Plains Exploration & Production Company (
posted second-quarter 2012 pro forma earnings of 35 cents per
share, lagging the Zacks Consensus Estimate of 66 cents per share
and the year-ago figure of 54 cents per share.
The company's second-quarter 2012 GAAP earnings was $1.70 per
share versus 87 cents in the year-ago quarter.
The variance of $1.35 per share between pro forma and GAAP
earnings was due to $1.69 unrealized gain on mark-to-market
derivative contracts and 66 cents unrealized gain on investment
measured at fair value. This was partially offset by a charge of 14
cents from realized gain on mark-to-market derivative contracts, 4
cents charge as debt extinguishment costs and 82 cents charges from
income tax adjustments. Total Revenue
Plains Exploration & Production's second-quarter 2012 revenue
increased 10.1% year over year to $566.7 million from $514.8
million in the year-ago quarter. The quarterly revenue missed the
Zacks Consensus Estimate of $578 million.
In the reported quarter, Oil segment
increased to $519.5 million compared with $399.3 million in
year-ago quarter. This was driven by higher crude oil sales
volumes, strong contribution from the Eagle Ford Shale and
California, and higher average realized price.
Quarterly Gas segment
revenue decreased to $46
million in second-quarter 2012 from $113.7 million in the year-ago
quarter due to the sale of assets at South Texas and Texas
Panhandle in December 2011, and planned production cut-back at the
Haynesville Shale. These negatives were partially offset by higher
production from the Eagle Ford Shale.
In the reported quarter, Other Operating segment
revenue was $1.3 million compared with $1.8 million in the
prior-year comparable quarter.Operating Results
Daily sales volumes at Plains Exploration & Production inched
up 0.6% year over year to 98,336 barrels of oil equivalent ("Boe")
per day in the second quarter of 2012. Average daily oil and
liquids sales volume increased 23.2% year over year to 59,780
barrels per day.
Average realized hydrocarbon price, before derivative
transactions, on a per Boe basis, was $63.19 in second-quarter
2012, up 9.5% year over year. A growth of 9.6% year over year in
oil realized prices helped the company to offset the 48.5% decline
in natural gas prices to $2.18 per thousand cubic feet
On the cost side, Plains Exploration & Production's quarterly
operating costs increased 31.2% year over year to $431.2 million.
The increase in costs was due to higher lease operating expenses,
electricity costs, production and ad valorem tax costs, gathering
and transportation costs, general and administrative expenses, and
depreciation, depletion and amortization expenses. This was
partially offset by lower steam gas costs and a decline in oil and
gas properties accretion.
In the quarter under review, Plains Exploration & Production's
operating income was $135.6 million compared with $186.1 million in
the year-ago quarter.Financial Update
Cash and cash equivalents as of June 30, 2012 were $302.2 million
compared with $419.1 million as of December 31, 2011.
As of June 30, 2012, long-term debt was $3.9 billion versus $3.8
billion as of December 31, 2011.
In the second quarter of 2012, the company generated cash from
operating activities of $348.5 million compared with $299.6 million
in the prior-year quarter.Guidance
For full-year 2012, Plains Exploration & Production increased
its sales volume guidance in the range of 95 - 97 thousand barrel
of oil equivalent per day ("MBoe/d") from the previous guidance of
92 - 96 MBoe/d.
For full-year 2012, the company reported total capital expenditure
of $1.6 billion.
For full-year 2012, the company's general and administrative
expenses will be in the range of $147 million - $157 million.
At the PeerNoble Energy Inc.
Plains Exploration & Production peer, announced adjusted
earnings of 77 cents per share for the second quarter of 2012
versus $1.44 per share in the year-ago quarter. The quarterly
earnings lagged the Zacks Consensus Estimate of 98 cents.
Noble Energy's second-quarter revenue was $966 million versus $842
million in the prior-year quarter, but below the Zacks Consensus
Estimate of $1,018 million.Our View
Plains Exploration & Production Company's results in the
second quarter failed to meet our expectations due to a strong
decline in Gas revenue.
We believe Plains Exploration & Production's continuous
divestment and acquisition strategy will enable it to rebalance its
portfolio, which subsequently improves its financial
However, we are concerned about regulatory restrictions,
unexpected natural disasters, and volatile oil and depressed
natural gas prices.
Plains Exploration & Production Company currently retains a
Zacks #3 Rank, which translates into a short-term Hold
Houston, Texas-based Plains Exploration & Production Company
engages in the acquisition, development, exploration and production
of oil and gas properties, primarily in the United States.
NOBLE ENERGY (NBL): Free Stock Analysis Report
PLAINS EXPL&PRD (PXP): Free Stock Analysis
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