry calculate PV-10 on the same
    basis.


    Plains Exploration & Production Company
    Costs Incurred & Finding and Development Costs

    Costs Incurred ($ Millions):
    Property acquisition costs:
          Unproved properties                                        $36.6
          Proved properties                                            9.2
    Exploration costs                                              1,147.9
    Development costs                                                708.5
                                                                     -----
    Total costs incurred (1)                                      $1,902.2
                                                                  ========

    Pro Forma Costs Incurred ($ Millions):(2)
    Property acquisition costs:
          Unproved properties                                        $36.2
          Proved properties                                            1.4
    Exploration costs                                              1,027.9
    Development costs                                                521.3
                                                                     -----
    Total costs incurred                                          $1,586.8
                                                                  ========

    Finding and Development Costs (F&D) (3)

    All-In F&D Costs per BOE                                        $23.48
    Calculation: Total costs incurred divided by reserve
     extensions, discoveries,
    revisions and other additions

    All-In F&D Costs Pro Forma for Asset Sales per BOE              $18.01
    Calculation: Total pro forma costs incurred divided by pro
     forma reserve extensions, discoveries,
    revisions and other additions
    (1)  Includes capitalized interest expense of $115.4 million and
    capitalized general and administrative expense of $77.1 million.

    (2)  Reflects the impact of fourth quarter property divestments.

    (3)  Finding and Development Costs per BOE is a non-GAAP metric
    commonly used in the exploration and production industry.  The
    calculations presented are described above.  This calculation does
    not include the future development costs required for the
    development of proved undeveloped reserves.  Finding and Development
    Costs per BOE is a statistical indicator which has limitations,
    including its predictive and comparative value.  As such, this
    metric should not be considered in isolation or as a substitute for
    an analysis of our performance as reported under GAAP.  Furthermore,
    this metric may not be comparable to similarly titled measurements
    used by other companies.


    Plains Exploration & Production Company
    Full-Year 2012 Operating and Financial Guidance

                                                                    Year Ended
                                                                December 31, 2012
                                                                -----------------
    Production Volumes (MBOE/day)
           Total Production volumes sold                      92        -      96
           Oil                                                55%       -      57%
           NGLs                                                3%       -       4%
           Natural Gas                                        42%       -      39%

    Product Price Realization (Unhedged)
           Oil - Brent                                        98%       -     102%
           Oil - Transportation Expense                             $5.00
           NGLs - WTI                                                  40%
           Gas - Henry Hub                                            100%
           Gas - Transportation Expense                             $0.15
    Production Costs per BOE
           Lease operating expense                         $9.50        -  $10.50
           Steam gas costs (1)                             $1.25        -   $1.75
           Electricity                                     $1.20        -   $1.40
           Production and ad valorem taxes (2)             $2.00        -   $2.25
           Gathering and transportation                    $1.50        -   $2.00

    Depreciation, Depletion and Amortization per
     BOE                                                     $22        -     $24

    General and Administrative Expenses (in
     millions)
           Cash                                             $107        -    $111
           Stock-based compensation (3)                      $40        -     $46

    Interest Expense
                                                                 30 Day LIBOR +
           Average revolver balance                                1.50% -2.50%
                                  $79 Million Senior Notes          7.750%
                                 $185 Million Senior Notes         10.000%
                                  $77 Million Senior Notes          7.000%
                                 $400 Million Senior Notes          7.625%
                                 $400 Million Senior Notes          8.625%
                                 $300 Million Senior Notes          7.625%
                                 $600 Million Senior Notes          6.625%
                               $1,000 Million Senior Notes          6.750%

    Effective Tax Rate                                        38%       -      40%

    Weighted Average Equivalent Shares
     Outstanding (in thousands)
           Basic                                                  127,600
           Diluted                                                129,300
    Capital Expenditures (in millions)(4)
           PXP                                                     $1,366
           Gulf of Mexico - Plains Offshore                           234
           Total                                                   $1,600
    (1)  Steam gas costs assume a base SoCal Border index price of $3.02
    per MMBtu.  The purchased volumes are anticipated to be 43,000 -
    45,000 MMBtu per day.
    (2)  Production and ad valorem taxes assume base index prices of
    $110.00 per barrel and $3.00 per MMBtu. (Note: Brent index price for
    oil)
    (3)  Based on current outstanding and projected awards and current
    stock price.
    (4)  Includes capitalized interest and general and administrative
    expenses.

SOURCE Plains Exploration & Production Company


Source: PR Newswire