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PXP Announces 2008 Second Quarter Earnings of $203 Million or $1.84 Per Diluted Share Representing a 701% Gain Over Same Period in 2007

August 5, 2008

HOUSTON, Aug. 5 /PRNewswire-FirstCall/ — Plains Exploration & Production Company (“PXP” or the “Company”) today announced financial and operating results for the second quarter 2008.

   Highlights:   -- Net income increased to $202.9 million in the second quarter 2008 from      $25.3 million in the second quarter 2007.   -- Operating cash flow was $450.3 million in the second quarter 2008      compared to $111.0 million in the second quarter 2007 (a non-GAAP      measure).   -- Second quarter 2008 oil and gas sales volumes averaged 87.5 thousand      barrels of oil equivalent per day (BOEPD) reflecting the previously      announced asset divestitures which closed in February 2008. Sales      volumes averaged 91.6 thousand BOEPD for the first six months of 2008.      PXP expects sales volumes to average between 92 and 96 thousand BOEPD      for the year-ended 2008 and is currently producing within that range.      Flatrock and other growth initiatives are expected to contribute to      sales volume growth throughout the year.   -- Positive drilling results at Flatrock which has four successful wells      to date and two producing wells with approximately 30 million cubic      feet equivalent per day (MMCFED) net to PXP:      - Flatrock No. 2 well commenced production on July 6, 2008. Gross        production currently approximates 102 MMCFED, 23 MMCFED net to PXP.      - Flatrock No. 3 well logged deeper pay in May 2008. In total, the well        encountered 256 feet of net pay. First production is expected in the        third quarter of 2008.      - Flatrock No. 4 development well logged 116 net feet of pay in June        2008 and is drilling below 16,800 feet to proposed total depth of        18,500 feet.      - Flatrock No. 5 well commenced on July 1, 2008 and is currently        drilling below 9,700 feet to proposed total depth of 18,400 feet.      - Flatrock No. 6 well is expected to commence drilling in the second        half of 2008.   -- South Timbalier Block 168 ultra-deep exploratory well has been drilled      to 32,550 feet and is being evaluated.   -- Fredericksburg exploratory prospect, operated by Shell and located on      Desoto Canyon Block 486, is currently drilling with results expected in      the third quarter.   -- Friesian #2 well, operated by PXP and located on Green Canyon Block      643, has a rig on location running anchors, with drilling results      expected in the fourth quarter.   -- Positive drilling results continue from the Texas Panhandle development      program. We began the year producing 6,500 BOEPD and are currently      producing approximately 7,600 BOEPD. These production gains are      primarily coming from the Courson Ranch and Marvin Lakes areas. We are      having better-than-expected results from vertical wells targeting the      Mississippian St. Louis formation and horizontal wells targeting the      Cleveland formation. Additionally, wells in the Marvin Lakes area      targeting the Granite Wash and Atoka Wash formations, where we have a      significant inventory of future drilling locations, are contributing to      these positive results.   -- Acquired a 20% interest in Chesapeake Energy's 550,000 acre leasehold      position in the Haynesville Shale, 110,000 acres net to PXP, for $1.65      billion. In addition, PXP has agreed to fund 50% of Chesapeake's 80%      share of drilling and completion costs for future Haynesville Shale JV      wells over a several year period until an additional $1.65 billion has      been paid. This applies to less than 10% of the estimated 6,800      potential future drilling locations. PXP expects average drilling and      completion costs of $1.25 per MCFE and total finding and development      costs of $1.83 per MCFE. Drilling operations are underway with 6 rigs      running and a total of 30 rigs expected by year-end 2009. Production      contribution is expected in the fourth quarter 2008.   -- Closed the Piceance Basin acquisition in June 2008, expanding an      existing PXP growth area by adding approximately 11,000 acres adjacent      to our existing position and increasing our overall Piceance drilling      inventory to over 3,600 potential well locations. Production from the      Piceance Basin properties has increased 155% to 27.5 MMCF per      day in the second quarter of 2008 compared to 10.8 MMCF per day in the      second quarter 2007. There are 6 rigs running and a total of 7 rigs      expected by year-end 2008.   -- Received Santa Barbara County Planning Commission approval of the      Tranquillon Ridge project in April, one of the necessary government      approvals. PXP is currently working to secure approval from the      California State Lands Commission.   -- In Vietnam we contracted a rig to drill our first well mid-year 2009.   -- Increased PXP's commodity price protection by acquiring incremental      derivatives on a significant portion of 2008, 2009 and 2010 production      volumes with over $100 crude oil floors and $10 by $20 natural gas      collars.     THREE MONTHS ENDED JUNE 30  

PXP reported second quarter 2008 net income of $202.9 million, or $1.84 per diluted share, on revenues of $732.7 million, an increase from second quarter 2007 net income of $25.3 million, or $0.35 per diluted share, on revenues of $255.5 million. Higher revenues during the second quarter of 2008 were primarily due to a 64% increase in sales volumes and a $39.08 per barrel of oil equivalent (BOE) increase in realized prices.

Sales volumes increased to 87.5 thousand BOEPD during the second quarter 2008 from 53.5 thousand BOEPD in the second quarter 2007 reflecting the Pogo acquisition and increased production from the Piceance Basin.

Total production costs per BOE were higher during second quarter 2008 compared to the prior year period. Higher commodity prices and the impact from Pogo and Piceance Basin properties increased per unit production and ad valorem tax costs. Additionally, an increase in our stock price during the period resulted in higher per unit lease operating costs due to charges for stock appreciation rights.

Operating cash flow, a non-GAAP measure, increased to $450.3 million in the second quarter 2008 from $111.0 million for the same period a year ago due to higher sales volumes and stronger commodity prices. An explanation and reconciliation of non-GAAP financial measures is included at the end of this release.

SIX MONTHS ENDED JUNE 30

Net income for the first six months of 2008 was $366.4 million, or $3.27 per diluted share, on revenues of $1.4 billion, a significant increase from net income of $45.9 million, or $0.63 per diluted share, on revenues of $480.2 million for the same period a year ago. Higher revenues during the first six months of 2008 were primarily due to a 74% increase in sales volumes and a $30.82 per BOE increase in realized prices.

Sales volumes for the first six months of 2008 increased to 91.6 thousand BOEPD from 52.7 thousand BOEPD for the same period in 2007. Higher year-over-year sales volumes are primarily due to the 2007 acquisitions.

Total production costs per BOE were nearly flat for the first six months of 2008 compared to the same period in 2007. Lower per unit lease operating, steam gas and electricity costs due to increased sales volumes were offset by higher per unit gathering and transportation and production and ad valorem tax costs associated with the addition of the Pogo and Piceance Basin properties.

Operating cash flow, a non-GAAP measure, increased to $800.4 million for the first six months of 2008 from $205.6 million in the prior year period due to higher sales volumes and stronger commodity prices.

Oil and gas capital expenditures, excluding acquisitions, were $449.6 million for the first six months of 2008 compared to $309.8 million for the prior year period.

OUTLOOK

PXP reaffirms full-year 2008 operating and financial guidance. As previously announced, oil and gas expenditures for 2008 are expected to be approximately $1.5 billion, excluding acquisitions.

SECOND QUARTER CONFERENCE CALL

PXP plans to host its quarterly conference call tomorrow, August 6, 2008, 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 replay will be available through August 20, 2008 and can be accessed by dialing 1-800-642-1687 or 1-706-645-9291. Conference call and replay ID: 54420420.

PXP is an independent oil and gas company primarily engaged in the activities of acquiring, developing, exploring and producing oil and gas in its core areas of operation: California, Rockies, Haynesville Shale/North Louisiana and East Texas, Gulf Coast, Gulf of Mexico, Texas Panhandle, South Texas and the Permian Basin of the United States. 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,   * 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 the year ended December 31, 2007, for a discussion of these risks.

All forward-looking statements in this report 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 report 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 for any obligation to disclose material information under the Federal securities laws, we do not intend to update these forward-looking statements and information.

   Plains Exploration & Production Company   Consolidated Statements of Income (Unaudited)   (amounts in thousands, except per share data)                                     Three Months Ended     Six Months Ended                                          June 30,              June 30,                                       2008      2007        2008      2007   Revenues     Oil sales                      $545,767  $231,583  $1,002,351  $437,101     Gas sales                       182,334    23,210     346,403    40,745     Other operating revenues          4,602       754       7,026     2,394                                     732,703   255,547   1,355,780   480,240   Costs and Expenses     Production costs       Lease operating expenses       85,248    50,112     159,756    94,775       Steam gas costs                40,599    27,924      72,757    54,281       Electricity                    10,661     9,500      22,298    18,267       Production and ad valorem        taxes                         24,181     5,042      50,409    10,301       Gathering and transportation        expenses                       2,462     1,220      10,951     1,406     General and administrative       45,203    29,913      85,131    52,410     Depreciation, depletion and      amortization                   130,749    58,523     271,602   111,201     Accretion                         3,223     2,273       6,610     4,535                                     342,326   184,507     679,514   347,176   Income from Operations            390,377    71,040     676,266   133,064   Other Income (Expense)     Gain on sale of assets              -         -        34,658       -     Interest expense                (23,511)  (11,698)    (54,120)  (17,058)     Debt extinguishment costs           -         -       (10,263)      -     Loss on mark-to-market      derivative contracts           (51,427)  (15,837)    (60,908)  (36,427)     Interest and other income         1,686       747       1,661     1,324   Income Before Income Taxes        317,125    44,252     587,294    80,903     Income tax expense       Current                       (61,716)      -      (102,253)      -       Deferred                      (52,491)  (18,934)   (118,622)  (35,015)   Net Income                       $202,918   $25,318    $366,419   $45,888   Earnings per share     Basic                             $1.88     $0.35       $3.33     $0.63     Diluted                           $1.84     $0.35       $3.27     $0.63   Weighted Average Shares    Outstanding     Basic                           107,707    72,171     109,939    72,316     Diluted                         110,138    73,275     112,147    73,382      Plains Exploration & Production Company   Operating Data (Unaudited)                                        Three Months Ended  Six Months Ended                                              June 30,         June 30,                                           2008     2007    2008     2007   Daily Average Volumes     Oil and liquids sales (Bbls)          55,153  46,865   56,399  47,106     Gas (Mcf)       Production                         200,358  46,285  217,573  40,148       Used as fuel                         6,015   6,415    6,236   6,423       Sales                              194,343  39,870  211,337  33,725     BOE       Production                          88,546  54,579   92,662  53,798       Sales                               87,543  53,510   91,622  52,727   Unit Economics (in dollars)     Average NYMEX Prices       Oil                                $123.80  $65.02  $111.12  $61.67       Gas                                  10.90    7.55     9.50    7.17     Average Realized Sales Price Before       Derivative Transactions       Oil (per Bbl)                      $108.74  $54.31   $97.65  $51.27       Gas (per Mcf)                        10.31    6.40     9.01    6.68       Per BOE                              91.40   52.32    80.89   50.07     Cash Margin per BOE (1)       Oil and gas revenues                $91.40  $52.32   $80.89  $50.07       Costs and expenses          Lease operating expenses         (10.70) (10.29)   (9.58)  (9.93)          Steam gas costs                   (5.10)  (5.73)   (4.36)  (5.69)          Electricity                       (1.34)  (1.95)   (1.34)  (1.91)          Production and ad valorem taxes   (3.04)  (1.04)   (3.02)  (1.08)          Gathering and transportation      (0.31)  (0.25)   (0.66)  (0.15)       Gross margin before DD&A (GAAP)      70.91   33.06    61.93   31.31         Cash derivative settlements        (2.86)  (5.20)   (2.35)  (5.23)       Cash margin (Non-GAAP)              $68.05  $27.86   $59.58  $26.08    (1) Cash margin (a non-GAAP measure) is calculated by adjusting gross       margin before DD&A (a GAAP measure) to deduct cash derivative       settlements.  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 and for comparative purposes within the       industry. This measure is not intended to replace the GAAP statistic       but to provide additional information that may be helpful in       evaluating the Company's operational trends and performance.      Plains Exploration & Production Company   Consolidated Balance Sheets   (in thousands of dollars)                                                   June 30,      December 31,                                                     2008              2007                      ASSETS                     (Unaudited)   Current Assets     Cash and cash equivalents                      $2,494           $25,446     Restricted cash                                   -              59,092     Accounts receivable                           406,745           304,972     Inventories                                    24,291            18,394     Deferred income taxes                         175,793           229,893     Other current assets                           12,946            37,123                                                   622,269           674,920   Property and Equipment, at cost     Oil and natural gas properties -      full cost method       Subject to amortization                   7,087,870         7,340,238       Not subject to amortization               1,384,611         1,951,783     Other property and equipment                  110,955            85,928                                                 8,583,436         9,377,949     Less allowance for depreciation,      depletion and amortization                (1,267,019)       (1,000,722)                                                 7,316,417         8,377,227   Goodwill                                        535,296           536,822   Other Assets                                    103,433           104,382                                                $8,577,415        $9,693,351      LIABILITIES AND STOCKHOLDERS' EQUITY   Current Liabilities     Accounts payable                             $284,148          $319,583     Commodity derivative contracts                101,825            79,938     Royalties and revenues payable                169,196           132,919     Stock appreciation rights                      23,977            63,106     Interest payable                               19,228            25,330     Accrued merger expenses                         2,764            77,980     Other current liabilities                      79,483           119,190                                                   680,621           818,046   Long-Term Debt     Senior revolving credit facility              611,000         2,205,000     Senior notes                                1,500,000         1,100,000                                                 2,111,000         3,305,000   Other Long-Term Liabilities     Asset retirement obligation                   179,665           184,080     Commodity derivative contracts                 31,428            33,821     Other                                         143,460            54,726                                                   354,553           272,627   Deferred Income Taxes                         2,006,433         1,959,431   Stockholders' Equity     Common stock                                    1,128             1,128     Additional paid-in capital                  2,710,212         2,711,617     Retained earnings                             990,412           623,993     Accumulated other comprehensive income          1,519             1,566     Treasury stock                               (278,463)              (57)                                                 3,424,808         3,338,247                                                $8,577,415        $9,693,351      Plains Exploration & Production Company   Consolidated Statements of Cash Flows (Unaudited)   (in thousands of dollars)                                 Three Months Ended        Six Months Ended                                     June 30,                 June 30,                                 2008         2007        2008         2007   CASH FLOWS FROM OPERATING    ACTIVITIES   Net income                 $202,918      $25,318    $366,419      $45,888   Items not affecting cash    flows from operating    activities     Gain on sale of assets        -            -       (34,658)         -     Depreciation, depletion,      amortization and      accretion                133,972       60,796     278,212      115,736     Deferred income taxes      52,491       18,934     118,622       35,015     Debt extinguishment      costs                        -            -        10,263          -     Loss on commodity      derivative contracts      51,427       15,837      60,908       36,427     Noncash compensation       28,378       15,717      40,451       21,621     Other noncash items         1,936          (24)      2,886          (31)   Change in assets and    liabilities from    operating activities      (146,514)     (15,282)   (233,741)    (113,406)   Net cash provided by    operating activities       324,608      121,296     609,362      141,250   CASH FLOWS FROM INVESTING    ACTIVITIES   Additions to oil and gas    properties                (186,423)    (113,281)   (441,123)    (258,182)   Acquisition of oil and    gas properties            (311,136)    (973,875)   (331,293)    (973,875)   Acquisition of Pogo    Producing Company          (62,625)         -       (74,844)         -   Derivative settlements      (12,946)     (25,615)    (29,593)     (49,143)   Proceeds from property    sales, net of costs and    expenses                     7,901          -     1,717,781          -   Decrease in restricted cash    and cash held in escrow    339,974          -        59,092          -   Additions to other    property and equipment      (4,754)     (19,774)    (27,443)     (24,164)   Other, net                      505       (3,431)     (1,229)      (3,431)   Net cash provided by (used    in) investing activities  (229,504)  (1,135,976)    871,348   (1,308,795)   CASH FLOWS FROM FINANCING    ACTIVITIES   Revolving credit    facilities     Borrowings              1,083,315    1,119,475   4,237,756    1,456,250     Repayments             (1,532,315)    (744,475) (5,831,756)  (1,316,750)   Proceeds from issuance    of long-term debt          400,000      600,000     400,000    1,100,000   Costs incurred in    connection with    financing arrangements      (5,927)      (9,972)     (6,064)     (17,917)   Derivative settlements       (7,898)         -       (13,088)         -   Purchase of treasury    stock                      (32,385)     (15,193)   (304,192)     (47,485)   Other                        (5,709)       1,462      13,682        3,341   Net cash (used in)    provided by financing    activities                (100,919)     951,297  (1,503,662)   1,177,439   Net (decrease) increase    in cash and cash    equivalents                 (5,815)     (63,383)    (22,952)       9,894   Cash and cash equivalents,    beginning of period          8,309       74,176      25,446          899   Cash and cash equivalents,    end of period               $2,494      $10,793      $2,494      $10,793      Plains Exploration & Production Company   Summary of Open Derivative Positions   at July 1, 2008                 Instrument      Daily   Period         Type         Volumes       Average Price (1)       Index   Sales of Crude Oil Production   2008   July - Dec   Put options  42,000 Bbls    $55.00 Strike price       WTI   July - Dec   Collar       2,500 Bbls     $60.00 Floor -                                            $80.13 Ceiling            WTI   2009   Jan - Dec    Put options  32,500 Bbls    $55.00 Strike price       WTI   Jan - Dec    Put options  40,000 Bbls    $106.16 Strike price      WTI   2010   Jan - Dec    Put options  40,000 Bbls    $111.49 Strike price      WTI    Sales of Natural Gas Production   2008   July - Dec   Collar       15,000 MMBtu   $8.00 Floor -                                            $12.11 Ceiling          Henry Hub   July - Dec   Collar       150,000 MMBtu  $10.00 Floor -                                            $20.00 Ceiling          Henry Hub   2009   Jan - Dec    Collar       150,000 MMBtu  $10.00 Floor -                                            $20.00 Ceiling          Henry Hub    (1) The average strike prices do not reflect the cost to purchase the put       options or collars.      Plains Exploration & Production Company   Reconciliation of GAAP to Non-GAAP Measure    The following table reconciles Net Cash Provided by Operating Activities   (GAAP) to Operating Cash Flow (Non-GAAP) for the three and six months   ended June 30, 2008 and 2007. Management believes this presentation may be   useful to investors because it is illustrative of the impact of the   Company's derivative contracts. 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 to provide   additional information that may be helpful in evaluating the Company's   operational trends and performance.    Operating cash flow is calculated by adjusting the GAAP measure of cash   provided by operating activities to exclude changes in operating assets   and liabilities and include derivative cash flows that are classified as   financing or investing activities in the statement of cash flows. Pursuant   to GAAP certain cash payments with respect to our derivative instruments   are required to be reflected as financing or investing activities.                                                   Three Months Ended June 30,                                                     2008              2007                                                      (millions of dollars)   Net cash provided by operating    activities (GAAP)                               $324.6            $121.3     Changes in operating assets and      liabilities                                    146.5              15.3     Cash payments for commodity      derivative contracts that settled      during the period that are reflected      as investing or financing cash flows      in the statement of cash flows                 (20.8)            (25.6)   Operating cash flow (Non-GAAP)                   $450.3            $111.0                                                     Six Months Ended June 30,                                                     2008              2007                                                      (millions of dollars)   Net cash provided by operating    activities (GAAP)                               $609.4            $141.3     Changes in operating assets and      liabilities                                    233.7             113.4     Cash payments for commodity      derivative contracts that settled      during the period that are reflected      as investing or financing cash flows      in the statement of cash flows                 (42.7)            (49.1)   Operating cash flow (Non-GAAP)                   $800.4            $205.6  

Plains Exploration & Production Company

CONTACT: Investors, Hance Myers, Vice President Investor Relations+1-713-579-6291 or 1-800-934-6083, or Media, Scott Winters, Vice PresidentCorporate Communications, +1-713-579-6190 or 1-800-934-6083, both of PlainsExploration & Production Company

Web site: http://www.pxp.com/