Plains Seeks to Reduce GOM Exposure

Plains Exploration & Production (PXP) plans to reduce its exposure to the Gulf of Mexico and related capital spending through asset sales, third party joint ventures or a combination of both.

The uncertain regulatory environment resulting from the U.S. Gulf drilling moratorium and a desire to expand its onshore activity has prompted to PXP has engaged Barclays Capital and Jefferies & Company to assist in executing this value recognition strategy over the next few months, said PXP President, Chairman and Chief Executive Officer James C. Flores.

The company aims to secure $1 billion to $2 billion of value from its Gulf assets ventures and sales and to align capital spending with operating cash flow, the company said in its second quarter 2010 earnings report.

"We hope to continue to be in the Gulf of Mexico, we hope to continue to get some form or fashion, just in the smaller form or fashion," said Flores. "At the same time raising this money out of the Gulf of Mexico is going to put us in a situation to be stronger and more opportunistic onshore in the years to come as we see the gas price fundamentals change to the positive.

"We do not see that in the near-term or for the medium term so it's going to be a while but we think the stronger balance sheet is going to work."