Houston-based Plains Exploration & Production Co. (PXP) said Thursday it hopes to raise $1-2 billion from its Gulf of Mexico (GOM) properties either through third-party joint ventures or through asset sales “to align capital spending with operating cash flow.”

The independent, which didn’t indicate a time frame for the sales, said it had “studied its GOM operations over the past few months and now plans to reduce its GOM exposure and related capital spending while delivering to its shareholders the unrecognized value created by our recent drilling success” in the onshore.

Although PXP’s extensive GOM operations are being cut back or eliminated, the onshore operations delivered strong quarterly results.

At the Granite Wash development in the Texas Panhandle, PXP is operating four rigs and plans to add another rig by the end of September. “The five-rig program will enable PXP to spud up to 19 horizontal wells in 2010 and 22 projected wells in 2011,” said the company. This year two producing wells have been drilled and a third is awaiting completion.

PXP’s first Granite Wash horizontal producer, the Thomas 903-H well in the Wheeler area, was completed with an initial production (IP) rate of 12.2 MMcf/d with 1,373 b/d of condensate and an estimated 1,311 b/d of natural gas liquids (NGL) per day (3,653 boe/d net). A second well was completed with an IP rate of 15.4 MMcf/d with 746 b/d of condensate and 1,532 barrels b/d of NGL (3,822 boe/d net).

In the Haynesville Shale, 2Q2010 average sales volumes were 106 MMcfe/d net, which is 19% more than in the first three months of this year.

“With interests in nearly 50 active drilling rigs, production from this asset area is expected to exceed 125 MMcfe/d net in the fourth quarter 2010 and to contribute approximately 60% of PXP’s production growth for the second half of 2010,” said the company.

PXP also continues to develop its onshore projects in California. This year it has drilled 59 wells in the San Joaquin Valley and one well in the Los Angeles Basin. During the second half of the year PXP plans to drill up to 40 wells in the San Joaquin Valley and up to 25 wells in the Los Angeles Basin.

Net profits in 2Q2010 fell by almost half from the year-ago period to $36.9 million (26 cents/share) from $71.7 million (60 cents) on hedging losses and asset sales. Minus the one-time items, net income would have been $45.4 million (32 cents/share) versus $43.6 million (37 cents). Revenue in the latest period was $364.6 million, and operating net cash was $252.7 million.

Average sales volumes for quarter, weighted 53% to oil, were 85,000 boe/d, which was 5% higher than in 2Q2009. Total production costs were $13.03/boe in 2Q2010, or 10% below costs of $14.43 a year earlier.

Sales volumes in the latest quarter were riddled by a fire and resulting damage at a natural gas processing facility at the Madden Field in Fremont County, WY, which reduced quarterly net production from the field to PXP by about 850 boe/d. Current net production at the Madden Field, which is at 75% capacity, is 3,800 boe/d. The operator told PXP that it expects to return to full capacity by the end of the year.

PXP reaffirmed its 2010 full-year operating and financial guidance, “but with lower volumes due to the facilities fire at the Madden Field, PXP expects full-year 2010 average daily sales volumes to be at the lower end of the stated guidance of 88,000-92,000 boe/d,” it said.

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