*Capital Budget*Plains Exploration and Production has released a
capital budget of $1.2 billion for 2011, up slightly from the $1.1
billion spent in 2010. This capital will be split between the
Haynesville Shale, Eagle Ford Shale, Granite Wash and the company's
properties in California.
Plains Exploration and Production indicated that 73% of this capital
will be directed towards plays that produce oil and other liquid
hydrocarbons. This is a marked departure from previous years where,
as recently as 2009, the company put only 7% of its capital into oil
and liquids plays.
Another shift for Plains Exploration and Production is that the
company is putting 72% of its capital into areas that the company is
operating. In 2009, 75% of its capital was spent on non operated
development.
*Oil Focus*Plains Exploration and Production will focus on developing
the Eagle Ford Shale in Texas in 2011, and also on its large acreage
position in California. The company plans to put 23% of its capital
budget into each of these areas in 2011.
Plains Exploration and Production has 60,000 net acres in the Eagle
Ford Shale and is involved in a joint venture with *EOG Resources*
(NYSE:EOG). The company also has its own operated acreage in the
play.
Plains Exploration and Production has 86,000 acres in California that
are prospective for the Monterey Shale. The company plans to drill
exploratory wells here in 2011 in three separate basins.
*Long Term Goals*The oil and liquids development planned for 2011 is
part of a plan to grow production by 10% to 15%, and proved reserves
by 15% to 20% annually over the next three years.
*Haynesville Shale*Although dry gas development is not currently in
fashion, Plains Exploration and Production is putting 18% of its
capital here in 2011. The company is involved in a joint venture with
*Chesapeake Energy* (NYSE:CHK), and is drilling mostly to hold acreage
in the play.
*Divestitures*Plains Exploration and Production has been divesting
assets to help fund its 2011 onshore development program. The company
recently closed on the sale of its Gulf of Mexico shallow water
properties to *McMoRan Exploration Co.* (NYSE:MMR) for $818 million in
cash and stock. Plains Exploration and Production is also marketing
its deepwater assets in the Gulf of Mexico.
*Bottom Line*
Plains Exploration and Production likes oil and liquids plays due to
the higher returns these plays generate, and the company will put most
of its capital into these areas in 2011.
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Source: Investopedia.Com
