PXP Acquires Incremental Derivatives on 2011 and 2012 Production Volumes

HOUSTON, April 19 /PRNewswire-FirstCall/ -- Plains Exploration & Production Company (NYSE: PXP) ("PXP" or the "Company") today announced it has acquired crude oil put option spread contracts on 31,000 barrels of oil per day in 2011 and 40,000 barrels of oil per day in 2012. Both the 2011 and 2012 put options have a floor price of $80 with a limit of $60 per barrel. If the index price is below $80 per barrel, PXP will receive the difference between $80 and the index price up to a maximum of $20 per barrel less the option premium. If the index price is at or above $80 per barrel, PXP only pays the option premium.

PXP also acquired crude oil three-way collars that have a floor price of $80 with a limit of $60 and a ceiling price of $110 on 9,000 barrels of oil per day for 2011. If the index price is below $80 per barrel, PXP will receive the difference between $80 and the index price up to a maximum of $20 per barrel less the option premium. If the index price is greater than $110 per barrel, PXP will pay the difference between the index price and $110 per barrel plus the option premium. If the index price is at or above $80 per barrel but at or below $110 per barrel, PXP only pays the option premium.

Winston M. Talbert, Executive Vice President and Chief Financial Officer of PXP commented, "We acquired incremental derivatives on a significant portion of our 2011 and 2012 crude oil production volumes during the recent strong oil price market. We continue to deploy our hedge strategy using a combination of put options and three-way collars to protect our cash flows through 2012 and retain exposure to substantially all oil price upside potential. These derivatives enhance our credit position and underpin our capital expenditure program thereby providing PXP greater flexibility to deliver its double-digit production and reserve growth targets."

A summary of PXP's open commodity derivative positions is as follows:

PXP has elected not to use hedge accounting for these derivatives and consequently the derivatives will be marked-to-market each quarter with fair value gains and losses recognized currently as a gain or loss on mark-to-market derivative contracts on the income statement.

PXP is an independent oil and gas company primarily engaged in the activities of acquiring, developing, exploring and producing oil and gas in California, Texas, Louisiana and the Gulf of Mexico. PXP is headquartered in Houston, Texas.

ADDITIONAL INFORMATION & FORWARD-LOOKING STATEMENTS

This press release contains forward-looking information regarding PXP that is intended to be covered by the safe harbor "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. All statements included in this press release that address activities, events or developments that PXP expects, believes or anticipates will or may occur in the future are forward-looking statement. These include statements regarding:

• reserve and production estimates,
• oil and gas prices,
• the impact of derivative positions,
• production expense estimates,
• cash flow estimates,
• future financial performance,
• capital and credit market conditions,
• planned capital expenditures, and
• other matters that are discussed in PXP's filings with the SEC.

These statements are based on our current expectations and projections about future events and involve known and unknown risks, uncertainties, and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. Please refer to our filings with the SEC, including our Form 10-K, for a discussion of these risks.

All forward-looking statements in this report are made as of the date hereof, and you should not place undue reliance on these statements without also considering the risks and uncertainties associated with these statements and our business that are discussed in this report and our other filings with the SEC. Moreover, although we believe the expectations reflected in the forward-looking statements are based upon reasonable assumptions, we can give no assurance that we will attain these expectations or that any deviations will not be material. Except as required by law, we do not intend to update these forward-looking statements and information.

SOURCE Plains Exploration & Production Company