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. The Senior Notes rank senior in
right of payment to all of our existing and future subordinated indebtedness;
pari passu
in right of
payment with any of our existing and future unsecured indebtedness that is not by its terms
subordinated to the Senior Notes; effectively junior to our existing and future secured indebtedness,
including indebtedness under our senior revolving credit facility and the Plains Offshore’s senior credit
facility, to the extent of our assets constituting collateral securing that indebtedness; and effectively
subordinate to all existing and future indebtedness and other liabilities (other than indebtedness and
liabilities owed to us) of our non-guarantor subsidiaries. In the event of a change of control, as defined
in the indenture, we will be required to make an offer to repurchase the Senior Notes at 101% of the
principal amount thereof, plus accrued and unpaid interest to the date of repurchase.
Cash Flows
Year Ended December 31,
2011
2010
2009
(in millions)
Cash provided by (used in):
Operating activities . . . . . . $ 1,110.8 $ 912.5 $ 499.0
Investing activities . . . . . . .
(1,154.6)
(1,575.3)
(1,280.4)
Financing activities . . . . . .
456.5
667.4
471.3
Net cash provided by operating activities was $1.1 billion in 2011, $912.5 million in 2010 and
$499.0 million in 2009. The increase in net cash provided by operating activities in 2011 primarily reflects
higher operating income in 2011 as a result of higher average realized oil prices and a $63.9 million
refund of income tax paid in prior years. The increase in net cash provided by operating activities in 2010
primarily reflects higher operating income in 2010 as a result of higher commodity prices.
Net cash used in investing activities of $1.2 billion in 2011 primarily reflects additions to oil and gas
properties of approximately $1.8 billion partially offset by the divestment of our Panhandle and South
Texas properties of approximately $735.8 million. Net cash used in investing activities of $1.6 billion in
2010 primarily reflects additions to oil and gas properties of $1.0 billion and the acquisition of our Eagle
Ford Shale properties for $596.3 million, partially offset by a $35.4 million net cash inflow primarily
associated with an adjustment to the final settlement of the $1.1 billion payment to Chesapeake in
September 2009 related to the prepayment of the Haynesville Carry. Net cash used in investing
activities of $1.3 billion in 2009 includes additions to oil and gas properties of $1.6 billion and
acquisitions of oil and gas properties of $1.2 billion, reflecting the payment of the Haynesville Carry,
partially offset by derivative settlements received of $1.5 billion. Derivative settlements related to
derivatives that are not accounted for as hedges and do not contain a significant financing element are
reflected as investing activities.
Net cash provided by financing activities of $456.5 million in 2011 primarily reflects the $1.6 billion
of net proceeds from the 6
3
⁄
4
% Senior Notes and the 6
5
⁄
8
% Senior Notes offerings, the $430.2 million
in net proceeds from the issuance of Plains Offshore preferred stock and the net increase in
borrowings under our senior revolving credit facility of $115.0 million, partially offset by the $1.3 billion
redemption of long-term debt and $361.7 million for treasury stock purchases. Net cash provided by
financing activities of $667.4 million in 2010 primarily reflects the net increase in borrowings under our
senior revolving credit facility of $390.0 million and the net proceeds from the $300 million offering of
7
5
⁄
8
% Senior Notes due 2020. Net cash provided by financing activities of $471.3 million in 2009
primarily reflects the proceeds of $916.4 million, net of original issue discount of $48.6 million, from the
issuance of the 10% and the 8
5
⁄
8
% Senior Notes and the $648.0 million of proceeds from our common
stock offerings partially offset by the $1.1 billion net reduction in borrowings under our senior revolving
credit facility.
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