PXP Prices Senior Notes - Analyst Blog

By Zacks Equity Research,

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Oil and gas company Plains Exploration & Production Company ( PXP ) announced that it has priced $750 million of 6.13% Senior Notes. This will be sold to the public at 100% of the principal amount and will fall due in 2019.  

Plains Exploration & Production plans to utilize the net proceeds of this offering to repay outstanding debts under the company's senior revolving credit facilities and redeem all outstanding Senior Notes due 2017 with an aggregate principal amount worth $76.9 million.  

It is a normal practice for the company to issue Senior Notes for meeting its short and long-term fund requirements. Prior to this offering, on November 16, 2011, Plains Exploration & Production had issued $1 billion 6.75% Senior Notes due 2022.

The company offered the notes to the public at 100% of the principal amount. The company intends to utilize the net proceeds from the issue to replenish the sum due under senior revolving credit facility and for general corporate purposes.

We expect interest expenses of the company to exceed 2011 levels of $161.3 million as a result of twice interest payment schedule related to this Senior Notes offering.

We believe Plains Exploration & Production is well positioned with its consistent attempts to acquire low-cost and high-quality assets, particularly onshore assets in the Haynesville Shale, the Eagle Ford Shale and California.

Plains Exploration & Production has a number of significant contracts in the Eagle Ford Shale and California for fiscal 2012. The company has also got the approval for the development of the Lucius project at Keathley Canyon in deepwater Gulf of Mexico and expects production to commence from 2014.

The company's future growth largely depends on volatile oil and natural gas prices. The top line suffers when the prices fail to scale up to the expected levels.

Plains Exploration & Production Company currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

Plains Exploration & Production Company is slated to release its first-quarter 2012 numbers on May 2, 2012. The Zacks Consensus Estimate for the first-quarter 2012 is currently pegged at 68 cents per share.

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 States. The company competes with Noble Energy, Inc. ( NBL ).

NOBLE ENERGY ( NBL ): Free Stock Analysis Report
PLAINS EXPL&PRD ( PXP ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: NBL , PXP

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