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As Of Filer Filing For·On·As Docs:Size Issuer Agent 10/04/06 Plains Exploration & Producti… Co 8-K:1,2,7,8 9/28/06 6:349K RR Donnelley/FA |
Document/Exhibit Description Pages Size
1: 8-K Current Report HTML 42K
2: EX-4.1 Second Amendment and Waiver to Amended and HTML 67K
Restated Credit Agreement
3: EX-10.1 Amendment to Purchase and Sale Agreement Dated HTML 35K
September 29, 2006
4: EX-99.1 Press Release Dated October 4, 2006 HTML 16K
5: EX-99.2 Press Release Dated October 4, 2006 HTML 15K
6: EX-99.3 Pro Forma Financial Information HTML 154K
| Pro forma financial information |
EXHIBIT 99.3
PLAINS EXPLORATION & PRODUCTION COMPANY
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma consolidated financial statements of Plains Exploration & Production Company (the “Company”, “PXP”, “our”, “we” or “us”) reflect the pro forma effects of:
| • | The sale of certain oil and gas properties to certain subsidiaries of Occidental Oil Corporation (“Occidental”). This transaction closed on September 29, 2006 with an effective date of October 1, 2006. The Company received approximately $853 million in cash proceeds, after deducting approximately $12 million in fees and expenses associated with the sale. |
| • | The payment on September 29, 2006 of all amounts outstanding under the Company’s senior revolving credit facility and short-term credit facility. |
| • | The sale of certain non-producing oil and gas properties to Statoil Gulf of Mexico LLC (“Statoil”). This transaction is expected to close in early November 2006 with an effective date of September 1, 2006. The Company expects to receive approximately $696 million in cash proceeds, after deducting approximately $10 million in fees and expenses associated with the sale. |
| • | The redemption of $250 million of 7.125% senior notes due 2014 (the “7.125% Notes”) announced by the Company on October 4, 2006. This transaction is expected to be consummated in early November 2006. |
| • | The unaudited pro forma consolidated statement of income for the year ended December 31, 2005 also reflects the effects of the sale of certain oil and gas properties to XTO Energy Inc. that closed May 31, 2005. |
Pursuant to the rules prescribed by the Securities and Exchange Commission for pro forma financial statements, the unaudited pro forma income statements do not include nonrecurring charges or credits directly attributable to the transactions. Such transactions include the gains on the sales to Occidental and Statoil and the debt extinguishment costs related to the retirement of the 7.125% Notes (see Note 1 to the unaudited pro forma consolidated financial statements).
The unaudited pro forma consolidated balance sheet as of June 30, 2006 has been prepared based on the historical consolidated balance sheet of PXP assuming that the aforementioned transactions occurred on June 30, 2006. The unaudited pro forma consolidated statements of income for the year ended December 31, 2005 and the six months ended June 30, 2006 have been prepared based on the historical consolidated statements of income of PXP for such periods and assume that the transactions occurred on January 1, 2005.
The unaudited pro forma consolidated financial statements do not reflect the effects of certain transactions that have occurred or may occur subsequent to June 30, 2006:
| • | The purchase in July 2006 of 2.5 million outstanding common shares for $100.8 million. |
| • | The purchase of all $275 million outstanding principal amount of 8.75% senior subordinated notes due 2012 (the “8.75% Notes”) under the terms of a tender offer/consent solicitation that was announced on October 4, 2006. The Company’s obligation to accept for purchase and to pay for the 8.75% Notes is conditioned on, among other things, the tender of at least a majority of the total outstanding principal amount of the 8.75% Notes and the Company having redeemed the 7.125% Notes. |
| • | The Company’s repayment of its obligations under certain 2007 and 2008 collar positions (approximately $593 million) in the fourth quarter of 2006. While the Company may complete such transaction, it is under no obligation to do so. |
Such transactions are not included either because they are not directly attributable to the transactions included in the unaudited pro forma consolidated financial statements or because there are contingencies regarding whether or not the transactions will actually occur.
The pro forma balance sheet at June 30, 2006 reflects pro forma adjustments to increase current income taxes payable by approximately $321 million. If the transactions with respect to the Company’s 8.75% senior subordinated notes and 2007 and 2008 collar positions took place on June 30, 2006, the pro forma adjustment to current income taxes payable would be approximately $148 million.
The unaudited pro forma consolidated statements of income do not purport to represent what PXP’s results of operations would have been if such transactions had occurred on January 1, 2005. The Company believes the assumptions used provide a reasonable basis for presenting the significant effects directly attributable to the transactions. These unaudited pro forma consolidated financial statements should be read in conjunction with PXP’s Annual Report on Form 10-K for the year ended December 31, 2005 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.
1
PLAINS EXPLORATION & PRODUCTION COMPANY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(in thousands of dollars)
| Pro Forma Adjustments | ||||||||||||||||||||
| Historical | Sale to Occidental (a) |
Sale to Statoil (a) |
Debt Retirement (b) |
Pro Forma |
||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current Assets |
||||||||||||||||||||
| Cash and cash equivalents |
$ | 1,403 | $ | 852,752 | $ | 695,560 | $ | (499,358 | ) | $ | 1,050,357 | |||||||||
| Accounts receivable |
131,642 | — | — | — | 131,642 | |||||||||||||||
| Deferred income taxes |
162,277 | 19,371 | 32,358 | (1,214 | ) | 212,792 | ||||||||||||||
| Other current assets |
23,984 | — | — | — | 23,984 | |||||||||||||||
| 319,306 | 872,123 | 727,918 | (500,572 | ) | 1,418,775 | |||||||||||||||
| Property and Equipment, at cost |
||||||||||||||||||||
| Oil and natural gas properties - full cost method |
||||||||||||||||||||
| Subject to amortization |
2,845,684 | (482,526 | ) | — | — | 2,363,158 | ||||||||||||||
| Not subject to amortization |
187,681 | (19,284 | ) | (60,025 | ) | — | 108,372 | |||||||||||||
| Other property and equipment |
18,676 | — | — | — | 18,676 | |||||||||||||||
| 3,052,041 | (501,810 | ) | (60,025 | ) | — | 2,490,206 | ||||||||||||||
| Less allowance for depreciation, depletion and amortization |
(597,120 | ) | — | — | — | (597,120 | ) | |||||||||||||
| 2,454,921 | (501,810 | ) | (60,025 | ) | — | 1,893,086 | ||||||||||||||
| Goodwill |
173,790 | — | — | — | 173,790 | |||||||||||||||
| Other Assets |
41,169 | — | — | (5,108 | ) | 36,061 | ||||||||||||||
| $ | 2,989,186 | $ | 370,313 | $ | 667,893 | $ | (505,680 | ) | $ | 3,521,712 | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
| Current Liabilities |
||||||||||||||||||||
| Accounts payable |
$ | 135,503 | $ | 150 | $ | — | $ | — | $ | 135,653 | ||||||||||
| Commodity derivative contracts |
266,418 | — | — | — | 266,418 | |||||||||||||||
| Income taxes payable |
2,721 | 123,098 | 205,623 | (7,712 | ) | 323,730 | ||||||||||||||
| Interest payable |
13,029 | — | — | (742 | ) | 12,287 | ||||||||||||||
| Other current liabilities |
136,975 | — | — | — | 136,975 | |||||||||||||||
| 554,646 | 123,248 | 205,623 | (8,454 | ) | 875,063 | |||||||||||||||
| Long-Term Debt |
||||||||||||||||||||
| Revolving credit facility |
231,000 | — | — | (231,000 | ) | — | ||||||||||||||
| 8.75% Senior Subordinated Notes |
276,439 | — | — | — | 276,439 | |||||||||||||||
| 7.125% Senior Notes |
248,888 | — | — | (248,888 | ) | — | ||||||||||||||
| 756,327 | — | — | (479,888 | ) | 276,439 | |||||||||||||||
| Other Long-Term Liabilities |
||||||||||||||||||||
| Asset retirement obligation |
165,882 | (29,677 | ) | — | — | 136,205 | ||||||||||||||
| Commodity derivative contracts |
507,506 | — | — | — | 507,506 | |||||||||||||||
| Other |
5,687 | — | — | — | 5,687 | |||||||||||||||
| 679,075 | (29,677 | ) | — | — | 649,398 | |||||||||||||||
| Deferred Income Taxes |
271,410 | 41,671 | 69,607 | (2,611 | ) | 380,077 | ||||||||||||||
| Stockholders’ Equity |
727,728 | 235,071 | 392,663 | (14,727 | ) | 1,340,735 | ||||||||||||||
| $ | 2,989,186 | $ | 370,313 | $ | 667,893 | $ | (505,680 | ) | $ | 3,521,712 | ||||||||||
2
PLAINS EXPLORATION & PRODUCTION COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 2006
(in thousands, except per share data)
| Pro Forma Adjustments | ||||||||||||||||
| Historical | Sale to Occidental |
Debt Retirement |
Pro Forma | |||||||||||||
| Revenues |
||||||||||||||||
| Oil and gas sales |
$ | 528,152 | $ | (68,089 | )(c) | $ | — | $ | 460,063 | |||||||
| Other operating revenues |
1,853 | — | — | 1,853 | ||||||||||||
| 530,005 | (68,089 | ) | — | 461,916 | ||||||||||||
| Costs and Expenses |
||||||||||||||||
| Production costs |
147,769 | (21,803 | )(c) | — | 125,966 | |||||||||||
| General and administrative |
61,037 | — | — | 61,037 | ||||||||||||
| Depreciation, depletion and amortization |
100,684 | (21,847 | )(e) | (318 | )(f) | 78,519 | ||||||||||
| Accretion |
4,942 | (876 | )(e) | — | 4,066 | |||||||||||
| 314,432 | (44,526 | ) | (318 | ) | 269,588 | |||||||||||
| Income from Operations |
215,573 | (23,563 | ) | 318 | 192,328 | |||||||||||
| Other Income (Expense) |
||||||||||||||||
| Interest expense |
(35,004 | ) | — | 15,124 | (g) | (19,880 | ) | |||||||||
| Gain (loss) on mark-to-market derivative contracts |
(312,242 | ) | — | — | (312,242 | ) | ||||||||||
| Gain on termination of merger agreement |
37,902 | — | — | 37,902 | ||||||||||||
| Interest and other income (expense) |
1,620 | — | — | 1,620 | ||||||||||||
| Income (Loss) From Continuing Operations Before Income Taxes |
(92,151 | ) | (23,563 | ) | 15,442 | (100,272 | ) | |||||||||
| Income tax (expense) benefit |
35,554 | 9,119 | (h) | (5,976 | )(h) | 38,697 | ||||||||||
| Income (Loss) From Continuing Operations |
$ | (56,597 | ) | $ | (14,444 | ) | $ | 9,466 | $ | (61,575 | ) | |||||
| Earnings (Loss) From Continuing Operations Per Share, basic and diluted |
$ | (0.72 | ) | $ | (0.78 | ) | ||||||||||
| Weighted Average Shares Outstanding, basic and diluted |
78,567 | 78,567 | ||||||||||||||
3
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 2005
(in thousands, except per share data)
| Pro Forma Adjustments | ||||||||||||||||||||
| Historical | Sale to Occidental |
Sale to XTO Energy |
Debt Retirement |
Pro Forma | ||||||||||||||||
| Revenues |
||||||||||||||||||||
| Oil and gas sales |
$ | 940,768 | $ | (136,323 | )(c) | $ | (36,983 | )(d) | $ | — | $ | 767,462 | ||||||||
| Other operating revenues |
3,652 | — | — | — | 3,652 | |||||||||||||||
| 944,420 | (136,323 | ) | (36,983 | ) | — | 771,114 | ||||||||||||||
| Costs and Expenses |
||||||||||||||||||||
| Production costs |
285,292 | (34,639 | )(c) | (7,437 | )(d) | — | 243,216 | |||||||||||||
| General and administrative |
127,513 | — | — | — | 127,513 | |||||||||||||||
| Depreciation, depletion and amortization |
180,337 | (38,874 | )(e) | (8,533 | )(e) | (636 | )(f) | 132,294 | ||||||||||||
| Accretion |
7,578 | (1,602 | )(e) | (65 | )(e) | — | 5,911 | |||||||||||||
| 600,720 | (75,115 | ) | (16,035 | ) | (636 | ) | 508,934 | |||||||||||||
| Income from Operations |
343,700 | (61,208 | ) | (20,948 | ) | 636 | 262,180 | |||||||||||||
| Other Income (Expense) |
||||||||||||||||||||
| Interest expense |
(55,421 | ) | — | — | 27,825 | (g) | (27,596 | ) | ||||||||||||
| Gain (loss) on mark-to-market derivative contracts |
(636,473 | ) | — | — | — | (636,473 | ) | |||||||||||||
| Interest and other income (expense) |
3,324 | — | — | — | 3,324 | |||||||||||||||
| Income (Loss) From Continuing Operations Before Income Taxes |
(344,870 | ) | (61,208 | ) | (20,948 | ) | 28,461 | (398,565 | ) | |||||||||||
| Income tax (expense) benefit |
130,858 | 26,754 | (h) | 9,156 | (h) | (12,440 | )(h) | 154,328 | ||||||||||||
| Income (Loss) From Continuing Operations |
$ | (214,012 | ) | $ | (34,454 | ) | $ | (11,792 | ) | $ | 16,021 | $ | (244,237 | ) | ||||||
| Earnings (Loss) from Continuing Operations Per Share, basic and diluted |
$ | (2.75 | ) | $ | (3.14 | ) | ||||||||||||||
| Weighted Average Shares Outstanding, basic and diluted |
77,726 | 77,726 | ||||||||||||||||||
4
Plains Exploration & Production Company
Notes to Pro Forma Consolidated Financial Statements
NOTE 1 — BASIS OF PRESENTATION
The unaudited pro forma consolidated financial statements of Plains Exploration & Production Company (the “Company”, “PXP”, “our”, “we” or “us”) reflect the pro forma effects of:
| • | The sale of certain oil and gas properties to certain subsidiaries of Occidental Oil Corporation (“Occidental”). This transaction closed on September 29, 2006 with an effective date of October 1, 2006. The Company received approximately $853 million in cash proceeds, after deducting approximately $12 million in fees and expenses associated with the sale. |
| • | The payment on September 29, 2006 of all amounts outstanding under the Company’s senior revolving credit facility and short-term credit facility. |
| • | The sale of certain non-producing oil and gas properties to Statoil Gulf of Mexico LLC (“Statoil”). This transaction is expected to close in early November 2006 with an effective date of September 1, 2006. The Company expects to receive approximately $696 million in cash proceeds, after deducting approximately $10 million in fees and expenses associated with the sale. |
| • | The redemption of $250 million of 7.125% senior notes due 2014 (the “7.125% Notes”) announced by the Company on October 4, 2006. This transaction is expected to be consummated in early November 2006. |
| • | The unaudited pro forma consolidated statement of income for the year ended December 31, 2005 also reflects the effects of the sale of certain oil and gas properties to XTO Energy Inc. that closed May 31, 2005. |
The unaudited pro forma consolidated balance sheet as of June 30, 2006 has been prepared based on the historical consolidated balance sheet of PXP assuming that the aforementioned transactions occurred on June 30, 2006. The unaudited pro forma consolidated statements of income for the year ended December 31, 2005 and the six months ended June 30, 2006 have been prepared based on the historical consolidated statements of income of PXP for such periods and assume that the transactions occurred on January 1, 2005.
PXP follows the full cost method of accounting under which proceeds from the sale of oil and gas properties are accounted for as reductions to capitalized costs unless such sales involve a significant change in the relationship between capitalized costs and the estimated value of proved reserves, in which case a gain or loss is recognized. When a gain or loss is recognized, total capitalized costs within the cost center are allocated between the reserves sold and the reserves retained on the same basis used to compute amortization unless there are substantial economic differences between the properties sold and those retained, in which case capitalized costs are allocated on the basis of the relative fair values of the properties.
In the unaudited pro forma consolidated balance sheet we recognized gains on the sales of properties to Occidental and Statoil. With respect to the sale of properties to Occidental, capitalized costs were allocated on the basis of the relative fair values of the properties. With respect to the sale of properties to Statoil, capitalized costs consist of the costs of the prospects that were classified as costs not subject to amortization and were not part of the full cost center.
While the Company believes that it will recognize a gain on both sales transactions, if the actual amounts at closing do not result in a significant alteration in the relationship between capitalized
5
costs and the estimated value of proved reserves the proceeds would be accounted for as reductions to capitalized costs and a gain would not be recognized.
The pro forma consolidated statement of income for the year ended December 31, 2005 does not reflect the gains on the sales to Occidental and Statoil that the Company will recognize upon the closing of the transactions. Assuming the sales closed on June 30, 2006, PXP estimates it would recognize a pretax gain on the sale of the properties to Occidental of approximately $380 million, approximately $235 million after tax, and a pretax gain on the sale of the properties to Statoil of approximately $636 million, approximately $393 million after tax. Determination of the actual gains on the dispositions of the properties is dependent on several factors, including the net book value of PXP’s oil and gas properties and the estimated fair value of PXP’s oil and gas reserves at the dates the transactions close.
The pro forma consolidated statement of income for the year ended December 31, 2005 does not reflect the debt extinguishment cost the Company will recognize upon the retirement of its 7.125% Notes. Assuming the 7.125% Notes were retired on June 30, 2006, PXP estimates it would recognize debt extinguishment costs of approximately $24 million, $15 million after tax. Determination of the actual debt extinguishment cost recognized is dependent on several factors including interest rates at the time the 7.125% Notes are retired.
NOTE 2 — PRO FORMA ADJUSTMENTS RELATED TO THE TRANSACTIONS
(a) Reflects the cash proceeds received from the sales of certain oil and gas properties to Occidental and Statoil, the retirement of the costs associated with the properties sold and the related asset retirement obligation, the fees and expenses payable in connection with the transactions, the recognition of the gains on the dispositions and the effect of the transactions on current and deferred income taxes.
(b) Reflects the redemption of the Company’s 7.125% Notes, including related costs, and the payment of the $231 million balance outstanding at June 30, 2006 under the Company’s senior revolving credit facility.
(c) Reflects the reversal of revenues and expenses attributable to the properties sold to Occidental. There are no adjustments for the properties sold to Statoil because such properties consist of non-producing oil and gas properties that are classified as oil and gas properties not subject to amortization in the historical consolidated balance sheet.
(d) Reflects the reversal of revenues and expenses attributable to the properties sold to XTO Energy Inc.
(e) Adjusts depreciation, depletion and amortization (“DD&A”) for (1) the reduction in DD&A reflecting the production volumes attributable to the properties sold and (2) the revision to the Company’s DD&A rate reflecting the reserve volumes sold and the reduction in capitalized costs resulting from the transaction. The reduction in accretion expense relates to the asset retirement obligation attributable to the properties sold.
(f) Reflects the reversal of debt issue cost amortization for the period.
(g) Reflects the reversal of interest expense for the period on the retired debt.
(h) Adjusts pro forma income tax expense based on the Company’s estimated effective tax rate, after giving effect to the pro forma transactions. Variances in the Company’s estimated annual effective tax rate from the 35% federal statutory rate primarily result from the effect of state income taxes, changes in the estimated California apportionment factor and estimated permanent differences.
6
| This ‘8-K’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| Filed on: | 10/4/06 | |||
| 10/1/06 | 4 | |||
| 9/29/06 | ||||
| For Period End: | 9/28/06 | |||
| 9/1/06 | ||||
| 6/30/06 | 10-Q, 4 | |||
| 12/31/05 | 10-K | |||
| 5/31/05 | 8-K, 8-K/A | |||
| 1/1/05 | 4 | |||
| List all Filings | ||||