Plains Exploration & Production Company (PXP)

[Picassa]

Plains E&P: Plenty More to Pump


We are maintaining our Buy recommendation on Plains Exploration and Production (NYSE: PXP - News), but are decreasing our target price from $91.00 to $55.00 per share.


The credit crunch and soft commodity environment has been detrimental to E&P players stock prices, as the industry has slid more than 50% YTD. However, after its Piceance/Permian Basin asset divestiture, PXP will enter 2009 with $1.3 billion of liquidity, strong production growth from its Texas, Flatrock and Haynesville assets and a very favorable hedging program securing more than 80% of its production.

We believe that the slowing economy story has been priced into the stock and as such, there is much more upside potential than downside.