Plains Exploration & Production Co. (PXP) said Thursday it had growth in 2010 in average daily sales volume and in proved reserves, while also posting net income of $103.3 million for the year.

The Houston-based company said average daily barrel of oil equivalent (boe) sales increased 7% year over year. Proved reserves totaled 416.1 million boe, of which 54% was oil and 46% was natural gas, and 57% was developed versus 43% undeveloped. Those estimates are based on the 12-month average West Texas Intermediate oil price of $79.43/bbl and a Henry Hub natural gas price of $4.38/MMBtu.

PXP added 98.5 million boe to its total proved reserves in 2010, replacing 302% of 2010 production at a cost of $17.69/boe. Finding and development costs, minus acquisition costs, totaled $11.15/boe.

For 2010 PXP had revenues of $1.5 billion and net income of $103.3 million (73 cents/share), compared to revenues of $1.2 billion and net income of $136.3 million ($1.09/share), for 2009. The company said derivatives, an impairment to its properties in Vietnam and other items had a negative effect on net income for the year. Excluding them, PXP posted net income of $150.2 million ($1.06/share) for 2010.

CEO James Flores said the company reevaluated its Gulf of Mexico (GOM) operations because of the continuing de facto moratorium on oil and gas drilling there. He said that because of the ban, PXP was shifting to onshore drilling.

"[We] determined the greatest benefit to our shareholders was to adjust our long-term operational plan to an onshore versus offshore oil growth strategy," Flores said. "We reduced our [GOM] expenses and long lead-time capital requirements by divesting our shelf assets."

Last September, McMoRan Exploration Co. acquired all of PXP's interests and exploration rights on the Outer Continental Shelf, the shallow waters of the GOM. McMoRan, a New Orleans-based producer, paid $75 million in cash and issued 51 million shares of common stock in the deal, making PXP a 23% shareholder. Flores said the deal was worth $900 million based on PXP's Dec. 30 closing stock price (see Daily GPI, Sept. 21, 2010).

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