Plains Exploration and Production Company (NYSE:PXP) held a recent analyst meeting, and outlined the company's long-term plan to grow production and reserves through 2015. This effort involves the development of a number of onshore and offshore areas, and will lead to a further increase in the company's orientation towards crude oil and other liquids.
Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.

Growth Targets
Plains Exploration is targeting annual production growth of 15 to 20% per year, along with annual proved reserves growth of 20%. If the company is successful with its development program, production is projected to be 140,000 barrels of oil equivalent (BOE) per day in 2015, up from an estimated 80,000 BOE per day in 2011. Proved reserves should reach 616 million BOE in 2013, up from 350 million BOE in 2010. (For related reading, see Oil: A Big Investment With Big Tax Breaks.)

Oil Vs. Natural Gas
Plains Exploration has set a $1.6 billion capital budget in 2012, with the majority of the capital dedicated to properties that produce crude oil. These include the Eagle Ford Shale, California and the Gulf of Mexico. The company expects that 68% of the production will be crude oil by 2015, up from 54% of expected 2011 production.

Eagle Ford Shale
The Company will spend 34% of its 2012 capital budget to develop the Eagle Ford Shale. It has 58,700 net acres under lease, and will operate as many as nine rigs to develop the Eagle Ford Shale in 2012.

Eagle Ford Shale production is currently at approximately 10,000 BOE per day and growth from this play will nearly triple by 2014, providing much of the growth needed to meet the company's goals.

The company will spend $300 million, or 20% of its 2012 capital budget on properties in California. It has 211 million BOE of proved reserves in this state, and plans to drill 116 wells here in 2012.

It has approximately 2,300 drilling locations and expects production from the San Joaquin Valley and Los Angeles Basins to grow at a 9 and 10% compound annual growth rate, respectively, from 2011 to 2015.

Another operator with operations in California is Venoco (NYSE:VQ), which has both onshore and offshore assets. The company has the majority of its production from the Sacramento Basin in the northern part of the state.

Berry Petroleum (NYSE:BRY) has oil and gas properties in the San Joaquin Basin in southern California. The company estimates that 2011 production from California will total approximately 20,000 BOE per day. (For related reading, see What Determines Oil Prices?)

Gulf of Mexico
Plains Exploration has 191,000 net acres across 102 blocks in the deepwater area of the Gulf of Mexico. The company is involved with Anadarko Petroleum (NYSE:APC) in the Lucius discovery, and expects first production from here in 2014.

Plains Exploration also has considerable upside from additional drilling at Lucius, as well as the company's exploration portfolio in the deepwater Gulf of Mexico.

The Bottom Line
Plains Exploration and Production Company has a detailed plan to grow the company's production and reserves over the next five years. One component of this exploration development program that distinguishes the company from its peers is that it does not rely solely on trendy onshore shale plays to generate this growth.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  2. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
  3. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  4. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  5. Investing

    Don't Freak Out Over Black Swans; Be Prepared

    Could 2016 be a big year for black swans? Who knows? Here's what black swans are, how they can devastate the unprepared, and how the prepared can emerge unscathed.
  6. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
  7. Economics

    4 Countries Pleading for Higher Commodity Prices

    Discover what countries are struggling the most from the price collapse in commodities and what these countries require to return to economic growth.
  8. Investing News

    Bank Stocks: Time to Buy or Avoid? (WFC, JPM, C)

    Bank stocks have been pounded. Is this the right time to buy or should they be avoided?
  9. Stock Analysis

    Why the Bullish Are Turning Bearish

    Banks are reducing their targets for the S&P 500 for 2016. Here's why.
  10. Stock Analysis

    How to Find Quality Stocks Amid the Wreckage

    Finding companies with good earnings and hitting on all cylinders in this environment, although possible, is not easy.
  1. When does a growth stock turn into a value opportunity?

    A growth stock turns into a value opportunity when it trades at a reasonable multiple of the company's earnings per share ... Read Full Answer >>
  2. What is the formula for calculating EBITDA?

    When analyzing financial fitness, corporate accountants and investors alike closely examine a company's financial statements ... Read Full Answer >>
  3. How do I calculate the P/E ratio of a company?

    The price-earnings ratio (P/E ratio) is a valuation measure that compares the level of stock prices to the level of corporate ... Read Full Answer >>
  4. How do you calculate return on equity (ROE)?

    Return on equity (ROE) is a ratio that provides investors insight into how efficiently a company (or more specifically, its ... Read Full Answer >>
  5. How do you calculate working capital?

    Working capital represents the difference between a firm’s current assets and current liabilities. The challenge can be determining ... Read Full Answer >>
  6. What is the formula for calculating the current ratio?

    The current ratio is a financial ratio that investors and analysts use to examine the liquidity of a company and its ability ... Read Full Answer >>
Trading Center