Plains Exploration & Production Company announces that it and certain of its subsidiaries have executed definitive purchase and sale agreements to sell oil and gas properties for approximately $1.75 billion to a subsidiary of Occidental Petroleum Corporation ("Oxy") and XTO Energy Inc. ("XTO").
"The oil and gas property divestments balance PXP's asset portfolio and align operator strengths to specific assets maximizing efficiencies and returns," PXP Chairman, President and Chief Executive Officer Jim Flores said. "We are pleased with the values being realized today through these transactions with Oxy and XTO which are significantly higher than our properties are currently valued in our stock price allowing us to use the proceeds to buy back PXP common shares and reduce debt. The 2008 capital plan supports PXP's diversified growth strategy by funding drilling programs in each of our key asset areas and maintains capital discipline since we anticipate capital expenditures to be funded from internal cash flow."
PROPERTY DIVESTITURES
$1.55 Billion OXY Transaction
PXP and certain of its subsidiaries have entered into a definitive purchase and sale agreement with a subsidiary of Oxy to sell:
• 50 percent of PXP's working interests in oil and gas properties located in the Permian Basin, West Texas and New Mexico, to Oxy and retain a 50 percent working interest in these properties. Oxy will be the operator of all the assets currently operated by PXP and will apply its CO2 expertise to enhance future development and production growth; and
• 50 percent of PXP's working interests in oil and gas properties located in the Piceance Basin in Colorado to Oxy and retain a 50 percent working interest in these properties. PXP will remain the operator and expects to deliver multi-year production growth.
The Permian Basin properties currently generate sales volumes of approximately 18,000 barrels of oil equivalent per day (BOEPD) and had approximately 91 million barrels of oil equivalent (BOE) estimated proved reserves as of December 31, 2006 (PXP 50%, 9,000 BOEPD, 45.5 million BOE, respectively). The Piceance properties currently generate sales volumes of approximately 9,000 BOEPD and, based on PXP's estimates, had approximately 64 million BOE estimated proved reserves on the date of PXP's acquisition (PXP 50%, 4,500 BOEPD, 32 million BOE, respectively). The transaction effective date is January 1, 2008 and is expected to close on or before the end of the first quarter 2008 subject to customary closing conditions and adjustments.
$200 Million XTO Transaction
Certain of PXP's subsidiaries have entered into a definitive purchase and sale agreement with XTO Energy Inc. ("XTO") to sell PXP's interests in oil and gas properties located in the San Juan Basin in New Mexico and in the Barnett Shale in Texas. The properties currently generate sales volumes of approximately 3,000 BOEPD and have approximately 17 million BOE estimated proved reserves as of December 31, 2006. Under the terms of the agreement, PXP will receive $180 million of cash and XTO's 50 percent working interest in the Big Mac 3-D prospect area located on the Texas Gulf Coast. PXP will have a 100 percent working interest in the Big Mac 3-D prospect area, covering approximately 50,000 net lease acres in the 275 square mile 3-D. The transaction effective date is January 1, 2008 and is expected to close on or before the end of the first quarter 2008 subject to customary closing conditions and adjustments.
Lehman Brothers Inc., J.P. Morgan Securities Inc. and Jefferies Randall & Dewey acted as financial advisors to PXP on these transactions.
STOCK REPURCHASE AUTHORIZATION
PXP's Board of Directors authorized the Company to purchase $1.0 billion of PXP common stock replacing the previous authorization that had approximately $158 million remaining. The shares will be repurchased from time to time in open market transactions or privately negotiated transactions at the Company's discretion, subject to market conditions and other factors.
