On Apr 12, 2013, we upgraded our recommendation on
Plains Exploration & Production ( PXP ) to Outperform
from Neutral. The company currently has a Zacks Rank #2
(Buy).BP PLC (BP): Free Stock Analysis ReportEPL OIL&GAS INC (EPL): Free Stock Analysis
ReportPLAINS EXPL&PRD (PXP): Free Stock Analysis
ReportROYAL DTCH SH-A (RDS.A): Free Stock Analysis
ReportTo read this article on Zacks.com click here.Zacks Investment
Why the Upgrade?
There are several growth factors, including the company's strong
liquidity position, asset rebalancing strategy, and liquid-rich
profile, which encouraged us to improve our recommendation on the
As of Dec 31, 2012, Plains Exploration & Production's cash
balance was $180.6 million and cash from operating activities was
$1.3 billion in 2012. On Dec 31, 2012, the company's outstanding
borrowings and letters of credit outstanding under the revolving
credit facility were $1.6 billion and $2.2 million,
The strong financial condition enables Plains Exploration &
Production to spend $2.1 billion under its 2013 capital spending
program excluding acquisitions. At present, the company is focusing
on expanding and upgrading its existing high quality, low cost and
high return assets apart from adding new ones. The company also
continues with the development and drilling activities at the
deepwater assets at the Gulf of Mexico, and properties in Eagle
Ford Shale and California.
In addition, Plains Exploration & Production has completed a
number of significant deals during 2012. To enhance coverage in the
Gulf of Mexico, it acquired an oil and gas interest from BP
plc ( BP ).
The company also obtained a 50% working interest in the Holstein
Field located in the Gulf of Mexico from Royal Dutch Shell
plc ( RDS.A ).
The strong financial position also allows Plains Exploration &
Production to enhance its shareholders' value through share
repurchase. In 2012, the company repurchased 2.4 million shares
utilizing $88.5 million, which is part of a $1 billion
authorization program valid up to Jan 2016.
Other Stocks to Consider
Apart from Plains Exploration & Production Company, another
oil and gas company EPL Oil & Gas, Inc. ( EPL ) is currently
performing well and carries a Zacks Rank #1 (Strong Buy).
Houston-based Plains Exploration & Production Company engages
in the acquisition, development, exploration and production of oil
and gas properties, primarily in the United States.