PXP Announces 2008 Second Quarter Earnings of $203 Million or $1.84 Per Diluted Share Representing a 701% Gain Over Same Period in 2007
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HOUSTON, Aug. 5 /PRNewswire-FirstCall/ -- Plains Exploration & Production Company (NYSE: PXP) ("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.
