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North America's Source for Oil and Gas News
March 2004

Vol. 9, No. 11 Week of March 14, 2004

John Raymond goes after the big enchilada

Young executive turns in hat at Plains E&P to focus on Plains Resources’ lucrative tie to growing Plains All American Pipeline L.P.

Ray Tyson

Petroleum News Houston Correspondent

John T. Raymond, son of ExxonMobil chairman Lee Raymond, has relinquished two executive positions at the same exploration and production company to concentrate on his job at another E&P independent that leads to a much bigger prize, a personal stake in fast-growing Plains All American Pipeline L.P.

Raymond and his colleague in financial adventure, James Flores, along with Microsoft co-founder Paul Allen, stirred up a controversy among investors several weeks ago with their bid for Plains Resources, a small publicly traded independent that happens to own a considerable position in Plains All American.

Plains Exploration & Production Co., which doubled in size with its recent acquisition of fellow independent Nuevo Energy, announced March 3 that Raymond would no longer serve as president and chief operating officer of Plains E&P, a spin-off of Plains Resources, where Raymond remains as president and chief executive officer.

Flores remains chairman and CEO at Plains E&P

However, Raymond has not left himself without a conduit to Plains E&P. Flores remains as chairman and chief executive officer of that company, as well as chairman of Plains Resources. The pair go back to at least Ocean Energy, where Flores served as chairman and chief executive officer and Raymond was vice president of corporate development. Ocean eventually was taken over by big Oklahoma independent Devon Energy.

“With the recently announced Nuevo transaction, (Plains E&P) is in an excellent position for the future and I wish all of the employees continued success,” Raymond said. “Additionally, I look forward to a prosperous future with everyone at Plains Resources.”

Provided shareholders give the final nod, Raymond could indeed look forward to a prosperous future, as a stakeholder in what would become privately held Plains Resources and its large interest in Plains All American Pipeline. Plains Resources also participates in oil production in Florida through its wholly owned subsidiary Calumet Florida.

The board of directors of Plains Resources ended up accepting a $16.75 per share offer from the Vulcan Group, an affiliate of Vulcan Capital, the investment arm of Allen Vulcan Inc., after rejecting a bid of $14.25 from the group. However, the board failed to notify investors until after the deal that it had received and rejected an offer from another group led by Pershing Square L.P. and Leucadia National Corp.

Raymond also on board of All American Pipeline

Raymond also is listed as a board member of All American Pipeline, which has grown into one of the largest independent midstream oil companies in North America, handling more than 1.6 million barrels of crude per day through its network of assets in key producing basins and transportation gateways in the United States and Canada.

The company operates some 7,000 miles of gathering and mainline pipelines, primarily in Texas, Oklahoma, California and Louisiana and in the Canadian provinces of Alberta and Saskatchewan. It also is involved in marketing, terminaling and storage operations.

Plains All American is actually a publicly traded master limited partnership. Currently, Plains Resources owns 44 percent of the general partnership and 12.4 million limited partnership units, which represents about a 24 percent aggregate ownership interest in Plains All American.

For its pipeline operations, Plains All American generated $658.6 million in revenues in 2003, up nearly 36 percent from $486.2 million in 2002. The company received an additional $12 million in revenue from its other operations in 2003 versus $7.9 million in 2002. At year-end, it reported long-term debt of $519 million, representing a debt-to-total capitalization ratio of about 41 percent.

A key strategy of Plains All American is growth through acquisitions. Just weeks ago Plains All American closed a $158 million deal with Shell Pipeline, which gave the company a 22 percent interest in the Capline Pipeline System and about a 76 percent stake in the Capwood Pipeline System.

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