Plains Exploration & Production Co. said Thursday it is selling some non-core properties on and offshore California, as well as nearly all of its assets in South Texas and New Mexico to reduce its unit cost structure. The transactions, which represent about 11% of the company’s production volumes but 20% of total cash production expenses, are expected to close by the end of this year.

“This divestment package is an integral part of Plains’ strategy to reduce our unit cost structure and focus on growth assets,” said CEO James C. Flores. “These properties include most of our highest cost and lowest margin assets. We expect that these divestitures will reduce our overall unit operating cost structure by approximately $0.85/bbl. Moreover, from Plains’ perspective, the upside potential in these properties is limited.”

Plains agreed to sell 11 platforms in federal and state waters off the coast of California and three related onshore facilities for $112.5 million to privately held Dos Cuadras Offshore Resources LLC. In addition, Dos Cuadras, which currently has ownership interests in several of these properties, will assume some of the decommissioning costs. As of Dec. 31, 2003 these properties had proven developed reserves of 26 MMboe and 10 MMboe of proved undeveloped reserves.

After the sale to Dos Cuadras closes, Plains’ offshore California operations will consist of its 52.6% interest in the Point Arguello field and 100% interest in the Point Pedernales field, along with associated pipelines and onshore facilities. Plains’ ongoing drilling program into the Rocky Point structure from the Point Arguello platforms are not affected by this sale of unrelated offshore non-core properties.

Plains also is selling nearly all of its South Texas and New Mexico assets, which had proven reserves of 5.6 MMboe as of Dec. 31, 2003. The company expects to sell all of the properties for a total of $40 million through negotiated and auction transactions.

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