Bloomberg News

Plains Exploration Agrees to Sell Properties for $785 Million

November 07, 2011

Nov. 4 (Bloomberg) -- Plains Exploration & Production Co. agreed to sell certain oil and natural-gas assets in Texas and Oklahoma for $785 million as part of a plan to reduce debt.

The company is selling acreage largely in the Granite Wash formation of Texas and Oklahoma to Linn Energy LLC for $600 million, Houston-based Linn said in a statement today. Plains said in a separate statement it’s selling stakes in South Texas conventional gas holdings to an unnamed third party for $185 million.

Plains, based in Houston, plans to lower debt and cut its interest costs by 30 percent to 40 percent by the end of 2012, Chief Financial Officer Winston Talbert said in the statement. The company over the next 18 months has about $2.1 billion of high coupon debt that’s callable, he said.

The properties being sold to Linn had sales volumes of about 84 million cubic feet of gas equivalent a day in the third quarter and 263 billion cubic feet of estimated proved reserves at the end of 2010, Plains said.

The holdings being sold to the unnamed buyer had sales volumes of 39 million cubic feet a day equivalent in the quarter and 120 billion cubic feet of estimated proved reserves at the end of last year, according to the company.

Barclays Plc advised Plains on both sales. JPMorgan Chase & Co. provided a fairness opinion on the transaction with Linn. Citigroup Inc. and RBC Richardson Barr acted as financial advisers to Linn in the acquisition. Simmons & Co. International provided a fairness opinion on the sale of the South Texas properties.

Also today, Plains reported a third-quarter net loss of $88.3 million, or 62 cents a share, compared with net income of $18.8 million, or 13 cents, a year earlier. Excluding such items as losses on energy contracts and a stock investment, Plains earned 45 cents a share, 7 cents more than the average of 14 analysts’ estimates compiled by Bloomberg.

--Editors: Jessica Resnick-Ault, Tina Davis

To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net

To contact the editor responsible for this story: Tina Davis at tinadavis@bloomberg.net


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