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Pioneer Discovers New Field in Canada and Initiates Gas Production
DALLAS--(BUSINESS WIRE)--April 3, 2007--Pioneer Natural Resources Company (NYSE:PXD) announced today that the Company has discovered a new gas field in northern Alberta and initiated production at a gross rate of approximately 18 million cubic feet of gas per day (MMcfpd) from three wells. Pioneer has a 100% working interest and a 75% net revenue interest in the new field assuming a 25% sliding-scale government royalty.
The new field is located within a trend of Devonian and Cretaceous aged gas fields that have produced more than 2.2 trillion cubic feet of gas. The initial discovery well was drilled during the prior winter season in early 2006. Field operations are limited to the winter season in this area of Alberta. This winter, Pioneer drilled three successful development wells and constructed gas processing facilities and gathering pipelines. Within a week, production is expected to reach a sustainable rate of 24 MMcfpd, fully utilizing the initial capacity of the gas processing facilities in place. The facilities can be readily expanded to 40 MMcfpd with additional compression to accommodate future drilling success.
The gas reservoir in the new field is very shallow at only 2,000 feet, and the producing wells are flowing gas at rates that are 5 to 10 times the historical average for the trend. Permeability varies significantly and is unusually high in the producing wells. Horizontal drilling was used for the first time in this area and is also contributing to the high production rates. Two of the three producing wells were drilled as horizontal wells with laterals of approximately 300 feet. The total cost to drill, complete and tie in the producing wells has averaged $1.2 million per well.
Pioneer has acquired a significant land position within this gas field trend of more than 375,000 acres at an average working interest of 98% for a cost of less than $70 per acre. Six look-alike prospects have also been identified on these lands, and two prospect wells have tested gas and are awaiting development. Pioneer plans to test these prospects in future winter operation windows and will be able to produce successful wells through the Pioneer facilities constructed this past winter. Total gas resource potential from these prospects is currently estimated to be 50 to 180 billion cubic feet.
"I am excited to announce this new discovery," stated Scott Sheffield, Pioneer's Chairman and CEO. "Since drilling the discovery last year, our team in Canada has done an outstanding job building our substantial acreage position and constructing facilities to bring this production online. With relatively low well costs and high flow rates, this new play is expected to deliver strong returns and make a significant contribution to Pioneer's projected 2007 production growth in Canada of 30% to 35%."
Pioneer is a large independent oil and gas exploration and production company, headquartered in Dallas, Texas, with operations in the United States, Canada, South Africa and Tunisia. For more information, visit Pioneer's website at www.pxd.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 that 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, the ability to obtain environmental and other permits and the timing thereof, other government regulation or action, third party approvals, international operations, the costs and results of drilling and operations, availability of drilling equipment, Pioneer's ability to implement its business plans or complete its development projects as scheduled, access to and cost of capital, the assumptions underlying production forecasts, uncertainties about estimates of reserves, quality of technical data or environmental and weather risks. These and other risks are described in Pioneer's 10-K and 10-Q Reports and other filings with the Securities and Exchange Commission.
Cautionary Note to U.S. Investors -- The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. Pioneer uses certain terms in this release, such as "resource potential" or other descriptions of volumes of reserves potentially recoverable through additional drilling or recovery techniques that the SEC's guidelines prohibit Pioneer from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves and accordingly are subject to substantially greater risk of being recovered by Pioneer.
CONTACT: Pioneer Natural Resources Company Investors: Frank Hopkins or Scott Rice, 972-444-9001 or Media and Public Affairs: Susan Spratlen, 972-444-9001 SOURCE: Pioneer Natural Resources Company
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