Plains Exploration & Production (PXP) intends to fund the majority of the purchase price with proceeds from its completed divestments through the use of a tax deferred like-kind exchange.
The properties currently produce approximately 33 million cubic feet equivalent per day net to the firm. PXP estimates proved reserves are approximately 106 billion cubic feet equivalent (Bcfe) with an additional 70Bcfe of unproved resource potential.
The transaction is effective as of January 1, 2008, and is expected to close during the second quarter subject to customary closing conditions and purchase price adjustments.
James Flores, chairman and CEO of PXP, said: Due to the company’s superior financial position from high cash flow due to record commodity prices, we are opportunistically acquiring excellent production and development assets in south Texas to expand this strong operating area for PXP.
