PART I
Items 1 and 2.
Business and Properties
General
Plains Exploration & Production Company, a Delaware corporation formed in 2002, is an
independent energy company engaged in the upstream oil and gas business. The upstream business
acquires, develops, explores for and produces oil and gas. Our upstream activities are located in the
United States. We own oil and gas properties with principal operations in:
• Onshore California;
• Offshore California;
• the Gulf Coast Region;
• the Gulf of Mexico; and
• the Rocky Mountains.
Assets in our principal focus areas include mature properties with long-lived reserves and
significant development opportunities, as well as newer properties with development and exploration
potential. We believe our balanced portfolio of assets and our ongoing risk management program
position us well for both the current commodity price environment and future potential upside as we
develop our attractive resource opportunities, including our California, Eagle Ford Shale, Haynesville
Shale and Gulf of Mexico plays.
Oil and Gas Reserves
As of December 31, 2011, we had estimated proved reserves of 410.9 million barrels of oil
equivalent of which 59% was comprised of oil and 55% was proved developed. We have a total proved
reserve life of approximately 12 years and a proved developed reserve life of approximately seven
years. As of December 31, 2011, and based on the twelve-month average of the first-day-of-the-month
reference prices as adjusted for location and quality differentials, our proved reserves had a
standardized measure of $5.1 billion. As of December 31, 2011, we had estimated probable reserves
of 292.1 million barrels of oil equivalent of which 37% was comprised of oil and 2% was probable
developed. We believe our long-lived, low production decline reserve base, combined with our active
risk management program, should provide us with relatively stable and recurring cash flow. Unless
otherwise indicated, any reference to reserves is to PXP reserves and excludes our share of McMoRan
reserves.
The following table sets forth certain information with respect to our proved and probable reserves
that for 2011 are based upon (1) reserve reports prepared by the independent petroleum engineers of
Netherland, Sewell & Associates, Inc., or NSA, (95% of proved reserve volumes and 40% of probable
reserve volumes) and (2) reserve volumes prepared by us, which were not audited by an independent
petroleum engineer (5% of proved reserve volumes and 60% of probable reserve volumes). In 2010,
our proved reserves were based upon (1) reserve reports prepared by the independent petroleum
engineers of NSA and Ryder Scott Company L.P., or Ryder Scott, (99% of proved reserve volumes)
and (2) reserve volumes prepared by us, which were not audited by an independent petroleum
engineer (1% of proved reserve volumes). In 2009, our proved reserves were based upon reserve
reports prepared by NSA and Ryder Scott. The reserve volumes and values were determined using the
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