When traveling overseas, three things nag at the back of my mind: computer glitches; flight cancellations and lost luggage; and an unexpected announcement that causes a stock swoon. Chris Sheehan

The latest trip avoided a trifecta—no computer mayhem—but luggage showed up days late, and Plains Exploration & Production Co., Houston, made one of those announcements you just didn't see coming. You know, the kind that shakes up the shareholder base enough to knock the stock down 10% or so.

It's hardly surprising, because it's not every day that an E&P with an enterprise value of $9 billion embarks on an asset purchase as large as $6.1 billion. And the latest move seemed to continue an almost restless reshuffling of resources. Piceance assets, bought in 2007, were sold in 2008; Haynes - ville, acquired in 2008, is now on the block (along with PXP's Madden Field and Mc-MoRan Exploration Co. shares), as gas assets are shed to make a downpayment on a dramatic upsizing of its deepwater Gulf of Mexico operations.

For shareholders, the size of the latest transaction came as a shock, but one tempered by the assurance that no equity would be issued. Indeed, certain metrics even looked comforting. Based on its numbers, buying assets at 3.5 times cash flow didn't look bad for a company that was itself trading at a 5.4 times cash-flow multiple.

The $6.1-billion purchase comprises assets held mainly by BP, and likely came up for sale as part of BP's post-Macondo asset-divestiture program. What was involved in the quasi-distressed sale? Producing reserves, of course, but also giant infrastructure to facilitate not just current production but also development of future opportunities that otherwise would take years longer to bring onstream in the deepwater Gulf.

Moreover, the infrastructure package—platform facilities at Holstein, Horn Mountain and Marlin—in essence comes with a self-financing production stream. Of the 67,000 barrels of oil equivalent added with the acquisition, as much as 38,000 per day is produced at the Marlin hub. This anchors the free cash flow needed early on—leveragedbuyout style—to pay down acquisition debt. With heavy hedging in place, free cash flow of $1 billion annually should be generated to reduce leverage. And supplementing free cash flow will be proceeds from asset divestitures, estimated at $1.5 billion or more.

But the real kicker depends on how effectively Plains can tap into additional reserves that can be developed at attractive costs by ramping volumes through its infrastructure, mainly at Holstein and Horn Mountain, which have plenty of room to raise utilization rates. The company first tried to acquire capacity at Holstein as long as five years ago, so the task is not lacking in Plains studies and expertise. Initially the company will focus on lower-risk opportunities on its currently held leases, followed by potential tiebacks of non-Plains production, as well as deeper exploration opportunities.

Street reaction in some quarters has been upbeat as the bigger picture emerged. "Simply stated, the infrastructure acquired places PXP at a strategic advantage going forward," writes Simmons & Co. E&P analyst David Kistler, whose new NAV for Plains is $66 per share, up $12. In a note by Capital One Southcoast, analyst Marshall Carver compares the $6.1-billion purchase to a 3P PV-10 value of $7.8 billion for the acquired properties, noting that success with tie-back projects on Plains' existing leases could add a further $3.4 billion of present value on a risked basis. His NAV for the company stands at $80 per share, up from $67.

Nonetheless, early stock action failed to muster a rebound, reflecting shareholder turnover and a lengthy timetable typical of the deep water. Most of 2013-2014 will involve permitting, securing long leadtime items, etc., so it will be mainly throughout the second half of the decade that investors can expect to see an accelerating production profile from the acquired assets. Elsewhere, Plains will count on growth from the startup in 2014 of its deepwater Lucius discovery, as well as ongoing growth in the Eagle Ford.

Consequently, realizing the full upside of the assets "will require patient and long-term-oriented shareholders," observes Kistler, plus "confidence in PXP's ability to execute on a long-term methodical exploitation program." Will it be worth the wait? If the acquisition truly represents "a once-in-a-cycle opportunity," then having to look out a couple of years to see value doesn't seem such a bad bet—especially if the infrastructure advantage allows a significant deepwater discovery to reach first production on a steeply accelerated schedule and with significantly reduced costs.