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Pioneer Reports Third Quarter 2008 Results

DALLAS--(BUSINESS WIRE)--Nov. 4, 2008--Pioneer Natural Resources Company (NYSE:PXD) today announced financial and operating results for the quarter ended September 30, 2008. Pioneer reported a third quarter net loss of $3 million, or $.03 per diluted share, including several significant noncash charges that totaled $112 million, or $.94 per diluted share (further discussed under Financial Review below). Earnings adjusted for these unusual items were $109 million, or $.91 per diluted share.

The third quarter was also materially impacted by the loss of approximately 3,000 barrels oil equivalent per day (BOEPD) of production due to shutting in and curtailing production related to Hurricanes Ike and Gustav as a result of damage to third-party pipelines and natural gas liquids (NGL) fractionation facilities in Mont Belvieu. In addition, the quarter was affected by declining oil and gas prices and widening differentials relative to NYMEX gas prices.

Despite the production lost as a result of hurricanes during the third quarter of 2008, the Company continued to generate strong production growth of 11% from the prior-year quarter (excluding 2007 sales from divested Canada assets). Pioneer's strong growth performance is also reflected in the results for the nine months ended September 30, 2008, with production rising 18% from levels achieved for the same period of 2007. Production from Pioneer's core growth assets (including Spraberry, Raton, Edwards, Tunisia and Alaska) increased 23% for the nine-month period compared to the same period in 2007.

    Other recent highlights included:

    --  Announced approval by the Railroad Commission of Texas in
        October of optional 20-acre downspacing in the Spraberry field

    --  Received encouraging results from additional Spraberry 20-acre
        drilling and shale interval testing

    --  Increased Wolfberry (Spraberry field) acreage position by
        approximately 30,000 gross acres

    --  Drilled first two Pierre Shale horizontal wells, which
        encountered intense natural fracturing and gas shows

    --  Drilled two new discovery wells in Tunisia and one in the
        Edwards Trend of South Texas

    --  Announced a substantial acreage position in the Eagle Ford
        Shale (South Texas) gas window and began drilling first
        horizontal well

    --  Initiated production from the most prolific well in the South
        Coast Gas Project ahead of schedule

    --  Repurchased approximately two million shares of stock
        (includes third quarter and October repurchases)

    --  Generated free cash flow (discretionary cash flow in excess of
        capital expenditures)

    Low Price Environment Initiatives

Concerns that the worldwide economic slowdown will negatively impact the demand for energy have resulted in a significant drop in commodity prices since their highs earlier in 2008. Even in the lower price environment, Pioneer's financial position remains strong. The Company has no significant bond maturities until 2013, has $775 million of liquidity under its senior unsecured credit facility that matures in 2012 and has significant capacity under its debt covenants. Pioneer expects capital spending for 2008 to be within cash flow. Pioneer has also hedged approximately 20% of its oil production in 2009 and 2010 utilizing collars with a floor price of $100 per barrel and a ceiling price of more than $190 per barrel.

As a result of the significant drop in commodity prices, the Company has started implementing initiatives to reduce capital spending and preserve financial flexibility. Specifically, the Company is implementing a plan for a near-term $60 per barrel of oil and $6 per thousand cubic feet (MCF) of gas environment. This plan includes minimizing drilling activities until margins improve as a result of (i) commodity prices improving, (ii) gas price differentials in the areas where the Company produces gas improving relative to NYMEX quoted prices and/or (iii) well cost reductions. The Company is focused on delivering free cash flow in 2009 and beyond. As a result, Pioneer is reducing its rig activity by approximately 60% and is pursuing reductions in well costs of 20% to 30% to align costs with the lower commodity price environment that currently exists. Rigs are being terminated or stacked in the Spraberry, Raton, Edwards Trend, Barnett Shale and Mid-Continent areas. The Company is also reducing the number of well service units running in the Spraberry field from 42 to 30, 15 of which are lower-cost well service units that are owned by Pioneer.

In 2009, the Company expects to reduce the capital budget by 30% to 60% compared to 2008 and generate free cash flow. Even with a significantly reduced capital budget in 2009, Pioneer expects 5% to 10% production growth. The low end of the production growth range reflects a $60 per barrel/$6 per MCF environment, while the high end of the range reflects current strip prices. Pioneer's ability to increase production with limited capital highlights the quality of its long-lived, low-decline assets and the low-risk drilling nature of these assets. Production growth for 2009 will also benefit from the October startup of the most prolific well in the South Coast Gas project (South Africa), infrastructure expansion currently being completed in the Edwards Trend and reduced commitments under Pioneer's volumetric production payment (VPP) agreements. The Company's Oooguruk project on the North Slope of Alaska is also expected to generate significant growth in 2009 and 2010.

Scott Sheffield, Chairman and CEO, stated, "Pioneer's assets continue to perform at or above expectations, and our strategy to deliver low-risk, consistent growth and free cash flow remains intact. We have a large drilling inventory of over 20,000 locations, over 1.8 billion barrels of net resource potential and upside from several new shale plays. In an $80 per barrel and $8 per MCF environment with proportional well cost reductions, we would ramp up drilling activity to be in a position to deliver the Company's prior 14+% compound annual production per share growth target. Free cash flow will be utilized to continue to reduce outstanding shares, decrease debt and pursue bolt-on acquisition opportunities."

Financial Review

Cash flow from operating activities for the third quarter was $303 million.

Third quarter sales averaged 111,838 BOEPD, consisting of oil sales averaging 30,406 barrels per day (BPD), NGL sales averaging 18,921 BPD and gas sales averaging 375 million cubic feet per day (MMCFPD).

The reported third quarter average price for oil was $81.51 per barrel and included $9.34 per barrel related to deferred revenue from VPPs for which production was not recorded. The reported price for NGLs was $62.24 per barrel. The reported price for gas was $7.99 per MCF, including $.39 per MCF related to deferred revenue from VPPs for which production was not recorded.

Third quarter production costs averaged $15.13 per BOE. Production costs were primarily impacted by fixed costs associated with wells shut-in or curtailed by the recent hurricanes and higher energy-related costs.

Depreciation, depletion and amortization (DD&A) expense averaged $12.39 per BOE for the third quarter. DD&A expense increased primarily due to losing end-of-well-life reserves that became uneconomical as a result of lower quarter-end gas prices and significantly wider gas differentials in certain areas relative to the NYMEX gas price.

Noncash charges for the third quarter totaling $112 million (on an after-tax basis) included a receivable allowance of $12 million ($.10 per share) for unpaid pre-bankruptcy claims for condensate sold to certain subsidiaries of SemGroup, L.P., an Equatorial Guinea exit charge of $5 million ($.04 per share), drilling and acreage charges related to the abandonment of Pioneer's Lay Creek coal bed methane (CBM) and Delaware shale projects of $38 million ($.32 per share), and an impairment charge to reduce the carrying value of Pioneer's Uinta Piceance assets of $57 million ($.48 per share) as a result of lower gas prices.

Exploration and abandonment costs were $111 million for the quarter and included $30 million of acreage and unsuccessful drilling costs, $60 million related to the previously discussed noncash charge to abandon the Lay Creek CBM and Delaware Shale projects and $21 million of geologic and geophysical expenses, including seismic in the Edwards Trend and Tunisia and personnel costs.

Operations Update

In the Spraberry field, the Railroad Commission of Texas has approved Pioneer's petition for a field rule change to allow optional fieldwide 20-acre downspacing. Pioneer has identified 9,500 drilling locations across its acreage where it intends to utilize 20-acre downspacing in future years. Based on historical downspacing performance, the Company expects internal rates of return similar to 40-acre Spraberry wells. Recoveries from these wells are expected to be at least 75% to 80% of the gross economic ultimate recovery of a 40-acre Spraberry well (100,000 barrels oil equivalent from 40-acre wells). Results from the nine 20-acre wells drilled year-to-date reflect similar rates of production to offset 40-acre wells and are supportive of these expectations.

Pioneer has also continued testing of the shale/silt non-traditional intervals in the Spraberry field. An analysis of the initial 650-foot core that was taken from these intervals indicates that up to 30 feet of additional net pay is present. The Company also increased its Wolfberry acreage position in the Spraberry Trend by approximately 30,000 acres.

In two horizontal wells recently drilled in the Pierre Shale in the Raton Basin, Pioneer encountered intense natural fracturing and gas shows. The first well is currently being fracture stimulated, and preparations are underway to fracture stimulate the second well.

In South Texas, Pioneer drilled another discovery well with resource potential of at least 25 billion cubic feet. The Company is also drilling and coring its first horizontal well in the Eagle Ford Shale play where it holds a substantial acreage position in the gas window. The Eagle Ford Shale overlays the Edwards Trend in the 310,000 acres that Pioneer holds.

In Tunisia, the Company's initial well in the Anaguid concession (Pioneer-operated) was a discovery that tested oil, gas and condensate at 2,300 BOEPD. Another discovery was also announced in the Cherouq concession and is currently being tested. Pioneer has participated in nine Cherouq discoveries to date for a Silurian success rate of 70%. Two of the four wells that were unsuccessful in the Silurian are being tested in other zones.

The most prolific well in the South Coast Gas (SCG) project offshore South Africa has been placed on production ahead of schedule. Gross production from SCG is currently averaging 68 million cubic feet equivalent per day (MMCFEPD) and is expected to gradually increase to a range of 80 MMCFEPD to 90 MMCFEPD in early 2009, with no additional capital required.

Financial Outlook

Fourth quarter 2008 production is forecasted to average 114,000 BOEPD to 119,000 BOEPD, reflecting the impact of production that continues to be shut-in and/or curtailed due to the hurricanes. The interruption is expected to continue through mid-November, resulting in an average loss of 2,000 BOEPD for the quarter. Overall production is expected to increase during the fourth quarter, driven primarily by increases in several of Pioneer's core areas (Spraberry, Edwards, Tunisia and Alaska). The forecasted fourth quarter production range includes production that is attributable to the public ownership in Pioneer Southwest Energy Partners L.P. (Pioneer Southwest). The expense estimates below also include amounts attributable to the public ownership in Pioneer Southwest.

Fourth quarter production costs (including production and ad valorem taxes and transportation costs) are expected to average $14.00 to $15.00 per BOE based on current NYMEX strip prices for oil and gas. DD&A expense is expected to average $13.00 to $14.00 per BOE, reflecting losing incremental end-of-well-life reserves based on current NYMEX strip prices for oil and gas.

Total exploration and abandonment expense during the fourth quarter is expected to be $40 million to $70 million, including up to $45 million associated with drilling in lower-risk resource plays in the Edwards Trend and Tunisia and $25 million of seismic activity and personnel costs.

General and administrative expense is expected to be $35 million to $39 million. Interest expense is expected to be $36 million to $40 million. Accretion of discount on asset retirement obligations is expected to be $2 million to $4 million.

Minority interest in consolidated subsidiaries' net income is expected to be $8 million to $10 million, primarily reflecting the public ownership in Pioneer Southwest.

The Company also expects to recognize $40 million to $45 million of charges in other expense associated with certain drilling rigs being terminated or stacked as a result of the Company's low price environment initiatives.

The Company's fourth quarter effective income tax rate is expected to range from 40% to 50% based on current capital spending plans. Cash taxes are expected to be $15 million to $20 million and are primarily attributable to Tunisia.

Fourth quarter 2008 amortization of deferred losses on terminated oil and gas hedges is expected to be $23 million. The Company's financial results, oil, NGL and gas hedges and future VPP amortization are outlined on the attached schedules.

Earnings Conference Call

On Wednesday, November 5 at 11:00 a.m. Central Time, Pioneer will discuss its financial and operating results with an accompanying presentation. The call will be webcast on Pioneer's website, www.pxd.com. The presentation will soon be available on Pioneer's website for preview in advance of the call. At the website, select 'INVESTORS' 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 (877) 879-6209 (confirmation code: 3324323) 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: 3324323).

Pioneer is a large independent oil and gas exploration and production company, headquartered in Dallas, with operations in the United States, 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 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 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 (including its plan to repurchase stock) or complete its development projects 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.

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," "gross economic ultimate recovery" 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.


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


                                            September 30, December 31,
                                                2008          2007
                                            ------------- ------------
                                             (Unaudited)

                                ASSETS

Current assets:
  Cash and cash equivalents                 $     66,817  $    12,171
  Accounts receivable, net                       295,607      283,832
  Income taxes receivable                         49,316       40,046
  Inventories                                    146,136       97,619
  Prepaid expenses                                16,710        9,378
  Deferred income taxes                           63,042      108,073
  Other current assets, net                       47,770      213,936
                                            ------------- ------------

    Total current assets                         685,398      765,055
                                            ------------- ------------

Property, plant and equipment, at cost:
  Oil and gas properties, using the
   successful efforts method of accounting    10,055,320    9,251,113
  Accumulated depletion, depreciation and
   amortization                               (2,358,385)  (2,028,472)
                                            ------------- ------------

    Total property, plant and equipment        7,696,935    7,222,641
                                            ------------- ------------

Deferred income taxes                              1,176       10,263
Goodwill                                         310,563      310,870
Other assets, net                                372,509      308,152
                                            ------------- ------------

                                            $  9,066,581  $ 8,616,981
                                            ============= ============

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                          $    399,459  $   378,416
  Interest payable                                29,296       42,020
  Income taxes payable                            24,119       12,842
  Deferred revenue                               150,396      158,138
  Other current liabilities                      210,780      402,753
                                            ------------- ------------

    Total current liabilities                    814,050      994,169
                                            ------------- ------------

Long-term debt                                 2,823,371    2,755,491
Deferred income taxes                          1,421,980    1,229,677
Deferred revenue                                 214,240      325,142
Minority interest in consolidated
 subsidiaries                                     57,933       11,942
Other liabilities                                224,233      257,838
Stockholders' equity                           3,510,774    3,042,722
                                            ------------- ------------

                                            $  9,066,581  $ 8,616,981
                                            ============= ============

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


                           Three Months Ended     Nine Months Ended
                              September 30,         September 30,
                           ------------------- -----------------------
                             2008      2007       2008        2007
                           --------- --------- ----------- -----------

Revenues and other income:
  Oil and gas              $612,200  $458,898  $1,823,985  $1,232,272
  Interest and other          3,389    30,665      36,892      68,273
  Gain (loss) on
   disposition of assets,
   net                          190       558       4,768        (860)
                           --------- --------- ----------- -----------
                            615,779   490,121   1,865,645   1,299,685
                           --------- --------- ----------- -----------
Costs and expenses:
  Oil and gas production    155,761   113,554     432,936     308,380
  Depletion, depreciation
   and amortization         127,467   113,879     351,773     280,927
  Impairment of oil and
   gas properties            89,753    (2,582)     89,753      15,309
  Exploration and
   abandonments             111,075    34,498     179,841     170,143
  General and
   administrative            31,617    32,330     103,646      94,304
  Accretion of discount on
   asset retirement
   obligations                2,180     1,702       6,482       5,025
  Interest                   37,689    35,476     113,423      94,432
  Hurricane activity, net       541       110       2,400      60,658
  Minority interest in
   consolidated
   subsidiaries' net
   income (loss)              8,422       172      15,388      (1,020)
  Other                      38,926     7,015      58,799      21,720
                           --------- --------- ----------- -----------
                            603,431   336,154   1,354,441   1,049,878
                           --------- --------- ----------- -----------

Income from continuing
 operations before income
 taxes                       12,348   153,967     511,204     249,807
Income tax provision        (14,895)  (60,948)   (227,919)    (92,181)
                           --------- --------- ----------- -----------

Income (loss) from
 continuing operations       (2,547)   93,019     283,285     157,626
Income (loss) from
 discontinued operations,
 net of tax                    (491)    8,908       2,245      10,374
                           --------- --------- ----------- -----------
Net income (loss)          $ (3,038) $101,927  $  285,530  $  168,000
                           ========= ========= =========== ===========

Basic earnings per share:
  Income (loss) from
   continuing operations   $  (0.03) $   0.78  $     2.40  $     1.30
  Income (loss) from
   discontinued
   operations, net of tax         -      0.07        0.02        0.09
                           --------- --------- ----------- -----------
  Net income (loss)        $  (0.03) $   0.85  $     2.42  $     1.39
                           ========= ========= =========== ===========

Diluted earnings per
 share:
  Income (loss) from
   continuing operations   $  (0.03) $   0.77  $     2.37  $     1.29
  Income (loss) from
   discontinued
   operations, net of tax         -      0.07        0.02        0.08
                           --------- --------- ----------- -----------
  Net income (loss)        $  (0.03) $   0.84  $     2.39  $     1.37
                           ========= ========= =========== ===========

Weighted average shares
 outstanding:
  Basic                     118,110   120,323     118,136     121,020
                           ========= ========= =========== ===========
  Diluted                   118,110   121,805     119,493     122,496
                           ========= ========= =========== ===========

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


                          Three Months Ended      Nine Months Ended
                             September 30,          September 30,
                         --------------------- -----------------------
                            2008       2007       2008        2007
                         ---------- ---------- ---------- ------------

Cash flows from
 operating activities:
  Net income (loss)      $  (3,038) $ 101,927  $ 285,530  $   168,000
    Adjustments to
     reconcile net
     income (loss) to
     net cash provided
     by operating
     activities:
        Depletion,
         depreciation
         and
         amortization      127,467    113,879    351,773      280,927
        Impairment of
         oil and gas
         properties         89,753     (2,582)    89,753       15,309
        Exploration
         expenses,
         including dry
         holes              89,414      8,725     93,996       92,706
        Hurricane
         activity                -          -          -       66,000
        Deferred income
         taxes              (9,234)    73,091    170,650      135,505
        (Gain) loss on
         disposition of
         assets, net          (190)      (558)    (4,768)         860
        Accretion of
         discount on
         asset
         retirement
         obligations         2,180      1,702      6,482        5,025
        Discontinued
         operations          3,304      6,719      3,677       41,518
        Interest expense     3,671      4,092     11,551       13,305
        Minority
         interest in
         consolidated
         subsidiaries'
         net income
         (loss)              8,422        172     15,388       (1,020)
        Commodity hedge
         related
         activity           15,602      5,349     31,118       15,982
        Amortization of
         stock-based
         compensation        8,283      8,461     25,504       24,816
        Amortization of
         deferred
         revenue           (39,708)   (45,578)  (118,644)    (135,934)
        Other noncash
         items              26,748      4,902     30,562        1,744
      Changes in
       operating assets
       and liabilities:
        Accounts
         receivable, net    59,496    (55,383)   (39,039)     (54,821)
        Income taxes
         receivable           (120)   (27,428)    (9,522)     (64,026)
        Inventories        (14,347)     3,073    (54,990)      (6,331)
        Prepaid expenses    (8,255)    (6,432)    (7,152)      (1,213)
        Other current
         assets, net        (9,747)     5,224     (2,561)       5,037
        Accounts payable    16,533     44,334     15,364       11,748
        Interest payable   (15,878)   (12,858)   (12,724)      (2,592)
        Income taxes
         payable           (16,584)     1,697     11,528        4,597
        Other current
         liabilities       (30,941)   (41,915)   (79,913)     (79,169)
                         ---------- ---------- ---------- ------------
Net cash provided by
 operating activities      302,831    190,613    813,563      537,973
Net cash used in
 investing activities     (393,238)  (418,625)  (884,719)  (1,405,062)
Net cash provided by
 financing activities      113,942    221,206    125,802      877,918
                         ---------- ---------- ---------- ------------
Net increase (decrease)
 in cash and cash
 equivalents                23,535     (6,806)    54,646       10,829
Effect of exchange rate
 changes on cash and
 cash equivalents                -        758          -        1,409
Cash and cash
 equivalents, beginning
 of period                  43,282     25,319     12,171        7,033
                         ---------- ---------- ---------- ------------
Cash and cash
 equivalents, end of
 period                  $  66,817  $  19,271  $  66,817  $    19,271
                         ========== ========== ========== ============

                  PIONEER NATURAL RESOURCES COMPANY
             UNAUDITED SUMMARY PRODUCTION AND PRICE DATA


                                  Three Months Ended Nine Months Ended
                                    September 30,      September 30,
                                  ------------------ -----------------
                                    2008      2007     2008     2007
                                  --------- -------- -------- --------

Average Daily Sales
 Volumes from
 Continuing
 Operations:
   Oil (Bbls) -      U.S.            20,580   18,298   21,012   18,617
                     South Africa     2,995    2,368    2,879    2,599
                     Tunisia          6,831    4,328    5,705    4,062
                                  --------- -------- -------- --------
                       Worldwide     30,406   24,994   29,596   25,278
                                  ========= ======== ======== ========

   Natural gas       U.S.
    liquids (Bbls) -                 18,921   19,997   19,610   18,190
                                  ========= ======== ======== ========

   Gas (Mcf) -       U.S.           367,398  333,842  369,501  308,447
                     South Africa     4,956        -    5,199        -
                     Tunisia          2,709    1,003    2,303    2,755
                                  --------- -------- -------- --------
                       Worldwide    375,063  334,845  377,003  311,202
                                  ========= ======== ======== ========

   Total (BOE) -     U.S.           100,734   93,936  102,205   88,215
                     South Africa     3,821    2,368    3,746    2,599
                     Tunisia          7,283    4,495    6,089    4,521
                                  --------- -------- -------- --------
                       Worldwide    111,838  100,799  112,040   95,335
                                  ========= ======== ======== ========

Average Daily Sales
 Volumes from
 Discontinued
 Operations:
   Oil (Bbls) -      Canada               -      277        -      309
                                  ========= ======== ======== ========

   Natural gas       Canada
    liquids (Bbls) -                      -      425        -      406
                                  ========= ======== ======== ========

   Gas (Mcf) -       Canada               -   47,537        -   49,808
                                  ========= ======== ======== ========

   Total (BOE) -     Canada               -    8,624        -    9,017
                                  ========= ======== ======== ========

Average Reported
 Prices (a):
   Oil (per Bbl) -   U.S.          $  71.20 $  68.28 $  71.68 $  59.38
                     South Africa  $ 107.89 $  79.54 $ 113.39 $  70.57
                     Tunisia       $ 101.01 $  73.61 $ 109.38 $  66.24
                       Worldwide   $  81.51 $  70.27 $  83.01 $  61.63

   Natural gas       U.S.
    liquids (per
    Bbl) -                         $  62.24 $  42.48 $  57.43 $  38.09

   Gas (per Mcf) -   U.S.          $   7.94 $   7.11 $   8.12 $   7.27
                     South Africa  $   8.10 $      - $   8.09 $      -
                     Tunisia       $  15.67 $   9.83 $  14.29 $   7.92
                       Worldwide   $   7.99 $   7.11 $   8.15 $   7.27

   Total (BOE) -     U.S.          $  55.18 $  47.60 $  55.10 $  45.79
                     South Africa  $  95.07 $  79.54 $  98.39 $  70.57
                     Tunisia       $ 100.58 $  73.07 $ 107.89 $  64.34
                       Worldwide   $  59.50 $  49.48 $  59.42 $  47.35

_____________
    (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 or net cash provided by
 operating activities, as defined by GAAP.


                            Three Months Ended    Nine Months Ended
                               September 30,        September 30,
                            ------------------- ----------------------
                              2008      2007       2008        2007
                            --------- --------- ----------- ----------

Net income (loss)           $ (3,038) $101,927  $  285,530  $ 168,000
Depletion, depreciation and
 amortization                127,467   113,879     351,773    280,927
Impairment of oil and gas
 properties                   89,753    (2,582)     89,753     15,309
Exploration and
 abandonments                111,075    34,498     179,841    170,143
Hurricane activity                 -         -           -     66,000
Accretion of discount on
 asset retirement
 obligations                   2,180     1,702       6,482      5,025
Interest expense              37,689    35,476     113,423     94,432
Minority interest in
 consolidated subsidiaries'
 net income (loss)             8,422       172      15,388     (1,020)
Income tax provision          14,895    60,948     227,919     92,181
(Gain) loss on disposition
 of assets, net                 (190)     (558)     (4,768)       860
Discontinued operations        3,304     6,719       3,677     41,518
Current income tax
 provision on discontinued
 operations                      135       340         306      5,029
Cash exploration and
 interest expense on
 discontinued operations           -       441           -      5,092
Commodity hedge related
 activity                     15,602     5,349      31,118     15,982
Amortization of stock-based
 compensation                  8,283     8,461      25,504     24,816
Amortization of deferred
 revenue                     (39,708)  (45,578)   (118,644)  (135,934)
Other noncash items           26,748     4,902      30,562      1,744
                            --------- --------- ----------- ----------

    EBITDAX (a)              402,617   326,096   1,237,864    850,104

Cash interest expense        (34,018)  (31,437)   (101,872)   (81,221)
Current income taxes         (24,264)   11,803     (57,575)    38,295
                            --------- --------- ----------- ----------

    Discretionary cash flow
     (b)                     344,335   306,462   1,078,417    807,178

Cash exploration expense     (21,661)  (26,161)    (85,845)   (82,435)
Changes in operating assets
 and liabilities             (19,843)  (89,688)   (179,009)  (186,770)
                            --------- --------- ----------- ----------

    Net cash provided by
     operating activities   $302,831  $190,613  $  813,563  $ 537,973
                            ========= ========= =========== ==========


_____________
(a) "EBITDAX" represents earnings before depletion, depreciation and
 amortization expense; impairment of oil and gas properties;
 exploration and abandonments; minority interest in consolidated
 subsidiaries' net income (loss); noncash hurricane activity;
 accretion of discount on asset retirement obligations; interest
 expense; income taxes; (gain) 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
    UNAUDITED SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES (continued)
                (in thousands, except per share data)

Income adjusted for significant noncash charges, as presented in this
 press release, is presented and reconciled to Pioneer's net loss
 determined in accordance with GAAP because Pioneer believes that this
 non-GAAP financial measure reflects an additional way of viewing
 aspects of Pioneer's business that, when viewed together with its
 financial results computed in accordance with GAAP, provides 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 this
 non-GAAP measure may enhance investors' ability to assess Pioneer's
 historical and future financial performance. This non-GAAP financial
 measure is not intended to be a substitute for the comparable GAAP
 measure and should be read only in conjunction with Pioneer's
 consolidated financial statements prepared in accordance with GAAP.
 Many of the noncash charges are of a type that could 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 loss for the three months ended September 30, 2008, as
 determined in accordance with GAAP, to income adjusted for
 significant noncash charges for that quarter:

                                                   After-tax    Per
                                                     Amounts   share
                                                   ---------- --------


Net loss                                           $  (3,038) $ (0.03)

Significant noncash charges:
  Semcrude receivable allowance                       12,347     0.10
  Equatorial Guinea exit charge                        5,046     0.04
  Lay Creek CBM and Delaware Shale abandonment        38,104     0.32
  Uinta Piceance impairment                           56,544     0.48
                                                   ---------- --------

Income as adjusted for significant noncash charges $ 109,003  $  0.91
                                                   ========== ========

                  PIONEER NATURAL RESOURCES COMPANY
                       SUPPLEMENTAL INFORMATION
        Open Commodity Hedge Positions as of November 3, 2008


                       2008
                     ---------
                      Fourth
                      Quarter    2009      2010      2011
                     --------- --------- -------- ----------

Average Daily Oil
 Production Hedged:
Swap Contracts:
  Volume (Bbl)         15,000     2,500    4,000          -
  NYMEX price (Bbl)  $  65.46  $  99.26  $ 85.21    $     -
Collar Contracts:
  Volume (Bbl)          3,000     4,000    5,000      2,000
  NYMEX price (Bbl):
    Ceiling          $  80.80  $ 190.06  $194.70    $170.00
    Floor            $  65.00  $ 100.00  $100.00    $115.00
Average Daily
 Natural Gas Liquid
 Production Hedged:
Swap Contracts:
  Volume (Bbl)          1,000     1,250    1,250          -
  Blended index
   price (Bbl) (a)   $  50.74  $  49.00  $ 47.39    $     -
Average Daily Gas
 Production Hedged:
Swap Contracts:
  Volume (MMBtu)      180,000    12,397    5,000          -
  NYMEX price
   (MMBtu) (b)       $   8.37  $   9.10  $  8.54    $     -

_____________
(a) Represents blended Mont Belvieu posted price per Bbl.
(b) Approximate NYMEX price, based on historical differentials to the
 index price at the time the derivative was entered into.


Amortization of Deferred Revenue Associated with Volumetric Production
      Payments and Net Derivative Losses as of September 30, 2008
                            (in thousands)


                       2008
                     ---------
                      Fourth
                      Quarter    2009      2010   Thereafter   Total
                     --------- --------- -------- ---------- ---------

Total deferred
 revenues (a)        $ 39,495  $147,906  $90,216    $87,019  $364,636
Less derivative
 losses to be
 recognized in
 pretax earnings (b)     (839)   (3,613)  (2,403)    (6,730)  (13,585)
                     --------- --------- -------- ---------- ---------

Total VPP impact to
 pretax earnings     $ 38,656  $144,293  $87,813    $80,289  $351,051
                     ========= ========= ======== ========== =========

_____________
(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.

                  PIONEER NATURAL RESOURCES COMPANY
                       SUPPLEMENTAL INFORMATION

 Deferred Losses on Terminated Commodity Hedges as of September 30,
                               2008 (a)
----------------------------------------------------------------------
                            (in thousands)


                                     2008
                                    -------
                                    Fourth
                                    Quarter  2009    2010   Thereafter
                                    ------- ------- ------- ----------

Commodity hedge losses (b)          $29,237 $20,709 $17,783         $-

______________
(a) Excludes deferred hedge gains and losses on terminated derivatives
 related to the VPPs.
(b) Deferred commodity hedge losses will be amortized as decreases to
 oil and gas revenues during the indicated future periods.

    CONTACT: Pioneer Natural Resources
             Investors
             Frank Hopkins, 972-969-4065
             or
             Matt Gallagher, 972-969-4017
             or
             Media and Public Affairs
             Susan Spratlen, 972-969-4018

    SOURCE: Pioneer Natural Resources Company

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