PXP considers separating deepwater, onshore business as it plans senior notes offering

Plains Exploration & Production Co. (NYSE: PXP) intends to offer, subject to market and other conditions, senior notes due in 2021 in an underwritten public offering. The offering will be made under PXP's shelf registration statement, which became effective immediately upon filing with the Securities and Exchange Commission on March 5, 2010.

Net proceeds from the offering are expected to be used to repay indebtedness under PXP's senior revolving credit facility and for general corporate purposes.

JP Morgan Securities LLC, Barclays Capital Inc., BNP Paribas Securities Corp., BMO Capital Markets Corp., Wells Fargo Securities, LLC and Scotia Capital (USA) Inc. are acting as book-running managers of the offering.
The Houston-based company is currently evaluating alternatives to separate its deepwater and onshore businesses, which include separately capitalizing its deepwater business through a joint venture or outside capital and then either spinning-off or divesting these assets.

James C. Flores, chairman, president and CEO of PXP commented, "The planned separation of our Gulf of Mexico and onshore businesses is aimed at optimizing the value of PXP’s assets, both onshore and offshore. However, to-date, the deepwater separation process reflects a discounted value due to the current regulatory uncertainties, permit delays, and reduced activity for Gulf of Mexico exploration and development, rather than the underlying long-term value of this oil-weighted asset, especially in this strong energy commodity market.

“We believe it prudent to allow time for the regulatory uncertainties to abate and to complete the Lucius well test operations before proceeding. Our Lucius operator, Anadarko Petroleum Corp. (NYSE: APC), recently received approval to conduct well test operations beginning late March 2011. The flow test is a key milestone to possible project sanctioning in 2011, which results in significant discovered resources becoming proved reserves. Prior to separation, potential additional drilling could occur on the current leasehold on 50,000 acres covering 10 OCS blocks to further de-risk the Lucius-Phobos complex.”

PXP anticipates capital exposure for these properties in 2011 of approximately $50-$60 million net to PXP with the easing of Gulf of Mexico activity curtailments. 

Source: PXP



Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now

Whitepapers

The Time is Right for Optimum Reliability: Capital-Intensive Industries and Asset Performance Management

Imagine a plant that is no longer at risk of a random shutdown. Imagine not worrying about losing...

Going Digital: The New Normal in Oil & Gas

In this whitepaper you will learn how Keystone Engineering, ONGC, and Saipem are using software t...

Maximizing Operational Excellence

In a recent survey conducted by PennEnergy Research, 70% of surveyed energy industry professional...

Leveraging the Power of Information in the Energy Industry

Information Governance is about more than compliance. It’s about using your information to drive ...