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 September 30, 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 ¨
77.1 million shares of Common Stock, $0.01 par value, issued and outstanding at October 29, 2004.
PLAINS EXPLORATION & PRODUCTION COMPANY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| PART I. FINANCIAL INFORMATION |
||
| Item 1. Unaudited Financial Statements: |
||
|
Consolidated Balance Sheets |
1 | |
| 2 | ||
|
Consolidated Statements of Cash Flows |
3 | |
| 4 | ||
| 5 | ||
| 6 | ||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
28 | |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk |
43 | |
| 45 | ||
| PART II. OTHER INFORMATION |
46 | |
PLAINS EXPLORATION & PRODUCTION COMPANY
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands of dollars)
| September 30, 2004 |
December 31, 2003 |
|||||||
| ASSETS | ||||||||
| Current Assets |
||||||||
| Cash and cash equivalents |
$ | 1,790 | $ | 1,377 | ||||
| Accounts receivable—Plains All American Pipeline, L.P. |
27,747 | 25,344 | ||||||
| Other accounts receivable |
91,777 | 25,267 | ||||||
| Inventories |
6,831 | 5,318 | ||||||
| Deferred income taxes |
90,718 | 21,807 | ||||||
| Assets held for sale |
43,612 | — | ||||||
| Other current assets |
9,615 | 3,019 | ||||||
| 272,090 | 82,132 | |||||||
| Property and Equipment, at cost |
||||||||
| Oil and natural gas properties—full cost method |
||||||||
| Subject to amortization |
2,420,467 | 1,074,302 | ||||||
| Not subject to amortization |
180,356 | 63,658 | ||||||
| Other property and equipment |
10,253 | 4,939 | ||||||
| 2,611,076 | 1,142,899 | |||||||
| Less allowance for depreciation, depletion and amortization |
(272,972 | ) | (186,004 | ) | ||||
| 2,338,104 | 956,895 | |||||||
| Goodwill |
221,499 | 147,251 | ||||||
| Other Assets |
30,087 | 19,641 | ||||||
| $ | 2,861,780 | $ | 1,205,919 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities |
||||||||
| Accounts payable |
$ | 89,528 | $ | 41,736 | ||||
| Commodity derivative contracts |
274,749 | 55,123 | ||||||
| Royalties payable |
41,456 | 19,080 | ||||||
| Stock appreciation rights |
32,711 | 16,049 | ||||||
| Interest payable |
11,189 | 622 | ||||||
| Deposit on assets held for sale |
40,711 | — | ||||||
| Other current liabilities |
30,917 | 22,476 | ||||||
| 521,261 | 155,086 | |||||||
| Long-Term Debt |
||||||||
| 8.75% Senior Subordinated Notes |
276,773 | 276,906 | ||||||
| 7.125% Senior Notes |
248,718 | — | ||||||
| Revolving credit facility |
263,000 | 211,000 | ||||||
| 788,491 | 487,906 | |||||||
| Asset Retirement Obligation |
163,144 | 33,235 | ||||||
| Commodity Derivative Contracts |
234,312 | 23,697 | ||||||
| Other Long-Term Liabilities |
7,962 | 8,497 | ||||||
| Deferred Income Taxes |
355,164 | 143,242 | ||||||
| Commitments and Contingencies (Note 6) |
||||||||
| Stockholders’ Equity |
||||||||
| Common stock |
772 | 403 | ||||||
| Additional paid-in capital |
910,281 | 322,856 | ||||||
| Retained earnings |
52,879 | 71,566 | ||||||
| Accumulated other comprehensive income |
(172,091 | ) | (40,439 | ) | ||||
| Treasury stock |
(395 | ) | (130 | ) | ||||
| 791,446 | 354,256 | |||||||
| $ | 2,861,780 | $ | 1,205,919 | |||||
See notes to consolidated financial statements.
1
PLAINS EXPLORATION & PRODUCTION COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except per share data)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues |
||||||||||||||||
| Oil sales to Plains All American Pipeline, L.P. |
$ | 69,173 | $ | 58,903 | $ | 196,459 | $ | 178,496 | ||||||||
| Other oil sales |
122,540 | 5,366 | 185,722 | 7,002 | ||||||||||||
| Oil hedging |
(43,046 | ) | (11,595 | ) | (84,679 | ) | (37,863 | ) | ||||||||
| Gas sales |
62,012 | 37,011 | 159,235 | 57,240 | ||||||||||||
| Gas hedging |
(1,185 | ) | 5,437 | (2,246 | ) | 5,436 | ||||||||||
| Other operating revenues |
867 | 260 | 1,601 | 667 | ||||||||||||
| 210,361 | 95,382 | 456,092 | 210,978 | |||||||||||||
| Costs and Expenses |
||||||||||||||||
| Production costs |
||||||||||||||||
| Lease operating expenses |
44,501 | 18,606 | 92,066 | 49,168 | ||||||||||||
| Steam gas costs |
14,309 | 686 | 22,620 | 2,147 | ||||||||||||
| Electricity |
9,207 | 5,307 | 21,720 | 15,635 | ||||||||||||
| Production and ad valorem taxes |
6,565 | 3,893 | 15,118 | 6,749 | ||||||||||||
| Gathering and transportation expenses |
2,581 | 969 | 5,567 | 1,296 | ||||||||||||
| General and administrative |
||||||||||||||||
| G&A excluding items below |
12,073 | 5,517 | 30,916 | 14,274 | ||||||||||||
| Stock appreciation rights |
15,023 | 4,670 | 28,449 | 7,317 | ||||||||||||
| Merger related costs |
2,430 | 2,007 | 3,475 | 3,104 | ||||||||||||
| Depreciation, depletion, amortization and accretion |
45,807 | 16,201 | 94,242 | 35,327 | ||||||||||||
| 152,496 | 57,856 | 314,173 | 135,017 | |||||||||||||
| Income from Operations |
57,865 | 37,526 | 141,919 | 75,961 | ||||||||||||
| Other Income (Expense) |
||||||||||||||||
| Interest expense |
(10,969 | ) | (6,936 | ) | (26,506 | ) | (17,130 | ) | ||||||||
| Debt extinguishment costs |
— | (224 | ) | (19,691 | ) | (224 | ) | |||||||||
| Gain (loss) on mark-to-market derivative contracts |
(124,651 | ) | 1,741 | (125,842 | ) | 3,207 | ||||||||||
| Interest and other income |
364 | 234 | 669 | 67 | ||||||||||||
| Income (Loss) Before Income Taxes and Cumulative Effect of Accounting Change |
(77,391 | ) | 32,341 | (29,451 | ) | 61,881 | ||||||||||
| Income tax expense |
||||||||||||||||
| Current |
(463 | ) | (271 | ) | (607 | ) | (2,700 | ) | ||||||||
| Deferred |
29,876 | (14,526 | ) | 11,371 | (24,134 | ) | ||||||||||
| Income (Loss) Before Cumulative Effect of Accounting Change |
(47,978 | ) | 17,544 | (18,687 | ) | 35,047 | ||||||||||
| Cumulative effect of accounting change, net of tax |
— | — | — | 12,324 | ||||||||||||
| Net Income (Loss) |
$ | (47,978 | ) | $ | 17,544 | $ | (18,687 | ) | $ | 47,371 | ||||||
| Earnings (Loss) Per Share (in dollars) |
||||||||||||||||
| Basic |
||||||||||||||||
| Income (loss) before cumulative effect of accounting change |
$ | (0.62 | ) | $ | 0.44 | $ | (0.32 | ) | $ | 1.13 | ||||||
| Cumulative effect of accounting change |
— | — | — | 0.40 | ||||||||||||
| $ | (0.62 | ) | $ | 0.44 | $ | (0.32 | ) | $ | 1.53 | |||||||
| Diluted |
||||||||||||||||
| Income (loss) before cumulative effect of accounting change |
$ | (0.62 | ) | $ | 0.43 | $ | (0.32 | ) | $ | 1.12 | ||||||
| Cumulative effect of accounting change |
— | — | — | 0.39 | ||||||||||||
| $ | (0.62 | ) | $ | 0.43 | $ | (0.32 | ) | $ | 1.51 | |||||||