OilVoice - PXP Announces 2009 Operational Results

PXP Announces 2009 Operational Results

Tuesday, January 26, 2010

Highlights:
• Proved reserves increased 23% during 2009 to 359.5 million barrels of oil equivalent (BOE).
• Full-year average daily sales volumes of 82.7 thousand BOE increased 8% compared to 2008, excluding the impact of our 2008 divestments. Fourth quarter average daily sales volumes increased 4% to 86.4 thousand BOE from the third quarter 2009.
• In the Gulf of Mexico, two significant exploration discoveries, Lucius and Davy Jones, were recently announced expanding PXP's large development portfolio. Appraisal and further drilling continues on these wells as well as our Blueberry Hill and Hurricane Deep appraisal wells.

Plains Exploration & Production Company has reported 2009 operational results.

James C. Flores, Chairman, President and CEO of PXP commented:
"The quality of our people and portfolio continue to stand out as we reported significant progress in growing production and reserves. During 2009, we increased production sales volumes by 8% over 2008, excluding the impact of our 2008 divestments, and grew total proved reserves by 23% over 2008 year-end amounts. Our Flatrock development in the Gulf of Mexico and our accelerated Haynesville Shale project are the primary drivers of this growth. Our Gulf of Mexico exploration program delivered a number of discoveries adding to our potential future development project inventory. We participated in discoveries at the Davy Jones prospect on South Marsh Island Block 230 announced in January 2010, the Lucius prospect on Keathley Canyon Block 875, and the Blueberry Hill prospect on Louisiana State Lease 340. PXP is in an enviable position with a balanced, geographically diverse, lower-risk portfolio of producing properties, which underpin our long-term growth strategy. These are the catalysts supporting our average annual reserve growth target of 20% and production growth target of 10% over the next several years."

Proved Reserves
Year-end estimated proved reserves of 359.5 million BOE were 60% oil and 40% natural gas. Further, estimated proved reserves were 64% developed and 36% undeveloped. The estimated reserves are based on the twelve-month average West Texas Intermediate oil price of $61.18 per barrel and Henry Hub natural gas price of $3.87 per million British thermal units.

The following table provides a proved reserve summary reconciliation.

Proved Reserves (MMBOE):
2008 Year-end estimated proved reserves: 292.1
2009 Extensions, discoveries and other additions: 59.4
2009 Revisions: 38.6
2009 Production: (30.6)
2009 Year-end estimated proved reserves: 359.5
Reserve replacement ratio: 320%

Operational Highlights
Outstanding drilling results continue in the Haynesville Shale and production from this resource base is growing quickly. The fourth quarter average daily production of approximately 75 million cubic feet equivalent (MMCFE) net to PXP represents a 436% increase from the first quarter 2009. Production is expected to continue to increase to approximately 125 MMCFE net per day by year-end 2010. PXP and its partner, and operator, Chesapeake Energy Corporation (NYSE: CHK) are currently operating 37 rigs and expect to operate an average of 40 rigs in 2010, plus 15 or more rigs by other operators on our acreage.

The Flatrock area wells averaged 58 MMCFE per day net to PXP in the fourth quarter of 2009. At year-end 2009, production from the Flatrock area exceeded 62 MMCFE per day net to PXP.

As previously reported, the Davy Jones well has been drilled from 28,263 feet to 28,603 feet and the well has been logged with pipe-conveyed wireline logs to 28,530 feet. The wireline log results indicated a new hydrocarbon bearing sand that totaled 65 net feet. The new sand interval combined with the 135 feet of net pay announced on January 11, 2010 brings the total possible productive net sands to 200 feet in the Davy Jones well. McMoRan Exploration Company (NYSE: MMR) is the operator and PXP holds a 27.7% working interest.

The Blueberry Hill appraisal well on Louisiana State Lease 340, which commenced on November 8, 2009, is currently drilling below 17,000 feet towards a proposed total depth of 21,850 feet. McMoRan is the operator and PXP holds a 47.9% working interest.

The Hurricane Deep appraisal well on South Marsh Island Block 217, which commenced on November 17, 2009, is currently drilling below 16,100 feet towards a proposed total depth of 21,750 feet. Chevron is the operator and PXP holds 30.0% working interest.

The Lucius appraisal well located on Keathley Canyon Block 875 is currently drilling below 20,000 feet. As previously announced, the discovery well encountered more than 200 feet of net pay in subsalt Pliocene and Miocene sands. The Lucius discovery was drilled to a total depth of about 20,000 feet in approximately 7,100 feet of water using the new ultra-deepwater Ensco 8500 semi-submersible drilling rig. This up-dip appraisal well is being drilled on the same block, approximately 3,200 feet south of the discovery and results are expected shortly. Anadarko Petroleum Corporation is the operator and PXP holds a 33.3% working interest.