Plains E&P Purchases Pogo Producing Co. for $3.6 Billion

Plains Exploration & Production Company (NYSE: PXP) and Pogo Producing Company (NYSE: PPP) enters definitive agreement to acquire Pogo in a stock and cash transaction valued at approximately $3.6 billion, based on PXP's closing price on July 16, 2007. Under the terms of the agreement, Pogo stockholders will receive 0.68201 shares of PXP common stock and $24.88 of cash for each share of Pogo common stock, which represents a total consideration of approximately $60 per Pogo share. Total consideration for outstanding Pogo shares is 40 million PXP shares and approximately $1.5 billion in cash.

"This accretive transaction represents a significant opportunity for the shareholders of both companies to benefit from the combined strengths of PXP and Pogo. Along with asset diversification and significant cost savings, the combined company will have a total estimated reserve potential of 1.4 billion barrels of oil equivalent (proved, probable and possible). This transaction almost doubles PXP's production with the addition of substantial producing properties and significant growth potential in Texas, primarily the Panhandle, Permian and Gulf Coast, plus the prolific Madden Field in Wyoming and the San Juan Basin in New Mexico. Since most of the Pogo assets are complementary to the profiles of the PXP assets, with long production lives and low decline rates, PXP will now be positioned to create one of the 'best-in-class' MLPs in the E&P marketplace. PXP has retained Lehman Brothers as financial advisor to formalize the Company's evaluation of a potential MLP filing," commented Mr. James C. Flores, Chairman, President and Chief Executive Officer of PXP.

"Today's announcement represents a significant milestone in the proud and productive 38-year history of Pogo Producing Company," said Paul G. Van Wagenen, Chairman, President and Chief Executive Officer of Pogo. "This transaction with Plains Exploration & Production Company creates a combined company with impressive financial and operational strength able to successfully capture the best of opportunities in our industry. We look forward to a prosperous future of great accomplishments benefiting our shareholders."

Following the acquisition, pro forma PXP will have a proved reserve base of approximately 635 million barrels of oil equivalent and a total estimated reserve potential of 1.4 billion barrels of oil equivalent (proved, probable and possible). At year-end 2006 pro forma for asset sales, Pogo reported 219 million barrels of oil equivalent proven reserves.

TERMS AND CONDITIONS

Under the terms of the definitive agreement, Pogo stockholders will receive 0.68201 shares of PXP common stock and $24.88 of cash for each share of Pogo common stock. Pogo stockholders have the right to elect to receive cash or stock, subject to prorating. The transaction is expected to qualify as a tax-free reorganization under Section 368(a) and is expected to be tax free to Pogo stockholders.

The Boards of Directors of both companies have unanimously approved the merger agreement and each will recommend the transaction to their respective stockholders for approval. The transaction will remain subject to stockholder approval from both companies and other customary conditions. In addition, we have entered into support agreements whereby Paul G. Van Wagenen, Chairman, President and Chief Executive Officer of Pogo and Third Point LLC have agreed to vote their shares in Pogo in favor of the proposed transaction. Dates for stockholder meetings will be announced as soon as possible. The companies anticipate completing the transaction in the fourth quarter of 2007. Post closing, it is anticipated that the PXP stockholders will own approximately 66 percent of the combined company and Pogo stockholders will own approximately 34 percent of the combined company.

Mr. James C. Flores will remain the Chairman, President and Chief Executive Officer and PXP's current executive staff Winston M. Talbert, Executive Vice President & CFO, John F. Wombwell, Executive Vice President and General Counsel, and Doss R. Bourgeois, Executive Vice President Exploration & Production, will continue in their current capacities. Two members of the Pogo Board of Directors will join the PXP Board at closing.

Lehman Brothers Inc. acted as financial advisor to PXP. Goldman, Sachs & Co. and TD Securities Inc., acted as financial advisor to Pogo.

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