OXY to buy out Plains Exploration & Production (PXP) for $1.25 billion.
The stock market in general is up on the news that Democrats and Republicans have agreed on the $700 billion bailout plan offered by the Bush Administration. On top of this, energy stocks in general are getting more help from the recent decision by Occidental Petroleum (OXY) to buy what remains of the stake that Plains Exploration & Production (PXP) has in two oil and gas fields in the Midwest. OXY is laying out $1.25 billion for the properties.
The move helps PXP by reducing its debt and helping it unload some property that was costing money. Instead, reports Yahoo! Finance, Plains hopes to set its sights on developing shale:
The Houston-based company also said the sale will let it focus more on the ‘unparalleled high-growth’ Haynesville Shale area, which it hopes will drive production and reserve growth for most of the next decade.
No doubt the company hopes that current worries over energy prices and supply will drive a market for more exploration in a variety of types of extraction that have — until now — been opposed on a variety of levels.
OXY will benefit by having its reserves of natural gas expanded. Indeed, natural gas is becoming more popular as worries about oil continue to mount. However, I suspect that the L.A.-based company is looking forward with greater excitement toward the eminent expiration of the offshore drilling ban. The lifting of the ban has already passed the House, and it is expected to pass the Senate as well.
Disclosure: I do not own Big Oil stock.