Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good morning. My name is Rich and I'll be your conference operator today. At this time I would like to welcome everyone to the Plains Exploration fourth quarter and full-year 2006 results conference call. [OPERATOR INSTRUCTIONS]
It is now my pleasure to turn the floor over the your host, Scott Winters, Vice President of Investor Relations. Sir, you may begin your conference.
SCOTT WINTERS, VP OF IR, PLAINS EXPLORATION & PRODUCTION: Operator, thank you. And good morning, everybody. On the call today is Jim Flores, our Chairman, President, and Chief Executive Officer, Doss Bourgeois, EVP of Exploration and Production, Winston Talbert, our EVP and Chief Financial Officer, and John Wombwell, our EVP and General Counsel. I'll begin by reviewing the highlights of PXP's financial and operating results. After I'm finished, I'll turn the call over to Jim.
First, let me remind everybody that during this call there will be forward-looking statements as defined by the Securities and Exchange Commission. These statements are based on our current expectations and projections about future events, and involve certain assumptions, known, as well as unknown risks, uncertainties and other factors that can cause our actual results to differ materially. Please refer to our forms 10-K, 10-Q, and 8-K filed with the SEC for a complete discussion on forward-looking statements. With that in mind, PXP plans to file its 10-K next week. An 8-K was filed this morning that includes full-year 2007 operational and financial guidance. The company is reaffirming its previously-issued operational guidance and is issuing financial guidance this morning which includes items such as G&A, interest, and taxes. Also, slides for this morning's conference call were posted on the company's Web site this morning.
I'll begin with the highlights for the year 2006. PXP stockholders realized a 19.6% return for the year, and since becoming a public company in 2002, PXP's total return to stockholders has been over 420%. For the year, PXP reported net income of $598 million versus a $214 million loss in 2005, an 8% increase in year over year revenues, which were in excess of $1 billion, a 66% increase in operating cash flow, and a 74% increase in cash margin per BOE. Operating cash flow and cash margin per BOE are non-GAAP measures. Tables are included in the press release and in the presentation on the company website that reconcile these two measures to the appropriate GAAP measure. The company ended the year with a debt to capitalization of 17% compared to 53% at year end 2005. Long-term debt of $236 million compared to $797 million at the end of 2005, and stockholder's equity in excess of $1 billion, which represents an increase of nearly 60% since the end of 2005.
PXP repurchased $300 million of PXP stock through December or roughly 6.6 million of its common shares outstanding. PXP ended the year with 72.4 million basic shares outstanding. There is $200 million remaining under the $500 million Board of Directors authorization, which was granted in December of 2005. The financial performance improved significantly and the balance sheet is strong, which is enhancing PXP's financial flexibility to seek investment opportunities with long-term benefits for its shareholders and to continue opportunistically purchasing PXP common shares.
Operationally during the year, finding and development costs were $10.25 per barrel of oil equivalent, primarily due to the exploration success in the Gulf of Mexico Miocene Trend, with three discoveries out of six exploratory drills during the year. PXP's exploration investment in the Gulf of Mexico Miocene Trend yielded the Big Foot discovery, which was announced in January of 2006, the Caesar discovery, this was announced in May of last year, and the Friesian discovery which was announced in November of last year. An unaudited reserve estimate for the Big Foot and Caesar discoveries is approximately 47 million barrels of oil equivalent, which were sold for $706 million in the fourth quarter. The Friesian prospect in Green Canyon OCS block number 599 is awaiting development and further delineation drilling. In addition to the $706 million property sale, let me remind everybody that we sold 43 million proved reserved for $864 million, plus we received a deal termination fees of $43 million, which totalled $1.6 billion of capital raised from operations. Building on the exploration success, PXP expanded its exploration prospected portfolio in the Gulf of Mexico Miocene Trend. The current inventory includes 30 high-impact prospects, some close to infrastructure while others are located in frontier areas. Included in today's announcement is an update on Hurricane D, which is one of the recent additions to the prospect portfolio. I'll leave this for discussion later in the call.
With respect to reserves as determined by its third party independent engineers, Netherland, Sewell and Associates, PXP's year end 2006 proven reserves totalled approximately 350 million barrels of oil equivalent, compared to 401 million barrels of oil equivalent at year end 2005. The independent engineers NSA also determined that PXP has a 153.9 million [sic - see press release] barrels of oil equivalent of probable and possible reserves, nearly all of which are associated with California producing properties. This amount plus a 352 proven equals 506 million barrels of oil equivalent of thee p reserves for PXP. This estimate does not include any potential from the current discoveries, Friesian and Hurricane …