OT Plains & Stone Merger 04.21.06:
Plains Exploration & Production Co.
700 Milam Street
Suite 3100
Houston, TX 77002
Phone: 713-579-6000
Fax: 713-579-6500
Web Site: plainsxp.com
PXP Announces Agreement to Acquire Stone Energy and Elimination of 2007 and 2008 Crude Oil Collars
investor.plainsxp.com
HOUSTON, April 24 /PRNewswire-FirstCall/ -- "Plains Exploration & Production Company (NYSE: PXP) ("PXP" or the "Company") announced today that the Company has entered into a definitive agreement to acquire Stone Energy Corporation (NYSE: SGY) ("Stone") in a stock-for-stock transaction valued at approximately $1.46 billion, based on PXP's closing price on April 21, 2006, and the assumption of $483 million of net debt. Stone stockholders will receive 1.25 shares of PXP common stock for each share of Stone common stock.
Also today, PXP announced it has executed a series of contracts that will eliminate all of its 2007 and 2008 crude oil price collars at a pre-tax cost of approximately $600 million assuming payment in second quarter of 2006. The collars involved 22,000 barrels of oil per day (BOPD) for both years with a floor price of $25.00 per barrel and an average ceiling price of $34.76 per barrel. Although under the terms of the contracts the Company could repay the counterparties as the collars mature in 2007 and 2008, it is the Company's current intention to repay the positions in 2006. PXP maintains downside commodity price protection on 50,000 barrels of oil a day in years 2006 and 2007 with a strike price of $55.00 per barrel WTI. Additionally, the Company has purchased $55.00 per barrel puts for 2008 for 32,000 BOPD at a price of $3.79 per barrel on a deferred premium basis. The Company expects a 5 percent increase in production per share and an increase in per barrel cash margin of 35 percent in 2007.
"These accretive transactions represent an opportunity for the stockholders of both companies to benefit from combining the strengths of PXP and Stone. Upon completion of the acquisition, PXP will be in an enviable position to accelerate its cash flow per share and strong reserve growth through the Rocky Mountain business, highlighted by the Pinedale/Jonah/Eagle projects in the Green River Basin and the large Middle Bakken position in the Williston Basin, and the Gulf of Mexico, primarily in the Deep Water with our Big Foot discovery, and continued development of its large long-lived California oil resource base. PXP should have a stronger balance sheet and full commodity price exposure with downside commodity price risk protection at $55 WTI in 2006, 2007 and 2008. We look forward to the opportunity to carefully invest the excess cash flow in debt reduction, share repurchase or other sound investments that benefit our stockholders," commented James C. Flores, PXP's Chairman, President and Chief Executive Officer..."
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