$2.25B senior notes offering to help PXP fund BP acquisition

Plains Exploration & Production Co.

Plains Exploration & Production Co. (NYSE: PXP) intends to offer $2.25 billion of senior notes issued in an underwritten public offering. The senior notes are expected to be issued in two series, with the first series to be due in 2020 and the second series to be due in 2023.

PXP expects to use the net proceeds from the offering to fund a portion of the consideration for PXP's previously announced acquisition of oil and gas interests in the Gulf of Mexico from BP Exploration & Production Inc. and BP America Production Company and Shell Offshore Inc. Pending the use of proceeds for such purpose, PXP expects to use a portion of the net proceeds from the offering to repay borrowings outstanding under its senior revolving credit facility.

If the BP acquisition does not close on or prior to March 15, 2013, or if the BP purchase agreement is terminated at any time prior to consummation thereof, PXP will be required to redeem all of the notes of each series in cash at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest to the date of redemption.

Additionally, if PXP determines it is reasonably likely that the BP acquisition will not close on or prior to March 15, 2013, or the BP purchase agreement will be terminated at any time prior thereto, PXP may, at its option, redeem all but not less than all of the notes then outstanding in cash at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest to the date of redemption. 

J.P. Morgan Securities LLC, Barclays Capital Inc., BMO Capital Markets Corp., Citigroup and Wells Fargo Securities, LLC are acting as joint book-running managers of the offering.

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