Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Nasdaq  >  Microsoft Corporation    MSFT

MICROSOFT CORPORATION

(MSFT)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsOther languagesPress ReleasesOfficial PublicationsSector newsMarketScreener StrategiesReco analystes

PXP using big debt load to buy BP's U.S. Gulf wells for $5.5 billion

09/10/2012 | 04:25pm EST
A logo on a British Petroleum petrol station is seen in London

(Reuters) - Plains Exploration & Production Co (>> Plains Exploration & Production Company) will borrow $7 billion -- more than its market value -- to buy BP Plc's stake in some deepwater Gulf of Mexico wells in a $5.55 billion deal that will triple its crude production and boost its power in the North American energy market.

(Reuters) - Plains Exploration & Production Co (>> Plains Exploration & Production Company) will borrow $7 billion -- more than its market value -- to buy BP Plc's stake in some deepwater Gulf of Mexico wells in a $5.55 billion deal that will triple its crude production and boost its power in the North American energy market.

Shares of Plains, known by its ticker symbol "PXP," fell more than 10 percent on Monday as investors worried about the steep price of the deal and the debt load, which exceeds PXP's $4.66 billion market cap, that will fund the acquisition and other company needs.

BP is selling the large network of oil exploration rigs to help pay damages for the worst offshore oil spill in U.S. history. The deal will put Plains Exploration into the energy industry big leagues with Anadarko Petroleum Corp (>> Anadarko Petroleum Corporation), Devon Energy Corp (>> Devon Energy Corporation) and other large independent oil and natural gas producers.

Roughly two-thirds of PXP's operations will now be in the Gulf, with one-third on land, and daily production will triple to 300,000 barrels of oil equivalent per day. The deal is part of the company's strategy to focus on lucrative crude oil instead of natural gas, which has seen prices tumble to the lowest in a decade.

PXP Chief Executive James Flores touted the new assets to investors on a conference call, saying they are superior to peers' holdings in the Gulf.

"This is not your brother's Gulf of Mexico," Flores said. "This has very long life and we have a well-developed plan for the next eight years."

Flores has been CEO for nine years and owns roughly 0.9 percent of outstanding PXP shares. The stock is mostly held by institutional investors, including Vanguard and BlackRock Inc (>> BlackRock, Inc.).

Formed in 2002 by a tax-free spinoff from Plains Resources Inc, PXP has traditionally focused on oil drilling in Southern California.

PXP bought Nuevo Energy Inc and 3TEC Energy Corp in the first few years after gaining independence, boosting its portfolio's size and whetting its appetite for growth by acquisition. Each of those deals was for less than $1 billion, making Monday's buyout PXP's largest acquisition to date.

Plains Resources, which is heavily involved in oil and natural gas transportation, was itself bought in 2004 by Vulcan Energy, part of Microsoft Corp (>> Microsoft Corporation) co-founder Paul Allen's Vulcan Capital investment fund.

The deal helps London-based BP shed smaller, older assets to focus on a smaller number of more lucrative wells in the Gulf. It also helps the company reach its goal of raising $38 billion from asset sales to pay for damages from the 2010 oil spill in the Gulf of Mexico in which 11 people died and 4.9 million barrels of oil spewed from the mile-deep (1.6 km-deep) Macondo well.

DEBT LOAD

PXP executives on Monday tried to assuage investor concern about the large debt load for the deal by outlining a plan to use cash flow in 2013 and 2014 to retire borrowings.

The company will hold some of the $7 billion in debt as cash and is not issuing new stock.

PXP shares fell 10.5 percent to close Monday at $36.09. In London, BP shares closed up 0.7 percent at 438.4 pence.

The final price tag was "significantly higher than we expected," RBC Capital Markets wrote in a research note. Last month the brokerage had estimated the BP assets to be worth about $2.2 billion.

TPH Energy Research said the deal was good news for BP as it looks to move beyond the 2010 oil spill.

"A reduced and more-focused exposure to the Gulf of Mexico is welcome for BP, we think, in the midst of recently escalated" legal action by the U.S. government against the company for the spill, TPH said in a research note.

The properties that Houston-based PXP is acquiring were producing an estimated 59,500 barrels of oil equivalent net per day at the end of July.

PXP is buying BP's 100 percent stake in the Marlin, Dorado, and King and Horn Mountain fields. It said it would also pay $560 million to acquire the remaining 50 percent working interest in the Holstein Field from Royal Dutch Shell Plc <RDSa.L>.

PXP will also get BP's 33.33 percent working interest in the Diana-Hoover Field, which is operated by ExxonMobil Corp (>> Exxon Mobil Corporation), and BP's 31 percent stake in the Ram Powell field, which is operated by Shell Offshore Inc.

The platforms at the wells are roughly 10 years old and have successfully weathered several storms, Flores said.

Plains said it expected its production to be roughly 90 percent oil after it divests some natural gas assets it has decided to sell.

PXP plans to hedge up to 90 percent of oil production through 2015 to lock in current prices and guard against a drop from current levels of around $100 per barrel, executives said.

The company, which sold natural gas assets in Texas for $785 million last November, said it expected the BP deal to close by the end of the year.

A source told Reuters on Sunday that BP was in talks to sell some of its Gulf of Mexico oil fields to PXP.

(Reporting by Ernest Scheyder and Mike Erman in New York and Swetha Gopinath in Bangalore; Editing by Sriraj Kalluvila, Lisa Von Ahn, Matthew Lewis and David Gregorio)

By Ernest Scheyder


© Reuters 2012
Stocks mentioned in the article
ChangeLast1st jan.
BLACKROCK, INC. 0.09% 742.2 Delayed Quote.2.86%
BP PLC -2.47% 286 Delayed Quote.15.13%
EXXON MOBIL CORPORATION -2.87% 48.11 Delayed Quote.16.72%
LAND CO., LTD. 12.50% 9 End-of-day quote.12.50%
MICROSOFT CORPORATION 0.28% 224.97 Delayed Quote.0.86%
All news about MICROSOFT CORPORATION
01:03aMARKET CHATTER : Smartphone Brand Honor Partners with Intel, Qualcomm After Huaw..
MT
01/21Ford, GM Stocks Rally on Electric-Vehicle Enthusiasm -- 2nd Update
DJ
01/21Ford, GM Stocks Rally on Electric-Vehicle Enthusiasm -- Update
DJ
01/21MICROSOFT : New feature safeguards passwords in Microsoft Edge
PU
01/21ALPHABET : Google judge says U.S. states must begin turning over documents next ..
RE
01/21FROM BETTFEST 2021 : How Microsoft partners help teachers make the most of digit..
PU
01/21Quorum to Begin Deploying XSellerator Dealerships on Microsoft Azure Cloud Of..
MT
01/21MICROSOFT : Evercore ISI Adjusts Microsoft's Price Target to $260 from $250, Kee..
MT
01/21MICROSOFT CORPORATION : half-yearly earnings release
01/20TANLA PLATFORMS : Launches New E-commerce Platform in Partnership with Microsoft
MT
More news
Financials (USD)
Sales 2021 158 B - -
Net income 2021 51 430 M - -
Net cash 2021 76 850 M - -
P/E ratio 2021 33,3x
Yield 2021 0,97%
Capitalization 1 701 B 1 701 B -
EV / Sales 2021 10,3x
EV / Sales 2022 9,17x
Nbr of Employees 163 000
Free-Float 99,9%
Chart MICROSOFT CORPORATION
Duration : Period :
Microsoft Corporation Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends MICROSOFT CORPORATION
Short TermMid-TermLong Term
TrendsBullishNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 37
Average target price 247,93 $
Last Close Price 224,97 $
Spread / Highest target 26,7%
Spread / Average Target 10,2%
Spread / Lowest Target -2,21%
EPS Revisions
Managers and Directors
NameTitle
Satya Nadella Chief Executive Officer & Non-Independent Director
Bradford L. Smith President & Chief Legal Officer
John Wendell Thompson Independent Chairman
Kirk Koenigsbauer COO & VP-Experiences & Devices Group
Amy E. Hood Chief Financial Officer & Executive Vice President
Sector and Competitors
1st jan.Capitalization (M$)
MICROSOFT CORPORATION0.86%1 700 885
SEA LIMITED17.54%119 594
ZOOM VIDEO COMMUNICATIONS, INC.13.49%111 738
ATLASSIAN CORPORATION PLC0.13%58 358
DASSAULT SYSTÈMES SE-1.14%52 147
SYNOPSYS INC.5.26%41 758