DOW JONES NEWSWIRES
Plains Exploration & Production Co. (PXP:$35.5600,$-0.4300,-1.19%) is still reviewing options to separate its deepwater and onshore businesses but said current market conditions are undervaluing the assets.
Shares were trading down 1.6% at $35 premarket. As of Wednesday's $35.56 close, the stock had risen 18% over the past year.
"The deepwater separation process reflects a discounted value due to the current regulatory uncertainties, permit delays, and reduced activity for Gulf of Mexico exploration and development," said Chairman and Chief Executive James C. Flores. The company plans to wait for the regulatory uncertainties to abate before proceeding.
The company said it may fund its deepwater business through a joint venture or outside capital and then either spin-off or sell the assets.
Plains estimated capital exposure for the properties at $50 million to $60 million in 2011, with the easing of Gulf of Mexico activity curtailments.
Like many of its peers, Plains has tilted its resources toward the production of oil and liquid natural gasses, which trade in energy markets at a premium over dry natural gas, or methane. McMoRan Exploration Co. (MMR:$17.2800,$0.5200,3.10%) acquired Plains' shallow-water operations in the Gulf of Mexico plus other assets in December.
Plains said in February it swung to a fourth-quarter loss after low natural gas prices and heavy derivatives losses cut into the bottom line.
-By Melodie Warner, Dow Jones Newswires; 212-416-2283; melodie.warner@ dowjones.com