HOUSTON, Dec. 1, 2010 /PRNewswire-FirstCall/ -- Plains
Exploration & Production Company (NYSE: PXP) ("PXP" or the
"Company") provides updates to its derivative positions and its
Gulf of Mexico divestments.
DERIVATIVES
PXP has acquired natural gas three-way collars that have a floor
price of $4.00 with a limit of
$3.00 and a weighted average ceiling
price of $4.92 on 200,000 MMBtu per
day for 2011. If the index price is below $4.00 per MMBtu, PXP will receive the difference
between $4.00 and the index price up
to a maximum of $1.00 per MMBtu. If
the index price is greater than the ceiling price of $4.92 per MMBtu, PXP will pay the difference
between the index price and $4.92 per
MMBtu. If the index price is at or above $4.00 per MMBtu but at or below $4.92 per MMBtu, no cash settlement is
required.
Additionally, the Company acquired put option spread contracts
on 160,000 MMBtu per day for 2012 with a floor price of
$4.30 and a limit of $3.00 per MMBtu. If the index price is below
$4.30 per MMBtu, PXP will receive the
difference between $4.30 and the
index price up to a maximum of $1.30
per MMBtu less the option premium. If the index price is at or
above $4.30 per MMBtu, PXP only pays
the option premium.
PXP has elected not to use hedge accounting for these
derivatives and consequently the derivatives will be
marked-to-market with fair value gains and losses recognized
currently as a gain or loss on mark-to-market derivative contracts
on the income statement. A summary of PXP's open commodity
derivative positions is included at the end of this release.
GULF OF MEXICO DIVESTMENTS
PXP has informed parties reviewing its deepwater divestment
package that PXP will keep the data room open into the first
quarter 2011 in order to accommodate existing and several
additional participants. James C. Flores, Chairman, President
and CEO of PXP commented, "PXP is extending the process to allow
for a complete assessment by all interested parties of PXP's
properties. The divestment is aimed at optimizing the value
of PXP's deepwater portfolio and the additional time is an
important step in securing the optimum value for PXP
shareholders."
Also, on November 23, 2010,
McMoRan Exploration Co. ("MMR") announced it will hold a special
meeting of its stockholders on December 30,
2010, to vote on the issuance of common stock to PXP in
connection with MMR's proposed acquisition of PXP's shallow water
Gulf of Mexico shelf assets
announced in September 2010.
PXP is an independent oil and gas company primarily engaged in
the activities of acquiring, developing, exploring and producing
oil and gas in California,
Texas, Louisiana and the Gulf of Mexico. 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 statement. These include statements
regarding:
* value and completion of proposed divestments, including
receipt of McMoRan shareholder approval of the issuances of
securities;
* oil and gas prices,
* the impact of derivative positions,
* production expense estimates,
* cash flow estimates,
* future financial performance,
* capital and credit market conditions,
* 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 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 as required by
law, we do not intend to update these forward-looking statements
and information.
Plains Exploration &
Production Company
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Summary of Open Derivative
Positions
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At December 1,
2010
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Average
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Instrument
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Daily
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Average
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Deferred
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Period
(1)
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Type
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Volumes
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Price
(2)
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Premium
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Index
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Sales of Crude Oil
Production
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2010
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Dec
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Put
options
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40,000
Bbls
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$55.00
Strike price
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$5.00 per
Bbl (3)
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WTI
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2011
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Jan - Dec
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Put options
(4)
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31,000
Bbls
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$80.00 Floor with a $60.00 Limit
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$5.023 per
Bbl
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WTI
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Jan - Dec
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Three-way
collars (5)
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9,000
Bbls
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$80.00 Floor
with a $60.00 Limit
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$1.00 per
Bbl
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WTI
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$110.00
Ceiling
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2012
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Jan - Dec
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Put options
(4)
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40,000
Bbls
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$80.00 Floor
with a $60.00 Limit
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$6.087 per
Bbl
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WTI
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Sales of Natural Gas
Production
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2010
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Dec
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Three-way
collars (6)
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85,000 MMBtu
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$6.12 Floor with a $4.64 Limit
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$0.034 per
MMBtu
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Henry
Hub
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$8.00
Ceiling
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2011
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Jan - Dec
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Three-way
collars
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200,000
MMBtu
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$4.00 Floor
with a $3.00 Limit
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−
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Henry
Hub
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$4.92
Ceiling
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2012
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Jan - Dec
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Put
options
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160,000 MMBtu
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$4.30 Floor
with a $3.00 Limit
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$0.294 per
MMBtu
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Henry
Hub
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(1) All of our derivative
instruments are settled monthly.
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(2) The average strike
prices do not reflect the cost to purchase the put options or
collars.
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(3) In addition to the
deferred premium, an upfront payment of $3.86 per barrel was paid
upon entering into these derivative contracts.
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(4) If the index price is
less than the $80 per barrel floor, we receive the difference
between the $80 per barrel floor and the index price up to a
maximum of $20 per barrel less the option premium. If the index
price is at or above $80 per barrel, we pay only the option
premium.
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(5) If the index price is
less than the $80 per barrel floor, we receive the difference
between the $80 per barrel floor and the index price up to a
maximum of $20 per barrel less the option premium. We pay the
difference between the index price and $110 per barrel plus the
option premium if the index price is greater than the $110 per
barrel ceiling. If the index price is at or above $80 per barrel
but at or below $110 per barrel, we pay only the option premium.
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(6) If the index price is
less than the $6.12 per MMBtu floor, we receive the difference
between the $6.12 per MMBtu floor and the index price up to a
maximum of $1.48 per MMBtu less the option premium. We pay
the difference between the index price and $8.00 per MMBtu plus the
option premium if the index price is greater than the $8.00 per
MMBtu ceiling. If the index price is at or above $6.12 per
MMBtu but at or below $8.00 per MMBtu, we pay only the option
premium.
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SOURCE Plains Exploration & Production Company