UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-31470
PLAINS EXPLORATION & PRODUCTION COMPANY
(Exact name of registrant as specified in its charter)
| Delaware |
33-0430755 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
500 Dallas Street, Suite 700
Houston, Texas 77002
(Address of principal executive offices)
(Zip Code)
(713) 739-6700
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ¨ No þ
24,225,075 shares of Common Stock, $0.01 par value, issued and outstanding at April 30, 2003.
PLAINS EXPLORATION & PRODUCTION COMPANY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| PART I. FINANCIAL INFORMATION |
||
| ITEM 1. Financial Statements: |
||
| March 31, 2003 (Unaudited) and December 31, 2002 |
1 | |
| For the three months ended March 31, 2003 and 2002 |
2 | |
| For the three months ended March 31, 2003 and 2002 |
3 | |
| For the three months ended March 31, 2003 and 2002 |
4 | |
| Consolidated Statement of Changes in Stockholders' Equity (Unaudited) |
||
| For the three months ended March 31, 2003 |
5 | |
| 6 | ||
| ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 | |
| ITEM 3. Quantitative and Qualitative Disclosures About Market Risk |
29 | |
| 31 | ||
| 32 |
PLAINS EXPLORATION & PRODUCTION COMPANY
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands of dollars)
| March 31, 2003 |
December 31, 2002 |
|||||||
| ASSETS |
||||||||
| Current Assets |
||||||||
| Cash and cash equivalents |
$ |
1,002 |
|
$ |
1,028 |
| ||
| Accounts receivable—Plains All American Pipeline, L.P. |
|
25,722 |
|
|
22,943 |
| ||
| Other accounts receivable |
|
3,545 |
|
|
5,925 |
| ||
| Commodity hedging contracts |
|
1,623 |
|
|
2,594 |
| ||
| Inventories |
|
5,993 |
|
|
5,198 |
| ||
| Other current assets |
|
1,133 |
|
|
1,051 |
| ||
|
|
39,018 |
|
|
38,739 |
| |||
| Property and Equipment, at cost |
||||||||
| Oil and natural gas properties—full cost method |
||||||||
| Subject to amortization |
|
661,769 |
|
|
629,454 |
| ||
| Not subject to amortization |
|
30,779 |
|
|
30,045 |
| ||
| Other property and equipment |
|
2,286 |
|
|
2,207 |
| ||
|
|
694,834 |
|
|
661,706 |
| |||
| Less allowance for depreciation, depletion and amortization |
|
(145,174 |
) |
|
(168,494 |
) | ||
|
|
549,660 |
|
|
493,212 |
| |||
| Other Assets |
|
19,047 |
|
|
18,929 |
| ||
| $ |
607,725 |
|
$ |
550,880 |
| |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current Liabilities |
||||||||
| Accounts payable and other current liabilities |
$ |
44,815 |
|
$ |
40,012 |
| ||
| Commodity hedging contracts |
|
24,012 |
|
|
24,572 |
| ||
| Royalties payable |
|
13,187 |
|
|
11,873 |
| ||
| Interest payable |
|
4,780 |
|
|
9,207 |
| ||
| Current maturities of long-term debt |
|
511 |
|
|
511 |
| ||
|
|
87,305 |
|
|
86,175 |
| |||
| Long-Term Debt |
||||||||
| 8.75% senior subordinated notes |
|
196,908 |
|
|
196,855 |
| ||
| Revolving credit facility |
|
32,500 |
|
|
35,800 |
| ||
| Other |
|
511 |
|
|
511 |
| ||
|
|
229,919 |
|
|
233,166 |
| |||
| Asset Retirement Obligation |
|
26,240 |
|
|
— |
| ||
| Other Long-Term Liabilities |
|
9,464 |
|
|
6,303 |
| ||
| Deferred Income Taxes |
|
61,932 |
|
|
51,416 |
| ||
| Commitments and Contingencies (Note 6) |
||||||||
| Stockholders’ Equity |
||||||||
| Common stock |
|
244 |
|
|
244 |
| ||
| Additional paid-in capital |
|
175,025 |
|
|
174,279 |
| ||
| Retained earnings |
|
33,082 |
|
|
12,155 |
| ||
| Accumulated other comprehensive income |
|
(15,486 |
) |
|
(12,858 |
) | ||
|
|
192,865 |
|
|
173,820 |
| |||
| $ |
607,725 |
|
$ |
550,880 |
| |||
See notes to consolidated financial statements.
1
PLAINS EXPLORATION & PRODUCTION COMPANY
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except per share data)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Revenues |
||||||||
| Oil sales to Plains All American Pipeline, L.P. |
$ |
64,738 |
|
$ |
35,241 |
| ||
| Oil hedging |
|
(17,311 |
) |
|
3,444 |
| ||
| Gas sales |
|
4,104 |
|
|
1,988 |
| ||
| Other operating revenues |
|
207 |
|
|
— |
| ||
|
|
51,738 |
|
|
40,673 |
| |||
| Costs and Expenses |
||||||||
| Production expenses |
|
19,978 |
|
|
16,105 |
| ||
| Production and ad valorem taxes |
|
1,035 |
|
|
1,124 |
| ||
| General and administrative |
||||||||
| Stock appreciation rights |
|
(1,363 |
) |
|
— |
| ||
| Other |
|
4,439 |
|
|
2,452 |
| ||
| Depreciation, depletion and amortization |
|
7,723 |
|
|
6,691 |
| ||
| Accretion of asset retirement obligation |
|
582 |
|
|
— |
| ||
|
|
32,394 |
|
|
26,372 |
| |||
| Income from Operations |
|
19,344 |
|
|
14,301 |
| ||
| Other Income (Expense) |
||||||||
| Interest expense |
|
(4,856 |
) |
|
(4,692 |
) | ||
| Interest and other income |
|
33 |
|
|
18 |
| ||
| Income Before Income Taxes and Cumulative Effect of Accounting Change |
|
14,521 |
|
|
9,627 |
| ||
| Income tax expense |
||||||||
| Current |
|
(1,181 |
) |
|
(2,045 |
) | ||
| Deferred |
|
(4,737 |
) |
|
(1,718 |
) | ||
| Income Before Cumulative Effect of Accounting Change |
|
8,603 |
|
|
5,864 |
| ||
| Cumulative effect of accounting change, net of tax |
|
12,324 |
|
|
— |
| ||
| Net Income |
$ |
20,927 |
|
$ |
5,864 |
| ||
| Earnings Per Share (in dollars) |
||||||||
| Basic |
||||||||
| Income before cumulative effect of accounting change |
$ |
0.36 |
|
$ |
0.24 |
| ||
| Cumulative effect of accounting change |
|
0.51 |
|
|
— |
| ||
| $ |
0.87 |
|
$ |
0.24 |
| |||
| Diluted |
||||||||
| Income before cumulative effect of accounting change |
$ |
0.35 |
|
$ |
0.24 |
| ||
| Cumulative effect of accounting change |
|
0.51 |
|
|
— |
| ||
| $ |
0.86 |
|
$ |
0.24 |
| |||
| Weighted Average Shares Outstanding |
||||||||
| Basic |
|
24,015 |
|
|
24,200 |
| ||
| Diluted |
|
24,225 |
|
|
24,200 |
| ||
See notes to consolidated financial statements.
2
PLAINS EXPLORATION & PRODUCTION COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands of dollars)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Net income |
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