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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): AUGUST 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 YEAR 2001 ESTIMATES
The following table reflects the Company's current estimates of certain results
for the third quarter of 2001, the fourth quarter of 2001 and the year ending
December 31, 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 QUARTER ENDED YEAR ENDED
SEPTEMBER 30, 2001 DECEMBER 31, 2001 DECEMBER 31, 2001
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ESTIMATED SALES VOLUMES
Barrels of oil equivalent - MBOE 2,475-2,525 2,525-2,600 9,700-9,900
MBOE PER DAY 26.9-27.4 27.4-28.3 26.7-27.0
% Oil 94% 94% 94%
% Gas 6% 6% 6%
ESTIMATED OIL PRICE DIFFERENTIALS - $/BO
Estimated Differentials to NYMEX Prices - pre hedge $5.35 - $5.50 $5.35 - $5.50 $5.75 - $6.00
Estimated Hedging gain (loss) based on: ($ in thousands)
$22.00 NYMEX $3,600 $3,600
$23.00 NYMEX $2,800 $2,800
$25.00 NYMEX $1,250 $1,250
$26.00 NYMEX $470 $470
$27.00 NYMEX ($320) ($320)
$30.00 NYMEX ($4,300) ($4,300)
CRUDE OIL HEDGE POSITIONS - BARRELS PER DAY
Collars -Floor $20.00; Cap $27.00; Cap Limit $30.00 6,000 6,000
Puts - Floor $20.00 6,000 6,000
Swaps - Average price $26.59 per barrel 8,500 8,500
Calls - Average price/bbl $35.74 9,000 9,000
OPERATING COSTS PER BOE
Production expenses $8.00 - $8.25 $7.75 - $8.00 $7.60 - $7.80
General and administrative $1.00 - $1.10 $1.00 - $1.10 $1.15 - $1.25
DD&A - oil and gas $2.64 $2.64 $2.64
OTHER INCOME (EXPENSE) ($ IN THOUSANDS)
Equity in earnings of Plains All American Pipeline, L.P. $5,100
("PAA")
DD&A - other 400 400 1,700
Interest expense 6,400 6,400 26,100
BOOK TAX RATE
Current 5% 5% 5%
Deferred 35% 35% 35%
EQUIVALENT SHARES OUTSTANDING
Basic 23,100 23,100 20,800
Diluted 26,300 26,300 27,400
CAPITAL EXPENDITURES ($ IN THOUSANDS) $31,000 - $34,000 $20,000 - $22,000 $120,000 - $125,000
DISTRIBUTIONS FROM PLAINS ALL AMERICAN PIPELINE, L.P. $6,695 $6,680 $31,282
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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 six 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. Third and fourth quarter estimated differentials by
area are: Onshore California - $4.50 per barrel, Offshore California -
$6.85 per barrel, Florida - $14.00 per barrel, and Illinois - $.80 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 $8.00-$8.25 per BOE
during the third quarter of 2001, $7.75 - $8.00 per BOE during the
fourth quarter of 2001, and $7.60 - $7.80 per BOE for the full year
primarily due to increased electricity and fuel related expenses. Unit
G&A costs exclude nonrecurring costs related to the strategic
restructuring that we completed in June 2001. DD&A per BOE is based on
our year-end 2000 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
August 7, 2001 earnings release conference call and an aggregate
ownership interest of approximately 33%, consisting of (i) a 44%
ownership stake in the general partner interest and incentive
distribution rights, (ii) 48%, or approximately 4.5 million, of the
subordinated units and (iii) 28%, or approximately 7.9 million of the
common units. The Company currently owns 46% of the general partner
interest. For purposes of the estimate provided, it is assumed that PAA
management exercises its option to acquire an incremental 2% ownership
in the general partner of PAA.
Estimated interest expense consists of interest expense on the $275
million of subordinated notes, net of capitalized interest of
approximately $.9 million per quarter and assumes no outstanding
amounts on the Company's 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.
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6. Equivalent shares outstanding. Estimated basic shares outstanding
are based on shares outstanding on June 30, 2001, net of treasury
shares. Estimated diluted shares are based on 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.
7. Distributions from Plains All American Pipeline, L.P. The third and
fourth quarter cash distributions are based on PAA's recently declared
$.50 per unit distribution. The third and fourth quarter estimates are
based on a 46% and 44% general partner interest, respectively. The full
year estimate reflects the actual distributions received in the first
and second quarter plus the third and fourth quarter estimates. The
amounts presented reflect estimated cash payments to be received from
PAA and have not been adjusted for cash taxes attributable to the
Company's equity in earnings of PAA.
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: August 8, 2001 /s/ Cynthia A. Feeback
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Cynthia A. Feeback
Vice President - Accounting and Treasurer
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