Why Plains Exploration & Production's Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of oil and gas producer Plains Exploration & Production (NYS: PXP) fell 10% today after announcing asset acquisitions.

So what: The company announced it is buying $5.5 billion worth of assets in the Gulf of Mexico from BP (NYS: BP) and paying $560 million to Royal Dutch Shell for a stake in an oil field. The company doesn't plan to issue shares to pay for the purchases and will fund them through debt.

Now what: Investors aren't excited about the increased leverage on the balance sheet and that's why the stock is down today. Long-term debt was already at $3.9 billion at the end of June; this will only increase the debt load. It's a risky bet and that would be enough to keep me out of the stock, even after the 10% discount.

Interested in more info on Plains Exploration & Production? Add it to your watchlist byclicking here.

The article Why Plains Exploration & Production's Shares Plunged originally appeared on Fool.com.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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