Filed by Plains Exploration & Production Company Pursuant to Rule 425
of the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Nuevo Energy Company Commission File No: 001-10537
The following presentation was made by Plains Exploration & Production Company on February 19, 2004:
P L A I N S E X P L O R A T I O N & P R O D U C T I O N C O M P A N Y
Investor Presentations February 2004
N Y S E : P X P w w w . p l a i n s x p . c o m
Forward Looking Statements
Except for the historical information contained herein, the matters discussed in this presentation are forward-looking statements that involve certain assumptions and known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially. These risks and uncertainties include, among other things, uncertainties inherent in the exploration for and development and production of oil & gas and in estimating reserves, unexpected difficulties in integrating Nuevo’s operations into ours, unexpected future capital expenditures, general economic conditions, oil and gas price volatility, the success of our risk management activities, competition, regulatory changes and other factors discussed in PXP’s filings with the Securities and Exchange Commission.
Forward Looking Statements
PXP and Nuevo will file a joint proxy statement/prospectus and other documents with the SEC. Investors and security holders are urged to carefully read the joint proxy statement/prospectus when it becomes available, because it will contain important information regarding PXP, Nuevo and the acquisition. A definitive joint proxy statement/prospectus will be sent to security holders of PXP and Nuevo seeking their approval of the acquisition. Investors and security holders may obtain a free copy of the proxy statement/prospectus (when available) and other documents filed by PXP and Nuevo with the SEC at the SEC’s web site at www.sec.gov. The proxy statement/prospectus and such other documents (relating to PXP) may also be obtained for free from PXP by directing such request to: Plains Exploration & Production Company, 700 Milam, Suite 3100, Houston, TX 77002, Attention: Joanna Pankey; telephone: (832) 239-6000; e-mail: jpankey@plainsxp.com. The proxy statement/prospectus and such other documents (relating to Nuevo) may also be obtained for free from Nuevo by directing such request to: Nuevo Energy Company, 1021 Main Street, Suite 2100, Houston, Texas 77002 Attention: Barbara Forbes; telephone: (713) 374-4870; e-mail: forbesb@nuevoenergy.com.
PXP, its directors, executive officers and certain members of management and employees may be considered “participants in the solicitation” of proxies from PXP’s stockholders in connection with the acquisition. Information regarding such persons and a description of their interests in the acquisition will be contained in the Registration Statement on Form S-4 when it is filed. Nuevo, its directors, executive officers and certain members of management and employees may be considered “participants in the solicitation” in connection with the acquisition. Information regarding such persons and a description of their interests in the acquisition will be contained in the Registration Statement on Form S-4 when it is filed.
PXP / NEV Combination Summary
On February 12, 2004 we announced the proposed acquisition of Nuevo Energy Company Total transaction value of approximately $945 million implies a $4.54 / boe proved reserve valuation
Plains Exploration & Production Profile Nuevo Energy Company Profile
Equity Capitalization—$mm $641 Equity Capitalization—$mm $564
Firm Value—$mm $1,144 Firm Value—$mm $955
Proved Reserves (MMBOE) 281 Proved Reserves (MMBOE) 208
Core Areas of Operations California, East Texas, Core Areas of Operations California, West Texas,
Gulf Coast Republic of Congo
Key Attributes Large drilling inventory Key Attributes Strong free cash flow
Long reserve life Long reserve life
Identified organic growth Upside opportunities
Transaction Overview
Terms Description
Form of Consideration 100% stock-for-stock tax-free merger
Ownership 53% PXP shareholders/47% Nuevo
shareholders
Exchange Ratio 1.765 PXP shares for each Nuevo share
Governance 5 PXP directors/2 Nuevo directors
Management Existing PXP Management
Other Terms Break-up fee/transaction expenses reimbursed
in the event of deal termination
Approvals Required Regulatory and shareholders of both
companies
Timing 90-120 days
Strategic Rationale
Cash flow accretive to PXP stockholders
Significant cost savings
Diverse exploitation inventory for growth
Increased free cash flow
Complementary assets and operational synergies
Strengthened production profile/reserve base
Enhanced credit profile and financial flexibility
PXP Pro Forma Operating Areas
14 MMBOE
PXP Nuevo
396 MMBOE
75 MMBOE
Illinois
San Juan
Mid-Continent
Permian Basin
East Texas
4 MMBOE
South LA
South TX
Pro Forma Reserve Profile
Proved reserves (MMBoe) 489
% oil 83%
% proved developed 71%
Strengthened Reserve Base
Increases % proved developed reserves Optimizes R/P ratio
PXP – 12/31/03 NEV—12/31/03 Pro Forma – 12/31/03
PUD
PUD PUD
29%
11%
42%
PD
PD PD
58% 89%
71%
Proved reserves : 281 Mmboe Proved reserves : 208 Mmboe Proved reserves : 489 Mmboe
Reserve Life – 12/31/03 (years) Oil as a % of Total Proved Reserves – 12/31/03
19.8
87%
15.8 83%
81%
11.7
PXP NEV Pro Forma PXP NEV Pro Forma
Complementary Asset Bases
California
Arroyo Grande
Pt. Pedernales
Pt. Arguello & P-0451 E/2 (Rocky Point)
Dos Cuadras E. Dos Cuadras Pitas Point Carpinteria
Cymric Hanford So. Belridge Monument Junction
Mount Poso
Buena Vista Midway Sunset
Santa Clara Hueneme
Belmont Huntington Beach Beta
Inglewood, San Vincente, E. Beverly Hills & Montebello
Significant PXP areas of activity Significant NEV areas of activity Oil fields 0
Key Growth Contributors –Diverse Project Inventory
PXP:
Inglewood Deep
Breton Sound
Point Arguello
Nuevo:
Cymric
Midway–Sunset
Belridge
California OCS
Pakenham
Identified Synergies
Significant cost savings due to corporate and operational overlap
Expected synergies are in-line with other recent E&P transactions
$20mm of identified, pre-tax synergies to be achieved through the consolidation of corporate operations in Houston, without significantly increasing PXP’s current overhead
Combined operational expertise and core area overlap in California provides for additional operational synergies
Financing Strategy and Transaction Merits
Financing Strategy Key Financial Merits
Increase borrowing base to Immediately accretive to
$500mm+ PXP’s CFPS
Seek credit rating upgrade Enhanced credit profile as
Use free cash flow to all key credit statistics will
accelerate growth and improve
reduce debt
Significant free cash flow
Consider calling $150mm 9 after funding sizeable
3/8% notes in 2005 growth capex program
Expand hedging with puts Improves all-in cash costs
and collars
Cash Flow Accretive
$ in millions, except per share amounts
2004E
Current PXP DCF—$mm (consensus – pre-announcement)1 $ 152
Current NEV DCF—$mm (consensus – pre-announcement)1 165
Estimated Synergies (tax adjusted @ 10% cash tax rate) 18
Pro Forma PXP DCF—$mm 336
PXP Diluted S/O (3Q 10Q) 40.7mm
PXP Shares Issued (press release) 37.4mm
Pro Forma PXP Shares 78.1mm
Current PXP CFPS1 $ 3.74
Pro Forma PXP CFPS1 $ 4.30
Accretion 15%
1 Based on analyst published information, the company does not hereby adopt such information
Enhanced Credit Profile
Key Credit Benefits
Significantly strengthened balance sheet and credit ratios
– Debt / PD BOE
– Debt / EBITDA
– Debt / capitalization
Strong projected free cash flow
– Visibility due to hedged volumes
– Ability to simultaneously fund growth capital and repay debt to continue strengthening the pro forma company’s credit profile
Increased scale
– PD reserves of 349 MMBOE
– Equity value over $1.0bn
Improved Credit Statistics as of 9/30/03
PXP PF $ 3.08
2.7x $ 2.60
2.4x
59%
49%
Debt / cap Debt / Q3 annualized Debt / PD Boe
EBITDAX
Note: Q3 annualized EBITDA includes $20mm of synergies
Ratings Agency Announcements
• Moody’s – Review for Upgrade
• S&P – Credit Watch Positive
• Fitch – Watch Positive
Increased Financial Flexibility
PXP PXP NEV Adjustments Pro Forma
Facility Availability:
Borrowing Base—$mm $403 $200 $500+
Less: O/S (9/30/03)—$mm (226) (26) (15) (267)
Availability—$mm $177 $174 $233
Cash Flow Summary:
2004 Consensus DCF—$mm
(pre-announcement) 1 $152 $165 $18 $336
Announced Capex-$mm (238)
(mid-point of guidance) (170) (68)
Implied Cash Flow- $mm
(before W/C)1 ($18) $97 $98
1 Based on analyst published information, the company does not hereby adopt such information
Pro Forma Hedge Summary
Production Instrument Average
Period Type Daily Volumes Price
1H.04
Crude Oil Swap 38,150 BOPD $ 24.83
Crude Oil Three Way Collar 8,000 BOPD $19.28—$24.00—$ 31.00
Natural Gas Swap 35,500 MMBtu/d $ 4.60
Natural Gas Collar 20,000 MMBtu/d $4.00—$ 5.15
Natural Gas Collar 10,000 MMBTu/d $4.75—$ 5.67
2H.04
Crude Oil Swap 38,900 BOPD $ 24.92
Crude Oil Three Way Collar 8,000 BOPD $19.28—$24.00—$ 31.00
Natural Gas Swap 32,500 MMBtu/d $ 4.50
Natural Gas Collar 20,000 MMBtu/d $4.00—$ 5.15
Natural Gas Collar 10,000 MMBTu/d $4.75—$ 5.67
2005
Crude Oil Swap 27,750 BOPD $ 24.57
Natural Gas Swap 8,125 MMBtu/d $ 4.61
2006
Crude Oil Swap 15,000 BOPD $ 25.28
2004 Oil Hedging Summary (based on midpoint of guidance)
• Approximately 72% of projected oil production is hedged •60% is swapped at a wtd. avg. price of $24.83/bbl •12% is covered by a three-way collar with $19.28-$24.00-$31.00/bbl pricing terms
2004 Gas Hedging Summary (based on midpoint of guidance)
• Approximately 49% of projected gas production is hedged •25% is swapped at a wtd. avg. price of $4.50/mmbtu •23% is covered by collars with wtd. avg. floor and ceiling prices of $4.25 and $5.32/mmbtu, respectively
Summary Guidance
PXP Pro Forma(1)
Reserves (12/31/03):
Proved Reserves (MMBOE) 281 489
% Oil 81% 83%
% Proved Developed 58% 71%
Estimated Sales Volumes
Barrels of oil equivalent- MBOE 13,400-14,500 30,400-32,500
MBOE PER DAY 36.5-39.5 83.1-88.8
% Oil & Liquids 60% 75%
% Gas 40% 25%
Estimated Oil Price differential to NYMEX—$/Bbl $ 4.15 - $ 4.65 $ 4.54—$5.03(3)
Estimated Gas Price differential to Henry Hub -
$/MMBTU ( $ .05) - $ .05 $ 0.19-$ 0.30
Operating Costs per BOE
Lease Operating Costs $6.00—$ 6.50 $ 7.38-$ 7.89
Production & Other Taxes $1.00—$ 1.20 $ 0.61-$ 0.78
Gathering & Transportation $0.30 -$ 0 .37 $ 0.13-$ 0.16
DD&A $ 4.30 $ 4.70 - $ 4.90
General & Administrative per BOE (2)
Recurring G&A Expense per BOE $1.55 – $ 1.70 $ 1.25 - $ 1.50
Noncash Compensation Expense $ .30 - $ .35 $.11 - $ .13
$ 163,000 - $228,000 -
Capital Expenditures ($ in thousands) $ 177,000 $ 247,000
(1) Incorporates Nuevo guidance issued 2/12/04.
(2) PXP’s G&A does not include expenses related to outstanding stock appreciation rights (SARS). 2003 results will include expenses related to changes in the market price of common stock versus the average price of SARS and cash paid upon exercise in excess of amounts previously expensed. In addition, no cost savings resulting from the merger are assumed in the pro forma estimates.
(3) Pro forma oil price differentials based on $25.00 per boe NYMEX due to percentage based contracts.
Transaction Rationale
Cash flow accretive to PXP stockholders
Significant cost savings
Diverse exploitation inventory for growth
Increased free cash flow
Complementary assets and operational synergies
Strengthened production profile/reserve base
Enhanced credit profile and financial flexibility
INVESTOR NOTICES
This document includes “forward-looking statements” as defined by the Securities and Exchange Commission (“SEC”). Such statements are those concerning the companies’ combination and strategic plans, expectations and objectives for future operations. All statements included in this document that address activities, events or developments that the companies expect, believe or anticipate will or may occur in the future are forward-looking statements. These include:
| • | completion of the proposed acquisition, |
| • | effective integration of the two companies, |
| • | reliability of reserve and production estimates, |
| • | production expense, |
| • | future financial performance, and |
| • | other matters discussed in PXP’s and Nuevo’s filings with the SEC. |
These statements are based on certain assumptions made by the companies based on their experience and perception of historical trends, current conditions, expected future developments and other factors they believe are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the companies’ control. Statements regarding future production are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, variability in the price received for oil and gas production, lack of availability of oil field goods and services, environmental risks, drilling and production risks, risks related to offshore operations, particularly in California, and regulatory changes. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements.
PXP AND NUEVO WILL FILE A JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS WITH THE SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION REGARDING PXP, NUEVO AND THE ACQUISITIONS. A DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS WILL BE SENT TO SECURITY HOLDERS OF PXP AND NUEVO SEEKING THEIR APPROVAL OF THE ACQUISITION. INVESTORS AND SECURITY HOLDERS MAY OBTAIN A FREE COPY OF THE PROXY STATEMENT/PROSPECTUS (WHEN AVAILABLE) AND OTHER DOCUMENTS FILED BY PXP AND NUEVO WITH THE SEC AT THE SEC’S WEB SITE AT WWW.SEC.GOV. THE PROXY STATEMENT/PROSPECTUS AND SUCH OTHER DOCUMENTS (RELATING TO PXP) MAY ALSO BE OBTAINED FOR FREE FROM PXP BY DIRECTING SUCH REQUEST TO: PLAINS EXPLORATION & PRODUCTION COMPANY, 700 MILAM, SUITE 3100, HOUSTON, TX 77002, ATTENTION: JOANNA PANKEY; TELEPHONE: (832) 239-6000; E-MAIL: JPANKEY@PLAINSXP.COM. THE PROXY STATEMENT/PROSPECTUS AND SUCH OTHER DOCUMENTS (RELATING TO NUEVO) MAY ALSO BE OBTAINED FOR FREE FROM NUEVO BY DIRECTING SUCH REQUEST TO: NUEVO ENERGY COMPANY, 1021 MAIN STREET, SUITE 2100, HOUSTON, TEXAS 77002 ATTENTION: BARBARA FORBES; TELEPHONE: (713) 374-4870; E-MAIL: FORBESB@NUEVOENERGY.COM.
PXP, its directors, executive officers and certain members of management and employees may be considered “participants in the solicitation” of proxies from PXP’s stockholders in connection with the acquisition. INFORMATION REGARDING SUCH PERSONS AND A DESCRIPTION OF THEIR INTERESTS IN THE ACQUISITION WILL BE CONTAINED IN THE REGISTRATION STATEMENT ON FORM S-4 WHEN IT IS FILED.
Nuevo, its directors, executive officers and certain members of management and employees may be considered “participants in the solicitation” in connection with the acquisition. INFORMATION REGARDING SUCH PERSONS AND A DESCRIPTION OF THEIR INTERESTS IN THE ACQUISITION WILL BE CONTAINED IN THE REGISTRATION STATEMENT ON FORM S-4 WHEN IT IS FILED.