(RTTNews) - Thursday, independent oil and gas company Plains Exploration & Production Co. (PXP: News ) reported a sharp decline in third-quarter profit, as revenues plunged year-over-year on lower sales volume and prices.

The Houston, Texas-based company reported net income for the third quarter of $39.33 million or $0.30 per share, compared to $493.15 million or $4.50 per share in the year-ago quarter.

Net income for the current quarter include unrealized gain on mark-to-market derivative contracts of $14.8 million, realized gain on mark-to-market derivative contracts of $246.7 million and an adjust income taxes of $85.9 million.

Excluding these items, the company's third quarter non-GAAP net income was $185.3 million compared to $196.3 million in the same quarter last year. On per share basis, net income was $1.40 for the third quarter of 2009.

On average, 13 analysts polled by Thomson Reuters expected the company to earn $0.53 per share for the quarter. Analysts estimates typically exclude special items.

Total revenues for the quarter decreased to $312.19 million from $719.54 million in the prior-year quarter. Eight analysts had a revenue consensus of $375.62 million for the third quarter.

Daily sales volumes for the third quarter fell to 83.0 thousand BOE from 92.4 thousand BOE in the year-ago quarter, due to the impact of the 2008 divestments. Excluding divestments, sales volumes grew by 8% year-to-date, due to higher production from the company's Flatrock and Haynesville Shale properties.

The average realized sales price before derivatives was $57.26 per barrel of oil, down from $103.00 per barrel of oil in the third quarter of 2008.
Cash margin, a non-GAAP measure, declined to $60.50 per BOE from $62.92 per BOE in the similar quarter of 2008.

Total production costs decreased 9% to $13.11 per barrel of oil equivalent or BOE for the third quarter 2009.

For the nine-month period, the company's net income plummeted to $8.17 million or $0.73 per share from $859.56 million or $7.72 per share in the year-ago period. Revenues for the period plunged to $819.38 million from $2.08 billion in the same period last year.

Looking ahead for fiscal 2009, the company expects its capital budget to be $1.55 billion, including capitalized interest and general and administrative expenses.

For 2010, the company is targeting a $900 million to $1.1 billion of capital budget, including capitalized interest and general and administrative expenses. PXP intends to fund its 2010 capital budget from internally generated funds and borrowings under its senior revolving credit facility and has flexibility to adjust spending as market conditions warrant.

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