Plains Exploration to Buy BP Wells for $5.5 Billion

Reuters reported that Plains Exploration & Production Co. (NYSE:PXP) plans to borrow $7 billion so that it can purchase BP plc’s (LSE:BP) stake in some deepwater wells in the Gulf of Mexico for $5.5 billion. Since the announcement, PXP shares have dropped over 10 percent due to investors worrying about how the company will deal with the debt load it has taken on.

As quoted in the market news:

BP is selling the large network of oil exploration rigs to help pay damages for the worst offshore oil spill in U.S. history. The deal will put Plains Exploration into the energy industry big leagues with Anadarko Petroleum Corp, Devon Energy Corp and other large independent oil and natural gas producers.

Roughly two-thirds of PXP’s operations will now be in the Gulf, with one-third on land, and daily production will triple to 300,000 barrels of oil equivalent per day. The deal is part of the company’s strategy to focus on lucrative crude oil instead of natural gas, which has seen prices tumble to the lowest in a decade.

Click here to read the full Reuters report.