One of Plains Exploration & Production Company's subsidiaries has entered into a definitive agreement to acquire from a private company oil and gas producing properties, covering 67,929 gross acres/34,509 net acres in South Texas for $335 million. PXP intends to fund the majority of the purchase price with proceeds from the recently completed divestments through the use of a tax deferred like-kind exchange.
The properties currently produce approximately 33 million cubic feet equivalent per day net to PXP. PXP estimates proved reserves are approximately 106 billion cubic feet equivalent (BCFE) with an additional 70 BCFE of unproved resource potential.
"Due to the company's superior financial position from high cash flow due to record commodity prices, we are opportunistically acquiring excellent production/development assets in South Texas to expand this strong operating area for PXP. The company's per share growth strategy remains focused on acquiring significant and growing production/development assets, executing successful and impactful exploration drilling and repurchasing PXP's common shares consistently," commented James C. Flores, chairman, president and CEO of PXP.
The transaction is effective as of January 1, 2008 and is expected to close during the second quarter subject to customary closing conditions and purchase price adjustments. Jefferies Randall & Dewey acted as advisor to PXP on the transaction.
PXP today increased its 2008 full year average sales volume range to 92,000 BOEPD - 96,000 BOEPD reflecting the contribution of the proposed South Texas property acquisition. The expected current tax for 2008 has been reduced to a range of $40 million to $115 million due to the tax deferred like-kind exchange. PXP will provide updated 2008 full year financial and operating guidance after the acquisition is closed.
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