Plains Exploration & Production Company
(
PXP
) posted third-quarter 2012 pro forma earnings of 39 cents per
share, in line with the Zacks Consensus Estimate. However,
quarterly earnings were lower than the year-ago figure of 45
cents per share.
The company's third-quarter 2012 GAAP loss was 41 cents compared
with 62 cents in the year-ago quarter.
The variance of 80 cents per share between pro forma earnings and
GAAP loss was due to 77 cents unrealized loss from mark-to-market
derivative contracts, 12 cents realized loss from mark-to-market
derivative contracts, 32 cents unrealized loss on investment
measured at fair value, and acquisition related charges of 5
cents. This was partially offset by a gain of 46 cents from
income tax adjustments.
Total Revenue
Plains Exploration & Production's third-quarter 2012 revenue
increased 21.0% year over year to $605.1 million from $501.8
million in the year-ago quarter. The quarterly revenue beats the
Zacks Consensus Estimate of $602.0 million.
In the reported quarter,
Oil segment
revenue increased to $540.4 million compared with $379.1 million
in year-ago quarter. This was driven by higher crude oil sales
volumes due to strong contribution from the Eagle Ford Shale and
steady performance from California.
Quarterly
Gas segment
revenue decreased to $62.6 million in third-quarter 2012 from
$121.0 million in the year-ago quarter due to the sale of few
assets and 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 $2.0 million compared with $1.8 million in the
prior-year comparable quarter.
Operating Results
Daily sales volumes at Plains Exploration & Production
increased to 105,550 barrels of oil equivalent ("Boe") per day in
the third quarter of 2012 from 104,438 Boe per day in the
year-ago quarter. Quarterly average daily oil and liquids sales
volume was 63,548 barrels of oil ("Bbls"), up from 50,891 Bbls in
the prior-year quarter.
Average realized hydrocarbon price, before derivative
transactions, on a per Boe basis, was $62.10 in third-quarter
2012, up from $52.05 in a year-ago quarter. A growth of 14.2%
year over year in oil realized prices helped the company to
offset 34.1% decline in natural gas prices to $2.70 per thousand
cubic feet ("Mcf").
On the cost side, Plains Exploration & Production's quarterly
operating costs increased to $473.3 million from $333.3 million
in the year-ago quarter. The increase in costs was due to higher
lease operating expenses, 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 and electricity
costs, and a decline in oil and gas properties accretion.
In the quarter under review, Plains Exploration &
Production's operating income was $131.8 million compared with
$168.6 million in the year-ago quarter.
Financial Update
Cash and cash equivalents as of September 30, 2012 were $217.0
million compared with $419.1 million as of December 31, 2011.
As of September 30, 2012, long-term debt was $4.5 billion versus
$3.8 billion as of December 31, 2011.
In the third quarter of 2012, the company generated cash from
operating activities of $415.6 million compared with $345.2
million in the prior-year quarter.
Guidance
For full-year 2012, Plains Exploration & Production increased
its sales volume guidance to approximately 103 thousand barrel of
oil equivalent per day ("MBoe/d") from the previous guidance of
95 - 97 MBoe/d. This revision was driven by higher-than-expected
sales volume from the Eagle Ford Shale.
At the Peer
Plains Exploration & Production's peer
Noble Energy Inc.
(
NBL
) announced adjusted earnings of 93 cents per share for the third
quarter of 2012 versus $1.01 per share in the year-ago quarter.
The quarterly earnings lagged the Zacks Consensus Estimate of
$1.04.
Noble Energy's third-quarter 2012 revenue was $1,006.0 million
versus $879.0 million in the prior-year quarter, but below the
Zacks Consensus Estimate of $1,054.0 million.
Our View
Plains Exploration & Production Company's third-quarter 2012
earnings came in line with the Zacks Consensus Estimate, but
revenue surpassed estimate primarily due to strong performance
from Eagle Ford Shale.
We appreciate Plains Exploration & Production's strong
balance sheet and liquidity position, strong asset rebalancing
strategy, higher realized oil prices, liquid-rich profile, and
development of onshore assets in California along with the Eagle
Ford Shale, which offer ample upside potential over the longer
term.
However, we are cautious about uncertainty associated with
volatile commodity prices, unexpected natural disasters,
unfavorable drilling results and regulatory restrictions.
Plains Exploration & Production Company currently has
short-term Zacks #3 Rank (Hold rating).
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. With a market capitalization of $4.71 billion, the
company has 880 full time employees.
NOBLE ENERGY (NBL): Free Stock Analysis
Report
PLAINS EXPL&PRD (PXP): Free Stock Analysis
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