PIONEER NATURAL RESOURCES COMPANY
NYSE : PXD

PIONEER NATURAL RESOURCES COMPANY

August 02, 2005 08:30 ET

Pioneer Reports Second Quarter 2005 Results

DALLAS--(CCNMatthews - Aug 2, 2005) -

Pioneer Natural Resources Company (NYSE:PXD) today announced financial and operating results for the quarter ended June 30, 2005.

Pioneer reported net income for the quarter of $185.6 million, or $1.28 per diluted share, an increase of 166% over net income for the same period last year of $69.7 million, or $.58 per diluted share. Cash flow from operations for the second quarter was $332.6 million, an increase of 26% compared to $264.7 million for the same period in 2004. The significant increase in operating cash flow is attributable to higher realized prices for oil, gas and natural gas liquids offset partially by increases in costs. Cash flow from operations, proceeds from the Company's sale of its third volumetric production payment in April and proceeds from asset divestitures during the second quarter allowed Pioneer to reduce its long-term debt by $437 million and repurchase 2.1 million shares of its common stock during the quarter in addition to funding its second quarter capital program. At the end of the quarter, long-term debt was approximately $1.4 billion, or 35% of total capitalization, and shares outstanding totaled 141.9 million.

Net income for the quarter includes $44.1 million ($28.0 million net of tax) of other income which represents expected proceeds from business interruption insurance claims related to previously disclosed losses sustained as a result of Hurricane Ivan and a fire at one of Pioneer's domestic onshore gas plants. Second quarter net income was reduced by a $27.3 million reversal of the deferred tax benefit recorded in connection with the Company's decision to exit Gabon. The deferred tax benefit is being reversed as a result of Pioneer's agreement in June of 2005 to sell its interest in its Gabon subsidiary.

In May, the Company sold its interests in three non-core fields in Canada and has reflected the results of operations of these fields, the gain on the sale and the related tax effects as income from discontinued operations in the amount of $82.0 million. Income from continuing operations for the quarter was $103.5 million, or $.72 per diluted share, and compares to income from continuing operations of $64.2 million, or $.53 per diluted share, for the same period last year.

Second quarter oil and gas sales averaged 183,298 barrels oil equivalent per day (BOEPD) excluding approximately 2,100 BOEPD associated with discontinued operations. Second quarter oil sales averaged 44,882 barrels per day (BPD) and natural gas liquids sales averaged 17,466 BPD. Gas sales in the second quarter averaged 726 million cubic feet per day (MMcfpd). Second quarter realized prices for oil and natural gas liquids were $35.52 and $29.11 per barrel, respectively. The worldwide realized price for gas was $5.35 per thousand cubic feet (Mcf), including $.30 per Mcf associated with the VPP transactions. North American realized gas prices averaged $6.37 per Mcf, including $.37 per Mcf associated with the VPP transactions.

Second quarter production costs averaged $6.47 per barrel of oil equivalent (BOE). Exploration and abandonment costs were $52.4 million for the quarter and included $18.2 million of dry hole and abandonments associated with unsuccessful wells in the U.S., Argentina, Canada and Tunisia, $28.4 million of geologic and geophysical expenses including seismic costs and $5.8 million of delay rentals and unproved acreage abandonments. General and administrative costs for the quarter were $29.2 million.

For the same quarter last year, adjusted to exclude discontinued operations, Pioneer reported oil and gas sales of 180,404 BOEPD, including oil sales of 44,811 BPD, natural gas liquids sales of 21,708 BPD and gas sales of 683 MMcfpd. Realized prices for second quarter 2004 were $27.92 per barrel for oil, $22.73 per barrel for natural gas liquids and $4.28 per Mcf for gas. North American gas prices averaged $5.07 per Mcf.

Operations Update

Pioneer has increased its 2005 capital budget for development and exploratory activities and land additions by approximately $150 million to $1.1 billion. The increase encompasses expenditures related to Pioneer's success in extending its acreage positions in West Africa, the U.S. onshore Gulf Coast, the Rocky Mountains, Alaska and Canada, adding a 5-well Gulf of Mexico shallow shelf exploration program and an increase in drilling in the Spraberry field and the Horseshoe Canyon coalbed methane play in Canada. The increased budget also reflects the rising costs associated with drilling and completion activities given higher commodity prices. The capital budget excludes costs associated with recent acquisitions.

During the second quarter, Pioneer continued with the aggressive pace of development set earlier in the year. Currently, the Company has 16 onshore rigs running in the U.S., nine in Argentina and five in Canada.

In the Raton Basin, Pioneer has drilled 135 of the 300 wells planned by year end. The Company is scheduled to drill 30 to 40 wells per month through the end of the year given that each year's drilling schedule is back-end loaded to accommodate typical winter weather delays. During the second quarter, third-party pipeline capacity restraints began limiting Pioneer's production from the field and are expected to continue to have an impact until a pipeline expansion of approximately 35% is completed in October of 2005. As a result, Raton production in 2005 is now expected to be 5% to 7% above 2004 levels.

In the deepwater Gulf of Mexico, exploration drilling on Pioneer's Clipper prospect has resumed after having been suspended for severe weather and recurring loop currents. Pioneer also expects to use the rig that it has under contract on the Clipper prospect to drill its Paladin prospect later in the year. During the fourth quarter, an appraisal well is planned on the Thunder Hawk discovery.

The ramp-up of production from the Devils Tower field has also been impacted by severe weather. In addition, production from Devils Tower's deepest intervals is being extended, increasing recoverable reserves, but postponing access to shallower intervals that are expected to produce at higher rates. Plans for tying in two satellite fields, Triton and Goldfinger, are progressing toward completion during the fourth quarter.

In July, recoverable reserves from the Harrier field were fully produced, with ultimate recoverable reserves exceeding expectations. Pioneer has also been advised by the operator of the Canyon Express system that sidetrack operations planned for the Aconcagua field later this year will be postponed pending rig availability. The existing Aconcagua wells are expected to reach the end of their productive lives by the end of 2005 or early 2006; therefore, Pioneer now anticipates that the system will be shut-in once the Camden Hill recoverable reserves are fully produced during the first half of 2006 unless a rig becomes available to drill the Aconcagua sidetrack wells.

In Canada, Pioneer has drilled 30 wells in the Horseshoe Canyon coalbed methane play under a program to drill up to 100 wells during 2005. Initial stabilized flow rates have significantly exceeded expectations, and the Company is considering an expansion of this program. Two Manville coalbed methane pilots are also planned in the Bashaw area later this year.

The Company continues to expand its deepwater exploration program in West Africa. Pioneer was awarded exploration rights to acreage in Blocks 2 and 3 in the Joint Development Zone between Nigeria and Sao Tome and Principe through a consortium with ERHC Energy Inc. The consortium was awarded 65% interest in Block 2 and 25% interest in Block 3 subject to negotiating acceptable joint operating and production sharing agreements.

As announced yesterday, Pioneer is also expanding its portfolio in Alaska and has joined ConocoPhillips in the Cosmopolitan Unit located offshore in the Cook Inlet where three wells and a sidetrack have been drilled establishing a significant oil column. A new 3-D seismic survey is planned for later this year to refine the estimate of recoverable reserves.

Scott D. Sheffield, Chairman and CEO, stated, "Pioneer delivered another quarter of strong financial and operational performance, reflecting recent robust market conditions and our quality portfolio of producing assets. Since the beginning of this year, we have reduced long-term debt by $1 billion and substantially improved our financial flexibility. With this enhanced financial flexibility, we expect to continue to add net asset value and grow production on a per share basis through an aggressive development drilling program, the commercialization of several attractive discovered resources, core area acquisitions, further exploration success and additional share repurchases."

Financial Outlook

The following statements are estimates based on current expectations. These forward-looking statements are subject to a number of risks and uncertainties which may cause the Company's actual results to differ materially from the following statements. The last paragraph of this release addresses certain of the risks and uncertainties to which the Company is subject.

Full-year production is now expected to range from 63 MMBOE to 65 MMBOE for 2005, excluding production from discontinued operations. The new range reflects the production impact of closed and pending asset sales in Canada, East Texas and the inland waters of the Gulf of Mexico, the Company's third volumetric production payment transaction, production lost from the Devils Tower and West Panhandle fields which were covered by business interruption insurance, pipeline capacity limitations delaying the ramp up of production from the Raton Basin and the impact of weather and rig shortages in the deepwater Gulf of Mexico, most of which are discussed in the operations update above. The new range also reflects the impact of directives from the Minerals Management Service which required that uphole recompletions scheduled for Devils Tower wells be postponed to maximize the recovery of oil and gas from less prolific deeper zones.

Third quarter 2005 production is expected to average 160,000 to 175,000 BOEPD. This range is lower than the second quarter average and reflects the Harrier field having been fully produced, the resumption of production from the West Panhandle field in mid-July and the typical variability in the timing of oil cargo shipments in South Africa, Argentina and Tunisia.

Third quarter production costs (including production and ad valorem taxes) are expected to average $6.75 to $7.25 per BOE based on current NYMEX strip prices for oil and gas. The increase over the prior quarter is primarily the result of lower anticipated third quarter production from lower per unit cost Gulf of Mexico fields, higher commodity prices, and to a lesser extent, the retention of a full quarter of operating costs associated with the third VPP volumes sold in April. Depreciation, depletion and amortization expense is expected to average $8.75 to $9.25 per BOE.

Total exploration and abandonment expense is expected to be $40 million to $70 million and includes plans to drill two deepwater Gulf of Mexico exploration wells (Clipper and Paladin) and one well in the Anaguid Block in Tunisia and the acquisition of additional 3-D seismic data. General and administrative expense is expected to be $28 million to $30 million. Interest expense is expected to be $26 million to $29 million, and accretion of discount on asset retirement obligations is expected to be $2 million to $3 million.

The Company's third quarter effective income tax rate is expected to range from 36% to 39% based on current capital spending plans, including cash income taxes of $10 million to $20 million that are principally related to Argentine, Canadian and Tunisian income taxes and nominal alternative minimum tax in the U.S. Other than in Argentina, Canada and Tunisia, the Company continues to benefit from the carryforward of net operating losses and other positive tax attributes.

The Company's financial results and oil and gas hedges are outlined on the attached schedules.

Earnings Conference Call

This morning at 10:00 a.m. Eastern, Pioneer will discuss its second quarter financial and operating results with an accompanying presentation. The call will be webcast on Pioneer's website, www.pioneernrc.com. At the website, select 'INVESTOR' at the top of the page. For those who cannot listen to the live broadcast, a replay will be available shortly after the call. Or you may choose to dial (800) 474-8920 (confirmation code: 5477131) to listen to the call by telephone and view the accompanying visual presentation at the website above. A telephone replay will be available by dialing (888) 203-1112 (confirmation code: 5477131).

Pioneer is a large independent oil and gas exploration and production company with operations in the United States, Argentina, Canada, Equatorial Guinea, Nigeria, Sao Tome and Principe, South Africa and Tunisia. Pioneer's headquarters are in Dallas. For more information, visit Pioneer's website at www.pioneernrc.com.

Except for historical information contained herein, the statements in this News Release are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements and the business prospects of Pioneer are subject to a number of risks and uncertainties which may cause Pioneer's actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties include, among other things, volatility of oil and gas prices, product supply and demand, competition, government regulation or action, international operations and associated international political and economic instability, litigation, the costs and results of drilling and operations, availability of drilling equipment, Pioneer's ability to replace reserves, implement its business plans, or complete its development projects as scheduled, access to and cost of capital, uncertainties about estimates of reserves, quality of technical data, environmental and weather risks, acts of war or terrorism. These and other risks are described in Pioneer's 10-K and 10-Q Reports and other filings with the Securities and Exchange Commission.



PIONEER NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

June 30, December 31,
2005 2004
------------ -------------
(Unaudited)

ASSETS

Current assets:
Cash and cash equivalents $58,451 $7,257
Accounts receivable, net 265,191 210,279
Inventories 56,282 40,332
Prepaid expenses 5,015 10,822
Deferred income taxes 151,316 115,206
Other current assets, net 8,621 9,529
------------ -------------

Total current assets 544,876 393,425
------------ -------------

Property, plant and equipment, at cost:
Oil and gas properties, using the
successful efforts method of accounting 8,317,180 8,124,616
Accumulated depletion, depreciation and
amortization (2,399,542) (2,243,549)
------------ -------------

Total property, plant and equipment 5,917,638 5,881,067
------------ -------------

Deferred income taxes -- 2,963
Goodwill 307,068 315,880
Other assets, net 144,995 135,132
------------ -------------

$6,914,577 $6,728,467
============ =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable $273,484 $216,051
Interest payable 42,682 45,735
Income taxes payable 25,439 13,520
Deferred revenue 139,544 --
Other current liabilities 403,932 269,153
------------ -------------

Total current liabilities 885,081 544,459
------------ -------------

Long-term debt 1,394,739 2,385,950
Deferred income taxes 653,593 607,415
Deferred revenue 759,070 --
Other liabilities and minority interests 576,461 358,863
Stockholders' equity 2,645,633 2,831,780
------------ -------------

$6,914,577 $6,728,467
============ =============


PIONEER NATURAL RESOURCES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
(Unaudited)

Three months ended Six months ended
June 30, June 30,
------------------- ---------------------
2005 2004 2005 2004
--------- --------- ----------- ---------
Revenues and other income:
Oil and gas $544,600 $424,757 $1,054,642 $850,427
Interest and other 47,896 1,610 76,229 3,345
Gain (loss) on disposition
of assets, net 148 (232) 2,369 (245)
--------- --------- ----------- ---------

592,644 426,135 1,133,240 853,527
--------- --------- ----------- ---------
Costs and expenses:
Oil and gas production 107,996 81,177 219,494 155,878
Depletion, depreciation
and amortization 147,161 140,528 300,758 274,717
Impairment of long-lived
assets 471 -- 623 --
Exploration and
abandonments 52,384 39,605 119,473 119,351
General and administrative 29,217 17,140 58,802 35,415
Accretion of discount on
asset retirement
obligations 2,102 2,016 4,242 3,982
Interest 30,212 21,402 63,463 42,978
Other 17,582 8,300 29,302 8,496
--------- --------- ----------- ---------

387,125 310,168 796,157 640,817
--------- --------- ----------- ---------
Income from continuing
operations before income
taxes 205,519 115,967 337,083 212,710
Income tax provision (101,983) (51,759) (153,846) (91,536)
--------- --------- ----------- ---------

Income from continuing
operations 103,536 64,208 183,237 121,174
Income from discontinued
operations, net of tax 82,023 5,494 86,979 8,716
--------- --------- ----------- ---------
Net income $185,559 $69,702 $270,216 $129,890
========= ========= =========== =========

Basic earnings per share:
Income from continuing
operations $.74 $.54 $1.29 $1.02
Income from discontinued
operations, net of tax .58 .05 .61 .07
--------- --------- ----------- ---------
Net income $1.32 $.59 $1.90 $1.09
========= ========= =========== =========

Diluted earnings per share:
Income from continuing
operations $.72 $.53 $1.26 $1.01
Income from discontinued
operations, net of tax .56 .05 .60 .07
--------- --------- ----------- ---------
Net income $1.28 $.58 $1.86 $1.08
========= ========= =========== =========

Weighted average shares
outstanding:
Basic 140,812 118,855 141,849 118,787
========= ========= =========== =========
Diluted 145,246 120,402 146,286 120,333
========= ========= =========== =========


PIONEER NATURAL RESOURCES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

Three months ended Six months ended
June 30, June 30,
------------------- ---------------------
2005 2004 2005 2004
--------- --------- ----------- ---------

Cash flows from operating
activities:
Net income $185,559 $69,702 $270,216 $129,890
Depletion, depreciation
and amortization 147,161 140,528 300,758 274,717
Impairment of long-lived
assets 471 -- 623 --
Exploration expenses,
including dry holes 44,007 33,380 102,156 111,440
Deferred income taxes 86,434 47,144 129,406 79,864
Loss (gain) on disposition
of assets, net (148) 232 (2,369) 245
Accretion of discount on
asset retirement
obligations 2,102 2,016 4,242 3,982
Noncash effects from
discontinued operations (79,646) 2,300 (76,796) 5,370
Noncash interest expense 1,676 (4,993) 2,372 (11,363)
Commodity hedge related
activity (7,666) (11,242) (10,727) (22,533)
Amortization of stock-
based compensation 8,018 2,887 13,170 4,866
Amortization of deferred
revenue (20,449) -- (32,074) --
Other noncash items 12,086 6,463 16,764 5,704
Changes in operating
assets and liabilities,
net of effects from
acquisition:
Accounts receivable, net (42,269) (24,803) (54,302) (58,540)
Inventories (11,388) (4,161) (12,703) (4,180)
Prepaid expenses 3,359 3,930 5,808 4,847
Other current assets,
net (331) -- (529) 757
Accounts payable (8,029) 1,248 9,564 (4,754)
Interest payable 11,895 (607) (4,364) 86
Income taxes payable 9,144 1,397 11,919 4,455
Other current
liabilities (9,425) (717) (5,689) (6,519)
--------- --------- ----------- ---------

Net cash provided by
operating activities 332,561 264,704 667,445 518,334
Net cash provided by (used
in) investing activities 243,455 (192,233) 605,354 (364,534)
Net cash used in financing
activities (536,165) (66,108) (1,224,367) (157,534)
--------- --------- ----------- ---------

Net increase (decrease) in
cash and cash equivalents 39,851 6,363 48,432 (3,734)
Effect of exchange rate
changes on cash and cash
equivalents 2,561 (173) 2,762 (353)
Cash and cash equivalents,
beginning of period 16,039 9,022 7,257 19,299
--------- --------- ----------- ---------

Cash and cash equivalents,
end of period $58,451 $15,212 $58,451 $15,212
========= ========= =========== =========


PIONEER NATURAL RESOURCES COMPANY
SUMMARY PRODUCTION AND PRICE DATA
(Unaudited)

Three months Six months ended
ended June 30,
June 30,
----------------- -----------------
2005 2004 2005 2004
-------- -------- -------- --------
Average Daily Sales
Volumes from Continuing
Operations:
Oil (Bbls) - U.S. 26,424 26,039 27,567 25,505
Argentina 7,796 8,531 7,992 8,579
Canada 210 26 186 28
Africa 10,452 10,215 11,205 12,125
-------- -------- -------- --------
Worldwide 44,882 44,811 46,950 46,237
======== ======== ======== ========

Natural gas liquids
(Bbls) - U.S. 14,908 19,809 16,219 20,373
Argentina 1,948 1,494 1,761 1,459
Canada 610 405 514 432
-------- -------- -------- --------
Worldwide 17,466 21,708 18,494 22,264
======== ======== ======== ========

Gas (Mcf) - U.S. 553,803 536,109 546,086 531,870
Argentina 135,188 122,326 132,783 110,072
Canada 36,710 24,868 35,448 24,420
-------- -------- -------- --------
Worldwide 725,701 683,303 714,317 666,362
======== ======== ======== ========

Average Daily Sales
Volumes from
Discontinued
Operations:
Oil (Bbls) - Canada 45 69 57 69
Natural gas liquids
(Bbls) - Canada 264 511 224 549
Gas (Mcf) - Canada 10,472 16,425 12,910 16,236

Average Reported Prices
(a):
Oil (per Bbl) - U.S. $29.36 $27.63 $29.15 $27.16
Argentina $34.54 $20.13 $33.12 $24.05
Canada $35.22 $45.79 $41.97 $45.54
Africa $51.84 $35.13 $47.82 $32.98
Worldwide $35.52 $27.92 $34.33 $28.12

Natural gas liquids
(per Bbl) - U.S. $28.39 $22.29 $27.18 $21.90
Argentina $30.84 $27.22 $30.62 $28.17
Canada $41.18 $27.31 $39.89 $27.53
Worldwide $29.11 $22.73 $27.86 $22.42

Gas (per Mcf) - U.S. $6.39 $5.15 $6.17 $5.13
Argentina $.88 $.65 $.88 $.62
Canada $6.17 $3.35 $6.07 $3.30
Worldwide $5.35 $4.28 $5.18 $4.31

(a) Average prices are attributable to continuing operations and
include the results of hedging activities.


PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(in thousands)
(Unaudited)

EBITDAX and discretionary cash flow ("DCF") (as defined below) are
presented herein, and reconciled to the generally accepted accounting
principle ("GAAP") measures of net income and net cash provided by
operating activities because of their wide acceptance by the
investment community as financial indicators of a company's ability to
internally fund exploration and development activities and to service
or incur debt. The Company also views the non-GAAP measures of EBITDAX
and DCF as useful tools for comparisons of the Company's financial
indicators with those of peer companies that follow the full cost
method of accounting. EBITDAX and DCF should not be considered as
alternatives to net income or net cash provided by operating
activities, as defined by GAAP.

Three months ended Six months ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------

Net income $185,559 $69,702 $270,216 $129,890
Depletion, depreciation and
amortization 147,161 140,528 300,758 274,717
Impairment of long-lived
assets 471 -- 623 --
Exploration and abandonments 52,384 39,605 119,473 119,351
Accretion of discount on asset
retirement
obligations 2,102 2,016 4,242 3,982
Interest expense 30,212 21,402 63,463 42,978
Income tax provision 101,983 51,759 153,846 91,536
Loss (gain) on disposition of
assets, net (148) 232 (2,369) 245
Noncash effects from
discontinued operations (79,646) 2,300 (76,796) 5,370
Current income taxes on
discontinued operations 2,869 -- 2,869 --
Commodity hedge related
activity (7,666) (11,242) (10,727) (22,533)
Amortization of stock-based
compensation 8,018 2,887 13,170 4,866
Amortization of deferred
revenue (20,449) -- (32,074) --
Other noncash items 12,086 6,463 16,764 5,704
--------- --------- --------- ---------

EBITDAX (a) 434,936 325,652 823,458 656,106

Less: Cash interest expense (28,536) (26,395) (61,091) (54,341)
Current income taxes (18,418) (4,615) (27,309) (11,672)
--------- --------- --------- ---------

Discretionary cash
flow (b) 387,982 294,642 735,058 590,093

Less: Cash exploration
expense (8,377) (6,225) (17,317) (7,911)
Changes in operating
assets and
liabilities (47,044) (23,713) (50,296) (63,848)
--------- --------- --------- ---------

Net cash provided by operating
activities $332,561 $264,704 $667,445 $518,334
========= ========= ========= =========

(a) "EBITDAX" represents earnings before depletion, depreciation and
amortization expense; impairment of long-lived assets; exploration
and abandonments; accretion of discount on asset retirement
obligations; interest expense; income taxes; gain or loss on the
disposition of assets; noncash effects from discontinued
operations; commodity hedge related activity; amortization of
stock-based compensation; amortization of deferred revenue; and
other noncash items.

(b) Discretionary cash flow equals cash flows from operating
activities before changes in operating assets and liabilities and
before cash exploration expense.


PIONEER NATURAL RESOURCES COMPANY

SUPPLEMENTAL INFORMATION
As of August 1, 2005

Open Commodity Hedge Positions

2005
-----------------
Third Fourth
Quarter Quarter 2006 2007 2008
-------- -------- ------- ------- -------

Average Daily Oil Production
Hedged:
Swap Contracts:
Volume (Bbl) 27,000 27,000 10,000 13,000 17,000
NYMEX price (Bbl) $27.97 $27.97 $31.69 $30.89 $29.21
Collar Contracts:
Volume (Bbl) -- -- 3,500 -- --
NYMEX price (Bbl)
Ceiling $-- $-- $41.95 $-- $--
Floor $-- $-- $35.00 $-- $--

Average Daily Gas Production
Hedged:
Swap Contracts:
Volume (MMBtu) 283,422 253,535 73,842 29,195 5,000
NYMEX price (MMBtu) (a) $5.20 $5.20 $4.30 $4.30 $5.40
Collar Contracts:
Volume (MMBtu) -- -- 17,329 -- --
NYMEX price (MMBtu)
Ceiling $-- $-- $9.15 $-- $--
Floor $-- $-- $6.65 $-- $--

(a) Approximate, based on historical differentials to index prices.


Amortization of Volumetric Production Payment Proceeds and Net
Derivative Losses
(in thousands)

2005
-----------------
Third Fourth
Quarter Quarter 2006 Thereafter Total
-------- -------- --------- ---------- ---------


VPP proceeds, net of
transaction costs $21,126 $21,061 $184,099 $635,594 $861,880
Net hedge obligations
assigned 756 757 6,248 28,973 36,734
-------- -------- --------- ---------- ---------

Total deferred
revenue (a) 21,882 21,818 190,347 664,567 898,614
Less net derivative
losses to be
recognized in pretax
earnings (b) (1,043) (2,307) (4,860) (20,657) (28,867)
-------- -------- --------- ---------- ---------

Total VPP impact to
pretax earnings $20,839 $19,511 $185,487 $643,910 $869,747
======== ======== ========= ========== =========

(a) Deferred revenue will be amortized as increases to oil and gas
revenues during the indicated future periods.

(b) Represents the remaining pretax earnings impact of the derivatives
assigned in the VPPs.



Contact Information

  • Pioneer Natural Resources Company, Dallas
    Investors
    Frank Hopkins or Chris Paulsen, 972-444-9001
    or
    Media and Public Affairs
    Susan Spratlen, 972-444-9001