Plains Exploration & Production (PXP) is falling after McMoRan Exploration (MMR) reported that it had encountered difficulties with its Davy Jones energy field. In an October SEC filing, Plains Exploration reported that it had owned 51M shares of McMoRan, representing a stake of about 31.5%. McMoRan Exploration shares are declining for a second consecutive day after the company reported yesterday afternoon that it will have to inject a solvent into a well at its Davy Jones field, located in the Gulf of Mexico, in order to clean out perforations and obtain a measurable flow test. In a note to investors earlier today, Capital One analyst Richard Tullis responded to the news by lowering his price target on McMoran to $9 from $12. Although McMoRan may eventually be able to conduct the flow test, the company faces greater risk in light of yesterday's news, wrote Tullis, who nevertheless maintained an Add rating on the stock. Conversely, RBC Capital earlier today downgraded McMoRan to Sector Perform from Outperform, and JPMorgan asserted that the company has zero equity value, given uncertainty about the commercial viability of the Davy Jones field. In mid-morning trading, Plains Exploration fell 2.76% to $33.09 and McMoRan plunged 22.38% to $7.49. Meanwhile, Energy XXI (EXXI), which has a 15.8% stake in the Davy Jones field, dropped 4.19% to $30.22.
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