PXP REPORTS THIRD-QUARTER 2011 RESULTS,

The Dougherty #1H achieved peak rate of 2,579 gross BOE per day (100% working interest).

The Dougherty #2H achieved peak rate of 2,212 gross BOE per day (100% working interest).

The Deleon-Reinhard Unit #1H achieved peak rate of 2,435 gross BOE per day (50% working interest).

The Deleon-Wiatrek Unit #1H achieved peak rate of 2,444 gross BOE per day (50% working interest).

* completion of the proposed asset sales,

* completion of the deepwater financing,

* 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.

Plains Exploration & Production Company

Consolidated Statements of Income

(in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2011

2010

2011

2010

(Unaudited)

Revenues

Oil sales

$ 379,079

$ 276,423

$ 1,110,228

$ 828,690

Gas sales

121,014

110,510

331,486

305,927

Other operating revenues

1,755

890

5,233

1,849

501,848

387,823

1,446,947

1,136,466

Costs and Expenses

Lease operating expenses

79,987

67,668

234,380

187,707

Steam gas costs

17,015

17,146

49,641

52,166

Electricity

10,112

10,093

30,203

31,242

Production and ad valorem taxes

10,636

9,082

39,084

21,357

Gathering and transportation expenses

15,237

15,311

44,825

37,642

General and administrative

28,158

34,278

94,964

101,969

Depreciation, depletion and amortization

167,894

133,207

453,194

379,410

Impairment of oil and gas properties

-

-

-

59,475

Accretion

4,307

4,420

12,878

13,238

Legal recovery

-

-

-

(8,423)

Other operating income

(50)

(467)

(657)

(4,981)

333,296

290,738

958,512

870,802

Income from Operations

168,552

97,085

488,435

265,664

Other (Expense) Income

Interest expense

(43,495)

(26,514)

(113,141)

(75,606)

Debt extinguishment costs

-

(461)

-

(1,189)

Gain (loss) on mark-to-market derivative contracts

125,551

(42,600)

93,467

23,240

Loss on investment measured at fair value

(395,490)

-

(284,929)

-

Other income

1,399

1,704

2,949

14,245

(Loss) Income Before Income Taxes

(143,483)

29,214

186,781

226,354

Income tax benefit (expense)

Current

26,718

75,169

25,959

67,759

Deferred

28,469

(85,535)

(105,165)

(171,362)

Net (Loss) Income

$ (88,296)

$   18,848

$    107,575

$ 122,751

(Loss) Earnings per Share

Basic

$     (0.62)

$       0.13

$          0.76

$       0.87

Diluted

$     (0.62)

$       0.13

$          0.75

$       0.87

Weighted Average Shares Outstanding

Basic

141,826

140,601

141,500

140,304

Diluted

141,826

141,609

143,351

141,706

Plains Exploration & Production Company

Operating Data

Three Months Ended

Nine Months Ended

September 30,

September 30,

2011

2010

2011

2010

(Unaudited)

Daily Average Volumes

Oil and liquids sales (Bbls)

50,891

46,478

47,853

45,702

Gas (Mcf)

Production

327,248

270,072

299,423

252,635

Used as fuel

5,962

5,396

5,875

5,327

Sales

321,286

264,676

293,548

247,308

BOE

Production

105,432

91,490

97,756

87,807

Sales

104,438

90,591

96,777

86,920

Unit Economics (in dollars)

Average NYMEX Prices

Oil

$     89.54

$     76.21

$        95.47

$     77.69

Gas

4.20

4.39

4.20

4.57

Average Realized Sales Price Before Derivative Transactions

Oil (per Bbl)

$     80.96

$     64.65

$        84.98

$     66.42

Gas (per Mcf)

4.10

4.54

4.14

4.53

Per BOE

52.05

46.43

54.57

47.82

Cash Margin per BOE (1)

Oil and gas revenues

$     52.05

$     46.43

$        54.57

$     47.82

Costs and expenses

  Lease operating expenses

(8.32)

(8.12)

(8.87)

(7.91)

  Steam gas costs

(1.77)

(2.06)

(1.88)

(2.20)

  Electricity

(1.05)

(1.21)

(1.14)

(1.32)

  Production and ad valorem taxes

(1.11)

(1.09)

(1.48)

(0.90)

  Gathering and transportation

(1.59)

(1.84)

(1.70)

(1.59)

  Oil and gas related DD&A

(16.86)

(15.33)

(16.49)

(15.33)

Gross margin (GAAP)

21.35

16.78

23.01

18.57

Oil and gas related DD&A

16.86

15.33

16.49

15.33

Realized loss on derivative instruments

(1.48)

(0.89)

(1.63)

(1.11)

Cash margin (Non-GAAP)

$     36.73

$     31.22

$        37.87

$     32.79

Oil and gas capital expenditures accrued ($ in thousands) (2)

$ 502,745

$ 273,182

$ 1,364,142

$ 781,351

(1)

Cash margin per BOE (a non-GAAP measure) is calculated by adjusting gross margin per BOE (a GAAP measure) to include the realized gain and loss 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)

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 September 30, 2011

Oil

Gas

BOE

(per Bbl)

(per Mcf)

Average Realized Sales Price

Average realized price before derivative instruments (GAAP)  (1)

$   80.96

$      4.10

$ 52.05

Realized (loss) gain on derivative instruments

(3.13)

0.01

(1.48)

Realized cash price including derivative settlements (non-GAAP)

$   77.83

$      4.11

$ 50.57

Three Months Ended September 30, 2010

Oil

Gas

BOE

(per Bbl)

(per Mcf)

Average Realized Sales Price

Average realized price before derivative instruments (GAAP)  (1)

$   64.65

$      4.54

$ 46.43

Realized (loss) gain on derivative instruments

(4.18)

0.43

(0.89)

Realized cash price including derivative settlements (non-GAAP)

$   60.47

$      4.97

$ 45.54

Nine Months Ended September 30, 2011

Oil

Gas

BOE

(per Bbl)

(per Mcf)

Average Realized Sales Price

Average realized price before derivative instruments (GAAP)  (1)

$   84.98

$      4.14

$ 54.57

Realized (loss) gain on derivative instruments

(3.38)

0.01

(1.63)

Realized cash price including derivative settlements (non-GAAP)

$   81.60

$      4.15

$ 52.94

Nine Months Ended September 30, 2010

Oil

Gas

BOE

(per Bbl)

(per Mcf)

Average Realized Sales Price

Average realized price before derivative instruments (GAAP)  (1)

$   66.42

$      4.53

$ 47.82

Realized (loss) gain on derivative instruments

(4.25)

0.40

(1.11)

Realized cash price including derivative settlements (non-GAAP)

$   62.17

$      4.93

$ 46.71

(1)

Excludes the impact of production costs and expenses and DD&A.

Plains Exploration & Production Company

Consolidated Statements of Cash Flows

(in thousands of dollars)

Nine Months Ended

September 30,

2011

2010

(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$   107,575

$   122,751

Items not affecting cash flows from operating activities

Depreciation, depletion, amortization and accretion

466,072

392,648

Impairment of oil and gas properties

-

59,475

Deferred income tax expense

105,165

171,362

Debt extinguishment costs

-

1,189

Gain on mark-to-market derivative contracts

(93,467)

(23,240)

Loss on investment measured at fair value

284,929

-

Non-cash compensation

27,257

36,356

Other non-cash items

(6,332)

2,467

Change in assets and liabilities from operating activities

31,451

(85,836)

Net cash provided by operating activities

922,650

677,172

CASH FLOWS FROM INVESTING ACTIVITIES

Additions to oil and gas properties

(1,261,196)

(805,744)

Acquisition of oil and gas properties (1)

(36,750)

35,350

Proceeds from sales of oil and gas properties, net of costs and expenses

11,987

6,350

Derivative settlements

(47,448)

(23,546)

Additions to other property and equipment

(9,454)

(7,115)

Other

1,552

-

Net cash used in investing activities

(1,341,309)

(794,705)

CASH FLOWS FROM FINANCING ACTIVITIES

Borrowings from revolving credit facilities

4,026,900

1,486,610

Repayments of revolving credit facilities

(4,191,900)

(1,636,610)

Proceeds from issuance of Senior Notes

600,000

300,000

Costs incurred in connection with financing arrangements

(11,320)

(22,649)

Other

9

31

Net cash provided by financing activities

423,689

127,382

Net increase in cash and cash equivalents

5,030

9,849

Cash and cash equivalents, beginning of period

6,434

1,859

Cash and cash equivalents, end of period

$     11,464

$     11,708

(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)

September 30,

December 31,

2011

2010

ASSETS

(Unaudited)

Current Assets

Cash and cash equivalents

$            11,464

$            6,434

Accounts receivable

279,842

269,024

Commodity derivative contracts

49,298

-

Inventories

26,058

24,406

Deferred income taxes

19,945

74,086

Prepaid expenses and other current assets

18,466

28,937

405,073

402,887

Property and Equipment, at cost

Oil and natural gas properties - full cost method

Subject to amortization

11,821,891

9,975,056

Not subject to amortization

2,847,919

3,304,554

Other property and equipment

142,274

137,150

14,812,084

13,416,760

Less allowance for depreciation, depletion, amortization and impairment

(6,637,010)

(6,196,008)

8,175,074

7,220,752

Goodwill

535,140

535,144

Commodity Derivative Contracts

17,536

-

Investment

379,417

664,346

Other Assets

71,747

71,808

$       9,583,987

$     8,894,937

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

Accounts payable

$          369,784

$        284,628

Commodity derivative contracts

4,231

52,971

Royalties and revenues payable

86,409

70,990

Interest payable

78,881

49,127

Other current liabilities

77,767

75,973

617,072

533,689

Long-Term Debt

3,783,938

3,344,717

Other Long-Term Liabilities

Asset retirement obligation

250,896

225,571

Commodity derivative contracts

-

24,740

Other

9,227

28,205

260,123

278,516

Deferred Income Taxes

1,406,070

1,355,050

Stockholders'  Equity

Common stock

1,439

1,439

Additional paid-in capital

3,423,057

3,427,869

Retained earnings

240,291

148,620

Treasury stock, at cost

(148,003)

(194,963)

3,516,784

3,382,965

$       9,583,987

$     8,894,937

Plains Exploration & Production Company

Summary of Open Derivative Positions

At October 1, 2011

Average

Instrument

Daily

Average

Deferred

Period (1)

Type

Volumes

Price (2)

Premium

Index

Sales of Crude Oil Production

2011

Oct - Dec

Put options (3)

31,000 Bbls

$80.00 Floor with a $60.00 Limit

$5.023 per Bbl

WTI

Oct - Dec

Three-way collars (4)

9,000 Bbls

$80.00 Floor with a $60.00 Limit

$1.00 per Bbl

WTI

$110.00 Ceiling

2012

Jan - Dec

Three-way collars (5)

40,000 Bbls

$100.00 Floor with an $80.00 Limit

-

Brent

$120.00 Ceiling

2013

Jan - Dec

Put options (6)

22,000 Bbls

$90.00 Floor with a $70.00 Limit

$6.237 per Bbl

Brent

Sales of Natural Gas Production

2011

Oct - Dec

Three-way collars (7)

200,000 MMBtu

$4.00 Floor with a $3.00 Limit

-

Henry Hub

$4.92 Ceiling

2012

Jan - Dec

Put options (8)

120,000 MMBtu

$4.30 Floor with a $3.00 Limit

$0.298 per MMBtu

Henry Hub

Jan - Dec

Three-way collars (9)

40,000 MMBtu

$4.30 Floor with a $3.00 Limit

-

Henry Hub

$4.86 Ceiling

(1)

All of our derivatives are settled monthly.

(2)

The average strike prices do not reflect any premiums to purchase the put options or collars.

(3)

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.

(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.  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.

(5)

If the index price is less than the $100 per barrel floor, we receive the difference between the $100 per barrel floor and the index price up to a maximum of $20 per barrel.  We pay the difference between the index price and $120 per barrel if the index price is greater than the $120 per barrel ceiling.  If the index price is at or above $100 per barrel but at or below $120 per barrel, no cash settlement is required.

(6)

If the index price is less than the $90 per barrel floor, we receive the difference between the $90 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 $90 per barrel, we pay only the option premium.

(7)

If the index price is less than the $4.00 per MMBtu floor, we receive the difference between the $4.00 per MMBtu floor and the index price up to a maximum of $1.00 per MMBtu. We pay the difference between the index price and $4.92 per MMBtu if the index price is greater than the $4.92 per MMBtu ceiling.  If the index price is at or above $4.00 per MMBtu but at or below $4.92 per MMBtu, no cash settlement is required.

(8)

If the index price is less than the $4.30 per MMBtu floor, we receive the difference between the $4.30 per MMBtu floor and the index price up to a maximum of $1.30 per MMBtu less the option premium.  If the index price is at or above $4.30 per MMBtu, we pay only the option premium.

(9)

If the index price is less than the $4.30 per MMBtu floor, we receive the difference between the $4.30 per MMBtu floor and the index price up to a maximum of $1.30 per MMBtu.  We pay the difference between the index price and $4.86 per MMBtu if the index price is greater than the $4.86 per MMBtu ceiling.  If the index price is at or above $4.30 per MMBtu but at or below $4.86 per MMBtu, no cash settlement is required.

Derivative Settlements

(in thousands of dollars)

The following tables reflect cash (payments) receipts for derivatives attributable to the stated production periods.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2011

2010

2011

2010

Oil sales

$                 (14,672)

$        (17,854)

$                                        (44,209)

$             (52,980)

Natural gas sales

414

10,461

1,034

26,711

$                 (14,258)

$          (7,393)

$                                        (43,175)

$             (26,269)

Plains Exploration & Production Company

Reconciliation of GAAP to Non-GAAP Measure

The following tables reconcile net income (GAAP) to adjusted net income (non-GAAP) for the three and nine months ended September 30, 2011 and 2010. 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

September 30,

2011

2010

(millions of dollars)

Net (loss) income (GAAP)

$ (88.3)

$   18.8

Unrealized (gain) loss on mark-to-market derivative contracts

(125.6)

42.6

Realized loss on mark-to-market derivative contracts (1)

(14.3)

(7.4)

Unrealized loss on investment measured at fair value

395.5

-

Adjust income taxes (2)

(102.4)

(12.6)

Adjusted net income (non-GAAP)

$   64.9

$   41.4

Nine Months Ended

September 30,

2011

2010

(millions of dollars)

Net income (GAAP)

$ 107.6

$ 122.8

Unrealized gain on mark-to-market derivative contracts

(93.5)

(23.2)

Realized loss on mark-to-market derivative contracts (1)

(43.2)

(26.3)

Unrealized loss on investment measured at fair value

284.9

-

Impairment of oil and gas properties

-

59.5

Legal recovery

-

(8.4)

Other non-operating income

-

(8.1)

Adjust income taxes (2)

(61.3)

5.6

Adjusted net income (non-GAAP)

$ 194.5

$ 121.9

(1)

The amounts presented in the above tables 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.

(2)

Tax rates assumed based upon adjusted earnings are 42% and 36% for the three months ended September 30, 2011 and 2010, respectively. Tax rates assumed based upon adjusted earnings are 42% and 45% for the nine months ended September 30, 2011 and 2010. 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 and nine months ended September 30, 2011 and 2010.  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 the unrealized gain and loss on mark-to-market derivative contracts, to include derivative cash settlements for the realized gain and loss on mark-to-market derivative contracts that are classified as investing activities for GAAP purposes, to exclude the unrealized loss on the investment measured at fair value and to exclude certain items.  

Three Months Ended

Nine Months Ended

September 30,

September 30,

2011

2010

2011

2010

(millions of dollars)

Net (loss) income

$          (88.3)

$         18.8

$        107.6

$          122.8

Items not affecting operating cash flows

 Depreciation, depletion, amortization and accretion

172.2

137.6

466.1

392.6

 Impairment of oil and gas properties

-

-

-

59.5

 Deferred income tax (benefit) expense

(28.4)

85.5

105.2

171.4

 Debt extinguishment costs

-

0.5

-

1.2

 Unrealized (gain) loss on mark-to-market derivative contracts

(125.6)

42.6

(93.5)

(23.2)

 Unrealized loss on investment measured at fair value

395.5

-

284.9

-

 Non-cash compensation

(0.8)

13.4

27.3

36.3

 Other non-cash items

(6.0)

0.8

(6.3)

2.4

Realized loss on mark-to-market derivative contracts

(17.4)

(7.4)

(47.4)

(23.5)

Legal recovery and other

-

-

-

(16.5)

Current income taxes attributable to derivative contracts

-

(7.4)

-

-

Operating cash flow (non-GAAP)

$          301.2

$       284.4

$        843.9

$          723.0

Reconciliation of non-GAAP to GAAP measure

Operating cash flow (non-GAAP)

$          301.2

$       284.4

$        843.9

$          723.0

Legal recovery and other

-

-

-

16.5

Changes in assets and liabilities from operating activities

26.6

(96.5)

31.4

(85.8)

Realized loss on mark-to-market derivative contracts

17.4

7.4

47.4

23.5

Current income taxes attributable to derivative contracts

-

7.4

-

-

Net cash provided by operating activities (GAAP)

$          345.2

$       202.7

$        922.7

$          677.2