Houston-based Plains Exploration and Production Co. (PXD) has agreed to sell some of its noncore assets in California and Texas to Occidental Petroleum Corp. for $865 million in cash. The sale includes PXD’s interests in California’s Asphalto, Buena Vista and Mount Poso fields in the San Joaquin Valley and the Sansinena Field in the Los Angeles Basin, as well as the Pakenham Field in West Texas.

The properties currently generate sales volumes, net of exchange related natural gas volumes, of 7,200 boe/d, and as of Dec. 31, 2005, PXD’s independent reserve engineers estimated proven reserves of 45 million boe. Occidental, which noted that the properties are adjacent to some of its other assets, said the properties will contribute about 56 million boe to its reserves. Occidental CEO Ray R. Irani said the company expects to substantially increase the current production rate to about 8,900 boe/d in the next few years.

PXD CEO James C. Flores said there had been “significant interest by multiple parties” in the properties. “This quickly executed divestment allows us to accelerate our realignment of personnel and management responsibilities on our remaining properties that have growth potential for the next several years. This sale, reflecting a significant premium to PXD’s net enterprise value per proven barrel of oil equivalent, is an important part of our ongoing strategy to capture asset values currently unrecognized by the equity markets.”

PXD, which expects the transaction to close by Oct. 1, plans to use the sales proceeds to reduce debt and continue repurchasing company shares. Lehman Brothers and Randall & Dewey, a division of Jefferies & Co., assisted PXD in the sales process.

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