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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 8, 2001
PLAINS RESOURCES INC.
(Exact name of registrant as specified in charter)
DELAWARE 13-2898764
(State of Incorporation) (I.R.S. Employer Identification No.)
0-9808
(Commission File No.)
500 DALLAS STREET, SUITE 700
HOUSTON, TEXAS 77002
(Address of principal executive offices)
(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 654-1414
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ITEM 9. REGULATION FD DISCLOSURE
In accordance with General Instruction B.2.of Form 8-K, the following
information shall not be deemed "filed" for purposes of Section 18 of the
Securities Act of 1934, as amended, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, as amended, except as
shall be expressly set forth by specific reference in such a filing.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
All statements, other than statements of historical fact, included in this
report are forward-looking statements, including, but not limited to, statements
identified by the words "anticipate," "believe," "estimate," "expect,"
"plan," "intend" and "forecast" and similar expressions and statements
regarding our business strategy, plans and objectives of our management for
future operations. These statements reflect our current views with respect to
future events, based on what we believe are reasonable assumptions. These
statements, however, are subject to certain risks, uncertainties and
assumptions, including, but not limited to:
. uncertainties inherent in the exploration for and development and production
of oil and gas and in estimating reserves;
. unexpected future capital expenditures (including the amount and nature
thereof);
. impact of crude oil price fluctuations;
. the effects of competition;
. the success of our risk management activities;
. the availability (or lack thereof) of acquisition or combination
opportunities;
. the impact of current and future laws and governmental regulations;
. environmental liabilities that are not covered by an indemnity or insurance,
and
. general economic, market or business conditions.
If one or more of these risks or uncertainties materialize, or if underlying
assumptions prove incorrect, actual results may vary materially from those in
the forward-looking statements. Except as required by applicable securities
laws, we do not intend to update these forward-looking statements and
information.
DISCLOSURE OF FOURTH QUARTER 2001 ESTIMATES
The following table reflects the Company's current estimates of certain results
for the fourth quarter of 2001. These estimates are based on assumptions and
estimates that management believes are reasonable based on currently available
information; however, management's assumptions and the Company's future
performance are both subject to a wide range of business risks and uncertainties
and there is no assurance that these goals and estimates can or will be met. Any
number of factors could cause actual results to differ materially from those in
the following table. The estimates set forth below are given as of the date
hereof only based on information available as of the date hereof. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements. Further information on risks and uncertainties is available in the
Company's filings with the Securities and Exchange Commission ("SEC"), which are
incorporated by reference herein.
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OPERATING AND FINANCIAL GUIDANCE
Quarter Ended
December 31, 2001
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ESTIMATED SALES VOLUMES
Barrels of oil equivalent - MBOE 2,525-2,600
MBOE PER DAY 27.4-28.3
% Oil 94%
% Gas 6%
ESTIMATED OIL PRICE DIFFERENTIALS - $/BO
Estimated Differentials to NYMEX Prices - pre hedge $5.75 - $6.00
Estimated Hedging gain (loss) based on: ($ in thousands)
$20.00 NYMEX $ 6,900
$21.00 NYMEX $ 5,900
$22.00 NYMEX $ 5,000
$23.00 NYMEX $ 4,000
$24.00 NYMEX $ 3,000
$25.00 NYMEX $ 2,100
$26.00 NYMEX $ 1,100
$27.00 NYMEX $ 150
$30.00 NYMEX $(4,400)
CRUDE OIL HEDGE POSITIONS - BARRELS PER DAY
Collars -Floor $20.00; Cap $27.00; Cap Limit $30.00 6,000
Puts - Floor $20.00 6,000
Swaps - Average price $27.15 per barrel 10,500
Calls - Average price/bbl $35.74 9,000
OPERATING COSTS PER BOE
Production expenses $7.25 - $7.50
General and administrative $1.00 - $1.10
DD&A - oil and gas $2.64
OTHER INCOME (EXPENSE) ($ IN THOUSANDS)
Equity in earnings of Plains All American Pipeline, L.P. ("PAA") $4,600 - $4,900
DD&A - other $500
Interest expense $6,400 - $6,500
BOOK TAX RATE
Current 5%
Deferred 35%
WEIGHTED AVERAGE EQUIVALENT SHARES OUTSTANDING (IN THOUSANDS)
Basic 23,500
Diluted 25,500
CAPITAL EXPENDITURES ($ IN THOUSANDS) $24,000 - $26,000
DISTRIBUTIONS FROM PLAINS ALL AMERICAN PIPELINE, L.P. ($ IN THOUSANDS) $6,900
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Notes:
1. Estimated Sales Volumes. Production estimates are based on historical
operating performance and trends and the Company's 2001 capital budget and
assume that market demand and prices for oil and gas will continue at levels
that allow for profitable production of these products. Certain of the
Company's operations in California that have interruptible electrical
contracts have been adversely impacted by electrical service interruptions.
The Company estimates that its oil and gas production for the first nine
months of 2001 was adversely affected by approximately 60,000 BOE, as a
result of such interruptions. Although under recent regulatory rulings the
Company believes that its operations will only be affected if rolling
blackouts occur and the Company has made operational changes to mitigate the
effects of electrical interruptions, there can be no assurance that
operations will not be adversely impacted in the future by the California
power market.
SEC Staff Accounting Bulletin 101 ("SAB 101") requires that revenue from
crude oil production be recognized as the volumes are sold versus when
produced. Due to the location of the Company's Florida properties and the
transportation issues involved, reported sales volumes are impacted by the
timing of the barges that transport the crude oil. The Florida crude is
typically sold in shipments that range from 130,000 to 180,000 barrels.
2. Estimated Oil Price Differentials. The Company's realized wellhead crude oil
price is lower than the NYMEX index level as a result of area and quality
differentials. The Company has locked in a fixed price differential to NYMEX
on approximately 65% of its estimated 2001 production volumes. Fourth
quarter estimated differentials by area are: Onshore California - $4.70 per
barrel, Offshore California - $6.90 per barrel, Florida - $14.60 per barrel,
and Illinois - $1.00 per barrel and are based on current market conditions.
The estimated hedging gain (loss) is calculated based on the NYMEX prices
presented and the Company's current crude oil hedge positions.
3. Operating Costs per BOE. Production expenses (including production and ad
valorem taxes) averaged $7.01 per BOE in 2000. The Company estimates that
production expenses will average $7.25 - $7.50 per BOE during the fourth
quarter of 2001, primarily due to increased electricity and fuel related
expenses. Unit G&A costs exclude non cash compensation expense. DD&A per BOE
is based on our year-end 2000 proved reserve volumes. This rate will be
adjusted for the fourth quarter based on year-end 2001 proved reserve
volumes.
4. Other Income (Expense). Equity in earnings of Plains All American Pipeline,
L.P. (NYSE: PAA) is based on guidance provided by PAA in its November 7,
2001 earnings release conference call and an aggregate ownership interest of
approximately 29%, consisting of (i) a 44% ownership stake in the general
partner interest and incentive distribution rights, (ii) 45%, or
approximately 4.5 million, of the subordinated units and (iii) 24%, or
approximately 7.9 million of the common units. The Company's common
ownership has been adjusted to reflect PAA's 4.5 million unit equity
offering, which was announced in October 2001. The Company will recognize a
noncash gain in the fourth quarter as a result of the PAA offering.
Estimated interest expense consists of interest expense on our $275 million
of subordinated notes, net of capitalized interest of approximately $0.9
million per quarter and estimates of
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amounts outstanding on our revolving credit facility. The Company incurs a
non-use fee of 3/8ths of 1% per annum on its $225 million revolving credit
facility.
5. Book Tax Rate. The Company's book tax rate is based on an adjusted Federal
rate of 33% and an estimated combined foreign and state rate of 7%. The
foreign tax is attributable to the Canadian operations of PAA. The Company's
deferred and current tax rates are based on current estimates of taxable
income and utilization of net operating loss carryforwards.
6. Equivalent weighted average shares outstanding. Estimated basic weighted
average shares outstanding are based on approximately 24.3 million shares
outstanding, net of treasury shares, as of September 30, 2001, as adjusted
for treasury shares repurchased through October 31, 2001. During October, we
repurchased approximately 1 million shares of our common stock. Estimated
diluted shares are based on the estimated weighted average basic shares
outstanding, plus shares issuable upon conversion of preferred stock and
outstanding options and warrants utilizing the treasury stock method for the
options and warrants assuming the Company's average common stock price for
the third quarter of 2001.
7. Distributions from Plains All American Pipeline, L.P. The fourth quarter
cash distribution is based on PAA's recently declared $.5125 per unit
distribution. The amount presented reflects estimated cash payments to be
received from PAA and has not been adjusted for cash taxes attributable to
the Company's equity in earnings of PAA.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PLAINS RESOURCES INC.
Date: November 8, 2001 /s/ Cynthia A. Feeback
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Cynthia A. Feeback
Vice President- Accounting and Treasurer
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