Debt Offering and Tender Offers
In November 2011, we issued $1 billion of 6
3
⁄
4
% Senior Notes due 2022, or the 6
3
⁄
4
% Senior
Notes, at par. We received approximately $984 million of net proceeds, after deducting the
underwriting discount and offering expenses. We used the net proceeds to reduce indebtedness
outstanding under our senior revolving credit facility and for general corporate purposes.
In December 2011, we made payments totaling approximately $1.4 billion, including premiums, to
retire $520.7 million of the $600 million outstanding principal amount of our 7
3
⁄
4
% Senior Notes due
2015, or the 7
3
⁄
4
% Senior Notes, $380.1 million of the $565 million outstanding principal amount of our
10% Senior Notes due 2016, or the 10% Senior Notes, and $423.1 million of the $500 million
outstanding principal amount of our 7% Senior Notes due 2017, or the 7% Senior Notes. In connection
with the retirement of the 7
3
⁄
4
% Senior Notes, 10% Senior Notes and 7% Senior Notes, we recorded
$121.0 million of debt extinguishment costs.
Derivatives
In December 2011, we entered into natural gas swap contracts, at an average price of $4.27 per
MMBtu, on 110,000 MMBtu per day for 2013.
During the period from January 1, 2012 through February 22, 2012, we converted 5,000 of the
22,000 BOPD of Brent crude oil put option contracts in 2013 to three-way collars. These modified
three-way collars have a floor price of $90 per barrel with a limit of $70 per barrel and a weighted
average ceiling price of $126.08 and eliminates approximately $11 million of deferred premiums.
Additionally, we entered into the following Brent oil derivatives for 2013 and 2014:
• Brent crude oil put option spread contracts on 13,000 BPOD for 2013 with a floor price of $100
per barrel and a limit of $80 per barrel.
• Brent three-way collars on 25,000 BOPD for 2013 that have a floor price of $100 per barrel
with a limit of $80 per barrel and a weighted average ceiling price of $124.29 per barrel.
• Brent crude oil put option spread contracts on 20,000 BOPD for 2014 with a floor price of $90
per barrel and a limit of $70 per barrel.
In February 2012, we entered into natural gas swap contracts, at an average price of $4.16 per
MMBtu, on 70,000 MMBtu per day for 2014.
Stock Repurchase Program
During the year ended December 31, 2011, we repurchased 10.4 million common shares at an
average cost of $34.73 per share totaling $361.7 million.
In January 2012, we completed the purchase of an additional 2.4 million common shares at an
average cost of $37.02 per share totaling $88.5 million. Subsequent to those purchases, our Board of
Directors reset the authorization to $1.0 billion of PXP common stock, all of which is available for
repurchase, and extended the program until January 2016.
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