PXP Announces 2010 First Quarter Net Income of $58.5 Million or 41 Cents Per Share on Higher Year-Over-Year Production and Commodity Prices
HOUSTON, May 6 /PRNewswire-FirstCall/ -- Plains Exploration & Production Company (NYSE: PXP) (“PXP” or the “Company”) announces 2010 first quarter financial and operating results.
FINANCIAL SUMMARY
For the first quarter 2010, revenues of $384.1 million generated $58.5 million of net income, or $0.41 per diluted share compared to revenues of $228.5 million and net income of $5.2 million, or $0.05 per diluted share, for the first quarter 2009. These results include certain items affecting comparability of operating results. Those items consist of realized and unrealized gains and losses on our mark-to-market derivative contracts, which exclude the impact of the derivatives monetized in the first quarter 2009, and other items. When considering these items, net income for the first quarter 2010 was $43.5 million, or $0.31 per diluted share, compared to $10.0 million, or $0.09 per diluted share, for the first quarter 2009 (a non-GAAP measure).
For the first quarter 2010, net cash provided by operating activities was $221.8 million and operating cash flow was $226.2 million compared to net cash used in operating activities of $29.4 million and operating cash flow of $164.7 million for the first quarter 2009 (a non-GAAP measure).
A reconciliation of non-GAAP financial measures used in this release to comparable GAAP financial measures is included with the financial tables.
OPERATIONAL HIGHLIGHTS
Average daily sales volumes for the first quarter 2010 were 85.1 thousand barrels of oil equivalent (BOE) or 5% higher than 80.9 thousand BOE in the first quarter 2009. Oil represented approximately 53% of the first quarter 2010 daily volumes.
Total production costs per BOE were $14.37 in the first quarter 2010 or 10% lower than $15.89 per BOE in the first quarter 2009.
In California, PXP continues to expand the development of incremental Diatomite, Non-Diatomite and Miocene projects to maintain production volumes. The 2010 plan includes drilling over 100 onshore wells compared to 12 wells in 2009.
In the Haynesville Shale, first quarter average daily production increased 19% to approximately 89 million cubic feet equivalent (MMcfe) net to PXP from approximately 75 MMcfe net per day during the fourth quarter 2009. Production is expected to continue to increase to approximately 125 MMcfe net per day by year-end 2010.
In the Gulf of Mexico, an active appraisal and exploration drilling program is underway.
Gulf of Mexico - Shallow Water
The Davy Jones offset appraisal well (Davy Jones #2), operated by McMoRan Exploration Co. (NYSE: MMR) and located on South Marsh Island Block 234, is currently drilling towards a proposed total depth of approximately 29,950 feet. Davy Jones #2 is expected to test similar sections up-dip to the discovery well located on South Marsh Island Block 230. In March 2010, a production liner was set and the discovery well was temporarily abandoned until necessary equipment for the completion is available. PXP’s working interest is 27.7%.
The Blackbeard East exploration well, operated by McMoRan and located on South Timbalier Block 144, is currently drilling towards a proposed total depth of approximately 29,950 feet targeting Middle and Lower Miocene objectives. In addition to drilling the objective section previously seen below 30,000 feet in the Blackbeard West well, Blackbeard East is designed to test a younger Miocene section due to a shallower salt exit point. PXP’s working interest is 31.5%.
The Lafitte exploration well is expected to commence drilling in 2010. Lafitte, operated by McMoRan and located on Eugene Island Block 223, will target Middle and Lower Miocene objectives. PXP’s working interest is 26.25%.
The 2010 shallow water exploratory drilling plan includes sidetracking operations at Blueberry Hill and re-drilling of Hurricane Deep. The Blueberry Hill sidetrack well, operated by McMoRan and located on State Lease Block 340, is currently drilling towards a proposed total depth of 24,000 feet. PXP’s working interest is 47.9%. The Hurricane Deep sidetrack well, operated by Chevron Corporation and located on South Marsh Island Block 217, will be re-drilled during 2010. The operator encountered an underground flow in the well at approximately 18,450 feet, and PXP anticipates insurance will cover its share of costs to re-drill to 18,450 feet. PXP’s working interest is 30%.
Gulf of Mexico - Deepwater
The Lucius #2 appraisal well, operated by Anadarko Petroleum Corporation (NYSE: APC) and located on Keathley Canyon Block 875, is currently drilling towards a proposed total depth of 20,256 feet. The Lucius discovery well was announced in December 2009, followed by a successful appraisal sidetrack in late January 2010, which confirmed a major oil discovery. PXP’s working interest is 33.3%.
Gulf of Mexico - Lease Sale 213
PXP and its partners are apparent high bidders on 44 blocks on which they bid at the U.S. Minerals Management Service (MMS) Central Gulf of Mexico Oil and Gas Lease Sale 213 in March 2010. PXP’s apparent high bids include interests in 16 shelf blocks and 28 deepwater blocks. The Company's working interests on the blocks range from 25%-100%, with a net exposure of approximately $34 million. PXP and its partners expect the leases to be awarded over the next several months subject to MMS review and approval.
In the Texas Panhandle, PXP recently finished drilling and set completion liners on two Granite Wash horizontal test wells, one in the Wheeler Field and one in the Marvin Lake Field. Hydrocarbon shows during drilling operations for both wells were in-line with pre-drill expectations. PXP expects first production from these wells by the end of the second quarter. The 2010 plan includes drilling 13 Granite Wash wells from an inventory of over 100 potential locations.
In the Gulf Coast, drilling operations are underway at the Big Mac project in Southeast Texas. The proposed total depth on the first well is approximately 14,770 feet and results are expected by the end of the second quarter. PXP has approximately 30 to 40 leads, all amplitude driven, associated with its Big Mac project.
DERIVATIVE SUMMARY
As previously reported, PXP 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 pays only 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 pays only the option premium.
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. A summary of PXP’s open commodity derivative positions is included with the financial tables in this release.
CONFERENCE CALL
PXP will host a conference call today, Thursday, May 6, 2010 at 8:00 a.m. Central time. Investors wishing to participate in the conference call may dial 1-800-567-9836 or 1-973-935-8460. The conference call and replay ID is: 63883713. The replay will be available through Thursday, May 20, 2010 and can be accessed by dialing 1-800-642-1687 or 1-706-645-9291. A live webcast of the conference call will be available in the Investor Information section of PXP’s website at www.pxp.com.
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.
References to quantities of oil or natural gas may include amounts that the Company believes will ultimately be produced, but that are not yet classified as “proved reserves” under SEC definitions.
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.
Plains Exploration & Production Company | |||||||
Consolidated Statements of Income | |||||||
(in thousands, except per share data) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2010 | 2009 | ||||||
(Unaudited) | |||||||
Revenues | |||||||
Oil sales | $ 276,004 | $ 156,614 | |||||
Gas sales | 107,739 | 71,264 | |||||
Other operating revenues | 307 | 634 | |||||
384,050 | 228,512 | ||||||
Costs and Expenses | |||||||
Lease operating expenses | 62,503 | 70,884 | |||||
Steam gas costs | 19,663 | 15,557 | |||||
Electricity | 10,034 | 10,942 | |||||
Production and ad valorem taxes | 8,447 | 11,621 | |||||
Gathering and transportation expenses | 9,419 | 6,647 | |||||
General and administrative | 37,390 | 37,093 | |||||
Depreciation, depletion and amortization | 122,393 | 88,114 | |||||
Accretion | 4,411 | 3,531 | |||||
Legal recovery | (8,423) | - | |||||
Other operating (income) expense | (569) | 4,457 | |||||
265,268 | 248,846 | ||||||
Income (Loss) from Operations | 118,782 | (20,334) | |||||
Other (Expense) Income | |||||||
Interest expense | (21,053) | (21,997) | |||||
Debt extinguishment costs | (728) | (10,243) | |||||
Gain on mark-to-market derivative contracts | 7,856 | 88,139 | |||||
Other income (expense) | 1,306 | (707) | |||||
Income Before Income Taxes | 106,163 | 34,858 | |||||
Income tax (expense) benefit | |||||||
Current | (4,738) | (55,791) | |||||
Deferred | (42,897) | 26,131 | |||||
Net Income | $ 58,528 | $ 5,198 | |||||
Earnings Per Share | |||||||
Basic | $ 0.42 | $ 0.05 | |||||
Diluted | $ 0.41 | $ 0.05 | |||||
Weighted Average Shares Outstanding | |||||||
Basic | 139,741 | 107,755 | |||||
Diluted | 141,940 | 108,224 | |||||
Plains Exploration & Production Company | |||||||
Operating Data (Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2010 | 2009 | ||||||
Daily Average Volumes | |||||||
Oil and liquids sales (Bbls) | 45,217 | 49,394 | |||||
Gas (Mcf) | |||||||
Production | 244,594 | 195,943 | |||||
Used as fuel | 5,313 | 7,175 | |||||
Sales | 239,281 | 188,768 | |||||
BOE | |||||||
Production | 85,983 | 82,052 | |||||
Sales | 85,097 | 80,856 | |||||
Unit Economics (in dollars) | |||||||
Average NYMEX Prices | |||||||
Oil | $ 78.88 | $ 43.31 | |||||
Gas | 5.27 | 4.87 | |||||
Average Realized Sales Price Before Derivative Transactions | |||||||
Oil (per Bbl) | $ 67.82 | $ 35.23 | |||||
Gas (per Mcf) | 5.00 | 4.19 | |||||
Per BOE | 50.11 | 31.31 | |||||
Cash Margin per BOE (1) | |||||||
Oil and gas revenues | $ 50.11 | $ 31.31 | |||||
Costs and expenses | |||||||
Lease operating expenses | (8.16) | (9.74) | |||||
Steam gas costs | (2.57) | (2.14) | |||||
Electricity | (1.31) | (1.50) | |||||
Production and ad valorem taxes | (1.10) | (1.60) | |||||
Gathering and transportation | (1.23) | (0.91) | |||||
Oil and gas related DD&A | (15.33) | (11.49) | |||||
Gross margin (GAAP) | 20.41 | 3.93 | |||||
Oil and gas related DD&A | 15.33 | 11.49 | |||||
Realized (losses) gains on derivative instruments(2) | (1.62) | 12.34 | |||||
Cash margin (Non-GAAP) | $ 34.12 | $ 27.76 | |||||
Oil and gas capital expenditures (in thousands) (3) | $ 223,416 | $ 350,358 | |||||
(1) Cash margin per BOE (a non-GAAP measure) is calculated by adjusting gross margin per BOE (a GAAP measure) to include realized gains and losses on derivative instruments and to exclude DD&A. Management believes this presentation may be helpful to investors as it represents the cash generated by our oil and gas production that is available for, among other things, capital expenditures and debt service. PXP management uses this information to analyze operating trends for comparative purposes within the industry. This measure is not intended to replace the GAAP statistic but rather to provide additional information that may be helpful in evaluating trends and performance. | |||||||
(2) The 2009 realized gain excludes all cash settlements for the $106 crude oil puts and the $54 crude oil swaps monetized in the first quarter of 2009. Cash receipts on these instruments were $121.4 million prior to the $1.1 billion monetization in the first quarter 2009. | |||||||
(3) Additions to oil and gas properties reported in our consolidated statement of cash flows differ from the accrual basis amounts reflected above due to the timing of cash payments. Excludes acquisitions. | |||||||
Plains Exploration & Production Company | |||||||||
Reconciliation of GAAP to Non-GAAP Measure | |||||||||
Three Months Ended March 31, | |||||||||
2010 | |||||||||
Oil | Gas | BOE | |||||||
(per Bbl) | (per Mcf) | ||||||||
Average Realized Sales Price | |||||||||
Average realized price before derivative instruments (GAAP) (1) | $ 67.82 | $ 5.00 | $ 50.11 | ||||||
Realized (losses) gains on derivative instruments | (4.29) | 0.24 | (1.62) | ||||||
Realized cash price including derivative settlements (non-GAAP) | $ 63.53 | $ 5.24 | $ 48.49 | ||||||
Three Months Ended March 31, | |||||||||
2009 | |||||||||
Oil | Gas | BOE | |||||||
(per Bbl) | (per Mcf) | ||||||||
Average Realized Sales Price | |||||||||
Average realized price before derivative instruments (GAAP) (1) | $ 35.23 | $ 4.19 | $ 31.31 | ||||||
Realized gains on derivative instruments (2) | 5.73 | 3.79 | 12.34 | ||||||
Realized cash price including derivative settlements (non-GAAP) | $ 40.96 | $ 7.98 | $ 43.65 | ||||||
(1) Excludes the impact of production costs and expenses and DD&A. | |||||||||
(2) The 2009 realized gain excludes all cash settlements for the $106 crude oil puts and the $54 crude oil swaps monetized in the first quarter of 2009. Cash receipts on these instruments were $121.4 million prior to the $1.1 billion monetization in the first quarter 2009. | |||||||||
Plains Exploration & Production Company | ||||||
Consolidated Statements of Cash Flows | ||||||
(in thousands of dollars) | ||||||
Three Months Ended | ||||||
March 31, | ||||||
2010 | 2009 | |||||
(Unaudited) | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
Net income | $ 58,528 | $ 5,198 | ||||
Items not affecting cash flows from operating activities | ||||||
Depreciation, depletion, amortization and accretion | 126,804 | 91,645 | ||||
Deferred income tax expense (benefit) | 42,897 | (26,131) | ||||
Debt extinguishment costs | 728 | 10,243 | ||||
Gain on mark-to-market derivative contracts | (7,856) | (88,139) | ||||
Noncash compensation | 16,900 | 14,499 | ||||
Other noncash items | 1,371 | 1,826 | ||||
Change in assets and liabilities from operating activities | (17,594) | (38,492) | ||||
Net cash provided by (used in) operating activities | 221,778 | (29,351) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
Additions to oil and gas properties | (267,015) | (416,350) | ||||
Acquisition of oil and gas properties (1) | 51,065 | - | ||||
Derivative settlements | (9,460) | 1,294,157 | ||||
Additions to other property and equipment | (2,137) | (5,819) | ||||
Net cash (used in) provided by investing activities | (227,547) | 871,988 | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
Borrowings from revolving credit facilities | 625,935 | 2,240,090 | ||||
Repayments of revolving credit facilities | (855,935) | (3,545,090) | ||||
Proceeds from issuance of Senior Notes | 300,000 | 337,161 | ||||
Costs incurred in connection with financing arrangements | (5,344) | (6,541) | ||||
Derivative settlements | - | 1,392 | ||||
Net cash provided by (used in) financing activities | 64,656 | (972,988) | ||||
Net increase (decrease) in cash and cash equivalents | 58,887 | (130,351) | ||||
Cash and cash equivalents, beginning of period | 1,859 | 311,875 | ||||
Cash and cash equivalents, end of period | $ 60,746 | $ 181,524 | ||||
(1) Cash inflow in 2010 is associated with an adjustment to the final settlement of the $1.1 billion payment in September 2009 related to the prepayment of the Haynesville drilling carry. | ||||||
Plains Exploration & Production Company | |||||||
Consolidated Balance Sheets | |||||||
(in thousands of dollars) | |||||||
March 31, | December 31, | ||||||
2010 | 2009 | ||||||
ASSETS | (Unaudited) | ||||||
Current Assets | |||||||
Cash and cash equivalents | $ 60,746 | $ 1,859 | |||||
Accounts receivable | 193,368 | 258,585 | |||||
Commodity derivative contracts | 24,728 | 11,952 | |||||
Inventories | 17,871 | 19,934 | |||||
Prepaid expenses and other current assets | 25,626 | 14,305 | |||||
322,339 | 306,635 | ||||||
Property and Equipment, at cost | |||||||
Oil and natural gas properties - full cost method | |||||||
Subject to amortization | 9,403,577 | 9,044,146 | |||||
Not subject to amortization | 3,143,352 | 3,279,537 | |||||
Other property and equipment | 127,804 | 125,667 | |||||
12,674,733 | 12,449,350 | ||||||
Less allowance for depreciation, depletion, amortization and impairment | (5,736,965) | (5,616,628) | |||||
6,937,768 | 6,832,722 | ||||||
Goodwill | 535,237 | 535,237 | |||||
Other Assets | 61,314 | 60,137 | |||||
$ 7,856,658 | $ 7,734,731 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current Liabilities | |||||||
Accounts payable | $ 196,662 | $ 248,454 | |||||
Commodity derivative contracts | 54,322 | 59,176 | |||||
Royalties and revenues payable | 77,351 | 78,590 | |||||
Interest payable | 50,542 | 45,743 | |||||
Deferred income taxes | 109,126 | 153,473 | |||||
Other current liabilities | 87,320 | 97,115 | |||||
575,323 | 682,551 | ||||||
Long-Term Debt | 2,720,962 | 2,649,689 | |||||
Other Long-Term Liabilities | |||||||
Asset retirement obligation | 218,634 | 214,231 | |||||
Other | 50,578 | 55,531 | |||||
269,212 | 269,762 | ||||||
Deferred Income Taxes | 1,020,719 | 933,748 | |||||
Stockholders' Equity | |||||||
Common stock | 1,439 | 1,439 | |||||
Additional paid-in capital | 3,361,383 | 3,381,566 | |||||
Retained earnings | 106,517 | 51,204 | |||||
Treasury stock, at cost | (198,897) | (235,228) | |||||
3,270,442 | 3,198,981 | ||||||
$ 7,856,658 | $ 7,734,731 | ||||||
Plains Exploration & Production Company | ||||||||||||
Summary of Open Derivative Positions | ||||||||||||
At April 30, 2010 | ||||||||||||
Average | ||||||||||||
Instrument | Daily | Average | Deferred | |||||||||
Period (1) | Type | Volumes | Price (2) | Premium | Index | |||||||
Sales of Crude Oil Production | ||||||||||||
2010 | ||||||||||||
Apr - Dec | Put options | 40,000 Bbls | $55.00 Strike price | $5.00 per Bbl (3) | WTI | |||||||
2011 | ||||||||||||
Jan - Dec | Put options (4) | 31,000 Bbls | $80.00 Floor with a $60.00 Limit | $5.023 per Bbl | WTI | |||||||
Jan - Dec | Three-way collars (5) | 9,000 Bbls | $80.00 Floor with a $60.00 Limit | $1.00 per Bbl | WTI | |||||||
$110.00 Ceiling | ||||||||||||
2012 | ||||||||||||
Jan - Dec | Put options (4) | 40,000 Bbls | $80.00 Floor with a $60.00 Limit | $6.087 per Bbl | WTI | |||||||
Sales of Natural Gas Production | ||||||||||||
2010 | ||||||||||||
Apr - Dec | Three-way collars (6) | 85,000 MMBtu | $6.12 Floor with a $4.64 Limit | $0.034 per MMBtu | Henry Hub | |||||||
$8.00 Ceiling | ||||||||||||
(1) All of our derivative instruments are settled monthly. | ||||||||||||
(2) The average strike prices do not reflect the cost to purchase the put options or collars. | ||||||||||||
(3) In addition to the deferred premium, a premium averaging $3.86 per barrel was paid upon entering into these derivative contracts. | ||||||||||||
(4) If the index price is less than the $80 per barrel floor, we receive the difference between the $80 per barrel floor 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, we pay only the option premium. | ||||||||||||
(5) If the index price is less than the $80 per barrel floor, we receive the difference between the $80 per barrel floor and the index price up to a maximum of $20 per barrel less the option premium. We pay the difference between the index price and $110 per barrel plus the option premium if the index price is greater than the $110 per barrel ceiling. If the index price is at or above $80 per barrel but at or below $110 per barrel, we pay only the option premium. | ||||||||||||
(6) If the index price is less than the $6.12 per MMBtu floor, we receive the difference between the $6.12 per MMBtu floor and the index price up to a maximum of $1.48 per MMBtu less the option premium. We pay the difference between the index price and $8.00 per MMBtu plus the option premium if the index price is greater than the $8.00 ceiling. | ||||||||||||
Plains Exploration & Production Company
Reconciliation of GAAP to Non-GAAP Measure
The following table reconciles net income (GAAP) to adjusted net income (non-GAAP) for the three months ended March 31, 2010 and 2009. Adjusted net income excludes certain items affecting the comparability of operating results and the related tax effects. Management believes this presentation may be helpful to investors. PXP management uses this information to analyze operating trends and for comparative purposes within the industry. This measure is not intended to replace the GAAP statistic but rather to provide additional information that may be helpful in evaluating the Company's operational trends and performance.
Three Months Ended | ||||||||||||
March 31, | ||||||||||||
2010 | 2009 | |||||||||||
(millions of dollars) | ||||||||||||
Net income (GAAP) | $ 58.5 | $ 5.2 | ||||||||||
Unrealized gain on mark-to-market derivative contracts | (7.9) | (88.1) | ||||||||||
Realized (loss) gain on mark-to-market derivative contracts (1) (2) | (12.4) | 89.8 | ||||||||||
Legal recovery | (8.4) | - | ||||||||||
Adjust income taxes (3) | 13.7 | 3.1 | ||||||||||
Adjusted net income (non-GAAP) | $ 43.5 | $ 10.0 | ||||||||||
(1) The 2009 realized gain excludes all cash settlements for the $106 crude oil puts and the $54 crude oil swaps monetized in the first quarter of 2009. Cash receipts on these instruments were $121.4 million prior to the $1.1 billion monetization in the first quarter 2009. | ||||||||||||
(2) The amounts presented in the above table differ from the adjustments reflected in the calculation of operating cash flow on the following page due to the accrued amounts reflected in the income statement versus the actual cash received or paid reflected in the consolidated statement of cash flows. | ||||||||||||
(3) Tax rates assumed based upon adjusted earnings are 44% and 73% for the three months ended March 31, 2010 and 2009, respectively. Tax rates exclude the effects of nonrecurring tax related expenses and benefits. | ||||||||||||
Plains Exploration & Production Company
Reconciliation of GAAP to Non-GAAP Measure
The following tables reconcile Net Cash Provided by Operating Activities (GAAP) to Operating Cash Flow (non-GAAP) for the three months ended March 31, 2010 and 2009. Management believes this presentation may be useful to investors. PXP management uses this information for comparative purposes within the industry and as a means of measuring the Company's ability to fund capital expenditures and service debt. This measure is not intended to replace the GAAP statistic but rather to provide additional information that may be helpful in evaluating the Company's operational trends and performance.
Operating cash flow is calculated by adjusting net income to add back certain non-cash and non-operating items, including unrealized gains on mark-to-market derivative contracts, to include derivative cash settlements for realized gains and losses on mark-to-market derivative contracts that are classified as either investing or financing activities for GAAP purposes and to exclude certain items.
Three Months Ended | ||||||||
March 31, | ||||||||
2010 | 2009 | |||||||
(millions of dollars) | ||||||||
Net income | $ 58.5 | $ 5.2 | ||||||
Items not affecting operating cash flows | ||||||||
Depreciation, depletion, amortization and accretion | 126.8 | 91.6 | ||||||
Deferred income tax expense (benefit) | 42.9 | (26.1) | ||||||
Debt extinguishment costs | 0.7 | 10.2 | ||||||
Unrealized gain on mark-to-market derivative contracts | (7.8) | (88.1) | ||||||
Noncash compensation | 16.9 | 14.5 | ||||||
Other noncash items | 1.4 | 1.8 | ||||||
Realized (loss) gain on mark-to-market derivatives contracts (1) | (9.5) | 99.8 | ||||||
Other income items | (8.4) | - | ||||||
Current income taxes attributable to derivative contracts | 4.7 | 55.8 | ||||||
Operating cash flow (non-GAAP) | $ 226.2 | $ 164.7 | ||||||
Reconciliation of non-GAAP to GAAP measure | ||||||||
Operating cash flow (non-GAAP) | $ 226.2 | $ 164.7 | ||||||
Other income items | 8.4 | - | ||||||
Changes in assets and liabilities from operating activities | (17.6) | (38.5) | ||||||
Realized loss (gain) on mark-to-market derivative contracts (1) | 9.5 | (99.8) | ||||||
Current income taxes attributable to derivative contracts | (4.7) | (55.8) | ||||||
Net cash provided by (used in) operating activities (GAAP) | $ 221.8 | $ (29.4) | ||||||
(1) The 2009 realized gain excludes all cash settlements for the $106 crude oil puts and the $54 crude oil swaps monetized in the first quarter of 2009. Cash receipts on these instruments were $121.4 million prior to the $1.1 billion monetization in the first quarter 2009. | ||||||||
Plains Exploration & Production Company | |||||
Derivative Settlements | |||||
(in thousands of dollars) | |||||
The following tables reflect cash (payments) receipts for derivatives attributable to the stated | |||||
production periods. | |||||
Three Months Ended | |||||
March 31, | |||||
2010 | 2009 | ||||
Oil sales (1) | $ (17,466) | $ 25,492 | |||
Natural gas sales | 5,089 | 64,312 | |||
$ (12,377) | $ 89,804 | ||||
Amortization of monetized derivatives (2) | 2010 | 2009 | |||
First quarter | $ 123,730 | $ 57,211 | |||
Second quarter | 125,105 | 167,943 | |||
Third quarter | 126,479 | 169,788 | |||
Fourth quarter | 126,479 | 169,788 | |||
$ 501,793 | $ 564,730 | ||||
(1) Excludes all cash settlements for the $106 crude oil puts and the $54 crude oil swaps monetized in the first quarter of 2009. Cash receipts on these instruments were $121.4 million prior to the $1.1 billion monetization in the first quarter 2009. | |||||
(2) Represents the net receipts for derivatives monetized in the first quarter of 2009 attributable to these production periods, net of accrued interest on our deferred premiums. | |||||
SOURCE Plains Exploration & Production Company
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