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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): October 30, 2002
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) 739-6700
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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:
o uncertainties inherent in the exploration for and development and
production of oil and gas and in estimating reserves;
o unexpected future capital expenditures (including the amount and nature
thereof);
o impact of crude oil and natural gas price fluctuations;
o the effects of competition;
o the success of our risk management activities;
o the availability (or lack thereof) of acquisition or combination
opportunities;
o the impact of current and future laws and governmental regulations;
o environmental liabilities that are not covered by an indemnity or
insurance; and
o 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 2002 Estimates
The following table reflects current estimates of certain results for the
fourth quarter of 2002 for Plains Resources Inc. (the "Company"). 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, including but
not limited to the factors discussed above. 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"), and we encourage you to review such filings.
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Operating and Financial Guidance
Quarter Ended
December 31, 2002
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Estimated Production Volumes
Barrels of oil equivalent- MBOE 2,625-2,775
MBOE PER DAY 28.5-30.2
% Oil 95%
% Gas 5%
Estimated Oil Price differentials - $/Bbl
Estimated Differentials to NYMEX Prices - pre hedge $4.75 - $5.25
Crude Oil Hedge Positions - barrels per day
Puts - Floor $20.00 2,000
Swaps - Average price $24.22 per barrel 20,000
Calls - Average price $35.17 per barrel 9,000
Operating Costs per BOE
Production expenses $9.00 - $9.25
General and administrative $1.25 - $1.35
DD&A - oil and gas Note 4
Other Income (Expense) ($ in thousands)
Equity in earnings of Plains All American Pipeline, L.P. $4,800 - $5,400
DD&A - other $400
Interest expense Note 6
Expenses of terminated public equity offering (Note 7) $650 - $700
Book Tax Rate
Current 4%
Deferred 37%
Weighted Average Equivalent Shares Outstanding (in thousands)
Basic 24,000
Diluted 25,400
Capital Expenditures ($ in thousands) $14,000 - $15,000
Distributions from Plains All American Pipeline, L.P.
($ in thousands) $7,400
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Notes:
1. Estimated production volumes. Production estimates are based on
historical operating performance and trends and the Company's 2002
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.
SEC Staff Accounting Bulletin 101 ("SAB 101") requires that revenue
from crude oil production be recognized as the volumes are sold versus
when produced. The location of our Florida properties and the timing
of the barges that transport the crude oil to market cause reported
sales volumes to differ from production volumes. Actual timing of
sales volumes is difficult to predict. Reported sales volumes will
differ from the production estimates provided. The Florida crude oil
is typically sold in shipments of approximately 130,000-140,000
barrels (100,000 barrels net to the Company's interest) and typically
occurs every 40-50 days.
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 production for
the fourth quarter of 2002.
3. General and administrative. For purposes of calculating upstream unit
G&A, we exclude noncash compensation expense related to stock options
and nonrecurring items from the calculation. For the fourth quarter of
2002 noncash compensation expense is estimated at $400,000.
4. DD&A - oil and gas. The Company's DD&A rate for the first nine months
of 2002 is $3.10 per BOE. The fourth quarter DD&A rate will be
adjusted based on year-end 2002 proved reserve volumes. For estimate
purposes we are utilizing the $3.10 rate for the fourth quarter.
5. Equity in earnings of Plains All American Pipeline, L.P. ("PAA"). The
Company's equity in earnings from PAA is based on guidance provided by
PAA in its Form 8-K filed with the SEC on October 29, 2002, and the
Company's aggregate ownership interest, as adjusted for general
partner incentive distributions. As of the date hereof, the Company
has an aggregate ownership interest of approximately 25%, 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 (including the Class B common units). PAA's Form
8-K provides guidance of $17.8 million to $20.1 million for its fourth
quarter 2002 net income.
6. Interest expense. The Company's interest expense will consist of
interest on:
a. $200 million of 8.75% Senior Subordinated Notes issued by our
wholly owned subsidiary, Plains Exploration & Production Company
("PXP"). The notes were issued at 98.376% of par, and interest
expense for the fourth quarter of 2002 will include $52,000 for
the amortization of the original issue discount.
b. Amounts outstanding under PXP's $300 million revolving credit
facility ("Credit Facility"). The Credit Facility provides for
grid pricing at LIBOR or Prime at PXP's
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option plus a margin based on the percentage of the borrowing base
then being utilized as follows:
25% greater greater
less than 25% to 50% than 50% than 75%
LIBOR Loans 1.375% 1.500% 1.625% 1.750%
Prime Loans 0.125% 0.250% 0.375% 0.500%
Commitment Fee 0.375% 0.375% 0.500% 0.500%
c. The Company has a three-year interest rate swap agreement under which
it receives LIBOR and pays 3.9% on a notional amount of $7.5 million.
d. The Company estimates it will capitalize approximately
$500,000-$600,000 of interest during the fourth quarter of 2002.
7. The Company estimates that fourth quarter results will include
approximately $650,000-$750,000 of expenses related to the terminated
initial public offering of PXP. Total costs of the offering including
amounts recognized in the third quarter are estimated to be approximately
$2.4-$2.5 million.
8. Book Tax Rate. The Company's book tax rate is based on a Federal rate of
35% and an estimated combined foreign and state rate of 6%. 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.
9. Weighted average equivalent shares outstanding. Estimated basic shares
outstanding are based on shares outstanding on September 30, 2002, 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 assuming a $25.00 average price for the Company's
common stock.
10. Distributions from Plains All American Pipeline, L.P. The estimated cash
distributions are based on PAA's $0.5375 per unit quarterly distribution
($2.15 on an annual basis) that was declared in October 2002. The amount
presented reflects estimated cash to be received from PAA and has not been
adjusted for cash taxes.
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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: October 30, 2002 /s/ Cynthia A. Feeback
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Cynthia A. Feeback
Senior Vice President-Accounting and Treasurer
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