Plains Exploration & Production Company
) posted first quarter 2012 pro forma earnings of 58 cents per
share compared with 37 cents in the prior-year comparable quarter.
Reported earnings were a penny lower than the Zacks Consensus
The company's first quarter 2012 GAAP loss was 64 cents per
share versus earnings of 49 cents in the year-ago quarter. The
variance between GAAP and pro forma earnings was due to realized
and unrealized gains and losses on mark-to-market derivative
contracts related to increased crude oil forward prices, and
unrealized loss on investment on the common stock of
McMoRan Exploration Company
Plains Exploration & Production's first quarter 2012 revenue
increased 21.8% year over year to $524.3 million from $430.3
million in the year-ago quarter. The quarterly revenue missed the
Zacks Consensus Estimate of $547 million.
revenue increased $135.6 million to $467.5 million, reflecting
higher average realized prices, strong contribution from the Eagle
Ford Shale and California and higher crude oil sales volumes.
revenue decreased to $53.5 million in first quarter 2012 from $96.8
million in the year-ago quarter due to the sale of assets at Texas
and Texas Panhandle, and planned lower production at the
In the reported quarter,
segment revenue was $3.3 million, compared with $1.7 million in the
prior-year comparable quarter.
In the reported quarter, Oil Sales accounted for approximately
89.2% of the company's revenue, Gas Sales represented 10.2% of
revenue, while other operating revenue made up the remaining
Daily sales volumes at Plains Exploration & Production
decreased 0.1% year over year to 87,873 barrels of oil equivalent
("Boe") per day in the first quarter of 2012. Average daily oil and
liquids sales volume increased 12.8% year over year to 49,657
barrels per day.
Average realized hydrocarbon price, before derivative
transactions, on a per Boe basis, was $65.16 in the first quarter
2012, up 20.4% year over year. A 23.6% year-over-year growth in oil
realized prices helped the company to offset the 37.3% decline in
natural gas prices to $2.56 per thousand cubic feet ("Mcf").
On the cost side, Plains Exploration & Production's
quarterly operating costs increased 19% year over year to $353
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;
partially offset by lower steam gas costs and a decline in oil and
gas properties accretion.
Despite significant rise in costs, overall realized sales price
growth raised Plains Exploration & Production's operating
income for the quarter to $171.3 million with an increase of
The company has already hedged 70% of its 2012, 90% of its 2013
and 60% of its 2014 expected oil sales volume. On the other hand,
70% of its 2012 and 60% of its 2013 and 2014 projected natural gas
sales volumes are hedged.
Cash and cash equivalents as of March 31, 2012 were $365.3
million compared with $419.1 million as of December 31, 2011.
As of March 31, 2012, long-term debt was $3.84 billion versus
$3.76 billion as of December 31, 2011.
In the first quarter of 2012, the company generated cash from
operating activities of $335.4 million compared with $290 million
in the prior-year quarter.
During first quarter of 2012, the company completed the purchase
of 2.4 million common shares at an average price of $37.02 per
share, totaling $88.5 million.
For fiscal 2012, Plains Exploration & Production reiterated
its sales volumes guidance in the range of 92-96 thousand Boe per
day. Increase in oil volume is expected to be more than offset by a
decline in natural gas volume.
At the Peer
Noble Energy, Inc.
), a Plains Exploration & Production peer, announced adjusted
earnings of $1.75 per share for the first quarter of 2012 versus
$1.35 per share in the year-ago quarter. The quarterly earnings
surpassed the Zacks Consensus Estimate of $1.42.
Noble Energy's first quarter revenue was $1.2 billion versus
$0.9 billion in the prior-year quarter. The reported revenue was
above the Zacks Consensus Estimate of $1.1 billion.
Plains Exploration & Production Company's results in the
first quarter failed to meet our expectations due to a strong
decline in Gas revenue.
We view Plains Exploration & Production Company as a
well-positioned organization with its consistent attempts to
acquire low-cost and high-quality assets, particularly onshore
assets in the Haynesville Shale, the Eagle Ford Shale and
Along with this, the company has also received approval for the
development of the Lucius project at Keathley Canyon in deepwater
Gulf of Mexico and expects production to start from 2014. It also
has a number of significant contracts in the Eagle Ford Shale and
in California for fiscal 2012.
However, we are concerned about volatile oil and depressed
natural gas prices. Plains Exploration & Production Company
currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating.
Based in Houston, Texas, Plains Exploration & Production
Company engages in the acquisition, development, exploration and
production of oil and gas properties, primarily in the United
MCMORAN EXPLOR (MMR): Free Stock Analysis
NOBLE ENERGY (NBL): Free Stock Analysis Report
PLAINS EXPL&PRD (PXP): Free Stock Analysis
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