Plains Exploration Raises $3 Billion for BP, Shell Acquisition

Plains Exploration & Production Co. (PXP), the oil and gas producer acquiring assets from BP Plc and Royal Dutch Shell Plc, sold $3 billion of bonds in two parts to help fund the purchase.

The company sold $1.5 billion each of 6.5 percent, eight- year debt to yield 509 basis points more than similar-maturity Treasuries and 6.875 percent securities due February 2023 at a relative yield of 516 basis points, according to data compiled by Bloomberg. Proceeds also will go toward repaying a senior revolving credit facility, the Houston-based company said in a filing. The offering was for an original $2.25 billion.

Plains last sold benchmark debt in April, issuing $750 million of 6.125 percent securities due June 2019 that traded at 101.5 cents on the dollar to yield 5.85 percent on Oct. 16, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

In September, Plains Exploration agreed to acquire from BP all of its interests in certain deep-water Gulf of Mexico oil and gas properties for $5.5 billion. Shell sold its stake in a field co-owned with BP for $560 million, according to a Sept. 10 company statement.

Moody’s Investors Service assigned a B1 rating to the issue and placed it under review for downgrade to B2, and possibly further cuts, the ratings company said today in a release.

JPMorgan Chase & Co., Barclays Plc, Bank of Montreal, Citigroup Inc., and Wells Fargo & Co. managed the sale, Bloomberg data show.

To contact the reporter on this story: Sarika Gangar in New York at sgangar@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net