PXP Stops Drilling for Social Cause - Analyst Blog

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Plains Exploration & Production Company ( PXP ) has signed an agreement, worth $8.75 million, with the Trust for Public Land ("TPL") to sell its oil and gas leases on 58,000 acres land, situated in the Hoback Basin at the state of Wyoming. Per the contract, the company will stop its oil and gas drilling activities in this environmentally sensitive region.

The Hoback Basin in the Wyoming Range is the blend of lively forests, splendid mountains and wonderful rivers and streams. This region is an important source of natural wealth along with rich hunting and fishing exposure. It is also an important corridor for migrating animals like moose, elk, mule deer and pronghorn antelope.

Apart from the stronghold of flora and fauna, Hoback Basin is famous for the richness of precious minerals. Oil and natural gas are the important businesses in the state of Wyoming. Most of the big oil and natural gas players have operations in this region.  

The TPL is a national non-profit organization that preserves lands for people to use as gardens, parks, historical spots and rural lands. This organization works both within the city and outside while ensuring livable communities for the future generations. Since 1972, TPL has shielded more than 3 million acres across the nation.

The signing of the Wyoming Range Legacy Act on 2009 ensures to protect the Wyoming Range from future energy development, but allows the existing leaseholders to continue their operations. As an existing leaseholder, Plains got an opportunity to continue its operations in the regions. The company filed to drill 136 natural gas wells in the Hoback Basin.

We note that from the last couple of years, Plains is continuously changing its exploration strategy due to mixed outlook on long-term natural gas prices. The company is swinging from low-margin natural gas to higher-priced oil exploration. We believe that the closure of the company's natural gas drilling operations in the Hoback Basin helps it to balance its overall margin.

We believe this significant agreement will sustain ecological balance of the region and Plains's effort to curtail or close down the mining operations in the environmentally sensitive regions will subsequently provide better opportunity to the present as well as future generation. 

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. The company competes with Newfield Exploration Co. ( NFX ) and currently retains a short-term Zacks #3 Rank (Hold Rating).


 
NEWFIELD EXPL (NFX): 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 The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: NFX , PXP

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