Plains Exploration & Production (PXP) has recently issued $400 million of 8.625% coupon bearing senior notes at 98.335% of the face value. The notes are due on October 15, 2019 and yield 8.875% to maturity based upon the initial offering price. Last month, it raised around $397 million by offering 17.25 million shares to public. PXP intends to utilize the proceeds for general corporate purposes, including funding a part of $1.1 billion payment due under the joint venture agreement signed with Chesapeake Energy (CHK) for sharing drilling and completion costs of Haynesville Shale wells. 

PXP management remains focused on maintaining a strong balance sheet, keeping it financially flexible and adequately liquid. It ended the second quarter of 2009 with nearly $455.8 million of cash and $1.34 billion under its senior revolving credit facility. Debt-to-capitalization came down to 43% at the end of the quarter compared to 54% at year-end 2008. This will enable PXP to pursue its aggressive exploration and development programs aimed at ensuring a long-term growth for the company. 

PXP closed at $27.34 on Tuesday, trading at 6.2X trailing 12-month EPS versus 5.6X of the peer group. We maintain our Outperform recommendation for the company
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