Note 16 — Consolidating Financial Statements
We are the issuer of 7
3
⁄
4
% Senior Notes, 10% Senior Notes, 7% Senior Notes, 7
5
⁄
8
% Senior
Notes due 2018, 8
5
⁄
8
% Senior Notes, 7
5
⁄
8
% Senior Notes due 2020, 6
5
⁄
8
% Senior Notes and 6
3
⁄
4
%
Senior Notes as of December 31, 2011, which are jointly and severally guaranteed by certain of our
existing domestic subsidiaries (referred to as “Guarantor Subsidiaries”). In the future, the guarantees
may be released or terminated under the following circumstances: (i) in connection with any sale or
other disposition of all or substantially all of the assets of that subsidiary guarantor; (ii) in connection
with any sale or other disposition of all the capital stock of a subsidiary guarantor; (iii) if designated to
be an unrestricted subsidiary; (iv) upon legal defeasance or satisfaction and discharge of the indenture;
(v) upon the liquidation or dissolution of such subsidiary guarantor provided no default or event of
default has occurred or is continuing; or (vi) at such time as such subsidiary guarantor does not have
outstanding any guarantee of any of our or any of our subsidiary guarantor’s indebtedness (other than
the notes) in excess of $10.0 million in aggregate principal amount. Certain of our subsidiaries do not
guarantee the Senior Notes (referred to as “Non-Guarantor Subsidiaries”).
PXP Operations LLC.
During the first half of 2011, the reverse like-kind exchange arrangements
pursuant to IRC Section 1031 were concluded prior to the completion of a like-kind exchange involving
any disposition of PXP properties. As a result, the related Eagle Ford Shale properties were transferred
from PXP Operations LLC, which was reported as a Non-Guarantor Subsidiary, to PXP, which is
reported as Issuer, and the outstanding notes between PXP Operations LLC and PXP were settled.
We have retrospectively adjusted the Issuer, Non-Guarantor Subsidiaries and Intercompany
Eliminations columns of the condensed consolidating balance sheet at December 31, 2010 and the
consolidating statements of income and cash flows for the year ended December 31, 2010 to reflect
the unwind of the reverse like-kind exchange arrangement involving PXP Operations LLC.
Plains Offshore.
In October 2011, we entered into a securities purchase agreement with EIG
pursuant to which we received $430.2 million of net cash proceeds in exchange for a 20% equity
interest in Plains Offshore. Plains Offshore holds all of our oil and natural gas properties and assets
located in the United States Gulf of Mexico in water depths of 500 feet or more. As a result, the
associated deepwater properties were transferred from PXP, which is reported as Issuer, to Plains
Offshore, which is reported as a Non-Guarantor Subsidiary. We have retrospectively adjusted the
Issuer, Non-Guarantor Subsidiaries and Intercompany Eliminations columns of the condensed
consolidating balance sheet at December 31, 2010 and the consolidating statements of income and
cash flows for the years ended December 31, 2010 and 2009 to reflect the transfer of these deepwater
assets.
The following financial information presents consolidating financial statements, which include:
• PXP (the “Issuer”);
• the Guarantor Subsidiaries on a combined basis;
• the Non-Guarantor Subsidiaries on a combined basis;
• elimination entries necessary to consolidate the Issuer, Guarantor Subsidiaries and
Non-Guarantor Subsidiaries; and
• PXP on a consolidated basis.
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