DOW JONES NEWSWIRES
Plains Exploration & Production Co. (PXP) plans to offer
$300 million of 10-year senior notes, with proceeds targeted to
help fund its agreement to help pay for drilling costs at its joint
venture with Chesapeake Energy Corp. (CHK).
Chesapeake had disclosed plans to cut output at its Haynesville
Shale joint venture in March, indicating more cuts were being
weighed. Plains Chairman and Chief Executive James C. Flores in
August said the venture agreement was amended to allow Plains to
pay the remaining drilling costs on a discounted and accelerated
basis.
Plains had agreed to fund half of Chesapeake's share of drilling
and other costs up to $1.65 billion over several years. Under the
amended pact, Plains agreed to pay $1.1 billion of an estimated
$1.25 billion balance on Sept. 29. Chesapeake agreed to drill a
minimum number of wells over a three-year period.
Plains is refocusing its efforts on the Haynesville Shale, a
fast-growing natural-gas field in Louisiana and Texas, where the
company bought a 20% stake from Chesapeake earlier this year. While
giving Plains a major presence in the region, it also saddled it
with debt and long-term costs.
Plains shares closed at $26.40 on Friday and didn't trade
premarket. The stock has lost 39% of its value over the past
year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
tess.stynes@dowjones.com
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