I am working on a prop and created a PP2 but when I opened the PP2 file there is no reference to to the object file. Is there a way to extract the object file from the pp2 file?

Have you tried changing the .pp2 extension to .obj?

THere is.

First, load your .pp2 in Poser. Immediately go to File ->Export -> Wavefront .OBJ. Select the options to keep the group names. Save the .OBJ at a meaningful location.

Next, open the .pp2 file in a CR2 editor (I use kim99's free CR2Builder, available from www.3minutesposer.com ) 
Expand the tree, and delete the entry "geomCustom"
In place of "geomCustom", you need an entry "storageOffset 0 0.3784 0"
and on the next line: "objFileGeom 0 0 "...<path to your saved .OBJ file>..."

If you want to have a peek at .pp2s that work with external geometries, download my V4 Warrior freebie and look at the props in there.

Here is the problem I ran into. Exported the obj files as suggested, edited the PP2 in notepad plus and saved the file with a different file name. When I opened in Poser it was small, about the size of a matchbox car compared to M3.

Reload the new prop, and set its scale to 100%, then resave. It'll keep the external .OBJ reference.

I am looking into something else at this point. I found a Python script that might work and will be testing it later.

Attached Link: http://market.renderosity.com/mod/bcs/index.php?ViewProduct=37406

I go with Paloth.  You then remove the geomCustom section from the pp2 file and insert the reference as svdl illustrates.  Voila.  Why do this the difficult way?  The stuff between the { } after the geomCustom is basically a Wavefront OBJ format just sitting there.  Remove the num... lines (or comment out with //) and you have an external obj file.

Add something like this in place of the geomCustom section (of course, change the file path to match the new obj file):

storageOffset 0 0.3487 0
objFileGeom 0 0 :Runtime:Geometries:ZygoteCostumes:Hats:blRHCap.obj