Exhibit 99.1
PXP |
Plains Exploration & Production Company 500 Dallas St., Suite 700 Houston, TX 77002 |
NEWS RELEASE
| Contact: | Stephen A. Thorington |
Executive Vice President and Chief Financial Officer
Winston Talbert
Vice President Finance and Investor Relations
(713) 739-6700 or (800) 934-6083
FOR IMMEDIATE RELEASE
PLAINS EXPLORATION REPORTS INCREASE IN FIRST QUARTER EARNINGS
Houston, Texas—May 14, 2003—Plains Exploration & Production Company (NYSE: PXP) (“PXP” or the “Company”) today reported first quarter 2003 net income of $20.9 million, or $0.86 per diluted share, compared to net income of $5.9 million, or $0.24 per diluted share, for the first quarter of 2002. Net income in the first quarter of 2003 includes an after-tax $12.3 million credit related to the adoption of Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations.”
Oil and gas production volumes increased 6% to 25.6 thousand barrels of oil equivalent (MBOE) per day in the first quarter of 2003, compared to 24.2 MBOE per day in the 2002 period. Unit gross margin increased to $13.26 per BOE in the first quarter of 2003 as compared to $10.76 in 2002 due to higher commodity prices. The Company’s average wellhead price, which is net of location and quality differentials and the impact of hedges, was $22.38 per BOE in the first quarter of 2003 versus $18.67 per BOE in 2002.
Mr. John Raymond, President and Chief Operating Officer of PXP stated, “PXP again delivered another solid set of results in the first quarter highly consistent with our previous 8-K guidance. Looking beyond the reported results that are affected by the current commodity environment that is benefiting the industry as a whole, the Company has advanced all major segments of its 2003 capital program on time and within budget. Furthermore, as previously announced, we look forward to closing the acquisition of 3TEC Energy in the near future.”
The Company will host a conference call to discuss the results and other forward-looking items at 10:00 a.m. Central on Wednesday, May 14, 2003. Investors wishing to participate may dial 1-800-223-9488 or international: 785-832-1508. Reference Conference I.D#: Plains XP. The replay will be available for 2 weeks at 1-800-938-1602 or international: 402-220-1548. To access the Internet webcast, please go to the Company’s website at: http://www.plainsxp.com, under the Investor Relations section choose “conference calls.” Following the live webcast, the call will be archived for a period of sixty (60) days on the Company’s website.
PXP is an independent oil and gas company primarily engaged in the upstream activities of acquiring, exploiting, developing and producing oil and gas in its core areas of operation: onshore California, primarily in the Los Angeles Basin, and offshore California in the Point Arguello unit, and the Illinois Basin in southern Illinois. PXP is headquartered in Houston, Texas.
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ADDITIONAL INFORMATION & FORWARD LOOKING STATEMENT
This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission (“SEC”). Such statements include those concerning PXP’s merger and strategic plans, expectations and objectives for future operations. 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:
| * | completion of the proposed merger with 3TEC Energy Corporation (“3TEC”), |
| * | effective integration of the two companies, |
| * | reliability of reserve and production estimates, |
| * | production expense estimates, |
| * | cash flow estimates, |
| * | future financial performance, and |
| * | other matters that are discussed in PXP’s filings with the SEC. |
These statements are based on certain assumptions PXP made based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond PXP’s control. Statements regarding future production are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, inflation or lack of availability of goods and services, environmental risks, drilling risks and regulatory changes. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements.
On February 12, 2003, PXP and 3TEC filed a joint proxy statement/prospectus with the Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM S-4 FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER. The proxy statement/prospectus was sent to security holders of PXP and 3TEC on May 5, 2003. Investors and security holders may obtain a free copy of the proxy statement/prospectus and other documents filed by PXP and 3TEC with the SEC at the SEC’s web site at www.sec.gov. The proxy statement/prospectus and such other documents (relating to PXP) may also be obtained for free from PXP by directing such request to: Plains Exploration & Production Company, 500 Dallas, Suite 700 Houston, TX 77002, Attention: Joanna Pankey; telephone: (713) 739-6700; e-mail: jpankey@plainsxp.com. The proxy statement/prospectus and such other documents (relating to 3TEC) may also be obtained for free from 3TEC by directing such request to: 3TEC Energy Corporation, 700 Milam, Suite 1100, Houston, Texas 77002, Attention: Investor Relations; telephone: (713) 821-7100.
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PXP, its directors, executive officers and certain members of management and employees may be considered “participants in the solicitation” of proxies from PXP’s stockholders in connection with the merger. Information regarding such persons and a description of their interests in the merger is contained in the Registration Statement on Form S-4 related to the merger filed with the SEC.
3TEC, its directors, executive officers and certain members of management and employees may be considered “participants in the solicitation” in connection with the merger. Information regarding such persons and a description of their interests in the merger is contained in the Registration Statement on Form S-4 related to the merger filed with the SEC.
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Plains Exploration & Production Company
Consolidated Statements of Income
(amounts in thousands, except per share data)
Three Months Ended March 31, | ||||||||
2003 | 2002 | |||||||
Revenues | ||||||||
Oil sales to Plains All American Pipeline, L.P. | $ | 64,738 |
| $ | 35,241 |
| ||
Oil hedging |
| (17,311 | ) |
| 3,444 |
| ||
Gas sales |
| 4,104 |
|
| 1,988 |
| ||
Other operating revenues |
| 207 |
|
| — |
| ||
| 51,738 |
|
| 40,673 |
| |||
Costs and Expenses | ||||||||
Production expenses |
| 19,978 |
|
| 16,105 |
| ||
Production and ad valorem taxes |
| 1,035 |
|
| 1,124 |
| ||
General and administrative | ||||||||
Stock appreciation rights |
| (1,363 | ) |
| — |
| ||
Other |
| 4,439 |
|
| 2,452 |
| ||
Depletion, depreciation and amortization |
| 7,723 |
|
| 6,691 |
| ||
Accretion of asset retirement obligation |
| 582 |
|
| — |
| ||
| 32,394 |
|
| 26,372 |
| |||
Income from Operations |
| 19,344 |
|
| 14,301 |
| ||
Other Income (Expense) | ||||||||
Interest expense |
| (4,856 | ) |
| (4,692 | ) | ||
Interest and other income |
| 33 |
|
| 18 |
| ||
Income Before Income Taxes and Cumulative Effect of Accounting Change |
| 14,521 |
|
| 9,627 |
| ||
Income tax expense | ||||||||
Current |
| (1,181 | ) |
| (2,045 | ) | ||
Deferred |
| (4,737 | ) |
| (1,718 | ) | ||
Income Before Cumulative Effect of Accounting Change |
| 8,603 |
|
| 5,864 |
| ||
Cumulative effect of accounting change, net of tax |
| 12,324 |
|
| — |
| ||
Net Income | $ | 20,927 |
| $ | 5,864 |
| ||
Earnings per Share | ||||||||
Basic | ||||||||
Income before cumulative effect of accounting change | $ | 0.36 |
| $ | 0.24 |
| ||
Cumulative effect of accounting change |
| 0.51 |
|
| — |
| ||
Net income | $ | 0.87 |
| $ | 0.24 |
| ||
Diluted | ||||||||
Income before cumulative effect of accounting change | $ | 0.35 |
| $ | 0.24 |
| ||
Cumulative effect of accounting change |
| 0.51 |
|
| — |
| ||
Net income | $ | 0.86 |
| $ | 0.24 |
| ||
Weighted Average Shares Outstanding | ||||||||
Basic |
| 24,015 |
|
| 24,200 |
| ||
Diluted |
| 24,225 |
|
| 24,200 |
| ||
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Plains Exploration & Production Company
Financial and Operating Data
Three Months Ended March 31, | ||||||||
2003 | 2002 | |||||||
Sales Volumes | ||||||||
Oil and liquids (MBbls) |
| 2,181 |
|
| 2,033 |
| ||
Gas (MMcf) |
| 729 |
|
| 877 |
| ||
MBOE |
| 2,303 |
|
| 2,179 |
| ||
Daily Average Sales Volumes | ||||||||
Oil and liquids (Bbls) | ||||||||
Onshore California |
| 15,855 |
|
| 16,214 |
| ||
Offshore California |
| 6,022 |
|
| 3,731 |
| ||
Illinois |
| 2,360 |
|
| 2,640 |
| ||
| 24,237 |
|
| 22,585 |
| |||
Gas (Mcf)—Onshore California |
| 8,099 |
|
| 9,743 |
| ||
BOE |
| 25,587 |
|
| 24,209 |
| ||
Oil & Gas Capital Expenditures (thousands of dollars) | $ | 17,123 |
| $ | 23,941 |
| ||
Unit Economics (in dollars) | ||||||||
Average Oil & Liquids Sales Price ($/Bbl) | ||||||||
Average NYMEX | $ | 33.80 |
| $ | 21.63 |
| ||
Hedging revenue (expense) |
| (7.94 | ) |
| 1.69 |
| ||
Differential |
| (4.11 | ) |
| (4.29 | ) | ||
Net realized price | $ | 21.75 |
| $ | 19.03 |
| ||
Average Gas Sales Price ($/Mcf) | $ | 5.63 |
| $ | 2.27 |
| ||
Average Sales Price per BOE | $ | 22.38 |
| $ | 18.67 |
| ||
Production Expenses per BOE | $ | (8.67 | ) | $ | (7.39 | ) | ||
Production and Ad valorem Taxes per BOE |
| (0.45 | ) |
| (0.52 | ) | ||
Gross Margin per BOE |
| 13.26 |
|
| 10.76 |
| ||
G&A per BOE (1) |
| (1.34 | ) |
| (1.13 | ) | ||
Gross Profit per BOE | $ | 11.92 |
| $ | 9.63 |
| ||
Cash Flows (thousands of dollars) | ||||||||
Net income | $ | 20,927 |
| $ | 5,864 |
| ||
Depletion, depreciation and amortization |
| 7,723 |
|
| 6,691 |
| ||
Accretion of asset retirement obligation |
| 582 |
|
| — |
| ||
Deferred income taxes |
| 4,737 |
|
| 1,718 |
| ||
Cumulative effect of accounting change |
| (12,324 | ) |
| — |
| ||
Changes in assets and liabilities from operating activities |
| (2,045 | ) |
| (4,735 | ) | ||
Other |
| (1,573 | ) |
| — |
| ||
Cash Flows from Operating Activities |
| 18,027 |
|
| 9,538 |
| ||
Additions to oil and gas properties |
| (12,768 | ) |
| (23,941 | ) | ||
Other |
| (2,372 | ) |
| (20 | ) | ||
Cash Flows from Investing Activities |
| (15,140 | ) |
| (23,961 | ) | ||
Change in revolving credit facility |
| (3,300 | ) |
| — |
| ||
Receipts from (payments to) Plains Resources |
| 510 |
|
| 14,411 |
| ||
Other |
| (123 | ) |
| — |
| ||
Cash Flows from Financing Activities |
| (2,913 | ) |
| 14,411 |
| ||
Net Increase (Decrease) in Cash | $ | (26 | ) | $ | (12 | ) | ||
| (1) | After $0.49 per BOE net reduction in G&A expense ($1.1 million) related to SARs and noncash compensation in 2003. |
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Plains Exploration & Production Company
Consolidated Balance Sheets
(thousands of dollars)
March 31, 2003 | December 31, 2002 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 1,002 |
| $ | 1,028 |
| ||
Accounts receivable—Plains All American Pipeline, L.P. |
| 25,722 |
|
| 22,943 |
| ||
Other accounts receivable and current assets |
| 4,678 |
|
| 6,976 | �� | ||
Commodity hedging contracts |
| 1,623 |
|
| 2,594 |
| ||
Inventories |
| 5,993 |
|
| 5,198 |
| ||
| 39,018 |
|
| 38,739 |
| |||
Properties and Equipment | ||||||||
Oil and natural gas properties—full cost method |
| 692,548 |
|
| 659,499 |
| ||
Other property and equipment |
| 2,286 |
|
| 2,207 |
| ||
| 694,834 |
|
| 661,706 |
| |||
Less—accumulated depletion, depreciation and amortization |
| (145,174 | ) |
| (168,494 | ) | ||
| 549,660 |
|
| 493,212 |
| |||
Other Assets |
| 19,047 |
|
| 18,929 |
| ||
$ | 607,725 |
| $ | 550,880 |
| |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable and other current liabilities | $ | 62,782 |
| $ | 61,092 |
| ||
Commodity hedging contracts |
| 24,012 |
|
| 24,572 |
| ||
Current maturities of long-term debt |
| 511 |
|
| 511 |
| ||
| 87,305 |
|
| 86,175 |
| |||
Long-Term Debt |
| 229,919 |
|
| 233,166 |
| ||
Asset Retirement Obligation |
| 26,240 |
|
| — |
| ||
Other Long-Term Liabilities |
| 9,464 |
|
| 6,303 |
| ||
Deferred Income Taxes |
| 61,932 |
|
| 51,416 |
| ||
Stockholders’ Equity | ||||||||
Common stock |
| 244 |
|
| 244 |
| ||
Additional paid-in capital |
| 175,025 |
|
| 174,279 |
| ||
Retained earnings |
| 33,082 |
|
| 12,155 |
| ||
Accumulated other comprehensive income |
| (15,486 | ) |
| (12,858 | ) | ||
| 192,865 |
|
| 173,820 |
| |||
$ | 607,725 |
| $ | 550,880 |
| |||
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