PXP Announces 2009 Third Quarter Results ---- Net income was $39.3 million or $0.30 per diluted share.---- Net income including realized gains and losses and excluding unrealized gains and losses on our mark-to-market derivative contracts was $185.3 million, or $1.40 per diluted share (a non-GAAP measure).---- Average daily sales volumes increased 3% to 83.0 thousand barrels of oil equivalent (BOE) from the second quarter 2009. Excluding the impact of our 2008 divestments, increased production from the Haynesville Shale and Flatrock resulted in an 8% increase in the average daily sales volumes for the first nine months of 2009 compared to the same period a year ago.---- Total production costs per BOE decreased 9% to $13.11 from the second quarter 2009.---- Haynesville Shale average daily production net to PXP increased 71% to approximately 48 million cubic feet equivalent (MMCFE) per day from the second quarter 2009. Production is expected to exceed 70 MMCFE per day net to

HOUSTON, Nov 05, 2009 /PRNewswire-FirstCall via COMTEX/ -- Plains Exploration & Production Company (NYSE: PXP) ("PXP" or the "Company") announces third quarter 2009 financial and operating results and files full-year 2010 guidance with the SEC on a Form 8-K.

Revenues of $312.2 million generated $39.3 million of net income, or $0.30 per diluted share, in the third quarter 2009. Net income including realized gains and losses and excluding unrealized gains and losses on our mark-to-market derivative contracts was $185.3 million, or $1.40 per diluted share (a non-GAAP measure). Net cash provided by operating activities was $168.2 million and operating cash flow was $427.9 million (a non-GAAP measure).

A reconciliation of non-GAAP financial measures used in this release to comparable GAAP financial measures is included with the financial tables in this release.

James C. Flores, Chairman, President and CEO of PXP commented, "We delivered solid results for the third quarter and are financially and operationally well positioned to continue delivering strong and consistent reserve and production growth. PXP reports significant progress in lowering costs, increasing production, strengthening liquidity and expanding its resource potential during today's challenging environment. Excluding the impact of our 2008 divestments, increased production from the Haynesville Shale and Flatrock properties resulted in an 8% increase in sales volumes in the first nine months of 2009 compared to the same period a year ago. Lease operating expenses per unit decreased 7% for the first nine months due to the success of our cost reduction program. The favorable quarterly results again highlight our sound execution of the strategic plan, successful hedge program, and high-quality asset base.

"Our 2010 capital spending plan leverages on those strengths and allocates capital to asset areas with the greatest returns and highest growth prospects.

PXP's Board of Directors approved a $900 million to $1.1 billion 2010 capital budget versus an estimated $1.55 billion 2009 capital budget. The 2010 capital investment is predominately focused on the continued development of our substantial Haynesville Shale acreage position, our large, high free-cash flow California oil business and our Texas Panhandle, South Texas and Gulf of Mexico asset areas. Approximately 10% of the 2010 capital plan is allocated to Gulf of Mexico exploration. We continue to target reserve growth of 20% through 2011 and production growth of 8-10% in 2010 and 2011 driven by the Haynesville Shale layered on top of our stable oil production base. PXP remains focused on cost control, operational execution and reserve and production growth from its balanced portfolio of excellent assets." OPERATIONAL HIGHLIGHTS -- Outstanding drilling results continue in the Haynesville Shale and production from this resource base is growing quickly. Third quarter average daily production of approximately 48 million cubic feet equivalent (MMCFE) net to PXP has ramped up from 14 MMCFE per day net during the first quarter 2009 and 28 MMCFE per day net in the second quarter. Production is expected to continue to increase and exceed approximately 70 MMCFE per day net by year-end 2009 and approximately 125 MMCFE net per day by year-end 2010. PXP and its partner, and operator, Chesapeake Energy Corporation (NYSE: CHK) are currently operating 35 rigs and expect to operate an average of 40 rigs in 2010, plus 15 or more rigs operated by others on our acreage consistent with this year's activity.

Two notable Haynesville Shale wells completed by Chesapeake are as follows: The Caspiana 13-15-12 H-1 in Caddo Parish, LA achieved a peak rate of 20.2 million cubic feet (MMCF) per day; and The Bradway 24-15-12 H-1 in Caddo Parish, LA achieved a peak rate of 18.6 MMCF per day.

-- The Flatrock area wells averaged 59 MMCFE per day net to PXP in the third quarter of 2009. As previously reported, the Flatrock #5 well was re-completed in the primary Rob-L zone in September 2009. The Flatrock #3 well is currently offline and will be re-completed in the fourth quarter of 2009. The Flatrock #4 well was shut in during August 2009 because of a mechanical (not reservoir) issue associated with the well bore and is expected to recommence production by year-end 2009.

-- Positive drilling results at the Blueberry Hill exploratory well, operated by McMoRan and located on Louisiana State Lease 340 in the Gulf of Mexico, indicate a discovery. A second sidetrack well was drilled to a total depth of 21,942 feet in October 2009. The operator plans to temporarily abandon the sidetrack #2 well and drill an offset appraisal well approximately 2,000 feet southeast with a proposed total depth of 21,850 feet. Offset drilling operations are expected to commence in November 2009. Development planning is underway. Blueberry Hill is located 11 miles southeast of Flatrock. PXP holds a 47.9% working interest.

-- The Hurricane Deep sidetrack well, operated by Chevron and located on South Marsh Island 217, on the southern flank of the Flatrock structure has a proposed total depth of 21,750 feet and is targeting the significant Gyro sand encountered in the Hurricane Deep well. The operator plans to commence sidetrack operations in the fourth quarter of 2009. PXP holds a 30.0% working interest.

-- Three significant Gulf of Mexico exploration prospects with a total reserve potential of more than 200 million BOE net to PXP are currently drilling: - The Davy Jones exploration prospect, operated by McMoRan and located on South Marsh Island Block 230 is drilling towards a proposed total depth of 28,000 feet. PXP holds a 27.7% working interest.

- The Rickenbacker exploration prospect, operated by Anadarko and located on Keathley Canyon Block 470, is drilling towards a proposed total depth of approximately 33,700 feet. PXP holds a 15.0% working interest.

- The Lucius exploration prospect, operated by Anadarko and located on Keathley Canyon Block 875, began drilling operations in October and is drilling towards a proposed total depth of 21,000 feet. PXP holds a 33.3% working interest.

-- The Northwood exploration prospect, operated by Chevron and located on Green Canyon Block 945, was drilled to a total depth of 35,955 feet and is being plugged and abandoned.

DERIVATIVE SUMMARY Approximately 80% of our 2009 estimated sales volumes, using the mid-point of our annual guidance, are protected by oil and natural gas derivative positions and natural gas physical purchases. For 2009, natural gas volumes are protected with $10 by $20 collars on 150,000 MMBtu per day while crude oil volumes have put options with a $55 strike price on 32,500 barrels per day. Approximately 68% of our 2010 estimated sales volumes, using the mid-point of our annual guidance, are protected by oil and natural gas derivative positions and natural gas physical purchases. For 2010, natural gas volumes are protected by three-way collars having a $6.12 floor with $4.64 limit and an $8.00 ceiling on 85,000 MMBtu per day, and crude oil volumes for 2010 have put options with a $55 strike price on 40,000 barrels per day. A summary of PXP's open commodity derivative positions is included with the financial tables in this release.

2010 FULL-YEAR GUIDANCE PXP filed full-year 2010 guidance with the SEC in a Form 8-K.

CONFERENCE CALL PXP will host a conference call today, Thursday, November 5, 2009 at 8:00 a.m.

Central time. Investors wishing to participate in the conference call may dial 1-800-567-9836 or 1-973-935-8460. The conference call and replay ID is: 34949709. The replay can be accessed by dialing 1-800-642-1687 or 1-706-645-9291. A live webcast of the conference call will be available in the Investor Information section of PXP's website at www.pxp.com.

PXP is an independent oil and gas company primarily engaged in the activities of acquiring, developing, exploring and producing oil and gas in California, Texas, Louisiana and the Gulf of Mexico. PXP is headquartered in Houston, Texas.

ADDITIONAL INFORMATION & FORWARD-LOOKING STATEMENTS This press release contains forward-looking information regarding PXP that is intended to be covered by the safe harbor "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. All statements included in this press release that address activities, events or developments that PXP expects, believes or anticipates will or may occur in the future are forward-looking statement. These include statements regarding: * reserve and production estimates, * oil and gas prices, * the impact of derivative positions, * production expense estimates, * cash flow estimates, * future financial performance, * capital and credit market conditions, * planned capital expenditures, and * other matters that are discussed in PXP's filings with the SEC.

These statements are based on our current expectations and projections about future events and involve known and unknown risks, uncertainties, and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. Please refer to our filings with the SEC, including our Form 10-K, for the year ended December 31, 2008, for a discussion of these risks.

All forward-looking statements in this report are made as of the date hereof, and you should not place undue reliance on these statements without also considering the risks and uncertainties associated with these statements and our business that are discussed in this report and our other filings with the SEC.

Moreover, although we believe the expectations reflected in the forward-looking statements are based upon reasonable assumptions, we can give no assurance that we will attain these expectations or that any deviations will not be material.

Except for any obligation to disclose material information under the Federal securities laws, we do not intend to update these forward-looking statements and information.

Plains Exploration & Production Company Consolidated Statements of Income (Unaudited) (amounts in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- Revenues Oil sales $249,619 $528,787 $625,822 $1,531,138 Gas sales 62,428 181,971 192,233 528,374 Other operating revenues 141 8,779 1,326 15,805 --- ----- ----- ------ 312,188 719,537 819,381 2,075,317 ------- ------- ------- --------- Costs and Expenses Lease operating expenses 60,276 76,943 194,564 236,699 Steam gas costs 10,956 37,418 37,425 110,175 Electricity 10,585 14,367 33,895 36,665 Production and ad valorem taxes 7,917 27,348 29,995 77,757 Gathering and transportation expenses 10,349 4,405 25,667 15,356 General and administrative 36,419 29,374 111,066 114,505 Depreciation, depletion and amortization 101,755 139,956 280,691 411,558 Accretion 3,541 3,258 10,628 9,868 Legal recovery - - (87,272) - Other operating (income) expense (4,403) - 1,553 - ------ --- ----- --- 237,395 333,069 638,212 1,012,583 ------- ------- ------- --------- Income from Operations 74,793 386,468 181,169 1,062,734 Other Income (Expense) Gain on sale of assets - - - 34,658 Interest expense (16,355) (32,994) (54,287) (87,114) Debt extinguishment costs (1,183) (3,138) (12,093) (13,401) Gain on mark-to-market derivative contracts 14,795 451,083 13,217 390,175 Other income (expense) 569 (13,842) 761 (12,181) --- ------- --- ------- Income Before Income Taxes 72,619 787,577 128,767 1,374,871 Income tax expense Current (21,696) (210,023) (33,757) (312,276) Deferred (11,597) (84,409) (6,837) (203,031) ------- ------- ------ -------- Net Income $39,326 $493,145 $88,173 $859,564 ======= ======== ======= ======== Earnings per Share Basic $0.30 $4.58 $0.74 $7.87 Diluted $0.30 $4.50 $0.73 $7.72 Weighted Average Shares Outstanding Basic 131,701 107,725 119,288 109,195 ======= ======= ======= ======= Diluted 132,725 109,617 120,003 111,297 ======= ======= ======= ======= Plains Exploration & Production Company Operating Data (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- Daily Average Volumes Oil and liquids sales (Bbls) 47,399 55,803 48,521 56,199 Gas (Mcf) Production 220,103 225,232 204,605 220,145 Used as fuel 6,443 5,691 6,678 6,053 Sales 213,660 219,541 197,927 214,092 BOE Production 84,083 93,342 82,622 92,890 Sales 83,009 92,393 81,509 91,881 Unit Economics (in dollars) Average NYMEX Prices Oil $68.24 $118.22 $57.32 $113.52 Gas 3.40 10.28 3.91 9.76 Average Realized Sales Price Before Derivative Transactions Oil (per Bbl) $57.26 $103.00 $47.24 $99.43 Gas (per Mcf) 3.18 9.01 3.56 9.00 Per BOE 40.86 83.62 36.76 81.81 Cash Margin per BOE (1) Oil and gas revenues $40.86 $83.62 $36.76 $81.81 Costs and expenses Lease operating expenses (7.89) (9.06) (8.75) (9.40) Steam gas costs (1.43) (4.40) (1.68) (4.38) Electricity (1.39) (1.69) (1.52) (1.46) Production and ad valorem taxes (1.04) (3.22) (1.35) (3.09) Gathering and transportation (1.36) (0.52) (1.15) (0.61) Oil and gas related DD&A (12.66) (15.71) (11.89) (15.72) ------ ------ ------ ------ Gross margin (GAAP) 15.09 49.02 10.42 47.15 Oil and gas related DD&A 12.66 15.71 11.89 15.72 Realized gains and losses on derivative instruments (2) 32.30 (1.81) 34.25 (2.17) ----- ----- ----- ----- Cash margin (Non-GAAP) $60.05 $62.92 $56.56 $60.70 ====== ====== ====== ====== Oil and gas capital expenditures accrued ($ in thousands) (3) $446,630 $356,762 $1,249,048 $806,408 (1) Cash margin per BOE (a non-GAAP measure) is calculated by adjusting gross margin per BOE (a GAAP measure) to include realized gains and losses on derivative instruments and to exclude DD&A. Management believes this presentation may be helpful to investors as it represents the cash generated by our oil and gas production that is available for, among other things, capital expenditures and debt service. PXP management uses this information to analyze operating trends for comparative purposes within the industry. This measure is not intended to replace the GAAP statistic but rather to provide additional information that may be helpful in evaluating trends and performance.

(2) Three and nine months ended September 30, 2009 amounts include $38.94 per barrel or $22.23 per BOE attributable to July-September 2009 production and $29.82 per barrel or $17.75 per BOE attributable to March-September 2009 production, respectively, for the $106 crude oil puts and $54 crude oil swaps that were monetized in the first quarter of 2009. Year to date amounts also include $9.16 per barrel or $5.45 per BOE associated with the January and February settlement of the $106 crude oil puts and the $54 crude oil swaps that we monetized in the first quarter of 2009.

(3) Additions to oil and gas properties reported in our consolidated statement of cash flows differ from the accrual basis amounts reflected above due to the timing of cash payments. Excludes acquisitions.

Plains Exploration & Production Company Reconciliation of GAAP to Non-GAAP Measure Three Months Ended September 30, 2009 ------------------ Oil Gas BOE --- --- --- Average Realized Sales Price Average realized price before derivative instruments (GAAP) (1) $57.26 $3.18 $40.86 Realized gains on derivative instruments (2) 36.83 4.38 32.30 ----- ---- ----- Realized cash price including derivative settlements (non-GAAP) $94.09 $7.56 $73.16 ====== ===== ====== Three Months Ended September 30, 2008 ------------------ Oil Gas BOE --- --- --- Average Realized Sales Price Average realized price before derivative instruments (GAAP) (1) $103.00 $9.01 $83.62 Realized gains and losses on derivative instruments (4.22) 0.31 (1.81) ----- ---- ----- Realized cash price including derivative settlements (non-GAAP) $98.78 $9.32 $81.81 ====== ===== ====== (1) Excludes the impact of production costs and expenses and DD&A.

(2) Includes $38.94 per barrel or $22.23 per BOE attributable to July- September 2009 production for the $106 crude oil puts and $54 crude oil swaps that were monetized in the first quarter of 2009.

Nine Months Ended September 30, 2009 ------------------- Oil Gas BOE --- --- --- Average Realized Sales Price Average realized price before derivative instruments (GAAP) (3) $47.24 $3.56 $36.76 Realized gains on derivative instruments (4) 39.90 4.33 34.25 ----- ---- ----- Realized cash price including derivative settlements (non-GAAP) $87.14 $7.89 $71.01 ====== ===== ====== Nine Months Ended September 30, 2008 ------------------- Oil Gas BOE --- --- --- Average Realized Sales Price Average realized price before derivative instruments (GAAP) (3) $99.43 $9.00 $81.81 Realized gains and losses on derivative instruments (3.98) 0.12 (2.17) ----- ---- ----- Realized cash price including derivative settlements (non-GAAP) $95.45 $9.12 $79.64 ====== ===== ====== (3) Excludes the impact of production costs and expenses and DD&A.

(4) Includes $29.82 per barrel or $17.75 per BOE attributable to March- September 2009 production for the $106 crude oil puts and $54 crude oil swaps that were monetized in the first quarter of 2009. Also includes $9.16 per barrel or $5.45 per BOE associated with the January and February settlement of the $106 crude oil puts and the $54 crude oil swaps that we monetized in the first quarter of 2009.

Plains Exploration & Production Company Consolidated Statements of Cash Flows (Unaudited) (in thousands of dollars) Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net income $39,326 $493,145 $88,173 $859,564 Items not affecting cash flows from operating activities Gain on sale of assets - - - (34,658) Depreciation, depletion, amortization and accretion 105,296 143,214 291,319 421,426 Deferred income tax expense 11,597 84,409 6,837 203,031 Debt extinguishment costs 1,183 3,138 12,093 13,401 Gain on mark-to-market derivative contracts (14,795) (451,083) (13,217) (390,175) Noncash compensation 15,250 (1,520) 47,816 38,931 Other noncash items 1,566 1,344 4,479 4,230 Change in assets and liabilities from operating activities 8,773 264,930 (127,614) 31,189 ----- ------- -------- ------ Net cash provided by operating activities 168,196 537,577 309,886 1,146,939 ------- ------- ------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to oil and gas properties (415,737) (247,082) (1,242,698) (688,205) Acquisition of oil and gas properties (1,137,142) (1,681,676) (1,137,142) (2,012,969) Payment of accrued merger costs - (1,801) - (76,645) Proceeds from sales of oil and gas properties and related assets, net of costs and expenses - 18,278 - 1,736,059 Derivative settlements 76,910 (6,619) 1,457,232 (36,212) Decrease in restricted cash - - - 59,092 Additions to other property and equipment (2,807) (7,005) (12,167) (34,448) Other 162 (442) 162 (1,671) --- ---- --- ------ Net cash used in investing activities (1,478,614) (1,926,347) (934,613) (1,054,999) ---------- ---------- -------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Borrowings from revolving credit facilities 75,000 7,263,596 2,315,090 11,501,352 Repayments of revolving credit facilities - (5,840,465) (3,545,090)(11,672,221) Proceeds from issuance of Senior Notes 393,340 - 916,439 400,000 Costs incurred in connection with financing arrangements (7,327) (19,384) (19,441) (25,448) Derivative settlements - (11,009) 1,392 (24,097) Issuance of common stock 397,161 - 648,035 - Purchase of treasury stock - - - (304,192) Other - (4,035) 28 9,647 --- ------ --- ----- Net cash provided by (used in) financing activities 858,174 1,388,703 316,453 (114,959) ------- --------- ------- -------- Net decrease in cash and cash equivalents (452,244) (67) (308,274) (23,019) Cash and cash equivalents, beginning of period 455,845 2,494 311,875 25,446 ------- ----- ------- ------ Cash and cash equivalents, end of period $3,601 $2,427 $3,601 $2,427 ====== ====== ====== ====== Plains Exploration & Production Company Consolidated Balance Sheets (Unaudited) (in thousands of dollars) September 30, December 31, 2009 2008 ---- ---- ASSETS Current Assets Cash and cash equivalents $3,601 $311,875 Accounts receivable 159,107 175,896 Commodity derivative contracts 63,913 945,838 Inventories 20,491 23,368 Prepaid expenses and other current assets 29,514 19,464 ------ ------ 276,626 1,476,441 ------- --------- Property and Equipment, at cost Oil and natural gas properties - full cost method Subject to amortization 8,661,710 7,106,785 Not subject to amortization 3,346,861 2,513,424 Other property and equipment 123,157 110,990 ------- ------- 12,131,728 9,731,199 Less allowance for depreciation, depletion, amortization and impairment (5,491,734) (5,217,803) ---------- ---------- 6,639,994 4,513,396 --------- --------- Goodwill 535,265 535,265 ------- ------- Commodity Derivative Contracts - 530,181 --- ------- Other Assets 59,994 56,632 ------ ------ $7,511,879 $7,111,915 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $361,041 $363,713 Royalties and revenues payable 73,579 87,874 Interest payable 33,548 20,843 Income taxes payable - 102,948 Deferred income taxes 131,716 285,426 Other current liabilities 126,426 132,841 ------- ------- 726,310 993,645 ------- ------- Long-Term Debt 2,493,583 2,805,000 --------- --------- Other Long-Term Liabilities Asset retirement obligation 169,287 159,473 Other 34,746 32,061 ------ ------ 204,033 191,534 ------- ------- Deferred Income Taxes 926,124 744,456 ------- ------- Stockholders' Equity Common stock 1,439 1,129 Additional paid-in capital 3,400,559 2,739,625 Retained earnings (deficit) 3,072 (85,101) Accumulated other comprehensive loss - (684) Treasury stock, at cost (243,241) (277,689) -------- -------- 3,161,829 2,377,280 --------- --------- $7,511,879 $7,111,915 ========== ========== Plains Exploration & Production Company Summary of Open Derivative Positions At October 1, 2009 Average Instrument Daily Average Deferred Period (1) Type Volumes Price (2) Premium Index ---------- ---- ------- -------- ------- ----- Sales of Crude Oil Production 2009 Oct - Dec Put options 32,500 Bbls $55.00 Strike $3.38 per Bbl WTI price 2010 Jan - Dec Put options 40,000 Bbls $55.00 Strike $5.00 per Bbl (3) WTI price Sales of Natural Gas Production 2009 Oct - Dec Collars 150,000 MMBtu $10.00 Floor - $0.346 per MMBtu Henry $20.00 Ceiling Hub 2010 Jan - Dec Three-way 85,000 MMBtu $6.12 Floor $0.034 MMBtu Henry collars (4) with a Hub $4.64 Limit $8.00 Ceiling (1) All of our derivative instruments are settled monthly.

(2) The average strike prices do not reflect the cost to purchase the put options or collars.

(3) In addition to the deferred premium, a premium averaging $3.86 per barrel was paid from the proceeds of our first quarter 2009 derivative monetization upon entering into these derivative contracts.

(4) If NYMEX is less than the $6.12 per MMBtu floor, we receive the difference between NYMEX and the $6.12 per MMBtu floor up to a maximum of $1.48 per MMBtu. We pay the difference between NYMEX and $8.00 per MMBtu if NYMEX is greater than the $8.00 ceiling.

Plains Exploration & Production Company Reconciliation of GAAP to Non-GAAP Measure The following table reconciles net income (GAAP) to adjusted net income (non-GAAP) for the three and nine months ended September 30, 2009 and 2008. Adjusted net income includes realized gains and losses and excludes unrealized gains and losses on mark-to-market derivative contracts, gain on sale of assets and legal recovery and the effects of nonrecurring tax related expenses and benefits. Management believes this presentation may be helpful to investors. PXP management uses this information to analyze operating trends and for comparative purposes within the industry. This measure is not intended to replace the GAAP statistic but rather to provide additional information that may be helpful in evaluating the Company's operational trends and performance.

Three Months Ended September 30, ------------- 2009 2008 ---- ---- (millions of dollars) Net income (GAAP) $39.3 $493.1 Unrealized gain on mark-to-market derivative contracts (14.8) (451.1) Realized gain (loss) on mark-to-market derivative contracts (1) 246.7 (15.4) Adjust income taxes (2) (85.9) 169.7 ----- ----- Adjusted net income (non-GAAP) $185.3 $196.3 ====== ====== Nine Months Ended September 30, ------------- 2009 2008 ---- ---- (millions of dollars) Net income (GAAP) $88.2 $859.6 Unrealized gain on mark-to-market derivative contracts (13.2) (390.2) Realized gain (loss) on mark-to-market derivative contracts (1) 762.3 (54.6) Gain on sale of assets - (34.7) Legal recovery (87.3) - Adjust income taxes (2) (266.6) 174.4 ------ ----- Adjusted net income (non-GAAP) $483.4 $554.5 ====== ====== (1) Three and nine months ended September 30, 2009 totals include $169.8 million attributable to July-September 2009 production and $394.9 million attributable to March-September production, respectively, for the $106 crude oil puts and $54 crude oil swaps that were monetized in the first quarter of 2009. Nine month 2009 totals also include $121.4 million associated with the January and February settlement of the $106 crude oil puts and the $54 crude swaps that we monetized in the first quarter of 2009. The remaining proceeds from the monetization are not included in the above table because they are attributable to production months subsequent to September 30, 2009.

The amounts presented in the above table differ from the adjustments reflected in the calculation of operating cash flow on the following page due to the accrued amounts reflected in the income statement versus the actual cash received or paid reflected in the consolidated statement of cash flows.

(2) Tax rates assumed based upon adjusted earnings are 39% for the three months ended September 30, 2009 and 2008. Tax rates assumed based upon adjusted earnings are 39% and 38% for the nine months ended September 30, 2009 and 2008, respectively. Tax rates exclude the effects of nonrecurring tax related expenses and benefits.

Plains Exploration & Production Company Reconciliation of GAAP to Non-GAAP Measure The following tables reconcile Net Cash Provided by Operating Activities (GAAP) to Operating Cash Flow (non-GAAP) for the three and nine months ended September 30, 2009 and 2008. Management believes this presentation may be useful to investors. PXP management uses this information for comparative purposes within the industry and as a means of measuring the Company's ability to fund capital expenditures and service debt. This measure is not intended to replace the GAAP statistic but rather to provide additional information that may be helpful in evaluating the Company's operational trends and performance.

Operating cash flow is calculated by adjusting net income to add back certain non-cash and non-operating items, including unrealized gains and losses on mark-to-market derivative contracts, to include derivative cash settlements for realized gains and losses on mark-to-market derivative contracts that are classified as either investing or financing activities for GAAP purposes and to exclude certain nonrecurring items.

Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- (millions of dollars) Net income $39.3 $493.1 $88.2 $859.6 Items not affecting operating cash flows Gain on sale of assets - - - (34.6) Depreciation, depletion, amortization and accretion 105.3 143.2 291.3 421.4 Deferred income tax expense 11.6 84.4 6.8 203.0 Debt extinguishment costs 1.2 3.1 12.1 13.4 Unrealized gain on mark-to-market derivative contracts (14.8) (451.0) (13.2) (390.2) Noncash compensation 15.3 (1.5) 47.8 38.9 Other noncash items 1.6 1.3 4.5 4.2 Realized gain (loss) on mark-to-market derivative contracts (1) 246.7 (17.6) 779.2 (60.3) Legal recovery - - (87.3) - Current income taxes attributable to derivative contracts and property sales 21.7 210.0 33.8 312.3 ---- ----- ---- ----- Operating cash flow (non-GAAP) $427.9 $465.0 $1,163.2 $1,367.7 ====== ====== ======== ======== Reconciliation of non-GAAP to GAAP measure Operating cash flow (non-GAAP) $427.9 $465.0 $1,163.2 $1,367.7 Legal recovery - - 87.3 - Changes in assets and liabilities from operating activities 8.7 265.0 (127.6) 31.2 Realized (gain) loss on mark-to-market derivative contracts (1) (246.7) 17.6 (779.2) 60.3 Current income taxes attributable to derivative contracts and property sales (21.7) (210.0) (33.8) (312.3) ----- ------ ----- ------ Net cash provided by operating activities (GAAP) $168.2 $537.6 $309.9 $1,146.9 ====== ====== ====== ======== (1) Three and nine months ended September 30, 2009 totals include $169.8 million attributable to July-September 2009 production and $394.9 million attributable to March-September production, respectively, for the $106 crude oil puts and $54 crude oil swaps that were monetized in the first quarter of 2009. Nine month 2009 totals also include $121.4 million associated with the January and February settlement of the $106 crude oil puts and the $54 crude oil swaps that were monetized in the first quarter of 2009. Such amounts are classified as investing activities for GAAP purposes. The remaining proceeds from the monetization are included as a cash receipt from investing activities in the accompanying consolidated statement of cash flows but are not included in the non-GAAP measure of operating cash flow because they are attributable to production months subsequent to September 30, 2009.

Plains Exploration & Production Company Derivative Settlements (in thousands of dollars) The following tables reflect cash receipts (payments) for derivatives attributable to the following production periods.

Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2009 2008 2009 2008 ---- ---- ---- ---- Oil sales $(9,199) $(21,686) $133,494 $(61,330) Natural gas sales 86,110 6,325 233,871 6,752 ------ ----- ------- ----- $76,911 $(15,361) $367,365 $(54,578) ======= ======== ======== ======== 2009 2010 ---- ---- Amortization of monetized derivatives (1) First Quarter $57,211 $123,730 Second Quarter 167,943 125,105 Third Quarter 169,788 126,479 Fourth Quarter 169,788 126,479 ------- ------- $564,730 $501,793 ======== ======== (1) Represents the net receipts for derivatives monetized in the first quarter of 2009 attributable to their production periods.

SOURCE Plains Exploration & Production Company URL: http://www.pxp.com www.prnewswire.com Copyright (C) 2009 PR Newswire. All rights reserved -0- KEYWORD: Texas INDUSTRY KEYWORD: OIL SUBJECT CODE: ERN

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