HOUSTON, Feb. 27 /PRNewswire-FirstCall/ -- Plains Exploration & Production Company ("PXP" or the "Company") today announced financial and operating results for the fourth quarter and full year 2007.
Highlights for the year 2007 and early 2008 include:
-- Increased sales volumes 58% in fourth quarter 2007 compared to fourth
quarter 2006.
-- Increased operating cash flow 149% in fourth quarter 2007 compared to
fourth quarter 2006, (a non-GAAP measure).
-- Reported proved reserves of 577 million barrels of oil equivalent
(BOE), a 64% increase over year end 2006 total Company proved reserves,
and approximately 1.1 billion BOE proved, probable and possible
reserves. The reserve amounts are pro forma the previously announced
asset divestments.
-- Achieved all-in $18.07 per BOE finding and development costs,
$14.69 per BOE excluding the impact of the Pogo acquisition deferred
tax gross up.
-- Increased Piceance Basin sales volumes 57% from June acquisition to a
December gross rate of approximately 63.4 million cubic feet equivalent
per day (MMCFEPD) with 51.3 MMCFEPD net to PXP. The Company is
currently operating 5 rigs in the basin.
-- Continued Gulf of Mexico exploration success with two material
discoveries, Flatrock and Vicksburg.
- Flatrock: The discovery well, OCS 310 #228, found significant
accumulations of gas/condensate pay in multiple intervals and was
recently confirmed by 2 additional offset wells that encountered
multiple reservoirs. Presently, these offset wells are being readied
for completion and/or preparing to drill deeper potential
accumulations on the large Flatrock structure. The Flatrock complex
encompasses 5 productive wells in as many drills with 3 additional
drilling locations permitted. First production to sales began in
January 2008 with only 2 of the 5 productive wells, the OCS 310 #226
and OCS 310 #228, producing a current gross rate of 72.2 MMCFEPD
with 21.7 MMCFEPD net to PXP's 30% interest.
- Vicksburg: In February 2008, the operator announced a material oil
discovery at the Vicksburg prospect, which is in 7,500 feet of water
in DeSoto Canyon blocks 353 and 397 and Mississippi Canyon block
393. The discovery well was drilled to a depth of approximately
25,400 feet and encountered a hydrocarbon column of approximately
300 feet. PXP expects to participate in an additional similar offset
prospect with the same operator during 2008.
-- Increased oil price realizations to 85% of NYMEX prices in fourth
quarter 2007 compared to 83% in fourth quarter 2006. After changes in
certain contracts PXP estimates 88% of NYMEX prices during 2008.
-- Announced and closed $4.6 billion in acquisitions, Pogo Producing
Company (Pogo) and Piceance Basin properties, adding substantial future
growth opportunities with producing assets in high quality basins,
mainly in the United States.
-- Announced $1.75 billion asset divestments. The XTO transaction closed
on February 15, 2008 and the OXY transaction is expected to close
February 29, 2008.
-- Announced $1 billion share repurchase authorization supplementing the
2006 and 2007 stock repurchase program in which we purchased
7.7 million shares for $342 million.
FOURTH QUARTER 2007
PXP reported fourth quarter 2007 net income of $80.0 million, or $0.81 per diluted share, on revenues of $493.6 million, compared to fourth quarter 2006 net income of $383.6 million, or $5.02 per diluted share, on revenues of $207.6 million. Net income for the 2006 period includes a $637.5 million pre-tax gain on the sale of oil and gas properties and a $45.1 million pre-tax charge for extinguishment of debt.
Sales volumes during the fourth quarter 2007 increased approximately 50% to 85.1 thousand BOEPD from 57.1 thousand BOEPD in the third quarter 2007 representing the third consecutive quarterly increase. Higher Piceance Basin volumes and nearly two months of Pogo volumes accounted for the increase.
Operating cash flow, a non-GAAP measure, during the fourth quarter 2007 increased 88% to $273.7 million from $145.8 million in the third quarter 2007 due to higher sales volumes and stronger commodity prices. Operating cash flow for the fourth quarter 2007 more than doubled from the fourth quarter 2006 reflecting the impact of both the Piceance Basin property and Pogo acquisitions. An explanation and reconciliation of all non-GAAP financial measures is included at the end of this release.
FULL YEAR 2007
For the year PXP reported net income of $158.8 million, or $1.99 per diluted share, on revenues of $1.3 billion, compared to net income of $597.5 million, or $7.64 per diluted share, on revenues of $1.0 billion for the full year 2006. Net income in 2006 includes a $982.9 million pre-tax gain on the sale of oil and gas properties and a $297.5 million pre-tax derivative mark-to-market loss.
Sales volumes for the year were 62.0 thousand BOEPD compared to 59.2 thousand BOEPD in 2006. Operating cash flow, a non-GAAP measure, during the year totaled $618.7 million compared to $584.2 million in 2006.
2007 RESERVES
PXP's year-end 2007 proved reserves totaled 689.9 million BOE compared to 351.7 million BOE at year-end 2006. Proved reserve additions from all sources totaled 361.2 million BOE compared to production of 23 million BOE, for a replacement rate of 1,570%.
The Company's total costs incurred for 2007 were approximately $6.5 billion, including an approximate $1.2 billion deferred tax gross up related to the Pogo acquisition, resulting in all-in finding and development costs of $18.07 per BOE. Excluding the impact of the deferred tax gross up associated with the Pogo acquisition all-in finding and development costs are $14.69 per BOE.
In December 2007 PXP announced two asset divestment transactions. The XTO transaction closed on February 15, 2008 and the OXY transaction is expected to close February 29, 2008. Post divestment, PXP's proved reserves will be approximately 577 million BOE of which 69% is oil and 31% is natural gas. Summary proved reserve and costs incurred tables are included at the end of this release.
OUTLOOK
PXP reiterates the previously issued full year 2008 operating and financial guidance and today provided a range for estimated 2008 depreciation, depletion and amortization per BOE of $17.25 - $17.75.
FINANCIAL AND OPERATING DATA
Included are several pages of summary financial and operating data, including GAAP to non-GAAP reconciliations, current hedge positions, proved reserves and costs incurred.
FOURTH QUARTER AND FULL YEAR RESULTS CONFERENCE CALL
PXP plans to host its quarterly conference call today at 9:00 a.m. Central time. Investors wishing to participate in the conference call may dial 1-800-567-9836 or 1-973-935-8460. The replay will be available through Wednesday, March 12, 2008 and can be accessed by dialing 1-800-642-1687 or 1-706-645-9291. Conference call and replay ID: 32786010. A live webcast will be available in the Investor Information section of PXP's website, http://www.pxp.com/.
PXP is an independent oil and gas company primarily engaged in the upstream activities of acquiring, developing, exploring and producing oil and gas in its core areas of operation: California, Rockies, Gulf Coast, Texas Panhandle, South Texas and the Permian Basin of the United States. 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 statements. These include statements regarding:
* completion of the proposed transaction,
* reserve and production estimates,
* oil and gas prices,
* the impact of derivative positions,
* production expense estimates,
* cash flow estimates,
* future financial performance,
* 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 the year ended December 31, 2007, 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 for any obligation to disclose material information under the Federal securities laws, we do not intend to update these forward-looking statements and information.
Consolidated Statements of Income
(amounts in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2007 2006 2007 2006
(Unaudited)
Revenues
Oil sales $403,179 $190,886 $1,116,376 $909,727
Gas sales 89,975 16,440 153,416 106,319
Other operating revenues 477 265 3,048 2,457
493,631 207,591 1,272,840 1,018,503
Costs and Expenses
Production costs
Lease operating expenses 78,374 42,483 225,845 179,741
Steam gas costs 26,834 22,484 103,464 63,811
Electricity 10,303 9,234 39,767 38,011
Production and ad valorem
taxes 17,217 4,982 32,636 24,777
Gathering and
transportation expenses 6,978 838 11,410 6,785
General and administrative 49,589 30,604 124,006 123,134
Depreciation, depletion and
amortization 125,346 55,645 306,278 207,173
Accretion 2,968 2,103 9,800 9,609
Gain on sale of oil and gas
properties - (637,508) - (982,988)
317,609 (469,135) 853,206 (329,947)
Income from Operations 176,022 676,726 419,634 1,348,450
Other Income (Expense)
Interest expense (33,685) (7,493) (68,908) (64,675)
Debt extinguishment costs - (45,063) - (45,063)
Gain (loss) on mark-to-
market derivative contracts (12,967) 2,399 (88,549) (297,503)
Gain on termination of
merger agreement - - - 37,902
Interest and other income 5,370 3,376 6,322 5,496
Income Before Income Taxes and
Cumulative Effect of
Accounting Change 134,740 629,945 268,499 984,607
Income tax (expense) benefit
Current 2,494 (86,131) 4,677 (142,378)
Deferred (57,231) (160,200) (114,425) (242,519)
Income Before Cumulative
Effect of Accounting Change 80,003 383,614 158,751 599,710
Cumulative effect of
accounting change, net of
tax benefit - - - (2,182)
Net Income $80,003 $383,614 $158,751 $597,528
Earnings per share
Basic
Income before cumulative
effect of accounting change $0.83 $5.09 $2.02 $7.76
Cumulative effect of
accounting change - - - (0.03)
Net income $0.83 $5.09 $2.02 $7.73
Diluted
Income before cumulative
effect of accounting change $0.81 $5.02 $1.99 $7.67
Cumulative effect of
accounting change - - - (0.03)
Net income $0.81 $5.02 $1.99 $7.64
Weighted Average Shares
Outstanding
Basic 96,813 75,329 78,627 77,273
Diluted 98,452 76,464 79,808 78,234
Operating Data
Three Months Twelve Months
Ended Ended
December 31, December 31,
2007 2006 2007 2006
Daily Average Volumes
Oil and liquids sales (Bbls) 56,837 49,533 49,655 51,985
Gas (Mcf)
Production 175,858 34,957 80,307 56,519
Used as fuel 6,293 8,707 6,307 13,214
Sales 169,565 26,250 74,000 43,305
BOE
Production 86,152 55,359 63,041 61,405
Sales 85,098 53,913 61,986 59,202
Unit Economics (in dollars)
Average NYMEX Prices
Oil $90.50 $60.20 $72.36 $66.23
Gas 6.94 6.51 6.86 7.21
Average Realized Sales Price Before
Derivative Transactions
Oil (per Bbl) $77.10 $49.82 $61.60 $55.62
Gas (per Mcf) 5.77 6.81 5.68 6.73
Per BOE 62.99 49.08 56.12 53.76
Cash Margin per BOE (1)
Oil and gas revenues $62.99 $41.80 $56.12 $47.02
Costs and expenses
Lease operating expenses (10.01) (8.56) (9.98) (8.32)
Steam gas costs (3.43) (4.53) (4.57) (2.95)
Electricity (1.32) (1.86) (1.76) (1.76)
Production and ad valorem taxes (2.20) (1.00) (1.44) (1.15)
Gathering and transportation (0.89) (0.17) (0.50) (0.31)
Gross margin before DD&A (GAAP) 45.14 25.68 37.87 32.53
Hedging expense included in oil
and gas revenues - 7.28 - 6.75
Cash derivative settlements
Oil and gas production (4.03) (4.55) (4.73) (4.15)
Natural gas purchases - (0.58) - (0.53)
Cash margin (Non-GAAP) $41.11 $27.83 $33.14 $34.60
(1) Cash margin (a non-GAAP measure) is calculated by adjusting gross
margin before DD&A (a GAAP measure) to exclude hedging expense
included in oil and gas revenues and to deduct cash derivative
settlements. Management believes this presentation may be helpful to
investors as it represents the cash generated by our oil and gas
production that is available for, among other things, capital
expenditures and debt service. PXP management uses this information to
analyze operating trends and for comparative purposes within the
industry. This measure is not intended to replace the GAAP statistic
but to provide additional information that may be helpful in
evaluating the Company's operational trends and performance.
Consolidated Balance Sheets
(in thousands of dollars)
December 31, December 31,
2007 2006
ASSETS
Current Assets
Cash and cash equivalents $25,446 $899
Restricted cash 59,092 -
Accounts receivable 304,972 113,193
Inventories 18,394 12,394
Deferred income taxes 229,893 51,084
Other current assets 37,123 7,226
674,920 184,796
Property and Equipment, at cost
Oil and natural gas properties -
full cost method
Subject to amortization 7,340,238 2,624,277
Not subject to amortization 1,951,783 142,096
Other property and equipment 85,928 41,392
9,377,949 2,807,765
Less allowance for depreciation,
depletion and amortization (1,000,722) (700,241)
8,377,227 2,107,524
Goodwill 536,822 158,515
Other Assets 104,382 12,393
$9,693,351 $2,463,228
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $319,583 $131,639
Commodity derivative contracts 79,938 95,162
Royalties and revenues payable 132,919 38,159
Stock appreciation rights 63,106 57,429
Interest payable 25,330 1,143
Income tax payable 3,492 94,272
Accrued merger expenses 77,980 -
Other current liabilities 115,698 42,388
818,046 460,192
Long-Term Debt
Revolving credit facility 2,205,000 235,500
7 3/4% Senior Notes 600,000 -
7% Senior Notes 500,000 -
3,305,000 235,500
Other Long-Term Liabilities
Asset retirement obligation 184,080 133,420
Commodity derivative contracts 33,821 18,114
Other 54,726 19,040
272,627 170,574
Deferred Income Taxes 1,959,431 466,279
Stockholders' Equity
Common stock 1,128 792
Additional paid-in capital 2,711,617 964,472
Retained earnings 623,993 463,864
Treasury stock, at cost (57) (298,445)
Accumulated other comprehensive income 1,566 -
3,338,247 1,130,683
$9,693,351 $2,463,228
Consolidated Statements of Cash Flows
(in thousands of dollars)
Three Months Ended Twelve Months Ended
December 31, December 31,
2007 2006 2007 2006
CASH FLOWS FROM OPERATING
ACTIVITIES (Unaudited)
Net income $80,003 $383,614 $158,751 $597,528
Items not affecting cash
flows from operating
activities
Gain on sale of oil
and gas properties - (637,508) - (982,988)
Depreciation,
depletion,
amortization and
accretion 128,314 57,748 316,078 216,782
Deferred income taxes 57,231 160,200 114,425 242,519
Cumulative effect of
adoption of
accounting change - - - 2,182
Commodity derivative
contracts 12,967 33,724 88,549 443,258
Noncash portion of debt
extinguishment costs - 9,289 - 9,289
Noncash compensation 23,547 5,172 43,697 37,766
Other noncash items 487 (204) 707 (268)
Change in assets and
liabilities from
operating activities (1) (198) 42,794 (134,095) 108,913
Net cash provided by
operating activities 302,351 54,829 588,112 674,981
CASH FLOWS FROM
INVESTING ACTIVITIES
Additions to oil and gas
properties (294,095) (177,534) (770,409) (634,330)
Acquisition of Piceance
Basin properties - - (975,407) -
Acquisition of Pogo,
net of cash acquired (298,031) - (298,031) -
Increase in restricted
cash (59,092) - (59,092) -
Proceeds from sales of
oil and gas properties,
net of costs and expenses - 700,236 - 1,550,663
Derivative settlements (25,102) (25,217) (99,861) (93,411)
Other, net (880) (3,456) (40,337) (10,923)
Net cash provided by
(used in) investing
activities (677,200) 494,029 (2,243,137) 811,999
CASH FLOWS FROM
FINANCING ACTIVITIES
Revolving credit
facilities
Borrowings 2,755,535 436,200 4,745,100 1,618,900
Repayments (1,030,535) (200,700) (2,775,600) (1,655,400)
Redemption of long-term
debt (1,291,926) (524,863) (1,291,926) (524,863)
Proceeds from issuance
of long-term debt - - 1,100,000 -
Costs incurred in
connection with
financing arrangements (29,151) - (47,333) -
Purchase of treasury
stock - (197,628) (47,485) (298,445)
Derivative settlements (3,688) (593,283) (3,688) (621,862)
Other (4,537) (9,934) 504 (5,963)
Net cash provided by
(used in) financing
activities 395,698 (1,090,208) 1,679,572 (1,487,633)
Net increase (decrease)
in cash and cash
equivalents 20,849 (541,350) 24,547 (653)
Cash and cash equivalents,
beginning of period 4,597 542,249 899 1,552
Cash and cash equivalents,
end of period $25,446 $899 $25,446 $899
(1) Net of effect of Pogo acquisition.
Summary of Open Derivative Positions
at January 1, 2008
Instrument Daily Average
Period Type Volumes Price Index
Sales of Crude Oil Production
2008
Jan - Dec Put options 42,000 Bbls $55.00 Strike price WTI
Jan - Dec Collar 2,500 Bbls $60.00 Floor - $80.13 Ceiling WTI
2009
Jan - Dec Put options 32,500 Bbls $55.00 Strike price WTI
Sales of Natural Gas Production
2008
Jan - Dec Collar 15,000 MMBtu $8.00 Floor - $12.11 Ceiling Henry Hub
2007 Year End Proved Reserves
(Millions BOE) 2007
Year End 2006 Proved Reserves 351.7
Additions 31.3
Revisions 92.5
Acquisitions 237.4
Production (23.0)
Year End 2007 Proved Reserves 689.9
Announced Asset Divestitures 112.8
Pro Forma 2007 Proved Reserves 577.1
2007 Costs Incurred
(In millions of dollars) 2007
Property acquisitions costs:
Unproved properties $1,822
Proved properties 3,884
Exploration costs 465
Development costs 358
$6,529
2007 total costs incurred include a $1,224 million deferred tax gross up
related to the Pogo Acquisition.
2007 all-in finding and development costs excluding the impact of the
deferred tax gross up are $14.69 per BOE.
2007 all-in finding and development costs as reported are $18.07 per BOE.
GAAP to Non-GAAP Reconciliation
The following chart reconciles Net Cash Provided by Operating Activities
(GAAP) to Operating Cash Flow (non-GAAP) for the periods highlighted
below. Management believes this presentation may be useful to investors
because it is illustrative of the impact of the Company's derivative
contracts. PXP management uses this information for comparative purposes
within the industry and as a means of measuring the Company's ability to
fund capital expenditures and service debt. This measure is not
intended to replace the GAAP statistic but to provide additional
information that may be helpful in evaluating the Company's operational
trends and performance.
Operating cash flow is calculated by adjusting the GAAP measure of cash
provided by operating activities to exclude the effect of current income
taxes on the gain on the sales of oil and gas properties and changes in
operating assets and liabilities and include derivative cash flows that
are classified as a financing or investing activity in the statement of
cash flows. Pursuant to accounting rules certain cash payments with
respect to our derivative instruments are required to be reflected as
financing or investing activities.
2007
(in millions of dollars) Total 4Q 3Q 2Q 1Q
Net cash provided by operating
activities (GAAP) $588.1 $302.3 $144.5 $121.3 $20.0
Changes in operating assets
and liabilities 134.1 0.2 26.9 12.0 95.0
Cash payments for commodity
derivatives contracts that
settled during the period
that are reflected as
investing or financing cash
flows in the statement of
cash flows (103.5) (28.8) (25.6) (25.6) (23.5)
Operating cash flow (Non-GAAP) $618.7 $273.7 $145.8 $107.7 $91.5
Full Year Full Year 4th Qtr 4th Qtr
(in millions of dollars) 2007 2006 2007 2006
Net cash provided by operating
activities (GAAP) $588.1 $675.0 $302.3 $54.8
Changes in operating assets
and liabilities 134.1 (108.8) 0.2 (42.7)
Current income taxes on gain
on sales of oil and gas
properties - 142.2 - 87.3
Cash premium paid on debt
extinguishment - 35.7 - 35.7
Gain on termination of merger
agreement - (37.9) - -
Cash payments for commodity
derivatives contracts that
settled during the period
that are reflected as
investing or financing cash
flows in the statement of
cash flows (103.5) (122.0) (28.8) (25.2)
Operating cash flow (Non-GAAP) $618.7 $584.2 $273.7 $109.9
Plains Exploration & Production Company
