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Pioneer Natural Resources Reports Fourth Quarter 2009 Results
DALLAS, Feb 02, 2010 (BUSINESS WIRE) -- Pioneer Natural Resources Company (NYSE:PXD) today announced financial and operating results for the quarter and year ended December 31, 2009.

Pioneer reported fourth quarter net income attributable to common stockholders of $57 million, or $.48 per diluted share. Net income included a noncash unrealized loss on commodity derivatives of $38 million after tax, or $.32 per diluted share. Without the effect of this item, adjusted income for the fourth quarter of 2009 would have been $95 million, or $.80 per diluted share.

Also included in Pioneer's fourth quarter results was income of $73 million after tax, or $.62 per diluted share, related to unusual items. These unusual items included:

  • the recognition of a $119 million ($75 million after tax) royalty refund receivable from the Minerals Management Service (MMS) related to the overpayment of royalties on production from deepwater Gulf of Mexico properties prior to the January 1, 2006 effective date of their sale ($.64 per diluted share),
  • a net hurricane-related insurance recovery of $1 million after tax ($.01 per diluted share) and
  • stacked rig charges of $3 million after tax ($.03 per diluted share).

2009, fourth quarter and recent highlights included:

  • 2009 production of 115 thousand barrels oil equivalent per day (MBOEPD), a 3% increase from 2008 and a 5% increase from 2008 on a per-share basis, reflecting the strong performance of Pioneer's low-decline assets during a period when drilling was severely curtailed,
  • reducing long-term debt by $205 million during 2009 (excludes $67 million of long-term debt of Pioneer Southwest Energy Partners L.P.),
  • issuing $450 million of 7.5% Senior Notes due 2020, with the net proceeds being used to reduce credit facility indebtedness,
  • adding 52 million barrels oil equivalent of proved reserves in 2009, or 114% of full-year production, from discoveries, extensions and technical revisions, despite a severely curtailed drilling program,
  • delivering a drillbit finding and development (F&D) cost of $7.42 per barrel oil equivalent (BOE) (excluding price revisions), a continuing downward trend in the Company's drillbit F&D cost, and an all-in F&D cost of $9.15 per BOE (excluding price revisions),
  • fourth quarter production of 106 MBOEPD, which reflects an incremental production curtailment of 2.5 MBOEPD due to the longer-than-anticipated maintenance shutdown at the gas-to-liquids plant in South Africa where the Company's gas production is sold (full production resumed in early January),
  • adding oil derivatives with price upside in 2011 and 2012, bringing forecasted oil production coverage to approximately 90% and 35%, respectively,
  • adding gas derivatives in 2010, 2011 and 2012 (combination of swaps, collars and three-way collars), bringing forecasted gas production coverage to approximately 85%, 70% and 25%, respectively,
  • ramping up Spraberry drilling activity as planned, and
  • successfully completing a second Eagle Ford Shale well with an initial production rate of 17 million cubic feet per day of gas (MMCFPD), the highest gas rate well drilled in the play to date.

Scott Sheffield, Chairman and CEO, stated, "Despite a substantial reduction in drilling activity for 2009, our high-quality assets delivered year-over-year production growth. We also delivered free cash flow and improved financial flexibility. We remain committed to a free cash flow model going forward.

"Improved oil prices and our strong derivative positions support operating cash flow forecasts of approximately $1.0 billion in 2010 and $1.3 billion in 2011. As a result, we have aggressively ramped up our drilling program in the Spraberry field and will continue our successful development program in Alaska. We also have 2 rigs operating in the burgeoning Eagle Ford Shale play. With this drilling program and the expiration of our 5 MBOEPD volumetric production payment obligation, we expect to generate quarterly production growth in 2010 and thereby increase production by at least 10% between the fourth quarter of 2009 and the fourth quarter of 2010. This growth rate could be higher when we significantly ramp up drilling activity in the Eagle Ford Shale later in 2010. Beyond 2010, we expect a further increase in our Spraberry and Eagle Ford Shale drilling programs and expect to resume double-digit annual production growth in 2011 and beyond."

Operations Update

In the Spraberry field, Pioneer grew production for the fourth consecutive year. Despite the significant reduction in drilling activity from 370 wells in 2008 to 48 wells in 2009, production in 2009 was 8% higher than in 2008. This production growth reflects the success of the 2008 drilling program, improved well performance and the Spraberry field's low production decline rates.

The Spraberry field is the largest onshore oil field in the U.S. lower 48 states, and Pioneer is the largest producer in the field. With a substantial reduction in well costs, Pioneer's internal rate of return on Spraberry field drilling has improved to approximately 50% before tax at current NYMEX strip prices for oil and gas. As a result, the Company is aggressively ramping up drilling activity in the field with 14 rigs running in February, increasing to 19 rigs by midyear and 24 rigs by year end.

Approximately 425 Spraberry wells are expected to be drilled during 2010, which is expected to generate quarter-to-quarter production growth. Fourth quarter 2009 production averaged 31 MBOEPD and is forecasted to increase by at least 10% to approximately 34 MBOEPD in the fourth quarter of 2010. The majority of these wells will include completions in additional zones, including the Wolfcamp and shale/silt intervals. Pioneer has also commenced a 7,000-acre waterflood project and expects to see an initial response by early 2011.

The Company plans to continue to add rigs beyond 2010, targeting 40 rigs and drilling 1,000 wells per year by 2012. From 2009 through 2013, Spraberry field production is expected to double, reflecting a compounded annual production growth rate of approximately 20%.

As Pioneer ramps up Spraberry field drilling, the Company will continue to focus on controlling drilling costs. Tubular and pumping unit requirements have been contracted through 2011, and sand supply has been contracted through 2012. The Company is also expanding its integrated services in the Spraberry field. One of the Company-owned fracture stimulation fleets has been transferred from the Raton field to the Spraberry field, and a second fleet is being acquired to commence completions in 2011. The Company also plans to purchase ten drilling rigs to cover 20% to 25% of its forecasted 2012 and forward Spraberry field drilling programs.

In South Texas, the Company recently announced its second successful well in the Eagle Ford Shale play. The Crawley #1 well flowed at an initial rate of 17 MMCFPD of gas, representing the highest gas rate reported to date in the play, and confirms that dry gas wells provide strong economics at today's prices.

The Company holds 310,000 gross acres in the Eagle Ford Shale play, mostly in the condensate window. To accelerate development of this substantial acreage position, the Company is actively pursuing a joint venture, with bids expected in the second quarter of 2010. In response to the joint venture effort and in preparation for an aggressive development drilling program to be initiated in this play later in 2010, Pioneer formed a new asset team to focus solely on the Eagle Ford Shale.

Pioneer is a technology leader in the Eagle Ford Shale with greater than 2,000 square miles of 3-D seismic data, logs from more than 150 operated wells, proprietary core samples and micro-seismic results. The Company is currently operating a two-rig horizontal drilling program, with wells underway in DeWitt and Karnes Counties, both targeting liquids-rich areas.

Pioneer's forecasted daily production from South Texas is expected to increase approximately 10% in the fourth quarter of 2010 as compared to the fourth quarter of 2009. The increase assumes that risked production from a two-rig Eagle Ford Shale drilling program will more than offset natural field declines in the Edwards Trend. Additional production growth is anticipated once the Company completes the joint venture process and begins ramping up its drilling program beyond two rigs, which is expected later in 2010.

On the North Slope of Alaska, production from Pioneer's Oooguruk field grew more than 300% in 2009, as compared to 2008, in response to the successful drilling of two Kuparuk wells (one production well and one water injection well) and five Nuiqsut wells (three fracture-stimulated production wells and two unstimulated water injection wells). The Company recently resumed drilling in the Kuparuk formation, where it has previously drilled two high-rate producing wells. After the winter drilling season ends for the Kuparuk formation, drilling will resume in the Nuiqsut formation. A third reservoir will also be tested during the first half of 2010. As a result of this drilling program, Pioneer is forecasting that production in the fourth quarter of 2010 will grow by 60% to 70%, as compared to the fourth quarter 2009 production rate of 5.5 thousand barrels oil per day (MBOPD).

In the Raton and Mid-Continent areas where drilling was curtailed during 2009, production decreased 6% to 186 MMCFPD and 8% to 107 million cubic feet equivalent per day (MMCFEPD), respectively, compared to 2008, reflecting the low production decline characteristics of these assets. The reduction in Mid-Continent production included the curtailment of approximately 6 MMCFEPD during the second quarter of 2009 due to an unscheduled third-party pipeline repair. Raton production is forecasted to decline by approximately 6% between the fourth quarter of 2009 and the fourth quarter of 2010, assuming drilling continues to be curtailed in this field. In the Mid-Continent area, production increased by approximately 28 MMCFPD on January 1, 2010 with the expiration of the volumetric production payment (VPP) obligation in the Hugoton field. As a result, although no significant drilling is scheduled for the Mid-Continent area in 2010, production in the fourth quarter of 2010 is expected to be approximately 18% higher than the comparable quarter in 2009.

Daily production in Tunisia increased 4% to 7 MBOEPD in 2009 as compared to 2008. Pioneer-operated drilling will resume in March 2010, targeting three new prospects identified from new 3-D seismic. The Company will also be participating in three non-operated wells during 2010. This drilling program is expected to provide production growth of approximately 10% to 15% between the fourth quarter of 2009 and the fourth quarter of 2010.

In South Africa, a major maintenance shutdown commenced in late September and was expected to be completed in early November at the Mossel Bay gas-to-liquids plant where Pioneer's gas production is sold. As a result, Pioneer's fourth quarter production was expected to be curtailed by approximately 12 MMCFEPD and average 24 MMCFEPD. However, the shutdown lasted longer than anticipated, resulting in fourth quarter production averaging only 9 MMCFEPD. Production resumed at full capacity in early January and is expected to be approximately 200% higher in the fourth quarter of 2010 than the fourth quarter of 2009.

MMS Royalty Refund

The royalty refund from the MMS of $119 million before tax, recognized by Pioneer in fourth quarter earnings, relates to a federal court ruling that the MMS did not have the authority to insert price thresholds into deepwater Outer Continental Shelf (OCS) leases that were issued pursuant to the OCS Deep Water Royalty Relief Act of 1995, an act designed to encourage deepwater exploration by providing lessees with royalty free leases until certain volume thresholds were achieved. Since Pioneer operated in the deepwater Gulf of Mexico and paid royalties on certain leases subject to that act, the Company has filed for a refund from the MMS of $119 million before tax and expects to receive the refund in the first half of 2010.

Capital Expenditures

Capital spending for 2010 (excluding lease extensions, acquisitions, asset retirement obligations, capitalized interest and G&G G&A) is initially targeted at $800 million to $900 million and is focused on oil drilling. The lower end of the range includes drilling 425 Spraberry wells, running two rigs in the Eagle Ford Shale and one rig in Alaska, and drilling six wells in Tunisia (three operated and three non-operated). The upper end of the range assumes gas prices strengthen to a sustainable level that would support the recommencement of drilling in the Raton, Edwards Trend and Barnett Shale. Operating cash flow to fund this capital spending is forecasted to be approximately $1 billion, assuming current NYMEX strip pricing. Proceeds from the MMS refund will likely be used to support a further increase in Spraberry and Eagle Ford Shale drilling.

Cost Reduction Initiatives

Pioneer's asset teams have aggressively implemented initiatives to reduce 2009 production costs. Fourth quarter production costs were 22% lower per BOE than the same period in 2008. The Company achieved significant reductions in electricity, water disposal, well servicing, facilities and compression costs. Compared to the third quarter of 2009, fourth quarter production costs per BOE were up slightly (1%), primarily as a result of the reduced production from the Company's lower operating expense South Africa asset and increased workover expenses being offset by production tax refunds recorded during the quarter. The increased workover activity was primarily related to restoring production on oil wells with the improvement in oil prices.

The Company has also worked with service providers to reduce drilling and completion costs. Since the third quarter of 2008 when these costs peaked, Pioneer's drilling and completion costs have decreased by more than 30% per well for the majority of its domestic drilling inventory.

Financial Review

Fourth quarter sales from continuing operations averaged 106 MBOEPD, consisting of oil sales averaging 31 MBOPD, NGL sales averaging 19 thousand barrels per day and gas sales averaging 338 MMCFPD.

The reported fourth quarter average price for oil was $88.16 per barrel and included $8.47 per barrel related to deferred revenue from VPPs for which production was not recorded. The reported price for NGLs was $37.54 per barrel. The reported price for gas was $4.56 per thousand cubic feet (MCF) and included $.40 per MCF related to deferred revenue from VPPs for which production was not recorded.

Fourth quarter production costs averaged $11.60 per BOE.

Depreciation, depletion and amortization (DD&A) expense averaged $14.52 per BOE for the fourth quarter. Exploration and abandonment costs were $20 million for the quarter and included $6 million of acreage abandonment and unsuccessful drilling costs and $14 million of geologic and geophysical expenses and personnel costs.

Cash flow from operating activities for the fourth quarter was $132 million.

Financial Outlook

First quarter 2010 production is forecasted to average 112 MBOEPD to 117 MBOEPD, reflecting increased 2010 drilling activity, the expiration of the VPP obligation in the Hugoton field, the return of production in South Africa after the maintenance shutdown and the planned oil lifting schedule for Tunisia.

First quarter production costs are expected to average $11.50 to $13.50 per BOE, based on current NYMEX strip prices for oil and gas. DD&A expense is expected to average $14.50 to $16.00 per BOE.

Total exploration and abandonment expense during the first quarter is expected to be $25 million to $35 million, primarily related to exploration wells, including related acreage costs, and seismic and personnel costs.

General and administrative expense is expected to be $35 million to $39 million, interest expense is expected to be $45 million to $48 million, and other expense is expected to be $12 million to $17 million. Accretion of discount on asset retirement obligations is expected to be $2 million to $4 million.

Noncontrolling interest in consolidated subsidiaries' income, excluding noncash mark-to-market adjustments, is expected to be $9 million to $12 million, primarily reflecting the public ownership in Pioneer Southwest Energy Partners L.P.

The Company's effective income tax rate is expected to range from 40% to 50% based on current capital spending plans, higher tax rates in Tunisia and no significant mark-to-market changes in the Company's derivative position. Cash taxes are expected to be $10 million to $15 million and are primarily attributable to Tunisia.

Pioneer has increased its 2010 through 2012 commodity price derivative positions to support the Company's free cash flow model and the resumption of oil drilling. The Company has derivative positions covering approximately 85%, 90% and 35% of its forecasted oil production for 2010, 2011 and 2012, respectively, and derivative positions covering 85%, 70% and 25% of its forecasted gas production for 2010, 2011 and 2012, respectively.

The Company's financial and mark-to-market results, derivatives for oil, NGL and gas, amortization of net deferred gains on discontinued/terminated commodity hedges and future VPP amortization are outlined on the attached schedules.

Earnings Conference Call

On Wednesday, February 3, 2010 at 9:00 a.m. Central Time, Pioneer will discuss its financial and operating results for the quarter and year ended December 31, 2009, with an accompanying presentation. Instructions for listening to the call and viewing the accompanying presentation are shown below.

Internet: www.pxd.com
Select "Investors," then "Earnings Calls & Webcasts" to listen to the discussion and view the presentation.

Telephone: Dial (877) 675-4751 confirmation code: 9545624 five minutes before the call. View the presentation via Pioneer's internet address above.

A replay of the webcast will be archived on Pioneer's website. A telephone replay will be available through March 3 by dialing (888) 203-1112, confirmation code: 9545624.

Pioneer is a large independent oil and gas exploration and production company, headquartered in Dallas, Texas, with operations primarily in the United States. 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 commodity prices, product supply and demand, competition, the ability to obtain environmental and other permits and the timing thereof, other government regulation or action, the ability to obtain approvals from third parties and negotiate agreements (including joint venture agreements) with third parties on mutually acceptable terms, international operations and associated international political and economic instability, litigation, the costs and results of drilling and operations, access to and availability of drilling equipment and transportation, processing and refining facilities, Pioneer's ability to replace reserves, implement its business plans or complete its development activities as scheduled, access to and cost of capital, the financial strength of counterparties to Pioneer's credit facility and derivative contracts and the purchasers of Pioneer's oil, NGL and gas production, uncertainties about estimates of reserves and resource potential and the ability to add proved reserves in the future, the assumptions underlying production forecasts, quality of technical data, environmental and weather risks, and 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. In addition, Pioneer may be subject to currently unforeseen risks that may have a materially adverse impact on it. Pioneer undertakes no duty to publicly update these statements except as required by law.

"Finding and development cost per BOE" means total costs incurred divided by the summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates, purchases of minerals-in-place and discoveries and extensions. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred.

"Drillbit finding and development cost per BOE" means the summation of exploration and development costs incurred divided by the summation of annual proved reserves, on a BOE basis, attributable to revisions of previous estimates and discoveries and extensions. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in costs incurred.

PIONEER NATURAL RESOURCES COMPANY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
2009 2008
ASSETS
Current assets:
Cash and cash equivalents $ 27,368 $ 48,337
Accounts receivable, net 331,748 207,553
Income taxes receivable 25,022 60,573
Inventories 139,177 76,901
Prepaid expenses 9,011 12,464
Deferred income taxes 26,857 6,510
Derivatives 48,713 59,622
Other current assets, net 8,222 14,951
Total current assets 616,118 486,911
Property, plant and equipment, at cost:
Oil and gas properties, using the successful efforts
method of accounting 10,512,904 10,371,403
Accumulated depletion, depreciation and amortization (2,946,048 ) (2,511,401 )
Total property, plant and equipment 7,566,856 7,860,002
Deferred income taxes 387 553
Goodwill 309,259 310,563
Derivatives 43,631 72,594
Other assets, net 331,014 431,162
$ 8,867,265 $ 9,161,785
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 253,583 $ 356,972
Interest payable 47,009 43,247
Income taxes payable 17,411 3,618
Deferred income taxes 128 -
Deferred revenue 90,215 147,905
Derivatives 116,015 49,561
Other current liabilities 46,830 93,694
Total current liabilities 571,191 694,997
Long-term debt 2,761,011 2,899,241
Deferred income taxes 1,470,899 1,501,459
Deferred revenue 87,021 177,236
Derivatives 133,645 20,584
Other liabilities 200,467 187,409
Stockholders' equity 3,643,031 3,680,859
$ 8,867,265 $ 9,161,785
PIONEER NATURAL RESOURCES COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
Revenues and other income:
Oil and gas $ 461,472 $ 450,002 $ 1,609,984 $ 2,227,581
Interest and other 2,545 23,944 102,306 57,641
Loss on disposition of assets, net (327 ) (5,150 ) (774 ) (381 )
463,690 468,796 1,711,516 2,284,841
Costs and expenses:
Oil and gas production 94,709 125,272 380,326 422,571
Production and ad valorem taxes 18,868 34,747 98,371 164,417
Depletion, depreciation and amortization 142,138 151,563 651,560 489,716
Impairment of oil and gas properties - - 21,091 89,753
Exploration and abandonments 20,185 54,787 98,046 227,500
General and administrative 37,595 38,183 140,323 141,922
Accretion of discount on asset retirement obligations 2,753 2,018 11,012 7,903
Interest 45,310 43,661 173,361 166,785
Hurricane activity, net (967 ) 9,750 17,313 12,150
Derivative losses, net 109,974 8,697 195,557 10,148
Other 15,544 61,819 105,011 115,973
486,109 530,497 1,891,971 1,848,838
Income (loss) from continuing operations before income taxes (22,419 ) (61,701 ) (180,455 ) 436,003
Income tax benefit (provision) 437 16,525 48,108 (201,091 )
Income (loss) from continuing operations (21,982 ) (45,176 ) (132,347 ) 234,912
Income (loss) from discontinued operations, net of tax 76,212 (17,975 ) 90,080 (3,257 )
Net income (loss) 54,230 (63,151 ) (42,267 ) 231,655
Net (income) loss attributable to the noncontrolling interests 2,430 (6,248 ) (9,839 ) (21,635 )
Net income (loss) attributable to common stockholders $ 56,660 $ (69,399 ) $ (52,106 ) $ 210,020
Basic earnings per share:

Income (loss) from continuing operations attributable to common stockholders

$ (0.18 ) $ (0.44 ) $ (1.25 ) $ 1.79

Income (loss) from discontinued operations attributable to common stockholders

0.66 (0.16 ) 0.79 (0.03 )
Net income (loss) attributable to common stockholders $ 0.48 $ (0.60 ) $ (0.46 ) $ 1.76
Diluted earnings per share:

Income (loss) from continuing operations attributable to common stockholders

$ (0.18 ) $ (0.44 ) $ (1.25 ) $ 1.79

Income (loss) from discontinued operations attributable to common stockholders

0.66 (0.16 ) 0.79 (0.03 )
Net income (loss) attributable to common stockholders $ 0.48 $ (0.60 ) $ (0.46 ) $ 1.76
Weighted average shares outstanding:
Basic 114,347 115,455 114,176 117,462
Diluted 114,347 115,455 114,176 117,947
PIONEER NATURAL RESOURCES COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
Cash flows from operating activities:
Net income (loss) $ 54,230 $ (63,151 ) $ (42,267 ) $ 231,655

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depletion, depreciation and amortization 142,138 151,563 651,560 489,716
Impairment of oil and gas properties - - 21,091 89,753
Exploration expenses, including dry holes 6,542 36,144 47,241 130,140
Hurricane activity 3,650 9,000 19,850 9,000
Deferred income taxes 11,685 (7,946 ) (55,712 ) 152,400

Loss on disposition of assets, net

327 5,150 774 381
Gain on extinguishment of debt - (20,515 ) - (20,515 )
Accretion of discount on asset retirement obligations 2,753 2,018 11,012 7,903
Discontinued operations (77,626 ) 12,845 (82,999 ) 37,454
Interest expense 7,303 7,240 27,996 28,492
Derivative related activity 27,328 14,048 75,633 45,166
Amortization of stock-based compensation 8,319 8,506 37,638 34,077
Amortization of deferred revenue (37,004 ) (39,495 ) (147,905 ) (158,139 )
Other noncash items 4,774 30,273 35,439 60,768
Changes in operating assets and liabilities:
Accounts receivable, net (54,781 ) 84,485 16,293 45,446
Income taxes receivable (8,732 ) (11,006 ) 36,030 (20,528 )
Inventories 3,835 (27,413 ) (48,234 ) (82,403 )
Prepaid expenses 3,513 3,747 (3,387 ) (3,405 )
Other current assets, net (10,890 ) (9,184 ) 87,642 (11,745 )
Accounts payable 29,902 50,280 (64,336 ) 65,644
Interest payable 18,528 13,951 3,762 1,227
Income taxes payable 4,666 (20,753 ) 13,793 (9,225 )
Other current liabilities (8,226 ) (12,428 ) (97,855 ) (89,399 )
Net cash provided by operating activities 132,234 217,359 543,059 1,033,863
Net cash used in investing activities (97,994 ) (266,691 ) (410,985 ) (1,151,410 )
Net cash provided by (used in) financing activities (62,487 ) 30,852 (153,043 ) 153,713
Net increase (decrease) in cash and cash equivalents (28,247 ) (18,480 ) (20,969 ) 36,166
Cash and cash equivalents, beginning of period 55,615 66,817 48,337 12,171
Cash and cash equivalents, end of period $ 27,368 $ 48,337 $ 27,368 $ 48,337
PIONEER NATURAL RESOURCES COMPANY
UNAUDITED SUMMARY PRODUCTION AND PRICE DATA

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2009 2008 2009 2008

Average Daily Sales Volumes from Continuing Operations:

Oil (Bbls) - U.S. 24,906 24,584 24,968 21,091
South Africa 299 991 375 2,405
Tunisia 6,290 7,586 6,531 6,178
Worldwide 31,495 33,161 31,874 29,674
Natural gas liquids (Bbls) - U.S. 18,598 17,497 19,680 19,048
Gas (Mcf) - U.S. 328,571 370,843 352,749 366,796
South Africa 7,441 25,224 25,538 10,232
Tunisia 1,685 2,555 1,668 2,367
Worldwide 337,697 398,622 379,955 379,395
Total (BOE) - U.S. 98,267 103,887 103,440 101,271
South Africa 1,539 5,195 4,631 4,110
Tunisia 6,570 8,012 6,809 6,573
Worldwide 106,376 117,094 114,880 111,954

Average Daily Sales Volumes from Discontinued Operations:

Oil (Bbls) - U.S. 1 535 554 953
Natural gas liquids (Bbls) - U.S. 0 13 29 35
Gas (Mcf) - U.S. 12 1,536 1,899 3,428
Total (BOE) - U.S. 3 805 900 1,559
Average Reported Prices (a):
Oil (per Bbl) - U.S. $ 91.88 $ 57.10 $ 75.60 $ 65.74
South Africa $ 77.33 $ 82.74 $ 65.94 $ 110.21
Tunisia $ 73.95 $ 48.66 $ 60.98 $ 90.64
Worldwide $ 88.16 $ 55.94 $ 72.49 $ 74.53
Natural gas liquids (per Bbl) - U.S. $ 37.54 $ 30.98 $ 29.76 $ 51.31
Gas (per Mcf) - U.S. $ 4.49 $ 6.38 $ 3.88 $ 7.66
South Africa $ 6.27 $ 4.44 $ 5.17 $ 5.83
Tunisia $ 10.82 $ 6.01 $ 8.14 $ 12.04
Worldwide $ 4.56 $ 6.26 $ 3.99 $ 7.64
Total (BOE) - U.S. $ 45.42 $ 41.51 $ 37.15 $ 51.08
South Africa $ 45.32 $ 37.35 $ 33.85 $ 79.00
Tunisia $ 73.57 $ 47.99 $ 60.49 $ 89.53
Worldwide $ 47.15 $ 41.77 $ 38.40 $ 54.36
_____________

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

PIONEER NATURAL RESOURCES COMPANY
UNAUDITED SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(in thousands)
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 (loss) 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 (loss) or net cash provided by operating activities, as defined by GAAP.
Three Months Ended Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
Net income (loss) $ 54,230 $ (63,151 ) $ (42,267 ) $ 231,655
Depletion, depreciation and amortization 142,138 151,563 651,560 489,716
Impairment of oil and gas properties - - 21,091 89,753
Exploration and abandonments 20,185 54,787 98,046 227,500
Hurricane activity 3,650 9,000 19,850 9,000
Gain on extinguishment of debt - (20,515 ) - (20,515 )
Accretion of discount on asset retirement obligations 2,753 2,018 11,012 7,903
Interest expense 45,310 43,661 173,361 166,785
Income tax (benefit) provision (437 ) (16,525 ) (48,108 ) 201,091
Loss on disposition of assets, net 327 5,150 774 381
Discontinued operations (77,626 ) 12,845 (82,999 ) 37,454
Current income tax provision on discontinued operations 1,300 (6 ) 1,300 300

Cash exploration and abandonment expense on discontinued operations

(21 ) - 9 7,127
Derivative related activity 27,328 14,048 75,633 45,166
Amortization of stock-based compensation 8,319 8,506 37,638 34,077
Amortization of deferred revenue (37,004 ) (39,495 ) (147,905 ) (158,139 )
Other noncash items 4,774 30,273 35,439 60,768
EBITDAX (a) 195,226 192,159 804,434 1,430,022
Cash interest expense (38,007 ) (36,421 ) (145,365 ) (138,293 )
Current income taxes 10,822 8,585 (8,904 ) (48,991 )
Discretionary cash flow (b) 168,041 164,323 650,165 1,242,738
Cash exploration expense (13,622 ) (18,643 ) (50,814 ) (104,487 )

Changes in operating assets and liabilities

(22,185 ) 71,679 (56,292 ) (104,388 )
Net cash provided by operating activities $ 132,234 $ 217,359 $ 543,059 $ 1,033,863
_____________

(a) "EBITDAX" represents earnings before depletion, depreciation and amortization expense; impairment of oil and gas properties; exploration and abandonments; noncash hurricane activity; noncash derivative activity; gain on extinguishment of debt; accretion of discount on asset retirement obligations; interest expense; income taxes; (gain) loss on the disposition of assets, net; noncash effects from discontinued operations; 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
UNAUDITED SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (continued)
(in millions, except per share data)

Income adjusted for unrealized mark-to-market derivative losses, net, as presented in this press release are presented and reconciled to Pioneer's net income attributable to common stockholders that is determined in accordance with GAAP because Pioneer believes that these non-GAAP financial measures reflect an additional way of viewing aspects of Pioneer's business that, when viewed together with its financial results computed in accordance with GAAP, provide a more complete understanding of factors and trends affecting its historical financial performance and future operating results, greater transparency of underlying trends and greater comparability of results across periods. In addition, management believes that these non-GAAP measures may enhance investors' ability to assess Pioneer's historical and future financial performance. These non-GAAP financial measures are not intended to be substitutes for the comparable GAAP measure and should be read only in conjunction with Pioneer's consolidated financial statements prepared in accordance with GAAP. Unrealized mark-to-market derivative gains and losses will recur in future periods; however, the amount and frequency of each item can vary significantly from period to period. The table below reconciles Pioneer's net income attributable to common stockholders for the three months ended December 31, 2009, as determined in accordance with GAAP, to income adjusted for unrealized mark-to-market derivative losses, net, for that quarter.

After-tax Per
Amounts Share
Net income attributable to common stockholders $ 57 $ 0.48
Plus: Unrealized derivative mark-to-market losses, net 38 0.32

Income adjusted for unrealized mark-to-market derivative losses, net

$ 95 $ 0.80
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL INFORMATION

Open Commodity Derivative Positions as of January 18, 2010

2010
First Second Third Fourth
Quarter Quarter Quarter Quarter 2011 2012 2013

Average Daily Oil Production Associated with Derivatives:

Swap Contracts:
Volume (Bbl) 2,500 2,500 2,500 2,500 750 3,000 3,000
NYMEX price (Bbl) $ 93.34 $ 93.34 $ 93.34 $ 93.34 $ 77.25 $ 79.32 $ 81.02
Collar Contracts:
Volume (Bbl) - - - - 2,000 - -
NYMEX price (Bbl):
Ceiling $ - $ - $ - $ - $ 170.00 $ - $ -
Floor $ - $ - $ - $ - $ 115.00 $ - $ -
Collar Contracts with Short Puts:
Volume (Bbl) 26,750 27,000 27,000 27,250 37,000 15,000 1,250
NYMEX price (Bbl)(a):
Ceiling $ 83.79 $ 83.82 $ 83.82 $ 83.94 $ 99.22 $ 118.58 $ 111.50
Floor $ 66.86 $ 66.89 $ 66.89 $ 66.92 $ 73.92 $ 81.00 $ 83.00
Short Put Price $ 53.95 $ 53.96 $ 53.96 $ 53.97 $ 59.41 $ 65.00 $ 68.00
Percent of total oil production (b)

~85

%

~85

%

~85

%

~85

%

~90

%

~35

%

~5

%

Average Daily Natural Gas Liquid Production Associated with Derivatives:

Swap Contracts:
Volume (Bbl) 1,578 1,250 1,250 1,250 750 750 -
Blended index price (Bbl) (c) $ 49.00 $ 47.37 $ 47.38 $ 47.38 $ 34.65 $ 35.03 $ -
Collar Contracts:
Volume (Bbl) 2,000 2,000 2,000 2,000 1,000 - -
Index price (Bbl) (c):
Ceiling $ 49.98 $ 49.98 $ 49.98 $ 49.98 $ 50.93 $ - $ -
Floor $ 41.58 $ 41.58 $ 41.58 $ 41.58 $ 42.21 $ - $ -
Percentage Contracts of WTI Oil Prices (d):
Volume - (Bbl) 1,672 2,000 2,000 2,000 - - -
Percentage of NYMEX WTI received (%) 59 % 60 % 60 % 60 % - - -
Percent of total NGL production (b)

~30

%

~30

%

~30

%

~30

%

~10

%

<5

%

-

Average Daily Gas Production Associated with Derivatives:

Swap Contracts:
Volume (MMBtu) 167,500 167,500 167,500 167,500 77,500 2,500 2,500
NYMEX price (MMBtu) (e) $ 6.26 $ 6.26 $ 6.26 $ 6.26 $ 6.35 $ 6.77 $ 6.89
Collar Contracts:
Volume (MMBtu) 40,000 40,000 40,000 40,000 - - -
NYMEX price (MMBtu): (e)
Ceiling $ 7.19 $ 7.19 $ 7.19 $ 7.19 $ - $ - $ -
Floor $ 5.75 $ 5.75 $ 5.75 $ 5.75 $ - $ - $ -
Collar Contracts with Short Puts:
Volume (MMBtu) 95,000 95,000 95,000 95,000 175,000 90,000 -
NYMEX price (MMBtu): (e)
Ceiling $ 7.94 $ 7.94 $ 7.94 $ 7.94 $ 8.69 $ 8.72 $ -
Floor $ 6.00 $ 6.00 $ 6.00 $ 6.00 $ 6.36 $ 6.25 $ -
Sold Put Price $ 5.00 $ 5.00 $ 5.00 $ 5.00 $ 4.93 $ 4.61 $ -
Percent of U.S. gas production (b)

~85

%

~85

%

~85

%

~85

%

~70

%

~25

%

<5

%

Basis Swap Contracts:
Spraberry Index Swaps - (MMBtu) (f) 5,000 5,000 5,000 5,000 - - -
Price differential ($/MMBtu) $ (0.81 ) $ (0.81 ) $ (0.81 ) $ (0.81 ) - - -
Mid-Continent Index Swaps - (MMBtu) (f) 180,000 180,000 180,000 180,000 100,000 20,000 10,000
Price differential ($/MMBtu) $ (0.85 ) $ (0.85 ) $ (0.85 ) $ (0.85 ) $ (0.71 ) $ (0.78 ) $ (0.71 )
Gulf Coast Index Swaps - (MMBtu) (f) 30,000 30,000 30,000 30,000 20,000 20,000 -
Price differential ($/MMBtu) $ (0.29 ) $ (0.29 ) $ (0.29 ) $ (0.29 ) $ (0.17 ) $ (0.17 ) $ -
_____________
(a) Represents NYMEX and Dated Brent average prices on U.S. and foreign production.
(b) Represents the approximate percentage of forecasted production that is covered by derivative contracts.
(c) Represents the blended Mont Belvieu price or respective NGL product component prices per Bbl.
(d) Represents swaps whereby the Company pays respective NGL component index price and receives percentage of West Texas Intermediate ("WTI") NYMEX price.
(e) Represents the NYMEX Henry Hub index price or approximate NYMEX Henry Hub index price based on historical differentials to the index price on the derivative trade date.
(f) Represent swaps that fix the basis differentials between indices at which the Company sells its Spraberry, Mid-Continent and Gulf Coast gas and NYMEX Henry Hub index prices.
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL INFORMATION
Amortization of Deferred Revenue Associated with Volumetric Production Payments and Net Derivative Losses as of December 31, 2009
(in thousands)
2010
First Second Third Fourth
Quarter Quarter Quarter Quarter 2011 Thereafter Total
Total deferred revenues (a) $ 22,483 $ 22,587 $ 22,669 $ 22,476 $ 44,951 $ 42,070 $ 177,236

Less derivative losses to be recognized in pretax earnings (b)

(667 ) (620 ) (578 ) (538 ) (3,571 ) (3,158 ) (9,132 )
Total VPP impact to pretax earnings $ 21,816 $ 21,967 $ 22,091 $ 21,938 $ 41,380 $ 38,912 $ 168,104
_____________
(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.

Deferred Gains on Discontinued and Terminated Commodity Hedges

as of December 31, 2009 (a)

(in thousands)
2010
First Second Third Fourth
Quarter Quarter Quarter Quarter 2011
Commodity hedge gains (b):

Oil $ 19,792 $ 20,045 $ 20,297 $ 20,322 $ 36,624
NGL 1,799 1,819 1,839 1,840 -
Gas 910 920 930 931 -
$ 22,501 $ 22,784 $ 23,066 $ 23,093 $ 36,624
______________
(a) Excludes deferred hedge gains and losses on terminated derivatives related to the VPPs.
(b) Deferred commodity hedge gains will be amortized as increases to oil and gas revenues during the indicated future periods.
PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL INFORMATION
Derivative Losses, Net
(in thousands)
Three Months Ended

Twelve Months Ended

December 31, 2009 December 31, 2009
Noncash mark-to-market changes:
Oil derivative loss $ 84,004 $ 150,799
Gas derivative (gain) loss (37,699 ) 6,612
NGL derivative loss 11,946 20,206
Interest rate derivative loss 12,407 13,928
Total noncash derivative loss, net (a) 70,658 191,545
Cash settlements:
Oil derivative loss 35,365 60,604
Gas derivative gain (1,492 ) (66,428 )
NGL derivative loss 5,546 8,340
Interest rate derivative (gain) loss (103 ) 1,496
Total cash derivative loss, net 39,316 4,012

Total derivative loss, net

$ 109,974 $ 195,557
______________

(a) Total noncash derivative loss, net includes approximately $11.0 million and $19.1 million of losses attributable to noncontrolling interests in consolidated subsidiaries during the three and twelve month periods ended December 31, 2009, respectively.

SOURCE: Pioneer Natural Resources Company

Pioneer Natural Resources
Investors
Frank Hopkins, 972-969-4065
or
Matt Gallagher, 972-969-4017
or
Nolan Badders, 972-969-3955
or
Media and Public Affairs
Susan Spratlen, 972-969-4018
or
Suzanne Hicks, 972-969-4020

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