UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549


                                    FORM 10-Q



     / x /      Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                For the quarterly period ended September 30, 1998

                                       or

     /   /      Transition Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
               For the transition period from _______ to ________


                           Commission File No. 1-13245


                        PIONEER NATURAL RESOURCES COMPANY
             (Exact name of Registrant as specified in its charter)


                Delaware                               75-2702753       
     (State or other jurisdiction of                (I.R.S. Employer
     incorporation or organization)               Identification Number)

1400 Williams Square West, 5205 N. O'Connor Blvd., Irving, Texas     75039   
         (Address of principal executive offices)                  (Zip code)

       Registrant's Telephone Number, including area code : (972) 444-9001

                                 Not applicable
              (Former name, former address and former fiscal year,
                          if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                Yes / x / No / /

Number of shares of Common Stock outstanding as of
   October 31, 1998................................................ 100,217,893



<PAGE>



                        PIONEER NATURAL RESOURCES COMPANY


                                TABLE OF CONTENTS



                                                                          Page

                          PART I. FINANCIAL INFORMATION


Item 1. Financial Statements

        Consolidated Balance Sheets as of September 30, 1998 and
           December 31, 1997   .............................................3

        Consolidated Statements of Operations and Comprehensive
          Income for the three and nine months ended September 30,
          1998 and 1997.....................................................5

        Consolidated Statement of Stockholders' Equity for the nine
          months ended September 30, 1998...................................6

        Consolidated Statements of Cash Flows for the three and nine
          months ended September 30, 1998 and 1997..........................7

        Notes to Consolidated Financial Statements..........................8


Item 2. Management's Discussion and Analysis of Financial
          Condition and Results of Operations..............................18



                         PART II. OTHER INFORMATION


Item 1. Legal Proceedings..................................................29


Item 5. Other Information..................................................29


Item 6. Exhibits and Reports on Form 8-K...................................29

        Signatures.........................................................30

        Exhibit Index......................................................31


                                        2


<PAGE>



                          PART I. FINANCIAL INFORMATION


Item 1.      Financial Statements

                        PIONEER NATURAL RESOURCES COMPANY

                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

                                                September 30,    December 31,
                                                    1998             1997
                                                ------------     -----------
                                                (Unaudited)

                                     ASSETS
Current assets:
  Cash and cash equivalents                     $    70,285      $    71,713
  Restricted cash                                    25,020            1,695
  Accounts receivable:
    Trade, net                                       42,640           75,432
    Oil and gas sales                                56,751          116,500
  Inventories                                        17,460           13,576
  Deferred income taxes                              16,100           16,900
  Other current assets                               10,238           12,372
                                                 ----------       ----------
          Total current assets                      238,494          308,188
                                                 ----------       ----------
Property, plant and equipment, at cost:
  Oil and gas properties, using the successful
    efforts method of accounting:
       Proved properties                          3,899,703        3,575,971
       Unproved properties                          464,750          545,074
  Accumulated depletion, depreciation and
    amortization                                   (847,496)        (605,203)
                                                 ----------       ----------
                                                  3,516,957        3,515,842
                                                 ----------       ----------
Deferred income taxes                               102,200              -
Other property and equipment, net                    50,694           44,017
Other assets, net                                    84,281           78,543
                                                 ----------       ----------
                                                $ 3,992,626      $ 3,946,590
                                                 ==========       ==========

The financial information included as of September 30, 1998 has been prepared by
          management without audit by independent public accountants.

             The accompanying notes are an integral part of these
                      consolidated financial statements.

                                        3


<PAGE>


                        PIONEER NATURAL RESOURCES COMPANY

                     CONSOLIDATED BALANCE SHEETS (continued)
                        (in thousands, except share data)

                                                September 30,    December 31,
                                                    1998             1997
                                                ------------     -----------
                                                (Unaudited)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Current maturities of long-term debt         $     1,712      $     5,791
   Undistributed unit purchases                         -              1,695
   Accounts payable:
      Trade                                         108,088          176,697
      Affiliates                                      5,032            9,994
   Other current liabilities                        112,501           67,375
                                                 ----------       ----------
            Total current liabilities               227,333          261,552
                                                 ----------       ----------
Long-term debt, less current maturities           2,164,259        1,943,718
Other noncurrent liabilities                        176,595          180,275
Deferred income taxes                                   -             12,200

Stockholders' equity:
   Preferred stock, $.01 par value; 100,000,000
      shares authorized; one share issued and
      outstanding at September 30, 1998 and
      December 31, 1997, respectively                   -                -
   Common stock, $.01 par value; 500,000,000
      shares authorized; 100,755,293 and
      101,037,562 shares issued at September 30,
      1998 and December 31, 1997, respectively        1,007            1,010
   Additional paid-in capital                     2,350,996        2,359,992
   Treasury stock, at cost; 500,700 and 591
      shares at September 30, 1998 and December
      31, 1997, respectively                         (9,911)             (21)
   Unearned compensation                            (10,101)         (16,196)
   Retained deficit                                (909,574)        (795,940)
   Accumulated other comprehensive income:
      Cumulative translation adjustment               2,022              -  
                                                 ----------       ----------
            Total stockholders' equity            1,424,439        1,548,845

Commitments and contingencies (Note E)
                                                 ----------       ----------
                                                $ 3,992,626      $ 3,946,590
                                                 ==========       ==========

The financial information included as of September 30, 1998 has been prepared by
           management without audit by independent public accountants.

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                        4


<PAGE>



                        PIONEER NATURAL RESOURCES COMPANY

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                            AND COMPREHENSIVE INCOME
                      (in thousands, except per share data)
                                   (Unaudited)

<TABLE>
                                                 Three months ended       Nine months ended
                                                     September 30,           September 30,
                                              -----------------------   -----------------------
                                                 1998         1997         1998         1997
                                              ----------   ----------   ----------   ----------
<S>                                           <C>          <C>          <C>          <C>
Revenues:
   Oil and gas                                $  173,462   $  150,354   $  554,478   $  348,980
   Interest and other                              5,868          816        8,191        3,649
   Gain (loss) on disposition of assets, net        (461)         108         (136)       2,745
                                               ---------    ---------    ---------    ---------
                                                 178,869      151,278      562,533      355,374
                                               ---------    ---------    ---------    ---------
Costs and expenses:
   Oil and gas production                         57,753       42,003      169,508       91,674
   Depletion, depreciation and amortization       87,150       67,388      247,208      126,897
   Exploration and abandonments                   35,627       15,513       86,149       34,310
   General and administrative                     19,236       16,779       56,648       31,769
   Reorganization                                    609          -         21,158          -
   Interest                                       41,822       24,110      122,317       44,264
   Other                                           4,874        2,533       18,500        2,982
                                               ---------    ---------    ---------    ---------
                                                 247,071      168,326      721,488      331,896
                                               ---------    ---------    ---------    ---------
Income (loss) before income taxes and
   extraordinary item                            (68,202)     (17,048)    (158,955)      23,478
Income tax benefit (provision)                    24,300        6,000       55,400       (8,500)
                                               ---------    ---------    ---------    ---------
Income (loss) before extraordinary item          (43,902)     (11,048)    (103,555)      14,978
Extraordinary item - loss on early
   extinguishment of debt, net of tax                -         (1,518)         -         (1,518)
                                               ---------    ---------    ---------    ---------
Net income (loss)                                (43,902)     (12,566)    (103,555)      13,460
                                               ---------    ---------    ---------    ---------
Other comprehensive income:
   Translation adjustment                          4,784          -          2,022          -  
                                               ---------    ---------    ---------    ---------
Comprehensive income (loss)                   $  (39,118)  $  (12,566)  $ (101,533)  $   13,460
                                               =========    =========    =========    =========
Net income (loss) per share:
  Basic:
    Income (loss) before extraordinary item   $     (.44)  $     (.18)  $    (1.04)  $      .34
    Extraordinary item                               -           (.03)         -           (.03)
                                               ---------    ---------    ---------    ---------
        Net income (loss)                     $     (.44)  $     (.21)  $    (1.04)  $      .31
                                               =========    =========    =========    =========
  Diluted:
    Income (loss) before extraordinary item   $     (.44)  $     (.18)  $    (1.04)  $      .34
    Extraordinary item                               -           (.03)         -           (.03)
                                               ---------    ---------    ---------    ---------
        Net income (loss)                     $     (.44)  $     (.21)  $    (1.04)  $      .31
                                               =========    =========    =========    =========
Dividends declared per share                  $      .05   $      .05   $      .10   $      .10
                                               =========    =========    =========    =========
Weighted average shares outstanding               99,939       59,200       99,982       43,180
                                              ==========   ==========   ==========   ==========
</TABLE>

         The financial information included herein has been prepared by
           management without audit by independent public accountants.

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                        5


<PAGE>



                        PIONEER NATURAL RESOURCES COMPANY

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                        (in thousands, except share data)
                                   (Unaudited)


<TABLE>
                               Common                                                              Accumulated
                               Stock               Additional                                         Other         Total
                               Shares     Common    Paid-in    Treasury    Unearned    Retained   Comprehensive  Stockholders'
                             Outstanding   Stock    Capital      Stock   Compensation   Deficit       Income        Equity
                             -----------  -------  ----------  --------  ------------  ---------  -------------  ------------
<S>                          <C>          <C>      <C>         <C>       <C>           <C>        <C>            <C>
Balance at January 1, 1998   101,036,971  $ 1,010  $2,359,992  $    (21) $  (16,196)   $(795,940)   $     -      $  1,548,845
Common stock issued:
  Adjustment to acquisition
    of Chauvco Resources,
    Ltd.                        (401,755)      (4)    (11,095)      -           -            -            -           (11,099)
Tax provision related to
  restricted stock                   -        -          (600)      -           -            -            -              (600)
Purchase of treasury stock      (500,109)     -           -      (9,890)        -            -            -            (9,890)
Shares awarded                   119,486        1       2,699       -          (881)         -            -             1,819
Amortization of unearned
  compensation                       -        -           -         -         6,976          -            -             6,976
Dividends ($.10 per share)           -        -           -         -           -        (10,079)         -           (10,079)
Net loss                             -        -           -         -           -       (103,555)         -          (103,555)
Other comprehensive income:
  Translation adjustment             -        -           -         -           -            -          2,022           2,022
                             -----------   ------   ---------   -------   ---------     --------   ----------     -----------
Balance at September 30,
  1998                       100,254,593  $ 1,007  $2,350,996  $ (9,911) $  (10,101)   $(909,574) $     2,022    $  1,424,439
                             ===========   ======   =========   =======   =========     ========   ==========     ===========
</TABLE>


         The financial information included herein has been prepared by
          management without audit by independent public accountants.

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                        6


<PAGE>



                        PIONEER NATURAL RESOURCES COMPANY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (Unaudited)

<TABLE>
                                                             Three months ended      Nine months ended
                                                                September 30,          September 30,
                                                           ---------------------   ---------------------
                                                              1998       1997        1998        1997
                                                           ---------   ---------   ---------   ---------
<S>                                                        <C>         <C>         <C>         <C>
Cash flows from operating activities:
  Net income (loss)                                        $ (43,902)  $ (12,566)  $(103,555)  $  13,460
  Adjustments to reconcile net income (loss) to net
     cash provided by operating activities:
       Depletion, depreciation and amortization               87,150      67,388     247,208     126,897
       Exploration expenses, including dry holes              29,832      11,390      65,477      25,581
       Deferred income taxes                                 (24,600)     (4,800)    (53,000)      6,600
       (Gain) loss on disposition of assets, net                 461        (108)        136      (2,745)
       Other noncash items                                    12,232      10,720      38,045      12,900
  Change in operating assets and liabilities, net of
     effects from acquisitions and dispositions:
       Accounts receivable                                    59,383      (3,032)     96,685       8,992
       Inventories                                               731         729         874      (1,122)
       Other current assets                                      236        (544)     (1,093)        136
       Accounts payable                                       (2,198)     (4,074)    (26,921)       (975)
       Accrued income taxes and other current liabilities    (13,237)    (10,628)      2,652     (10,656)
                                                            --------    --------    --------    --------
         Net cash provided by operating activities           106,088      54,475     266,508     179,068
                                                            --------    --------    --------    --------
Cash flows from investing activities:
  Payment for acquisition, net of cash acquired                  -          (519)       (424)       (519)
  Proceeds from disposition of assets                          3,560         560      19,682      12,838
  Additions to oil and gas properties                        (97,866)    (81,300)   (427,938)   (246,574)
  Other property additions, net                               (5,985)     (4,902)    (23,390)     (9,878)
                                                            --------    --------    --------    --------
         Net cash used in investing activities              (100,291)    (86,161)   (432,070)   (244,133)
                                                            --------    --------    --------    --------
Cash flows from financing activities:
  Borrowings under long-term debt                             96,709      63,353     922,910     104,896
  Principal payments on long-term debt                       (63,277)     (5,477)   (694,502)    (18,279)
  Payments of other noncurrent liabilities                    (4,686)     (1,775)    (37,001)     (2,482)
  Deferred loan fees/issuance costs                           (1,765)        -        (7,199)        -
  Dividends                                                   (5,023)     (3,722)    (10,079)     (5,476)
  Purchase of treasury stock                                  (3,112)        -        (9,890)     (2,932)
  Exercise of long-term incentive plan stock options             -        10,095         -        11,258
                                                            --------    --------    --------    --------
         Net cash provided by financing activities            18,846      62,474     164,239      86,985
                                                            --------    --------    --------    --------
Net increase (decrease) in cash and cash equivalents          24,643      30,788      (1,323)     21,920
Effect of exchange rate changes on cash and
  cash equivalents                                               (51)        -          (105)        -
Cash and cash equivalents, beginning of period                45,693       9,843      71,713      18,711
                                                            --------    --------    --------    --------
Cash and cash equivalents, end of period                   $  70,285   $  40,631   $  70,285   $  40,631
                                                            ========    ========    ========    ========
</TABLE>

         The financial information included herein has been prepared by
           management without audit by independent public accountants.

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                        7


<PAGE>



                        PIONEER NATURAL RESOURCES COMPANY


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1998
                                   (Unaudited)



NOTE A.     Organization and Nature of Operations

       Pioneer  Natural   Resources   Company  (the  "Company")  is  a  Delaware
corporation  whose  common  stock is listed  and  traded  on the New York  Stock
Exchange and the Toronto Stock Exchange. The Company was formed by the merger of
Parker & Parsley  Petroleum  Company ("Parker & Parsley") and MESA Inc. ("Mesa")
on August 7, 1997.  The Company  was  significantly  expanded by the  subsequent
acquisition  of the  Canadian  and  Argentine  oil and gas  business  of Chauvco
Resources Ltd  ("Chauvco"),  a publicly  traded  independent oil and gas company
based in Calgary,  Canada,  on December 18, 1997.  The Company is an oil and gas
exploration  and  production  company  with  ownership  interests in oil and gas
properties located principally in the MidContinent, Southwestern and onshore and
offshore Gulf Coast regions of the United States, and in Canada and Argentina.

       In accordance with the provisions of Accounting  Principles Board Opinion
No. 16, "Business  Combinations",  both the merger with Mesa and the acquisition
of Chauvco have been accounted for as purchases by the Company  (formerly Parker
& Parsley). As a result, the historical financial statements for the Company are
those of Parker & Parsley prior to August 1997;  for the period from August 1997
through December 31, 1997, the historical  financial  statements for the Company
reflect  the above  described  merger of Parker & Parsley  and Mesa;  and, as of
December 31, 1997,  the financial  statements  for the Company have included the
addition of the acquired assets and liabilities of Chauvco.

NOTE B.     Basis of Presentation

       In the  opinion  of  management,  the  unaudited  consolidated  financial
statements  of the Company as of  September  30, 1998 and for the three and nine
months ended  September 30, 1998 and 1997 include all  adjustments and accruals,
consisting only of normal recurring accrual adjustments, which are necessary for
a fair  presentation  of the  results  for the interim  periods.  These  interim
results  are not  necessarily  indicative  of results  for a full year.  Certain
amounts in the prior  period  financial  statements  have been  reclassified  to
conform to the current period presentation.

       Certain  information  and  footnote   disclosures  normally  included  in
financial  statements  prepared in accordance with generally accepted accounting
principles  have been  condensed  or omitted in this Form 10-Q  pursuant  to the
rules  and  regulations  of  the  Securities  and  Exchange  Commission.   These
consolidated  financial  statements  should  be  read  in  connection  with  the
consolidated  financial  statements and notes thereto  included in the Company's
1997 Annual Report on Form 10-K.

       Effective  January 1, 1998,  the Company  adopted  Statement of Financial
Accounting  Standards No. 130,  "Reporting  Comprehensive  Income" ("SFAS 130"),
which  establishes  standards for reporting and display of comprehensive  income
(loss) and its components in a full set of general purpose financial statements.
Comprehensive  income (loss) includes net income (loss) and other  comprehensive
income  (loss),  which  includes,  but is not limited to,  unrealized  gains for
marketable  securities  and  future  contracts,   foreign  currency  translation
adjustments  and  minimum  pension  liability   adjustments.   The  accompanying
consolidated  financial  statements for the Company reflect other  comprehensive
income consisting of foreign currency translation adjustments.

NOTE C.     Pending Asset Divestiture

       In September  1998, the Company signed a purchase and sale agreement (the
"Agreement") to sell certain  non-strategic oil and gas properties for estimated
proceeds of $410 million. The Agreement will be effective October 1, 1998 and is
anticipated to close by December 31, 1998. The consummation of this Agreement is
primarily  dependent upon the buyer's successful ability to finance the purchase
as well as certain other  contingencies  defined in the Agreement.  As a result,
there can be no assurance that the divestiture of any or all of these properties
will be completed or that the estimated  proceeds will be realized in accordance

                                        8


<PAGE>



with the Agreement.  The buyer has paid a performance  deposit of $25 million to
the  Company.  Such  funds  have  been  classified  as  restricted  cash  in the
accompanying  Consolidated  Balance  Sheet as of September  30,  1998.  When the
Agreement is consummated,  the proceeds will be utilized to reduce the Company's
outstanding bank indebtedness.

NOTE D.     Senior Note Issuances

       During January 1998, the Company  completed the issuance of the following
two series of senior notes for total net proceeds of $593 million.  The proceeds
were used primarily to repay the Company's bank indebtedness.

       6.5% senior notes due 2008. $350 million aggregate  principal amount 6.5%
senior notes dated January 13, 1998, due January 15, 2008.  Interest on the 6.5%
senior  notes is payable  semi-annually  on January 15 and July 15 of each year,
commencing July 15, 1998.

       7.2% senior notes due 2028. $250 million aggregate  principal amount 7.2%
senior  notes dated  January 13, 1998,  due July 15, 2028.  Interest on the 7.2%
senior  notes is payable  semi-annually  on January 15 and July 15 of each year,
commencing July 15, 1998.

       Both senior note  issuances  are  governed  by an  Indenture  between the
Company  and The Bank of New York dated  January  13,  1998.  Both  senior  note
issuances are general  unsecured  obligations of the Company  ranking equally in
right of payment with all other senior unsecured indebtedness of the Company and
are  senior  in  right  of  payment  to all  existing  and  future  subordinated
indebtedness of the Company.

NOTE E.     Commitments and Contingencies

       Legal Actions.  The Company is party to various legal actions  incidental
to its business, including, but not limited to, the proceedings described below.
The majority of these lawsuits primarily involve claims for damages arising from
oil and gas leases and ownership  interest  disputes.  The Company believes that
the ultimate disposition of these legal actions will not have a material adverse
effect on the Company's  consolidated  financial  position,  liquidity,  capital
resources or future results of operations. The Company will continue to evaluate
its  litigation  matters  on a  quarter-by-quarter  basis  and will  adjust  its
litigation  reserve as  appropriate  to reflect the then  current  status of its
litigation.

       The Company  believes that the costs for  compliance  with  environmental
laws  and  regulations  have not and will  not  have a  material  effect  on the
Company's financial position or results of operations.

Masterson

        In February 1992, the current  lessors of an oil and gas lease (the "Gas
Lease")  dated April 30,  1955,  between R.B.  Masterson et al., as lessor,  and
Colorado Interstate Gas Company ("CIG"), as lessee, sued CIG in Federal District
Court in Amarillo,  Texas,  claiming that CIG had underpaid  royalties due under
the Gas Lease. Under the agreements with CIG, the Company, as successor to Mesa,
has an entitlement to gas produced from the Gas Lease. In August 1992, CIG filed
a third-party  complaint  against the Company for any such royalty  underpayment
which may be allocable to the Company.  Plaintiffs alleged that the underpayment
was the  result  of CIG's  use of an  improper  gas sales  price  upon  which to
calculate  royalties  and that the  proper  price  should  have been  determined
pursuant to a "favored-nations"  clause in a July 1, 1967,  amendment to the Gas
Lease.  The  plaintiffs  also sought a declaration by the court as to the proper
price to be used for calculating future royalties.

        The plaintiffs  alleged  royalty  underpayments  of  approximately  $500
million (including interest at 10%) dating from July 1, 1967. In March 1995, the
court made certain pretrial rulings that eliminated  approximately  $400 million
of the  plaintiff's  claims (which related to periods prior to October 1, 1989),
but which also reduced a number of the Company's  defenses.  The Company and CIG
filed stipulations with the court whereby the Company would have been liable for
between  50% and  60%,  depending  on the time  period  covered,  of an  adverse
judgment against CIG for post-February 1988 underpayments of royalties.

        On March 22,  1995,  a jury  trial  began and on May 4,  1995,  the jury
returned its  verdict.  Among its  findings,  the jury  determined  that CIG had
underpaid royalties for  the period after September 30,  1989,  in the amount of

                                        9


<PAGE>



approximately    $140,000.    Although   the   plaintiffs    argued   that   the
"favored-nations"  clause  entitled  them to be paid for all of their gas at the
highest price  voluntarily paid by CIG to any other lessor,  the jury determined
that the  plaintiffs  were estopped  from  claiming  that the  "favored-nations"
clause provides for other than a pricing-scheme to pricing-scheme comparison. In
light  of  this   determination,   and  the  plaintiff's   stipulation   that  a
pricing-scheme  to  pricing-scheme  comparison  would not result in any "trigger
prices" or damages,  defendants  asked the court for a judgment that  plaintiffs
take nothing. The court, on June 7, 1995, entered final judgment that plaintiffs
recover no monetary damages. The plaintiffs filed a motion for new trial on June
22, 1995. The court, on July 18, 1997, denied plaintiffs' motion. The plaintiffs
have appealed to the Fifth Circuit Court of Appeals,  where oral  arguments have
been scheduled for December 4, 1998. A decision by the Fifth Circuit Court could
be announced as early as the first quarter of 1999.

        On June 7, 1996,  the  plaintiffs  filed a separate suit against CIG and
the Company in state court in Amarillo,  Texas,  similarly claiming underpayment
of  royalties   under  the   "favored-nations"   clause,   but  based  upon  the
above-described  pricing-scheme to  pricing-scheme  comparison on a well-by-well
monthly basis. The plaintiffs also claim underpayment of royalties since June 7,
1995, under the "favored-nations" clause based upon either the pricing-scheme to
pricing-scheme  method or their  previously  alleged  higher price  method.  The
Company  believes it has several  defenses to this action and intends to contest
it vigorously. The Company has not yet determined the amount of damages, if any,
that would be payable if such action was determined adversely to the Company.

        The federal court in the above-referenced  first suit issued an order on
July 29, 1996,  which stayed the state suit pending the  resolution of the first
suit.

        Based on the jury  verdict  and final  judgment,  the  Company  does not
currently  expect the ultimate  resolution of either of these lawsuits to have a
material adverse effect on its financial position or results of operations.

Kansas Ad Valorem Tax

        The  Natural  Gas  Policy  Act of 1978  ("NGPA")  allows  a  "severance,
production  or  similar"  tax to be  included  as an add-on,  over and above the
maximum  lawful  price for natural  gas.  Based on a Federal  Energy  Regulatory
Commission  ("FERC")  ruling  that  Kansas ad valorem  tax was such a tax,  Mesa
collected the Kansas ad valorem tax in addition to the otherwise  maximum lawful
price.  The FERC's ruling was appealed to the United States Court of Appeals for
the District of Columbia ("D.C. Circuit"), which held in June 1988 that the FERC
failed to provide a reasoned basis for its findings and remanded the case to the
FERC for further consideration.

        On  December  1,  1993,  the FERC  issued an order  reversing  its prior
ruling,  but limiting the effect of its decision to Kansas ad valorem  taxes for
sales made on or after June 28, 1988.  The FERC  clarified the effective date of
its  decision  by an order  dated May 18,  1994.  The order  clarified  that the
effective date applies to tax bills rendered after June 28, 1988, not sales made
on or after that date.  Numerous  parties  filed appeals on the FERC's action in
the D.C. Circuit.  Various natural gas producers challenged the FERC's orders on
two  grounds:  (1) that the Kansas ad valorem  tax,  properly  understood,  does
qualify for  reimbursement  under the NGPA; and (2) the FERC's ruling should, in
any event, have been applied prospectively.  Other parties challenged the FERC's
orders  on  the  grounds  that  the  FERC's  ruling  should  have  been  applied
retroactively  to December 1, 1978,  the date of the  enactment  of the NGPA and
producers should have been required to pay refunds accordingly.

        The D.C. Circuit issued its decision on August 2, 1996, which holds that
producers  must make refunds of all Kansas ad valorem tax collected with respect
to production  since October 4, 1983 as opposed to June 28, 1988.  Petitions for
rehearing  were  denied on  November  6, 1996.  Various  natural  gas  producers
subsequently  filed a  petition  for writ of  certiori  with the  United  States
Supreme Court  seeking to limit the scope of the potential  refunds to tax bills
rendered on or after June 28, 1988 (the  effective date  originally  selected by
the FERC).  Williams  Natural Gas Company  filed a  cross-petition  for certiori
seeking to impose refund liability back to December 1, 1978. Both petitions were
denied on May 12, 1997.

        The Company and other  producers filed petitions for adjustment with the
FERC on June 24, 1997.  The Company is seeking  waiver or set-off from FERC with
respect  to that  portion  of the  refund  associated  with  (i)  non-recoupable
royalties,  (ii)  non-recoupable  Kansas property taxes based, in part, upon the
higher prices  collected,  and (iii) interest for all periods.  On September 10,
1997,  FERC denied this request,  and on October 10, 1997, the Company and other
producers filed a request for rehearing. Pipelines were given until November 10,

                                       10


<PAGE>



1997 to file  claims on refunds  sought  from  producers  and  refunds  totaling
approximately  $30 million were made against the Company.  The Company is unable
at this time to predict the final outcome of this matter or the amount,  if any,
that will ultimately be refunded. As of September 30, 1998, the Company has paid
$1.4 million and has set aside $29.3 million,  including accrued interest, in an
escrow  account with a similar  provision  for such  litigation  recorded in the
accompanying Consolidated Balance Sheet as of September 30, 1998.

NOTE F.     Commodity Hedge Derivatives

        The Company utilizes various  commodity swap and option contracts to (i)
reduce the effect of the  volatility  of price  changes on the  commodities  the
Company produces and sells,  (ii) support the Company's annual capital budgeting
and expenditure  plans and (iii) lock in prices to protect the economics related
to certain capital projects.

        Crude oil. All material purchase  contracts  governing the Company's oil
production are tied directly or indirectly to NYMEX prices.  The following table
sets forth the  Company's  outstanding  oil hedge  contracts as of September 30,
1998.

<TABLE>
                                                                                              Yearly
                                    First         Second          Third         Fourth      Outstanding
                                   Quarter        Quarter        Quarter        Quarter       Average
                                ------------   ------------   ------------   ------------   ------------
<S>                             <C>            <C>            <C>            <C>            <C>
Daily oil production:
   1998 - Swap Contracts
     Volume (Bbl)                                                                   8,900          8,900
     Price per Bbl                                                           $      19.74   $      19.74

   1998 - Collar Options
     Volume (Bbl)                                                                   2,000          2,000
     Price per Bbl                                                           $18.70-20.65   $18.70-20.65

   1998 - Long Put Options
     Volume (Bbl)                                                                   2,000          2,000
     Price per Bbl                                                           $      18.40   $      18.40

   1999 - Swap Contracts*
     Volume (Bbl)                     12,500         12,500         12,500         12,500         12,500
     Price per Bbl              $      17.86   $      17.86   $      17.86   $      17.86   $      17.86

   1999 - Collar Options**
     Volume (Bbl)                      5,000          5,000          5,000          5,000          5,000
     Price per Bbl              $17.00-19.05   $17.00-19.05   $17.00-19.05   $17.00-19.05   $17.00-19.05
</TABLE>


  *  The counterparties to the 1999 Swap Contracts have the contractual right to
     extend 7,000 barrels per day through the year 2000 at a price per barrel of
     $17.79.
**   Concurrent  with the  Company's  purchase of the 1999 Collar  Options,  the
     Company sold 1999 put options to the  counterparties  for a volume of 5,000
     Bbls per day at a price per  barrel of  $14.50.  Consequently,  there is no
     effective minimum price to be realized from the collar options if the NYMEX
     price falls below $14.50.  The  counterparties  to the 1999 Collar  Options
     have the contractual  right to extend the collar options and the associated
     put options at the same prices through the year 2000.

      The Company  reports  average oil prices per Bbl  including the effects of
oil quality,  gathering and  transportation  costs and the net effect of the oil
hedges.  The following table sets forth the Company's oil prices,  both realized
(excluding  hedge  results) and reported,  and net effects of settlements of oil
price hedges to revenue:

                                      Three months ended    Nine months ended
                                          September 30,       September 30,
                                      ------------------   ------------------
                                        1998       1997      1998       1997
                                      -------    -------   -------    -------

  Average price reported per Bbl      $ 12.97    $ 17.93   $ 13.34    $ 18.70
  Average price realized per Bbl      $ 11.80    $ 18.03   $ 12.30    $ 19.37
  Addition/(reduction) to revenue
    (in millions)                     $   6.2    $   (.4)  $  17.2    $  (6.3)

      Natural Gas.  The Company employs a policy of hedging gas production based
on the index price upon which the gas is actually  sold in order to mitigate the
basis risk between NYMEX prices and actual index prices. The following table

                                       11


<PAGE>



sets forth the  Company's  outstanding  gas hedge  contracts as of September 30,
1998.  Prices included  herein  represent the Company's  weighted  average index
price per MMBtu and, as an additional  point of reference,  the weighted average
price for the  portion  of the  Company's  gas  which is hedged  based on NYMEX.


<TABLE>
                                                                                      Yearly
                                   First       Second        Third       Fourth     Outstanding
                                  Quarter      Quarter      Quarter      Quarter      Average
                                ----------   ----------   ----------   ----------   ----------
<S>                             <C>          <C>          <C>          <C>          <C>
Daily oil production:
   1998 - Swap Contracts
     Volume (Mcf)                                                          51,848       51,848
     Index price per MMBtu                                             $     2.00   $     2.00
     NYMEX price per MMBtu                                             $     2.32   $     2.32

   1998 - Collar Options*
     Volume (Mcf)                                                          11,489       11,489
     Index price per MMBtu                                             $1.64-1.87   $1.64-1.87

   1998 - Long Put Options
     Volume (Mcf)                                                         254,402      254,402
     Index price per MMBtu                                             $     1.91   $     1.91
     NYMEX price per MMBtu                                             $     2.32   $     2.32

   1999 - Swap Contracts**
     Volume (Mcf)                  127,500      149,945      145,000      123,451      136,486
     Index price per MMBtu      $     2.21   $     2.23   $     2.24   $     2.27   $     2.24
     NYMEX price per MMBtu      $     2.39   $     2.39   $     2.39   $     2.39   $     2.39

   1999 - Collar Contracts***
     Volume (Mcf)                  179,827      179,827      179,827      170,991      177,600
     Index price per MMBtu      $2.06-2.65   $2.06-2.60   $2.06-2.60   $2.08-2.65   $2.07-2.63
     NYMEX price per MMBtu      $     2.39   $     2.39   $     2.39   $     2.39   $     2.39

   2000 - Swap  Contracts**
     Volume (Mcf)                   35,000       35,000       35,000       35,000       35,000
     Index price per MMBtu      $     2.41   $     2.41   $     2.41   $     2.41   $     2.41

   2000 - Collar Options****
     Volume (Mcf)                   74,000       74,000       74,000       71,348       73,534
     Index price per MMBtu      $2.17-2.85   $2.17-2.85   $2.17-2.85   $2.19-2.88   $2.18-2.86
</TABLE>

    * Concurrent  with the Company's  purchase of the 1998 Collar  Options,  the
      Company sold 1998 put options to the counterparties for a volume of 11,489
      Mcf per day at an index price of $1.35 per MMBtu.  Consequently,  there is
      no effective  minimum price to be realized from the collar  options if the
      index price falls below $1.35.
  **  The   counterparties  to  the  1999  and  2000  Swap  Contracts  have  the
      contractual  right to extend 35,000 Mcf per day for one additional year at
      prices of $2.40 and $2.41 per Mcf, respectively.
***   Concurrent  with the  Company's  purchase  of certain  of the 1999  Collar
      Options,  the  Company  sold 1999 put  options to the  counterparties  for
      125,100  Mcf per  day at an  average  index  price  of  $1.82  per  MMBtu.
      Consequently,  there is no effective  minimum price to be realized from an
      equal  volume of the 1999  Collar  Options if the index  price falls below
      $1.82.  65,000 Mcf per day of the 1999 Collar  Options and  associated put
      options  sold are  extendable  at the option of the  counterparties  for a
      period of one year at average per Mcf prices of $2.18-$2.79 for the collar
      options and $1.88 for the put options.
****  70,000 Mcf per day of the 2000 Collar  Options are extendable for one year
      at prices of $2.19-$2.89.  Concurrent  with the Company's  purchase of the
      2000  Collar   Options,   the  Company   sold  2000  put  options  to  the
      counterparties  for an equal  volume at an index price of $1.87 per MMBtu.
      Consequently,  there is no minimum  price to be  realized  from the collar
      options if the index price falls  below  $1.87.  70,000 Mcf per day of the
      put options are extendable for one year at a price of $1.89 per MMBtu.

      The Company  reports  average gas prices per Mcf  including the effects of
Btu content,  gathering and  transportation  costs, gas processing and shrinkage
and the net  effect  of the gas  hedges.  The  following  table  sets  forth the
Company's gas prices, both realized (excluding hedge results) and reported,  and
net effects of settlements of gas price hedges to revenue:

                                       12


<PAGE>



                                      Three months ended    Nine months ended
                                          September 30,       September 30,
                                      ------------------   ------------------
                                        1998       1997      1998       1997
                                      -------    -------   -------    -------

   Average price reported per Mcf     $  1.73    $  2.16   $  1.87    $  2.21
   Average price realized per Mcf     $  1.68    $  2.22   $  1.83    $  2.32
   Addition/(reduction) to revenue
     (in millions)                    $   2.5    $  (1.8)  $   4.8    $  (7.9)

NOTE G.     Other Derivatives

        During 1996, Mesa entered into Btu swap agreements covering 13,036 MMBtu
per day from January 1, 1997 through December 31, 2004. Under the terms of these
agreements,  the  Company  will  receive a premium of $.52 per MMBtu over market
natural gas prices from  January 1, 1997 through  December  31, 1998.  Following
this  two-year  period,  the Company will receive 10% of the NYMEX oil price for
the volumes covered for a six-year period  beginning  January 1, 1999 and ending
December 31, 2004. As these derivative contracts do not qualify as hedges, other
expenses in the accompanying  Consolidated  Statement of Operations for the nine
months  ended  September  30,  1998  include  a  $3.0  million  noncash  pre-tax
mark-to-market  adjustment  to the  carrying  value of the Btu swap  agreements.
Other expenses in the accompanying  Consolidated Statement of Operations for the
nine months ended  September  30, 1998 also include  mark-to-market  adjustments
totaling $14.5 million relating to certain foreign currency derivative contracts
acquired from Chauvco that do not qualify for hedge accounting treatment.  These
contracts  will  continue to be  marked-to-market  at the end of each  reporting
period during their respective lives and the effects on the Company's results of
operations in future periods could be significant.

NOTE H.     Reorganization

        In  February  1998,  the  Company  announced  its plans to sell  certain
nonstrategic fields and its intentions to reorganize its operations by combining
its six domestic  operating regions into three geographic  regions:  the Permian
Basin region,  the  MidContinent  region and the onshore and offshore Gulf Coast
region.  In addition,  most of the Company's  administrative  services are being
relocated from Midland,  Texas to Dallas, Texas. Shortly after the announcement,
the Company  formally  notified  the  employees  affected by the  reorganization
whether  they were to be severed or  relocated.  During  the nine  months  ended
September 30, 1998,  the Company has  recognized  severance,  relocation,  lease
termination  and other costs of  approximately  $21.2  million  relating to this
reorganization.

NOTE I.     Pioneer USA

      Pioneer  Natural  Resources  USA, Inc.  ("Pioneer  USA") is a wholly-owned
subsidiary of the Company that has fully and unconditionally  guaranteed certain
debt  securities  of  the  Company.  The  Company  has  not  prepared  financial
statements and related  disclosures for Pioneer USA under separate cover because
management of the Company has determined  that such  information is not material
to investors.  In accordance with practices accepted by the U.S.  Securities and
Exchange Commission ("SEC"),  the Company has prepared  Consolidating  Financial
Statements  in order to  quantify  the  assets of  Pioneer  USA as a  subsidiary
guarantor. The following Consolidating Balance Sheet, Consolidating Statement of
Operations and Consolidating  Statement of Cash Flows present,  on a stand-alone
basis,  financial  information  for  Pioneer  Natural  Resources  Company as the
Parent,  Pioneer USA and the  non-guarantor  subsidiaries  of the  Company.  All
investments  in  subsidiaries  are  presented  using the  equity  method and are
eliminated  in  consolidation.   Pioneer  USA  is  not  restricted  from  making
distributions to the Company.

      Pioneer USA's guarantees of the Company's debt securities were executed as
a result of the merger with Mesa in August 1997. Consequently, the Consolidating
Statements of Operations and Consolidating  Statement of Cash Flows for the nine
months ended September 30, 1997 have not been presented.

                                       13


<PAGE>



                           CONSOLIDATING BALANCE SHEET
                            As of September 30, 1998
                                 (in thousands)
                                   (Unaudited)

                                     ASSETS

<TABLE>
                                           Pioneer
                                           Natural
                                          Resources                      Non-
                                           Company       Pioneer      Guarantor                       The
                                           (Parent)        USA       Subsidiaries   Eliminations    Company
                                          ----------   -----------   ------------   ------------   ----------
<S>                                       <C>          <C>           <C>            <C>            <C>
Current assets:
  Cash and cash equivalents               $       17   $    55,963   $     14,305   $       -      $   70,285
  Restricted cash                                -          25,020            -             -          25,020
  Accounts receivable:
    Trade, net                                    55        33,928          8,657           -          42,640
    Affiliates                                   -          10,382        (10,382)          -             -
    Oil and gas sales                            -          34,720         22,031           -          56,751
  Intercompany notes receivable            2,233,305    (1,808,105)      (425,200)          -             -
  Inventories                                    -          10,163          7,297           -          17,460
  Deferred income taxes                       14,900           -            1,200           -          16,100
  Other current assets                            83         8,203          1,952           -          10,238
                                           ---------    ----------    -----------                   ---------
      Total current assets                 2,248,360    (1,629,726)      (380,140)                    238,494
                                           ---------    ----------    -----------                   ---------
Property, plant and equipment, at cost:
  Oil and gas properties, using the
    successful efforts method of accounting:
    Proved properties                            -       2,833,297      1,066,406           -       3,899,703
    Unproved properties                          -         121,585        343,165           -         464,750
  Accumulated depletion, depreciation and
    amortization                                 -        (699,528)      (147,968)          -        (847,496)
                                           ---------    ----------    -----------                   ---------
                                                 -       2,255,354      1,261,603                   3,516,957
                                           ---------     ---------    -----------                   ---------
Deferred income taxes                        242,815           -         (140,615)          -         102,200
Other property and equipment, net                -          33,326         17,368           -          50,694
Other assets, net                             10,748        35,288         38,245           -          84,281
Investment in subsidiaries                   625,269       139,421           (940)     (763,750)          -  
                                           ---------    ----------    -----------                   ---------
                                          $3,127,192   $   833,663   $    795,521                  $3,992,626
                                           =========    ==========    ===========                   =========

                                       LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current maturities of long-term debt    $      -     $       608   $      1,104   $       -      $    1,712
  Accounts payable:
    Trade                                        315        86,415         21,358           -         108,088
    Affiliates                                    84         5,193           (245)          -           5,032
  Other current liabilities                   15,053        84,928         12,520           -         112,501
                                           ---------    ----------    -----------                   ---------
      Total current liabilities               15,452       177,144         34,737                     227,333
                                           ---------    ----------    -----------                   ---------
Long-term debt, less current maturities    1,884,127            24        280,108           -       2,164,259
Other noncurrent liabilities                     -         145,051         31,544           -         176,595
Deferred income taxes                            (48)          -               48           -             -

Stockholders' equity:
  Partners' Capital                              -             -               22           (22)          -
  Common stock                                   933           -               75            (1)        1,007
  Additional paid-in capital               2,146,213     2,032,175        566,102    (2,393,494)    2,350,996
  Treasury stock, at cost                     (9,911)          -              -             -          (9,911)
  Unearned compensation                          -         (10,101)           -             -         (10,101)
  Retained deficit                          (909,574)   (1,510,630)      (119,137)    1,629,767      (909,574)
  Accumulated other comprehensive income:
    Cumulative translation adjustment            -             -            2,022           -           2,022
                                           ---------    ----------    -----------                   ---------

      Total stockholders' equity           1,227,661       511,444        449,084                   1,424,439

Commitments and contingencies                                                                                

                                          $3,127,192   $   833,663   $    795,521                  $3,992,626
                                           =========    ==========    ===========                   =========
</TABLE>

                                       14


<PAGE>



                                            CONSOLIDATING BALANCE SHEET
                                              As of December 31, 1997
                                                  (in thousands)


                                                      ASSETS

<TABLE>
                                           Pioneer
                                           Natural
                                          Resources                      Non-
                                           Company       Pioneer      Guarantor                       The
                                           (Parent)        USA       Subsidiaries   Eliminations    Company
                                          ----------   -----------   ------------   ------------   ----------
<S>                                       <C>          <C>           <C>            <C>            <C>
Current assets:
  Cash and cash equivalents               $       41   $    49,033    $    22,639   $              $   71,713
  Restricted cash                                -           1,695            -                         1,695
  Accounts receivable:
    Trade, net                                     5        56,424         19,003                      75,432
    Oil and gas sales                            -          82,145         34,355                     116,500
  Intercompany notes receivable            2,088,082    (1,673,443)      (414,639)                        -
  Inventories                                    -          11,677          1,899                      13,576
  Deferred income taxes                       16,700           -              200                      16,900
  Other current assets                           -           9,293          3,079                      12,372
                                           ---------    ----------     ----------                   ---------
      Total current assets                 2,104,828    (1,463,176)      (333,464)                    308,188
                                           ---------    ----------     ----------                   ---------
Property, plant and equipment, at cost:
  Oil and gas properties, using the
    successful efforts method of accounting:
    Proved properties                            -       2,453,750      1,122,221                   3,575,971
    Unproved properties                          -          98,664        446,410                     545,074
  Accumulated depletion, depreciation and
    amortization                                 -        (504,628)      (100,575)                   (605,203)
                                           ---------    ----------     ----------                   ---------
                                                 -       2,047,786      1,468,056                   3,515,842
                                           ---------    ----------     ----------                   ---------
Other property and equipment, net                -          26,096         17,921                      44,017
Other assets, net                              4,705        68,715         28,098       (22,975)       78,543
Investment in subsidiaries                   645,113       284,046            -        (929,159)           -  
                                           ---------    ----------     ----------                   ---------
                                          $2,754,646   $   963,467    $ 1,180,611                  $3,946,590
                                           =========    ==========     ==========                   =========

                                       LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current maturities of long-term debt    $      -     $       538    $    28,228   $   (22,975)   $    5,791
  Undistributed unit purchases                   -           1,695            -                         1,695
  Accounts payable:
    Trade                                        663       113,432         62,602                     176,697
    Affiliates                                    90         9,904            -                         9,994
  Other current liabilities                    5,771        59,953          1,651                      67,375
                                           ---------    ----------     ----------                   ---------

      Total current liabilities                6,524       185,522         92,481                     261,552
                                           ---------    ----------     ----------                   ---------

Long-term debt, less current maturities    1,700,500           565        242,653                   1,943,718
Other noncurrent liabilities                     -         140,668         39,607                     180,275
Deferred income taxes                       (216,253)          -          228,453                      12,200

Stockholders' equity:
  Partners' Capital                              -             -              401          (401)          -
  Common stock                                   901             1            110            (2)        1,010
  Additional paid-in capital               2,058,935     2,049,072        739,518    (2,487,533)    2,359,992
  Treasury stock, at cost                        (21)          -              -                           (21)
  Unearned compensation                          -         (16,196)           -                       (16,196)
  Retained deficit                          (795,940)   (1,396,165)      (162,612)    1,558,777      (795,940)
                                           ---------    -----------    ----------                  ----------

      Total stockholders' equity           1,263,875       636,712        577,417                   1,548,845

Commitments and contingencies                                                                                

                                          $2,754,646   $   963,467    $ 1,180,611                  $3,946,590
                                           =========    ==========    ===========                   =========
</TABLE>

                                       15


<PAGE>



          CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
                   For the Nine Months Ended September 30, 1998
                                   (in thousands)
                                     (Unaudited)


<TABLE>
                                  Pioneer
                                  Natural
                                 Resources                     Non-       Consolidated
                                  Company       Pioneer     Guarantor        Income                        The
                                  (Parent)        USA      Subsidiaries   Tax Benefit    Eliminations    Company
                                 ----------   ----------   ------------   ------------   ------------   ---------- 
<S>                              <C>          <C>          <C>            <C>            <C>            <C>
Revenues:
  Oil and gas                    $      -     $  408,885    $   145,593     $      -       $            $  554,478
  Interest and other                     38        7,433             84            -             636         8,191
  Gain (loss) on disposition of
    assets, net                         -           (168)            32            -                          (136)
                                  ---------    ---------     ----------      ---------                   ---------
                                         38      416,150        145,709            -                       562,533
                                  ---------    ---------     ----------      ---------                   ---------
Costs and expenses:
  Oil and gas production                -        124,411         45,097            -                       169,508
  Depletion, depreciation and
    amortization                        -        163,743         83,465            -                       247,208
  Exploration and abandonments          -         52,335         33,814            -                        86,149
  General and administrative          1,424       45,161         10,063            -                        56,648
  Reorganization                        -         21,158            -              -                        21,158
  Interest                          (14,309)     121,196         15,430            -                       122,317
  Equity (income) loss from
    subsidiary                      143,197       (3,929)           -              -        (139,268)          -
  Other                                  14        3,857         13,993            -             636        18,500
                                  ---------    ---------     ----------      ---------                   ---------
                                    130,326      527,932        201,862            -                       721,488
                                  ---------    ---------     ----------      ---------                   ---------
Loss before income taxes           (130,288)    (111,782)       (56,153)           -                      (158,955)
Income tax benefit                      -            -           28,667         26,733                      55,400
                                  ---------    ---------     ----------      ---------                   ---------
Net loss                           (130,288)    (111,782)       (27,486)        26,733                    (103,555)

Other comprehensive income:
  Translation adjustment                -            -            2,022            -                         2,022
                                  ---------    ---------     ----------      ---------                   ---------
    Comprehensive loss           $ (130,288)  $ (111,782)   $   (25,464)    $   26,733                  $ (101,533)
                                  =========    =========     ==========      =========                   =========
</TABLE>

                                       16


<PAGE>



                      CONSOLIDATING STATEMENT OF CASH FLOWS
                  For the Nine Months ended September 30, 1998
                                 (in thousands)
                                   (Unaudited)



<TABLE>
                                  Pioneer
                                  Natural
                                 Resources                     Non-       Consolidated
                                  Company       Pioneer     Guarantor        Income                        The
                                  (Parent)        USA      Subsidiaries   Tax Benefit    Eliminations    Company
                                 ----------   ----------   ------------   ------------   ------------   ----------
<S>                              <C>          <C>          <C>            <C>            <C>            <C>
Cash flows from operating
 activities:
  Net loss                       $ (130,288)  $ (111,782)   $  (27,486)    $   26,733     $ 139,268    $  (103,555)
  Adjustments to reconcile net
    loss to net cash provided by
    operating activities:
      Depletion, depreciation and
        amortization                    -        163,743        83,465            -                        247,208
      Exploration and abandonments      -         38,064        27,413            -                         65,477
      Deferred income taxes             -            -         (26,267)       (26,733)                     (53,000)
      Gain on disposition of
        assets, net                     -            175           (39)           -                            136
      Other noncash items           150,780        9,867        16,666            -        (139,268)        38,045
  Change in working capital        (170,501)     208,774        33,924            -                         72,197
                                  ---------    ---------     ---------      ---------                   ----------
       Net cash provided by (used
         in) operating activities  (150,009)     308,841       107,676            -                        266,508
                                  ---------    ---------     ---------      ---------                   ----------
Cash flows from investing
 activities:
  Payment for acquisitions, net
    of cash acquired                    -           (424)         -              -                            (424)
  Proceeds from disposition of
    assets                              -         16,900        2,782            -                          19,682
  Additions to oil and gas
    properties                          -       (268,132)    (159,806)           -                        (427,938)
  Other property additions, net         -        (16,903)      (6,487)           -                         (23,390)
                                  ---------    ---------     --------      ---------                    ----------
          Net cash used in
            investing activities        -       (268,559)    (163,511)           -                        (432,070)
                                  ---------    ---------     --------      ---------                    ----------
Cash flows from financing
 activities:
  Borrowings under long-term debt   805,785          -        117,125            -                         922,910
  Principal payments on long-term
    debt                           (628,635)        (476)     (65,391)           -                        (694,502)
  Payment of noncurrent liabilities     -        (32,873)      (4,128)           -                         (37,001)
  Dividends                         (10,079)         -            -              -                         (10,079)
  Purchase of treasury stock         (9,890)         -            -              -                          (9,890)
  Deferred loan fees/issuance
    costs                            (7,196)          (3)         -              -                          (7,199)
                                  ---------    ----------    --------      ---------                    ----------
          Net cash provided by
            (used in) financing
            activities              149,985      (33,352)      47,606            -                         164,239
                                  ---------    ----------    --------      ---------                    ----------
Net increase (decrease) in cash
  and cash equivalents                  (24)       6,930       (8,229)           -                          (1,323)
Effect of exchange rate changes
  on cash and cash equivalents          -            -           (105)           -                            (105)
Cash and cash equivalents,
  beginning of period                    41       49,033       22,639            -                          71,713
                                  ---------    ----------    --------      ---------                    ----------
Cash and cash equivalents, end
  of period                      $       17   $   55,963    $  14,305     $     -                      $    70,285
                                  =========    =========     ========      =========                    ==========
</TABLE>

                                       17


<PAGE>


                        PIONEER NATURAL RESOURCES COMPANY



I
tem 2.     Management's Discussion and Analysis of Financial Condition and
              Results of Operations(1)

Financial Performance

       The  Company  reported a net loss of $43.9  million  ($.44 per share) and
$103.6 million  ($1.04 per share) for the three and nine months ended  September
30, 1998,  as compared to net loss of $12.6  million  ($.21 per share) and a net
income of $13.5  million  ($.31 per  share) for the same  periods  in 1997.  The
Company's results have been significantly impacted by declines in 1998 commodity
prices as compared to 1997 price levels.  For a discussion  on commodity  prices
and other factors  impacting the three and nine months ended September 30, 1998,
see "Trends and Uncertainties" and "Results of Operations", below.

       Net cash provided by operating  activities  was $106.1 million and $266.5
million  during the three and nine months ended  September 30, 1998, as compared
to net cash provided by operating activities of $54.5 million and $179.1 million
for the same periods in 1997. These increases are primarily attributable to cash
flows generated by the oil and gas properties  acquired from Mesa and Chauvco in
1997,  offset,  to some extent,  by decreased  commodity prices and increases in
interest expense, general and administrative expenses and reorganization costs.

       The  Company  strives  to  maintain  its  outstanding  indebtedness  at a
moderate  level in order to provide  sufficient  financial  flexibility  to fund
future  opportunities.  The Company's total book capitalization at September 30,
1998 was $3.6 billion,  consisting of total  long-term  debt of $2.2 billion and
stockholders'  equity  of $1.4  billion.  Debt as a  percentage  of  total  book
capitalization was 60% at September 30, 1998, as compared to 56% at December 31,
1997.

Drilling Highlights

       During the first three quarters of 1998, the Company  participated in the
drilling of 80 gross exploration and extension and 389 gross development  wells,
including 260 in the Permian Basin  region,  30 in the Gulf Coast region,  64 in
the MidContinent region, 61 in Argentina, 49 in Canada and five in South Africa.
Of these  wells,  129 were in progress at December  31,  1997.  Of the 469 total
wells  drilled  during  the nine  months  ended  September  30,  1998,  436 were
completed  successfully which resulted in a 93% success rate. In addition to the
wells  completed in the first three  quarters of 1998, the Company had 102 wells
in progress at September 30, 1998.

       Permian  Basin.  During  1998,  the  majority  of the  drilling  has been
development  drilling in the Spraberry units of West Texas.  In particular,  the
Company has focused its  activities  on the  Spraberry  Driver Unit where it has
completed  57 wells  during  the first nine  months of 1998.  In  addition,  the
Company has approved the  acceleration of another  100-well  drilling program in
the Driver Unit starting in the fourth quarter of 1998. The  acceleration of the
drilling  into 1998 is  primarily  attributable  to the  Company  being  able to
negotiate lower drilling rates.

       Gulf  Coast.  During the first three  quarters  of 1998,  the Company has
completed  seven  wells  in the  Lopeno  field  with  a  resulting  increase  in
production of more than 30 MMcf of gas per day, net to the  Company's  interest.
In addition, two wells were drilled and placed on production in the Pawnee field
at a combined rate of three MMcf of gas per day, net to the Company's interest.

       Mid-Continent.  In the West  Panhandle  field,  Pioneer  drilled 57 wells
during the first three quarters of 1998. Through September 30, 1998, 40 of these
wells have been  connected  and are  producing at a combined  gross rate of nine
MMcf per day.  Pioneer holds a 77% interest and plans to drill an additional ten
wells this year.

       Argentina. In the Neuquen Basin of Argentina,  the Company has drilled 59
wells with initial  production  rates from 43 completed  wells of  approximately
3,300 BOE per day. In addition, the Company's Dorsal gas gathering expansion was
completed in June,  resulting in increased production of 27 MMcf of gas per day.
An additional ten wells are planned for the remainder of 1998.

       Canada.  In the  Chinchaga gas field in  Northeast British Columbia,  the
Company's net production is currently  averaging 28 MMcf per day, an increase of
22 MMcf per day from 1997 year-end levels.  Pioneer drilled 19 development wells

                                       18


<PAGE>


                        PIONEER NATURAL RESOURCES COMPANY


and  six  delineation  wells  and  installed  a 50 MMcf  per day gas  processing
facility  and  gathering  system  during its  winter-access  program,  more than
tripling  production  from the field.  Preparations  are  underway  for the 1999
winter drilling program with access expected to the area in early December.

Pending Asset Divestiture

       In September  1998, the Company signed a purchase and sale agreement (the
"Agreement") to sell certain  non-strategic oil and gas properties for estimated
proceeds of $410 million. The Agreement will be effective October 1, 1998 and is
anticipated to close by December 31, 1998. The consummation of this Agreement is
primarily  dependent upon the buyer's successful ability to finance the purchase
as well as certain other  contingencies  defined in the Agreement.  As a result,
there can be no assurance that the divestiture of any or all of these properties
will be completed or that the estimated  proceeds will be realized in accordance
with the Agreement.  (See Note C of Notes to Consolidated  Financial  Statements
included in "Item 1. Financial Statements.")

       If the Agreement is consummated,  the proceeds will be utilized to reduce
the Company's  outstanding  bank  indebtedness.  Also,  once the  divestiture is
completed,  the Company will have  significantly  fewer domestic  fields.  These
fields will  represent the Company's core domestic  assets that have  production
growth opportunities through additional development and exploration activities.

1998 Reorganization

       Coincidentally  with  the  property   divestiture  program  announced  in
February 1998, the Company announced its intentions to reorganize its operations
to take  advantage of the economies of scale  provided by the  concentration  of
reserves in a small number of fields. Consequently, the Company combined its six
domestic regions into three geographic  regions:  the Permian Basin region,  the
MidContinent region and the onshore and offshore Gulf Coast region. In addition,
most of the Company's  administrative services are being relocated from Midland,
Texas to Dallas,  Texas.  Shortly after the  announcement,  the Company formally
notified the employees  affected by the  reorganization  whether they were to be
severed or  relocated.  During the nine months ended  September  30,  1998,  the
Company has recognized severance,  relocation, lease termination and other costs
of approximately $21.2 million relating to this  reorganization.  (See Note H of
Notes to  Consolidated  Financial  Statements  included  in  "Item 1.  Financial
Statements".)

Trends and Uncertainties

       Commodity  Prices.  The oil and gas prices that the  Company  reports are
based on the market price received for the commodity  adjusted by the results of
the Company's  hedging  activities.  Historically,  worldwide oil and gas prices
have been extremely  volatile and subject to significant  changes in response to
real and perceived  conditions  in world  politics,  weather  patterns and other
fundamental supply and demand variables.

       Since the third  quarter  of 1997,  there has been a  declining  trend in
world oil prices  and,  more  recently,  natural  gas prices  have  declined  in
comparison  to 1997  levels.  The  benchmark  daily  average  NYMEX  West  Texas
Intermediate closing price has declined 28% in each of the three and nine months
ended  September 30, 1998, in comparison  with the same periods ended  September
30, 1997;  and, the benchmark  daily average NYMEX Henry Hub closing natural gas
price has declined  19% and 8% during the three and nine months ended  September
30, 1998, respectively,  in comparison with the same periods ended September 30,
1997.

       The  declines  in  commodity  prices  have  had,  and  continue  to have,
significant  impact on the  Company's  results  and cash flows from  operations,
capital spending programs and general financial  conditions.  Consequently,  the
Company is in the process of making organizational changes that are necessary to
remain   competitive   in  the  current   depressed   price   environment.   The
organizational changes include closing the Company's Oklahoma City, Oklahoma and
Houston, Texas offices and reducing the Company's current staffing.

                                       19


<PAGE>


                        PIONEER NATURAL RESOURCES COMPANY


       To mitigate  the impact of changing  prices on the  Company's  results of
operations,  cash flows and financial  condition,  the Company from time to time
enters into commodity  derivative  contracts as hedges against oil and gas price
risk (see Note F of Notes to Consolidated Financial Statements included in "Item
1. Financial Statements").

       Impairments.   In  accordance  with  Statement  of  Financial  Accounting
Standards No. 121,  "Accounting for the Impairment of Long-Lived  assets and for
Long-Lived  Assets to be Disposed Of", ("SFAS 121"), the Company reviews its oil
and gas properties for impairment  whenever events and circumstances  indicate a
decline in the recoverability of the carrying value of the Company's assets.

       The Company is  currently  in the process of  completing  its oil and gas
reserve study and assessing performance issues relative to certain properties in
East Texas and the Gulf Coast.  Both the  declining oil and gas price trends and
performance  issues may be indicative of a decline in the  recoverable  value of
the Company's  assets.  As a result,  asset  impairments  may be required in the
fourth quarter of 1998. The amount of impairments,  if any, cannot be determined
until the reserve study and performance assessments are complete.

       The  conditions  discussed  above  are  also  relevant  to the  Company's
continuing  review of its deferred tax asset.  As the Company  completes its oil
and gas reserve  study,  it will also  complete  its review of the  deferred tax
asset for a potential  valuation  allowance.  The amount, if any, of a potential
valuation allowance cannot be determined until the reserve study and performance
assessments are complete. (See "Income Taxes", below.)

       Year 2000 Project  Readiness.  Historically,  many computer programs have
been  developed  that use only the last two digits in a date to refer to a year.
As the year 2000 nears,  the  inability of such  computer  programs and embedded
technologies  to  distinguish  between  "1900"  and "2000" has given rise to the
"Year  2000"  problem.   Theoretically,   such  computer  programs  and  related
technology  could  fail  outright,  or  communicate   inaccurate  data,  if  not
remediated or replaced.  With the  proliferation of electronic data interchange,
the Year 2000 problem  represents a  significant  exposure to the entire  global
community, the full extent of which cannot be accurately assessed.

       In proactive response to the Year 2000 problem, the Company established a
"Year 2000" project to assess,  to the extent possible,  the Company's  internal
Year 2000 problem;  to take remedial actions necessary to minimize the Year 2000
risk exposure to the Company and significant third parties with whom it has data
interchange;  and, to test its systems and processes once remedial  actions have
been taken.  The Company has contracted  with IBM Global Services to perform the
assessment and remedial phases of its Year 2000 project.

       The  assessment  phase of the Company's Year 2000 project is 85% complete
and has included, but is not limited to, the following procedures:

o      the identification of  necessary remediation,  upgrade and/or replacement
       of existing information technology applications and systems;

o      the  assessment  of   non-information   technology  exposures,   such  as
       telecommunications systems, security systems,
       elevators and process control equipment;

o      the  initiation  of inquiry and  dialogue  with  significant  third party
       business partners, customers and suppliers in an effort to understand and
       assess their Year 2000  problems,  readiness and potential  impact on the
       Company and its Year 2000 problem;

o      the  implementation  of   processes  designed   to  reduce  the  risk  of
       reintroduction  of  Year 2000  problems  into the  Company's  systems and
       business processes; and,

o      the formulation of  contingency plans  for  mission-critical  information
       technology systems.

       The Company  expects to complete  the  assessment  phase of its Year 2000
project by the end of the first  quarter of 1999 but is being delayed by limited
responses received  on inquiries made  of third party businesses.  To date,  the

                                       20


<PAGE>


                        PIONEER NATURAL RESOURCES COMPANY


Company has distributed Year 2000 problem inquiries to over 500 entities and has
received responses to approximately 10% of those inquiries.

       The remedial  phase of the Company's  Year 2000 project is  approximately
40% complete,  subject to the results of the third party inquiry assessments and
the  testing  phase.   The  remedial  phase  has  included  the  upgrade  and/or
replacement  of certain  application  and  hardware  systems.  The  Company  has
upgraded its Artesia general ledger  accounting  systems through remedial coding
and is currently  testing this system for Year 2000 compliance.  The remediation
of  non-information  technology  is expected to be completed  by  mid-1999.  The
Company's  Year  2000  remedial  actions  have  not  delayed  other  information
technology projects or upgrades.

       The testing phase of the Company's Year 2000 project is on schedule.  The
Company  expects to complete the testing of the Artesia system upgrades by March
1999 and all other  information  technology  systems by May 1999. The testing of
the non-information  technology  remediation is scheduled to be completed by the
end of September 1999.

       The Company expects that its total costs related to the Year 2000 problem
will approximate $3.5 million,  of which  approximately  $500 thousand will have
been incurred to replace  non-compliant  information  technology  systems. As of
September 30, 1998, the Company's  total costs incurred on the Year 2000 problem
were $1.5 million, of which $200 thousand were incurred to replace non-compliant
systems.  The Company intends to use its working capital to pay for the costs of
the Year 2000 projects.

       The  risks  associated  with the Year 2000  problem  are  significant.  A
failure to remedy a critical Year 2000 problem  could have a materially  adverse
affect on the Company's  results of  operations  and  financial  condition.  The
problems  which may be  encountered  as a result of a Year  2000  problem  could
include  information  and  non-information   system  failures,  the  receipt  or
transmission of erroneous  data, lost data or a combination of similar  problems
of a  magnitude  that  cannot  be  accurately  assessed  at  this  time.  In the
assessment phase of the Company's Year 2000 project, contingency plans are being
designed to mitigate the exposures noted above. However, given the uncertainties
regarding the scope of the Year 2000 problem and the  compliance of  significant
third  parties,  there can be no  assurance  that  contingency  plans  will have
anticipated all Year 2000 scenarios.

       Accounting  for  Derivatives.  In June  1998,  the  Financial  Accounting
Standards Board issued Statement of Accounting Standards No. 133 "Accounting for
Derivative   Instruments  and  Hedging   Activities"   ("SFAS  133").  SFAS  133
establishes  accounting  and  reporting  standards for  derivative  instruments,
including   certain   derivative   instruments   embedded  in  other  contracts,
(collectively  referred  to as  derivatives)  and  for  hedging  activities.  It
requires  that  an  entity   recognize  all  derivatives  as  either  assets  or
liabilities in the statement of financial position and measure those instruments
at fair value.  If certain  conditions are met, a derivative may be specifically
designated  as (a) a hedge of the  exposure  to  changes  in the fair value of a
recognized asset or liability or an unrecognized firm commitment, (b) a hedge of
the exposure to variable cash flows of a forecasted transaction,  or (c) a hedge
of the foreign currency exposure of a net investment in a foreign operation,  an
unrecognized   firm   commitment,   an   available-for-sale   security,   or   a
foreign-currency-denominated forecasted transaction.

       SFAS 133 is effective for all fiscal  quarters of fiscal years  beginning
after June 15, 1999.  The Company has not determined  what effect,  if any, SFAS
133 will have on its consolidated financial statements.

                                       21


<PAGE>


                        PIONEER NATURAL RESOURCES COMPANY

Results of Operations

Oil and Gas Production.

     The following  tables  reflect the activities for the Company's oil and gas
properties for the nine months ended September 30, 1998 and 1997:

<TABLE>
                                                           Nine Months Ended September 30, 1998
                                           -----------------------------------------------------------
                                             United                              Other
                                             States      Canada    Argentina   Foreign(b)     Total
                                           ----------   --------   ---------   ----------   ----------
<S>                                        <C>          <C>        <C>         <C>          <C>
Revenues:
  Oil and gas                              $  454,339   $ 49,808   $  50,331   $      -     $  554,478
  Gain on disposition of oil and gas
    properties, net                              (117)       -           -            -           (117)
                                            ---------    -------    --------    ---------    ---------
                                              454,222     49,808      50,331          -        554,361
                                            ---------    -------    --------    ---------    ---------
Costs and expenses:
  Oil and gas production                     (134,292)   (19,303)    (15,913)         -       (169,508)
  Depletion                                  (176,944)   (28,390)    (31,729)         -       (237,063)
  Exploration and abandonments                (16,774)    (4,526)     (7,437)      (9,050)     (37,787)
  Geological and geophysical                  (25,136)   (11,221)     (8,689)      (3,316)     (48,362)
                                            ---------    --------   --------    ---------    ---------
                                             (353,146)   (63,440)    (63,768)     (12,366)    (492,720)
                                            ---------    --------   --------    ---------    ---------
    Operating profit (loss) (excluding
       general and administrative expenses
       and income taxes)                   $  101,076   $(13,632)  $ (13,437)  $  (12,366)  $   61,641
                                            =========    =======    ========    =========    =========
Production:
  Oil (MBbls)                                  11,568      2,563       2,378          -         16,509
  NGLs (MBbls)                                  7,616        207         169          -          7,992
  Gas (MMcf)                                  105,481     13,739      19,432          -        138,652
  Total (MBOE)                                 36,765      5,059       5,785          -         47,609
Average daily production:
  Oil (Bbls)                                   42,374      9,387       8,710          -         60,471
  NGLs (Bbls)                                  27,900        756         618          -         29,274
  Gas (Mcf)                                   386,378     50,328      71,178          -        507,884
Average oil price (per Bbl)                $    14.20   $  11.30   $   11.37   $      -     $    13.34
Average NGL price (per Bbl)                $     9.38   $   9.84   $   10.86   $      -     $     9.42
Average gas price (per Mcf)                $     2.07   $   1.37   $    1.10   $      -     $     1.87
Costs (per BOE):
  Lease operating expense                  $     3.01   $   3.73   $    2.59   $      -     $     3.04
  Production taxes                         $      .51   $    -     $     .16   $      -     $      .41
  Workover costs                           $      .14   $    .09   $     -     $      -     $      .11
                                            ---------    -------    --------    ---------    ---------
    Total production costs                 $     3.66   $   3.82   $    2.75   $      -     $     3.56
                                            =========    =======    ========    =========    =========
  Depletion                                $     4.81   $   5.61   $    5.48   $      -     $     4.98

                                                           Nine Months Ended September 30, 1997
                                           -----------------------------------------------------------
                                             United                              Other
                                             States      Canada    Argentina   Foreign(b)     Total
                                           ----------   --------   ---------   ----------   ----------
Revenues:
  Oil and gas                              $  346,756   $    -     $   2,224   $      -     $  348,980
  Gain on disposition of oil and gas
    properties, net (a)                         1,068        -           -            -          1,068
                                            ---------    -------    --------    ---------    ---------
                                              347,824        -         2,224          -        350,048
                                            ---------    -------    --------    ---------    ---------
Costs and expenses:
  Oil and gas production                      (90,998)       -          (676)         -        (91,674)
  Depletion                                  (120,322)       -          (980)         -       (121,302)
  Exploration and abandonments                (19,821)       -          (252)         -        (20,073)
  Geological and geophysical                  (11,691)       -        (1,261)      (1,285)     (14,237)
                                            ---------    -------    --------    ---------    ---------
                                             (242,832)       -        (3,169)      (1,285)    (247,286)
                                            ---------    -------    --------   ----------    ---------
    Operating profit (loss) (excluding
       general and administrative expenses
       and income taxes)                   $  104,992   $    -     $    (945)  $   (1,285)  $  102,762
                                            =========    =======    ========    =========    =========
Production:
  Oil (MBbls)                                   9,314        -           111          -          9,425
  NGLs (MBbls)                                  1,151        -           -            -          1,151
  Gas (MMcf)                                   71,284        -           -            -         71,284
  Total (MBOE)                                 22,346        -           111          -         22,457
Average daily production:
  Oil (Bbls)                                   34,117        -           408          -         34,525
  NGLs (Bbls)                                   4,214        -           -            -          4,214
  Gas (Mcf)                                   261,113        -           -            -        261,113
Average oil price (per Bbl)                $    18.69   $    -     $   19.96   $      -     $    18.70
Average NGL price (per (Bbl)               $    12.89   $    -     $     -     $      -     $    12.89
Average gas price (per Mcf)                $     2.21   $    -     $     -     $      -     $     2.21
Costs (per BOE):
  Lease operating expense                  $     2.92   $    -     $    5.86   $      -     $     2.94
  Production taxes                         $      .86   $    -     $     .21   $      -     $      .85
  Workover costs                           $      .29   $    -     $     -     $      -     $      .29
                                            ----------    -------   --------    ---------    ---------
    Total production costs                 $     4.07   $    -     $    6.07   $      -     $     4.08
                                            ==========    =======   ========    =========    =========

  Depletion                                $     5.38   $    -     $    8.83   $      -     $     5.40
</TABLE>


                                       22


<PAGE>


                        PIONEER NATURAL RESOURCES COMPANY


<TABLE>
                                                       Three Months Ended September 30, 1998
                                           -----------------------------------------------------------
                                             United                              Other
                                             States      Canada    Argentina   Foreign(b)     Total
                                           ----------   --------   ---------   ----------   ----------
<S>                                        <C>          <C>        <C>         <C>          <C>
Revenues:
  Oil and gas                              $  139,247   $ 16,407   $  17,808   $      -     $  173,462
  Loss on disposition of oil and gas
    properties, net                              (391)       -           -            -           (391)
                                            ---------    -------    --------    ---------    ---------
                                              138,856     16,407      17,808          -        173,071
                                            ---------    -------    --------    ---------    ---------
Costs and expenses:
  Oil and gas production                      (45,812)    (6,930)     (5,011)         -        (57,753)
  Depletion                                   (62,323)    (9,017)    (12,197)         -        (83,537)
  Exploration and abandonments                (10,017)      (536)     (2,111)      (5,114)     (17,778)
  Geological and geophysical                   (7,532)    (3,268)     (5,784)      (1,265)     (17,849)
                                            ---------    -------    --------    ---------    ---------
                                             (125,684)   (19,751)    (25,103)      (6,379)    (176,917)
                                            ---------    --------   --------    ---------    ---------
    Operating profit (loss) (excluding
       general and administrative expenses
       and income taxes)                   $   13,172   $ (3,344)  $  (7,295)  $   (6,379)  $   (3,846)
                                            =========    =======    ========    =========    =========
Production:
  Oil (MBbls)                                   3,746        806         744          -          5,296
  NGLs (MBbls)                                  2,589         76          57          -          2,722
  Gas (MMcf)                                   34,202      5,409       7,780          -         47,391
  Total (MBOE)                                 12,036      1,783       2,097          -         15,916
Average daily production:
  Oil (Bbls)                                   40,717      8,761       8,078          -         57,556
  NGLs (Bbls)                                  28,146        821         621          -         29,588
  Gas (Mcf)                                   371,757     58,793      84,570          -        515,120
Average oil price (per Bbl)                $    13.71   $  10.56   $   11.88   $      -     $    12.97
Average NGL price (per Bbl)                $     8.31   $   7.84   $    8.24   $      -     $     8.30
Average gas price (per Mcf)                $     1.94   $   1.35   $    1.09   $      -     $     1.73
Costs (per BOE):
  Lease operating expense                  $     3.20   $   3.73   $    2.25   $      -     $     3.13
  Production taxes                         $      .49   $    -     $     .14   $      -     $      .39
  Workover costs                           $      .12   $    .15   $     -     $      -     $      .11
                                            ---------    -------    --------    ---------    ---------
    Total production costs                 $     3.81   $   3.88   $    2.39   $      -     $     3.63
                                            =========    =======    ========    =========    =========

  Depletion                                $     5.18   $   5.06   $    5.82   $      -     $     5.25

                                                       Three Months Ended September 30, 1997
                                           -----------------------------------------------------------
                                             United                              Other
                                             States      Canada    Argentina   Foreign(b)     Total
                                           ----------   --------   ---------   ----------   ----------
Revenues:
  Oil and gas                              $  149,673   $    -     $     681   $      -     $  150,354
  Gain on disposition of oil and gas
    properties, net (a)                            (3)       -           -            -             (3)
                                            ---------    -------    --------    ---------    ---------
                                              149,670        -           681          -        150,351
                                            ---------    -------    --------    ---------    ---------
Costs and expenses:
  Oil and gas production                      (41,787)       -          (216)         -        (42,003)
  Depletion                                   (64,865)       -          (267)         -        (65,132)
  Exploration and abandonments                 (8,410)       -           (32)         -         (8,442)
  Geological and geophysical                   (5,900)       -          (327)        (844)      (7,071)
                                            ---------    -------    --------    ---------    ---------
                                             (120,962)       -          (842)        (844)    (122,648)
                                            ---------    -------    --------    ---------    ---------
    Operating profit (loss) (excluding
       general and administrative expenses
       and income taxes)                   $   28,708   $    -     $    (161)  $     (844)  $   27,703
                                            =========    =======    ========    =========    =========
Production:
  Oil (MBbls)                                   3,635        -            37          -          3,672
  NGLs (MBbls)                                  1,151        -           -            -          1,151
  Gas (MMcf)                                   32,327        -           -            -         32,327
  Total (MBOE)                                 10,174        -            37          -         10,211
Average daily production:
  Oil (Bbls)                                   39,509        -           403          -         39,912
  NGLS (Bbls)                                  12,506        -           -            -         12,506
  Gas (Mcf)                                   351,384        -           -            -        351,384
Average oil price (per Bbl)                $    17.98   $    -     $   18.36   $      -     $    17.93
Average oil price (per Bbl)                $    12.89   $    -     $     -     $      -     $    12.89
Average gas price (per Mcf)                $     2.16   $    -     $     -     $      -     $     2.16
Costs (per BOE):
  Lease operating expense                  $     3.11   $    -     $    5.66   $      -     $     3.11
  Production taxes                         $      .78   $    -     $     .16   $      -     $      .78
  Workover costs                           $      .22   $    -     $     -     $      -     $      .22
                                            ---------    -------    --------    ---------    ---------
    Total production costs                 $     4.11   $    -     $    5.82   $      -     $     4.11
                                            =========    =======    ========    =========    =========

  Depletion                                $     6.38   $    -     $    7.22   $      -     $     6.38
</TABLE>

- ---------------
(a) The 1997 amounts do not include the gain related to the  disposition  of the
    Company's  subsidiary  which owned an interest in oil and gas  properties in
    Turkey.
(b) Other  foreign  amounts  primarily  relate  to  exploratory   activities  in
    Guatemala and South Africa.
                                       23


<PAGE>


                        PIONEER NATURAL RESOURCES COMPANY


       Oil and Gas Revenues. Revenues from oil and gas operations totaled $173.5
million and $554.5  million for the three and nine months  ended  September  30,
1998 compared to $150.4 million and $349.0 million for the same periods in 1997,
representing an increase of 15% and 59%, respectively. The increase is primarily
attributable  to oil and gas  production  added from the oil and gas  properties
acquired  from Mesa and Chauvco and the results of the  Company's  1998 drilling
program, offset by substantial declines in commodity prices.

       Parker  &  Parsley  historically  accounted  for  processed  natural  gas
production as wellhead  production  on a wet gas basis while Mesa  accounted for
processed natural gas production in two components:  natural gas liquids and dry
residue gas. The combined  entities own three major gas  processing  facilities,
and the  majority  of the gas  processed  by  these  facilities  is owned by the
Company and produced by Company-operated properties.  Consequently,  the Company
now accounts for natural gas production as processed natural gas liquids and dry
residue gas, and separate  product  volumes will not be  comparable  for periods
prior  to  September  30,  1997.  Also,  prices  for gas  products  will  not be
comparable  as the price per Mcf for  natural  gas for the three and nine months
ended September 30, 1998 is the price received for dry residue gas and the price
per Mcf for  natural gas prior to August 1997 is a price for natural gas liquids
combined with dry residue gas.

       On a BOE basis,  production  increased  by 56% and 112% for the three and
nine months  ended  September  30, 1998,  respectively,  as compared to the same
periods in 1997.  The  additional  production  volumes from the Mesa  properties
contributed  approximately  28% and 51% of  production  growth  and the  Chauvco
properties  contributed  approximately 68% and 43% for the three and nine months
ended  September  30, 1998,  respectively.  The remainder of the increases are a
direct  result of the successes of the Company's  exploration  and  exploitation
efforts.  Such production  growth becomes  particularly  evident in light of the
fact that a portion of the average daily oil and gas production for 1997 related
to properties included in the 1997 sale of certain nonstrategic domestic assets.
Excluding  production  associated  with assets sold during 1997 and the Mesa and
Chauvco properties acquired in 1997, on a BOE basis, production increased 6% and
9% for the three and nine  months  ended  September  30, 1998 as compared to the
same periods in 1997.

       The  average  oil price for the nine  months  ended  September  30,  1998
decreased  29% (from  $18.70 per Bbl to $13.34 per Bbl for the nine months ended
September 30, 1997 and 1998, respectively);  the average NGL price decreased 27%
(from  $12.89 per Bbl to $9.42 per Bbl for the nine months ended  September  30,
1997 and 1998,  respectively);  and, the average gas price  decreased  15% (from
$2.21 per Mcf to $1.87 per Mcf for the nine months ended  September 30, 1997 and
1998,  respectively).  During the three months  ended  September  30, 1998,  the
average  prices of oil, NGL and gas received  decreased 28% (from $17.93 per Bbl
during the third  quarter of 1997 to $12.97 per Bbl during the third  quarter of
1998),  36% (from  $12.89 per Bbl during the third  quarter of 1997 to $8.30 per
Bbl during the third  quarter of 1998),  and 20% (from  $2.16 per Mcf during the
third  quarter  of 1997 to $1.73  per Mcf  during  the third  quarter  of 1998),
respectively.

       Hedging Activities

       The oil and gas prices that the  Company  reports are based on the market
price  received  for the  commodities  adjusted by the results of the  Company's
hedging  activities.  The  Company  from  time to  time  enters  into  commodity
derivative  contracts  (swaps,  futures and  options) in order to (i) reduce the
effect  of the  volatility  of price  changes  on the  commodities  the  Company
produces and sells,  (ii) support the  Company's  annual  capital  budgeting and
expenditure  plans and (iii) lock in prices to protect the economics  related to
certain capital  projects.  During the nine months ended September 30, 1998, the
Company's  hedging  activities  increased the average price received for oil and
gas sales 8% and 2%, respectively, as discussed below.

       Crude Oil. All material  sales  contracts  governing  the  Company's  oil
production  are tied directly or  indirectly  to NYMEX  prices.  The average oil
price per Bbl that the Company  reports  includes  the  effects of oil  quality,
gathering  and  transportation  costs and the net effect of the oil hedges.  The
Company's  average  realized  price  for  physical  oil sales  (excluding  hedge
results) for the three and nine months ended  September  30, 1998 was $11.80 per
Bbl and  $12.30  per Bbl,  respectively,  while,  as a point of  reference,  the
comparable  daily  average NYMEX closing per Bbl for the same periods was $14.18
per Bbl and $14.95 per Bbl, respectively.  The Company recorded net increases to

                                       24


<PAGE>


                        PIONEER NATURAL RESOURCES COMPANY


oil  revenues of $6.2  million  and $17.2  million for the three and nine months
ended September 30, 1998, respectively, as a result of its commodity hedges.

     During the three and nine months  ended  September  30,  1997,  the Company
realized an average price for physical oil sales  (excluding  hedge  results) of
$18.03 per Bbl and $19.37 per Bbl, respectively, while, as a point of reference,
the  comparable  daily  average  NYMEX  closing per Bbl for the same periods was
$19.79  per Bbl and $20.83  per Bbl,  respectively.  The  Company  recorded  net
reductions  to oil revenues of $351  thousand and $6.3 million for the three and
nine months ended September 30, 1997, respectively, as a result of its commodity
hedges.

     Natural Gas. The Company  employs a policy of hedging gas production  based
on the index price upon which the gas is actually  sold in order to mitigate the
basis risk between NYMEX prices and actual index  prices.  The average gas price
per Mcf that the Company reports includes the effects of Btu content,  gathering
and transportation costs, gas processing and shrinkage and the net effect of the
gas  hedges.  The  Company's  average  realized  price  for  physical  gas sales
(excluding hedge results) for the three and nine months ended September 30, 1998
was  $1.68  per Mcf  and  $1.83  per  Mcf,  respectively,  while  as a point  of
reference,  the comparable  daily average NYMEX closing for the same periods was
$2.02 and $2.14 per Mcf,  respectively.  The Company  recorded a net increase to
gas revenues of $2.5 million and $4.8 million,  respectively,  for the three and
nine months ended September 30, 1998, as a result of its commodity hedges.

     During the three and nine months  ended  September  30,  1997,  the Company
realized an average price for physical gas sales  (excluding  hedge  results) of
$2.22 per Mcf and $2.32 per Mcf,  respectively,  while as a point of  reference,
the  comparable  daily  average NYMEX closing for the same periods was $2.49 and
$2.33 per Mcf, respectively. The Company recorded net reductions to gas revenues
of $1.8 million and $7.9  million for the three and nine months ended  September
30, 1997, respectively, as a result of its commodity hedges.

     See Note F of Notes to Consolidated  Financial Statements included in "Item
1. Financial  Statements"  for  information  concerning the Company's open hedge
positions at September 30, 1998 and the related prices to be realized.

     Production  Costs.  During the three and nine month periods ended September
30,  1998,  total  production  costs  per BOE  decreased  to  $3.63  and  $3.56,
respectively,  as  compared  to  production  costs per BOE of $4.11  and  $4.08,
respectively,  during  the  same  periods  in  1997.  The  decreases  are due to
decreases  in domestic  production  taxes caused by lower  commodity  prices and
decreases in workover expense,  partially offset by increases in lease operating
expenses.

     Depletion  Expense.  Depletion expense per BOE decreased to $5.25 and $4.98
during the three and nine months  ended  September  30, 1998,  respectively,  as
compared to $6.38 and $5.40 per BOE during the same periods in 1997. The decline
in  depletion  expense  per BOE during  1998 is  primarily  associated  with the
reduction in net depletable basis that resulted from the 1997 impairment  charge
taken in accordance with SFAS 121.

     Exploration and  Abandonments/Geological and Geophysical Costs. Exploration
and abandonments/geological and geophysical costs increased to $35.6 million and
$86.1  million  during  the three and nine  months  ended  September  30,  1998,
respectively,  from $15.5 million and $34.3  million  during the same periods in
1997. The increase is largely the result of increased geological and geophysical
activity,  both in  domestic  and  international  activity,  resulting  from the
Company's increased focus on exploration activities.


                                       25


<PAGE>


                        PIONEER NATURAL RESOURCES COMPANY

                                        Three months            Nine months
                                    ended September 30,     ended September 30,
                                    -------------------    -------------------
                                      1998       1997        1998       1997
                                    --------   --------    --------   --------
                                                  (in thousands)
 Exploratory dry holes:
   United States                    $  8,639   $  7,184    $ 11,440   $ 16,885
   Foreign                             5,469         34      13,016        253
 Geological and geophysical costs:
   United States                       7,531      5,900      25,136     11,690
   Foreign                            10,318      1,171      23,226      2,547
 Leasehold abandonments and other      3,670      1,224      13,331      2,935
                                     -------    -------     -------    -------

                                    $ 35,627   $ 15,513    $ 86,149   $ 34,310
                                     =======    =======     =======    =======

        Approximately  25% of the Company's 1998 capital budget will be spent on
exploratory  projects (compared to 25% in 1997 and 16.7% in 1996). The Company's
1998 exploration efforts have been concentrated in the Gulf Coast region, Canada
and  Argentina.   The  Company  continues  to  review  opportunities   involving
exploration  joint  ventures  in  domestic or  international  areas  outside the
Company's existing core operating areas.

  General and Administrative Expense

        General and  administrative  expense was $19.2 million and $56.6 million
for the three  and nine  months  ended  September  30,  1998,  respectively,  as
compared to $16.8 million and $31.8 million for the same periods ended September
30,  1997,   representing  an  increase  of  $2.4  million  and  $24.8  million,
respectively. The increase is primarily attributable to the acquisitions of Mesa
and Chauvco;  however,  general and administrative  expense per BOE has declined
$.43 and $.22  during  the three  and nine  months  ended  September  30,  1998,
respectively, as compared to the same periods of 1997.

        Reorganization  costs  for the nine  months  ended  September  30,  1998
totaled  $21.2  million.   As  announced  in  February  1998,  the  Company  has
consolidated its six domestic operating  divisions into three geographic regions
and is relocating most of its administrative  services to Dallas,  Texas. During
the nine months ended  September 30, 1998, the  reorganization  charge  included
severance, relocation, lease termination and other costs.

  Interest Expense

        During the three  months ended  September  30,  1998,  interest  expense
increased  $17.7  million  to $41.8  million  from $24.1  million  for the third
quarter of 1997.  Interest  expense for the nine months ended September 30, 1998
increased to $122.3  million as compared to $44.3 million for the same period in
1997. The increase is due to an increase of $1.5 billion in the weighted average
outstanding  balance of the  Company's  indebtedness  for the nine months  ended
September 30, 1998 as compared to the nine months ended  September 30, 1997. The
increase  in  the  weighted  average   outstanding   balance  of  the  Company's
indebtedness  was primarily the result of the additional debt assumed from Mesa,
and to a lesser  extent,  from Chauvco.  This  increase is slightly  offset by a
decrease in the weighted  average  interest rate on the  Company's  indebtedness
from 8.05%  during the first  three  quarters  of 1997 to 7.2%  during the first
three quarters of 1998.

        During the three and nine months ended  September 30, 1998,  the Company
was a party to various interest rate swap agreements that resulted in a decrease
in interest  expense of $58 thousand and an increase in interest  expense of $15
thousand,  respectively.  During  the  same  periods  in 1997,  such  agreements
resulted in  reductions  in interest  expense of $5 thousand and $705  thousand,
respectively.

                                       26


<PAGE>


                        PIONEER NATURAL RESOURCES COMPANY


  Income Taxes

        The Company's  income tax benefit of $24.3 million and $55.4 million for
the three and nine  months  ended  September  30,  1998,  respectively,  and the
benefit of $6  million  and  provision  of $8.5  million  for the three and nine
months  ended  September  30, 1997,  respectively,  reflect the net benefits and
provision  resulting  from the  separate tax  calculation  prepared for each tax
jurisdiction  in which the Company is subject to income taxes.  At September 30,
1998,  the  Company  has a current  deferred  tax asset of $16.1  million  and a
noncurrent deferred tax asset of $102.2 million.  Management believes that it is
more likely than not that the net  deferred  tax asset is  realizable;  however,
during the fourth  quarter of 1998,  the Company will be reviewing  its deferred
tax asset position in light of evolving  economic  conditions in the oil and gas
industry.  Such analysis will include forecasting future operations to determine
if it is more likely than not that the deferred tax asset is realizable.

  Capital Commitments, Capital Resources and Liquidity

        Capital  Commitments.  The  Company's  primary  needs  for  cash are for
exploration,  development and acquisitions of oil and gas properties,  repayment
of  principal  and  interest on  outstanding  indebtedness  and working  capital
obligations.

        The Company's cash expenditures  during the first three quarters of 1998
for additions to oil and gas  properties  totaled  $427.9  million.  This amount
includes $46.4 million for the  acquisition of properties and $381.5 million for
development  and  exploratory   drilling.   Significant   drilling  and  seismic
expenditures  in the first three quarters of 1998 included $100.0 million in the
Permian Basin region,  $137.4 million in the Gulf Coast region, $24.1 million in
the MidContinent region, $55.2 million in Canada, $47.7 million in Argentina and
$17.1 million in other international areas.

        Funding for the Company's  working  capital  obligations  is provided by
internally-generated  cash flows.  Funding for the  repayment of  principal  and
interest  on   outstanding   debt  may  be  provided  by  any   combination   of
internally-generated  cash flows,  proceeds from the disposition of nonstrategic
assets or  alternative  financing  sources as discussed  in "Capital  Resources"
below.

        Capital Resources.  The Company's primary capital resources are net cash
provided  by  operating  activities,  proceeds  from  financing  activities  and
proceeds  from sales of  nonstrategic  assets.  The Company  expects  that these
resources will be sufficient to fund its capital commitments.

        Net cash provided by operating  activities was $106.1 million and $266.5
million  during the three and nine months ended  September 30, 1998, as compared
to net cash provided by operating activities of $54.5 million and $179.1 million
for the same periods in 1997. These increases are primarily attributable to cash
flows generated by the oil and gas properties  acquired from Mesa and Chauvco in
1997,  offset,  to some extent,  by decreased  commodity prices and increases in
interest expense, general and administrative expenses and reorganization costs.

        Financing  Activities.  The Company had an outstanding balance under its
bank  facilities at September 30, 1998 of $993 million  (including  outstanding,
undrawn letters of credit of $23 million), leaving approximately $167 million of
unused borrowing base immediately available.  At September 30, 1998, the Company
had four other  outstanding  significant  debt  issuances.  Such debt  issuances
consist  of (i) $150  million  of 8-7/8%  senior  notes  due in 2005,  (ii) $150
million of 8-1/4%  senior  notes due in 2007,  (iii) $350 million of 6.5% senior
notes due in 2008 and (iv) $250  million of 7.2% senior  notes due in 2028.  The
weighted  average  interest rate for the nine months ended September 30, 1998 on
the  Company's  indebtedness  was 7.2% as  compared to 8.05% for the nine months
ended  September  30, 1997  (taking  into  account  the effect of interest  rate
swaps).

        During  January  1998,  the Company  completed  the issuance of the 6.5%
senior  notes due 2008 and the 7.2% senior notes due 2028 for total net proceeds
of $593 million.  The proceeds were used  primarily to repay the Company's  bank
indebtedness.   Interest  on  the  6.5%  and  7.2%   senior   notes  is  payable
semi-annually on January 15 and July 15 of each year,  commencing July 15, 1998.
These two senior note issuances are governed by an Indenture between the Company
and The Bank of New York dated January 13, 1998.  Both senior note issuances are

                                       27


<PAGE>


                        PIONEER NATURAL RESOURCES COMPANY


general unsecured obligations of the Company ranking equally in right of payment
with all other senior  unsecured  indebtedness  of the Company and are senior in
right of payment to all existing  and future  subordinated  indebtedness  of the
Company.

        As the Company pursues its strategy, it will continue to utilize various
financing  sources,   including  fixed  and  floating  rate  debt,   convertible
securities,  preferred  stock or  common  stock.  The  Company  may  also  issue
securities in exchange for oil and gas  properties,  stock or other interests in
other oil and gas companies or related assets. Additional securities may be of a
class  preferred to common  stock with respect to such matters as dividends  and
liquidation  rights and may also have other rights and preferences as determined
by the Company's Board of Directors.

        Sales of Nonstrategic Assets. During the nine months ended September 30,
1998 and 1997,  proceeds from the sale of domestic  nonstrategic  assets totaled
$19.7  million and $12.8  million,  respectively.  The proceeds from these sales
were  utilized to reduce the Company's  outstanding  bank  indebtedness  and for
general working capital purposes.

        In February 1998, the Company  announced its intentions to sell domestic
nonstrategic  properties and has since signed a purchase and sale agreement (the
"Agreement") to sell certain  non-strategic oil and gas properties for estimated
proceeds of $410 million. The Agreement will be effective October 1, 1998 and is
anticipated  to close by December  31, 1998.  The  proceeds  will be utilized to
reduce the Company' s outstanding  bank  indebtedness.  The consummation of this
Agreement is primarily  dependent upon the buyer's successful ability to finance
the purchase and certain  other  contingencies  defined in the  Agreement.  As a
result,  there can be no  assurance  that the  divestiture  of any or all of the
properties will be completed or that the estimated  proceeds will be realized in
accordance  with the  Agreement.  The  properties  to be divested  represent  an
estimated 10% to 12% of the Company's reserves at December 31, 1997. The Company
anticipates that it will continue to sell  nonstrategic  properties from time to
time to increase capital resources available for other activities and to achieve
operating and administrative efficiencies and improved profitability.

        Liquidity.  At  September  30,  1998,  the Company had $70.3  million of
unrestricted  cash and cash  equivalents  on hand,  compared to $71.7 million at
December 31, 1997. The Company's ratio of current assets to current  liabilities
was 1.05 at September 30, 1998 and 1.18 at December 31, 1997.

- ---------------

(1)  The information in this document includes  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 Natural Resources Company,  are subject to a number of
     risks and  uncertainties  which may cause the Company'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,  litigation,  the costs and results of drilling  and
     operations,  the  Company's  ability to replace  reserves or implement  its
     business  plans,  access  to  and  cost  of  capital,  uncertainties  about
     estimates of reserves,  quality of technical data and environmental  risks.
     These and other risks are described in the Company's  1997 Annual Report on
     Form 10-K which is available from the United States Securities and Exchange
     Commission.
                                       28


<PAGE>


                        PIONEER NATURAL RESOURCES COMPANY



 
                          PART II. OTHER INFORMATION


Item 1.     Legal Proceedings

        Pioneer is party to various legal proceedings, which are described under
"Legal Actions" in Note E of Notes to Consolidated Financial Statements included
in "Item 1.  Financial  Statements".  Pioneer is also party to other  litigation
incidental to its business. The claims for damages from such other legal actions
are not in excess of 10% of Pioneer's  current assets and Pioneer  believes none
of these actions to be material.


Item 5.     Other Information

Stockholder Proposals

        Any  stockholder  of the Company  who  desires to submit a proposal  for
action at the Company's 1999 annual meeting of  stockholders  and wishes to have
such  proposal  (a  "Rule  14a-8  Proposal")  included  in the  Company's  proxy
materials,  must submit such Rule 14a-8 Proposal to the Company at its principal
executive  offices no later than December 14, 1998,  unless the Company notifies
the  stockholders  otherwise.  Only those Rule 14a-8  proposals  that are timely
received by the Company and proper for stockholder action (and otherwise proper)
will be included in the Company's proxy materials.

        Any  stockholder  of the Company  who  desires to submit a proposal  for
action at the 1999 annual meeting of stockholders but does not wish to have such
proposal  (a  "Non-Rule  14a-8  Proposal")   included  in  the  Company's  proxy
materials,  must  submit  such  Non-Rule  14a-8  Proposal  to the Company at its
principal  executive offices no later than February 27, 1999, unless the Company
notifies  the  stockholders  otherwise.  If a  Non-Rule  14a-8  Proposal  is not
received by the Company on or before February 27, 1999, then the Company intends
to exercise its  discretionary  voting  authority  with respect to such Non-Rule
14a-8 Proposal.  "Discretionary voting authority" is the ability to vote proxies
that  stockholders  have  executed and  returned to the Company,  on matters not
specifically   reflected  in  the  Company's  proxy  materials,   and  on  which
stockholders have not had an opportunity to vote by proxy.


Item 6.     Exhibits and Reports on Form 8-K

Exhibits

    27.*   Financial Data Schedule.

*  filed herewith

Reports on Form 8-K

None.

                                       29


<PAGE>


                        PIONEER NATURAL RESOURCES COMPANY



                               S I G N A T U R E S



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereto duly authorized.


                                         PIONEER NATURAL RESOURCES COMPANY





Date:     November 12, 1998        By:     /s/ Scott D. Sheffield
                                       ------------------------------------
                                           Scott D. Sheffield
                                           President



Date:     November 12, 1998        By:     /s/ M. Garrett Smith
                                       ------------------------------------
                                           M. Garrett Smith
                                           Executive Vice President and
                                           Chief Financial Officer


Date:     November 12, 1998        By:     /s/ Rich Dealy
                                       ------------------------------------
                                           Rich Dealy
                                           Vice President and Chief
                                           Accounting Officer






                                       30


<PAGE>


                        PIONEER NATURAL RESOURCES COMPANY

Exhibit Index                                                            Page

    27.*    Financial Data Schedule.

*  filed herewith





                                       31


<PAGE>








<TABLE> <S> <C>

<ARTICLE> 5
<CIK> 0001038357
<NAME> PNR CO
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1998
<PERIOD-END>                               SEP-30-1998
<CASH>                                          95,305
<SECURITIES>                                         0
<RECEIVABLES>                                   99,391
<ALLOWANCES>                                         0
<INVENTORY>                                     17,460
<CURRENT-ASSETS>                               238,494
<PP&E>                                       4,449,291
<DEPRECIATION>                                 881,640
<TOTAL-ASSETS>                               3,992,626
<CURRENT-LIABILITIES>                          227,333
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                         1,007
<OTHER-SE>                                   2,350,996
<TOTAL-LIABILITY-AND-EQUITY>                 3,992,626
<SALES>                                        554,478
<TOTAL-REVENUES>                               562,533
<CGS>                                                0
<TOTAL-COSTS>                                  169,508
<OTHER-EXPENSES>                               429,663
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                             122,317
<INCOME-PRETAX>                              (158,955)
<INCOME-TAX>                                  (55,400)
<INCOME-CONTINUING>                          (103,555)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                 (103,555)
<EPS-PRIMARY>                                   (1.04)
<EPS-DILUTED>                                   (1.04)
        

</TABLE>




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