PXP on of our Top Picks

[dan_s]

You should all read our recent company profile on PXP. Their new marketing contract in California will significantly increase top line revenues and cash flows. - Dan

Plains Exploration strengthens 2012 and 2013 oil derivative position to enhance and secure cash flow (PXP)

As previously announced in August, PXP executed a new marketing contract for its California crude production. The new contract that becomes effective January 1, 2012 covers ~90% of PXP's California production, extends the dedication from January 1, 2015 to January 1, 2023, and replaces the percent of NYMEX index pricing mechanism with a market-based pricing approach. In recent weeks, the PXP CA Basket Index price has averaged 92% of Brent; and net of PXP's transportation and quality discounts, the PXP CA Basket Index price has averaged 89% of Brent, representing an ~20% increase over existing NYMEX-based contracts.

Separately, PXP executed an agreement with a third party purchaser to sell its Eagle Ford crude oil using a Light Louisiana Sweet based pricing mechanism. In recent weeks, the LLS crude price has averaged 100% of Brent; and net of PXP's transportation and quality discounts, the LLS price has averaged 93% of Brent.

Oil production covered by the new "waterborne" contracts in California and the Texas Gulf Coast represents ~92% of PXP's total estimated 2012 crude production versus ~25% in 2011.