UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
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.) |
700 Milam Street, Suite 3100
Houston, Texas 77002
(Address of principal executive offices)
(Zip Code)
(832) 239-6000
(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 x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes x No ¨
40.4 million shares of Common Stock, $0.01 par value, issued and outstanding at April 30, 2004.
PLAINS EXPLORATION & PRODUCTION COMPANY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PLAINS EXPLORATION & PRODUCTION COMPANY
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands of dollars)
| March 31, 2004 |
December 31, 2003 |
|||||||
| ASSETS | ||||||||
| Current Assets |
||||||||
| Cash and cash equivalents |
$ | 1,985 | $ | 1,377 | ||||
| Accounts receivable—Plains All American Pipeline, L.P. |
25,665 | 25,344 | ||||||
| Other accounts receivable |
27,976 | 25,267 | ||||||
| Inventories |
4,359 | 5,318 | ||||||
| Other current assets |
2,108 | 3,019 | ||||||
| 62,093 | 60,325 | |||||||
| Property and Equipment, at cost |
||||||||
| Oil and natural gas properties—full cost method |
||||||||
| Subject to amortization |
1,088,287 | 1,074,302 | ||||||
| Not subject to amortization |
57,980 | 63,658 | ||||||
| Other property and equipment |
4,960 | 4,939 | ||||||
| 1,151,227 | 1,142,899 | |||||||
| Less allowance for depreciation, depletion and amortization |
(201,179 | ) | (186,004 | ) | ||||
| 950,048 | 956,895 | |||||||
| Goodwill |
145,046 | 147,251 | ||||||
| Other Assets |
19,497 | 19,641 | ||||||
| $ | 1,176,684 | $ | 1,184,112 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities |
||||||||
| Accounts payable |
$ | 34,877 | $ | 41,736 | ||||
| Commodity hedging contracts |
75,609 | 55,123 | ||||||
| Royalties payable |
16,879 | 19,080 | ||||||
| Stock appreciation rights |
21,025 | 16,049 | ||||||
| Interest payable |
6,296 | 622 | ||||||
| Other current liabilities |
19,491 | 22,476 | ||||||
| 174,177 | 155,086 | |||||||
| Long-Term Debt |
||||||||
| 8.75% Senior Subordinated Notes |
276,862 | 276,906 | ||||||
| Revolving credit facility |
191,000 | 211,000 | ||||||
| 467,862 | 487,906 | |||||||
| Asset Retirement Obligation |
30,447 | 33,235 | ||||||
| Other Long-Term Liabilities |
58,162 | 32,194 | ||||||
| Deferred Income Taxes |
108,938 | 121,435 | ||||||
| Commitments and Contingencies (Note 6) |
||||||||
| Stockholders’ Equity |
||||||||
| Common stock |
403 | 403 | ||||||
| Additional paid-in capital |
324,563 | 322,856 | ||||||
| Retained earnings |
81,964 | 71,566 | ||||||
| Accumulated other comprehensive income |
(69,519 | ) | (40,439 | ) | ||||
| Treasury stock |
(313 | ) | (130 | ) | ||||
| 337,098 | 354,256 | |||||||
| $ | 1,176,684 | $ | 1,184,112 | |||||
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, |
||||||||
| 2004 |
2003 |
|||||||
| Revenues |
||||||||
| Oil sales to Plains All American Pipeline, L.P. |
$ | 64,267 | $ | 64,738 | ||||
| Other oil sales |
4,037 | — | ||||||
| Oil hedging |
(19,033 | ) | (17,311 | ) | ||||
| Gas sales |
42,386 | 4,104 | ||||||
| Gas hedging |
1,068 | — | ||||||
| Other operating revenues |
236 | 207 | ||||||
| 92,961 | 51,738 | |||||||
| Costs and Expenses |
||||||||
| Lease operating expenses |
25,680 | 19,978 | ||||||
| Production and ad valorem taxes |
3,973 | 1,035 | ||||||
| Gathering and transportation expenses |
1,196 | — | ||||||
| General and administrative |
||||||||
| G&A excluding stock appreciation rights |
9,531 | 4,439 | ||||||
| Stock appreciation rights |
10,561 | (1,363 | ) | |||||
| Depreciation, depletion, amortization and accretion |
16,567 | 8,305 | ||||||
| 67,508 | 32,394 | |||||||
| Income from Operations |
25,453 | 19,344 | ||||||
| Other Income (Expense) |
||||||||
| Gain (loss) on derivatives |
(1,565 | ) | — | |||||
| Interest expense |
(6,930 | ) | (4,856 | ) | ||||
| Interest and other income (expense) |
262 | 33 | ||||||
| Income Before Income Taxes and Cumulative Effect of Accounting Change |
17,220 | 14,521 | ||||||
| Income tax expense |
||||||||
| Current |
(188 | ) | (1,181 | ) | ||||
| Deferred |
(6,634 | ) | (4,737 | ) | ||||
| Income Before Cumulative Effect of Accounting Change |
10,398 | 8,603 | ||||||
| Cumulative effect of accounting change, net of tax |
— | 12,324 | ||||||
| Net Income |
$ | 10,398 | $ | 20,927 | ||||
| Earnings Per Share (in dollars) |
||||||||
| Basic |
||||||||
| Income before cumulative effect of accounting change |
$ | 0.26 | $ | 0.36 | ||||
| Cumulative effect of accounting change |
— | 0.51 | ||||||
| $ | 0.26 | $ | 0.87 | |||||
| Diluted |
||||||||
| Income before cumulative effect of accounting change |
$ | 0.26 | $ | 0.35 | ||||
| Cumulative effect of accounting change |
— | 0.51 | ||||||
| $ | 0.26 | $ | 0.86 | |||||
| Weighted Average Shares Outstanding |
||||||||
| Basic |
40,247 | 24,015 | ||||||
| Diluted |
40,488 | 24,225 | ||||||
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, |
||||||||
| 2004 |
2003 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Net income |
$ | 10,398 | $ | 20,927 | ||||
| Items not affecting cash flows from operating activities |
||||||||
| Depreciation, depletion, amortization and accretion |
16,567 | 8,305 | ||||||
| Deferred income taxes |
6,634 | 4,737 | ||||||
| Cumulative effect of adoption of accounting change |
— | (12,324 | ) | |||||
| Stock appreciation rights and noncash compensation |
13,071 | (1,632 | ) | |||||
| Loss on derivatives |
557 | — | ||||||
| Other noncash items |
(44 | ) | 59 | |||||
| Change in assets and liabilities from operating activities |
||||||||
| Accounts receivable and other assets |
(1,300 | ) | (451 | ) | ||||
| Accounts payable and other liabilities |
(15,501 | ) | (1,594 | ) | ||||
| Net cash provided by operating activities |
30,382 | 18,027 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
| Additions to oil and gas properties |
(32,105 | ) | (12,768 | ) | ||||
| Proceeds from sale of oil and gas properties |
22,732 | — | ||||||
| Other |
(218 | ) | (2,372 | ) | ||||
| Net cash used in investing activities |
(9,591 | ) | (15,140 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
| Revolving credit facility |
||||||||
| Borrowings |
68,600 | 63,200 | ||||||
| Repayments |
(88,600 | ) | (66,500 | ) | ||||
| Other |
(183 | ) | 387 | |||||
| Net cash used in financing activities |
(20,183 | ) | (2,913 | ) | ||||
| Net increase (decrease) in cash and cash equivalents |
608 | (26 | ) | |||||
| Cash and cash equivalents, beginning of period |
1,377 | 1,028 | ||||||
| Cash and cash equivalents, end of period |
$ | 1,985 | $ | 1,002 | ||||
See notes to consolidated financial statements.
3
PLAINS EXPLORATION & PRODUCTION COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(in thousands of dollars)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Net Income |
$ | 10,398 | $ | 20,927 | ||||
| Other Comprehensive Income (Loss) |
||||||||
| Commodity hedging contracts, net of tax |
||||||||
| Change in fair value |
(39,882 | ) | (12,891 | ) | ||||
| Reclassification adjustment for settled contracts |
10,778 | 10,257 | ||||||
| Other, net of tax |
24 | 6 | ||||||
| (29,080 | ||||||||