PXP Bids High to Extend Eagle Ford Footprint
Plains E&P announced a significant acquisition in the Eagle Ford oil shale trend and provided an operational update.
PXP, Plains E&P, has agreed to acquire interests in approximately 60,000 net acres in the Eagle Ford oil and gas condensate windows in South Texas for $578 million in cash. Of the 60,000 net acres, approximately 20,400 net acres are located in a joint operating area between PXP and EOG Resources, Inc. (NYSE:EOG - News). The Eagle Ford properties are located primarily in Karnes County of South Texas and have net resource potential of approximately 140 to 175 million BOE, projected net production capability of approximately 2,000 BOE per day and a year-end 2011 production target exit rate of approximately 5,000 BOE per day net to PXP.
James C. Flores, Chairman, President and CEO of PXP commented, "We are pleased to announce this significant acquisition which enables us to aggressively expand our large, high-margin onshore oil business. The Eagle Ford transaction adds a high-quality oil asset with substantial reserve and oil production growth opportunities to PXP's existing domestic oil resource position. As part of our focused oil growth strategy, PXP will operate substantially all of its oil assets, maintain total company liquids volumes between 50% and 60% of total production, and continue to deploy a hedge strategy to protect our cash flows."
The Eagle Ford oil shale acquisition is expected to close during the fourth-quarter 2010, subject to customary closing conditions and adjustments, with an effective date of September 1, 2010. J.P. Morgan provided financial advisory services related to the acquisition. As previously announced, the data room process for the planned Gulf of Mexico deepwater divestment is underway with final bids expected in late-October to mid-November. PXP expects the divestment to close by year-end 2010. Barclays Capital and Jefferies & Company are assisting PXP in the Gulf of Mexico deepwater divestment.
- PXP's average daily sales volumes are estimated to be 89 thousand barrels of oil equivalent (BOE) per day for the third quarter 2010, up approximately 5% from 85 thousand BOE per day in the second quarter 2010.
- In the Texas Panhandle Granite Wash development, PXP is currently operating 5 rigs drilling horizontal wells to develop its inventory of over 150 potential locations. PXP plans to spud up to 19 horizontal wells in 2010 and over 25 wells in 2011. Three wells have been drilled, completed and are producing, and 3 additional wells are waiting on completion.
- In California, PXP continues to develop its onshore projects in both the Los Angeles Basin and the San Joaquin Basin. During the second half of 2010, PXP plans to drill up to 40 wells in the San Joaquin Valley and up to 20 wells in the Los Angeles Basin. As anticipated, the Company recently received project approval from the California Division of Oil, Gas and Geothermal Resources for PXP's next phase of its diatomite development in the Cymric Field.
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