High commodity prices and an active market for assets have prompted Houston-based Plains Exploration & Production Co. (PXP) to pursue the divestiture of nonstrategic oil and gas properties, mainly in California and Texas, the company said Wednesday. Separately, Midland, TX-based independent Saber Resources LLC hired Energy Spectrum Advisors Inc. (ESA) to divest all of its oil and gas interests in the Permian Basin, which are about 90% oil producing.

“PXP believes this environment provides a unique opportunity to capture asset value currently unrecognized by the equity markets,” the company said.

PXP said it plans to realize more than $1 billion from a combination of asset sale proceeds and free cash flow for the remainder of the year. Proceeds will be used to pay down debt and buy back shares, it said.

Properties to be divested currently produce about 8,000 boe/d. Certain properties to be offered include Buena Vista and Mt. Poso Fields in the San Joaquin Valley, Sansinena Field in the Los Angeles Basin and Pakenham Field in West Texas. The sales will be conducted in a combination of negotiated and auction transactions and are expected to close during the fourth quarter. PXP will retain Lehman Brothers and Randall & Dewey, a division of Jefferies & Co., to assist in the sales process.

PXP estimates that sales volumes for the second quarter will be between 61,000 and 62,000 boe/d. For the second half of 2006 PXP estimates that sales volumes will range between 63,000 and 68,000 boe/d. PXP core operating areas are onshore and offshore California and the Gulf Coast region.

As for Saber, the company currently has 31 wells producing approximately 580 net boe/d. Production has been increasing due to ongoing development, and Saber expects production to be approximately 650 net boe/d by the end of July. Approximately 85% of the production comes from the Knowles South and the Denton fields, which are both in Lea County, NM. Saber operates the majority of the production and the identified upside. ESA is preparing a property sale memorandum and data CD for distribution in July. ESA will host a data room in its Dallas offices in August.

Ben Davis, ESA senior vice president, told NGI his client’s decision to sell assets is just evidence of continued bullishness in the market at large. Anadarko’s double acquisition announced last week (see Daily GPI, June 26) gives support to but isn’t driving smaller transactions, he said. “I think it’s just a general sign of optimism…if they’re bullish at the top of the food chain, it would certainly suggest that the rest of us are sane in our bullishness as we move down the food chain.”

For more information on the Saber properties, potential buyers should contact Davis at (214) 987-6122 or ben.davis@energyspectrum.com.

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