PXP reported first quarter 2008 net income of $163.5 million, or $1.43 per diluted share, on revenues of $623.1 million, compared to first quarter 2007 net income of $20.6 million, or $0.28 per diluted share, on revenues of $224.7 million. Higher revenues were due primarily to the 2007 acquisitions of Pogo Producing Company (Pogo) and Piceance Basin properties and an increase in realized prices of $23.55 per barrel of oil equivalent. Net income for the 2008 period includes a $34.7 million pre-tax gain on the sale of 50% of PXP's interest in Collbran Valley Gas Gathering, a $10.3 million pre-tax charge for extinguishment of debt, and $4.5 million in pre-tax merger expenses included in general and administrative expense.
Sales volumes increased 84% to 95.7 thousand BOEPD during the first quarter 2008 compared to 51.9 thousand BOEPD in the first quarter 2007 reflecting the Pogo and Piceance Basin acquisitions. Piceance Basin gross volumes increased 6% in the first quarter 2008 compared to the fourth quarter 2007 and 61% since the acquisition in second quarter 2007. The Flatrock discovery well commenced production on January 28, 2008. Gross production currently approximates 50 MMCFED, 11 MMCFED net to PXP. First production is expected to commence at the Flatrock No. 2 and Cottonwood Point wells in mid-2008.
Operating cash flow, a non-GAAP measure, increased 270% to $350.2 million in the first quarter 2008 from $94.6 million in the prior year period due to higher sales volumes and stronger commodity prices.
Production costs on a per unit basis improved 4% to $17.57 per BOE during the first quarter 2008 compared to $18.25 per BOE in the first quarter 2007. Per unit lease operating, steam gas and electricity costs were lower due to stronger oil and gas sales volumes but were partially offset by higher per unit gathering & transportation and production & ad valorem tax costs associated with the addition of the Pogo and Piceance Basin properties.
PXP reaffirms full-year 2008 operating and financial guidance issued December 2007 and updated in March 2008 to reflect the impact of the South Texas property acquisition.
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