2010-10-05-2010-10-05

To buy 60,000 net acres in S TX Eagle Ford oil and gas windows, gaining 2,000 BOE/d, up to 175 MMBOE net resources.

Plains Exploration & Production Co., Houston, (NYSE: PXP) plans to acquire interests in approximately 60,000 net acres in the Eagle Ford oil and gas condensate windows in South Texas from an undisclosed seller for $578 million in cash.

The Eagle Ford properties are primarily in Karnes County and have projected net production capability of approximately 2,000 barrels of oil equivalent per day and a year-end 2011 production target exit rate of approximately 5,000 barrels equivalent per day net. The net resource potential is approximately 140- to 175 million barrels equivalent.

Of the 60,000 net acres, approximately 20,400 net acres are in a joint-operating area between Plains and EOG Resources Inc., Houston (NYSE: EOG).

Plains chairman, president and chief executive James C. Flores says, "We are pleased to announce this significant acquisition which enables us to aggressively expand our large, high-margin onshore oil business. The Eagle Ford transaction adds a high-quality oil asset with substantial reserve and oil production growth opportunities to Plains' existing domestic oil-resource position."

The deal is expected to close during the fourth quarter. The effective date is Sept. 1. J.P. Morgan is financial advisor to Plains.

Wells Fargo senior analyst David Tameron has valued the deal at approximately $9,633 per acre.

"EOG's Karnes County acreage, a portion of which we presume was sold, looks to be located primarily in the oil window of the play," says Tameron.