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0000950134-07-008755.txt : 200704230000950134-07-008755.hdr.sgml : 2007042320070423084028ACCESSION NUMBER:0000950134-07-008755CONFORMED SUBMISSION TYPE:8-KPUBLIC DOCUMENT COUNT:38CONFORMED PERIOD OF REPORT:20070423ITEM INFORMATION:Regulation FD DisclosureITEM INFORMATION:Financial Statements and ExhibitsFILED AS OF DATE:20070423DATE AS OF CHANGE:20070423
FILER:
COMPANY DATA:COMPANY CONFORMED NAME:PIONEER NATURAL RESOURCES COCENTRAL INDEX KEY:0001038357STANDARD INDUSTRIAL CLASSIFICATION:CRUDE PETROLEUM & NATURAL GAS [1311]IRS NUMBER:752702753STATE OF INCORPORATION:DEFISCAL YEAR END:1206
FILING VALUES:FORM TYPE:8-KSEC ACT:1934 ActSEC FILE NUMBER:001-13245FILM NUMBER:07780411
BUSINESS ADDRESS:STREET 1:200 WILLIAMS SQUARE WESTSTREET 2:5205 N OCONNOR BLVDCITY:IRVINGSTATE:TXZIP:75039BUSINESS PHONE:9724449001
MAIL ADDRESS:STREET 1:200 WILLIAMS SQUARE WESTSTREET 2:5205 N OCONNOR BLVDCITY:IRVINGSTATE:TXZIP:75039
8-K1d45765e8vk.htmFORM 8-K
e8vk
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April23, 2007
PIONEER NATURAL RESOURCES COMPANY
(Exact name of registrant as specified in its charter)
Delaware
(State or other
jurisdiction of incorporation)
1-13245
(Commission File Number)
75-2702753
(I.R.S. Employer
Identification Number)
5205 N. OConnor Blvd.
Suite200
Irving, Texas
(Address of principal
executive offices)
75039
(Zip code)
Registrants telephone number, including area code: (972)444-9001
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy thefiling obligation of the Registrant under any of the following provisions:
o Written communications pursuant to Rule425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule14d-2(b) under the Exchange Act (17 CFR240.14d-2(b))
o Pre-commencement communications pursuant to Rule13e-4(c) under the Exchange Act (17CFR 240.13e-4(c))
Item7.01. RegulationFD Disclosure.
The presentation attached hereto as exhibit 99.1 includes certain information about PioneerNatural Resources Company.
Item9.01. Financial Statements and Exhibits.
(d)Exhibits
99.1 IPAA Oil & Gas Investment Symposium Presentation
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PIONEER NATURAL RESOURCES COMPANY
/s/ Darin G. Holderness
Darin G. Holderness
Vice President and Chief Accounting Officer
Dated: April23, 2007
EXHIBIT INDEX
Exhibit
Number Exhibit Title
99.1 (a)
IPAA Oil & Gas Investment Symposium Presentation
(a) Furnished herewith.
EX-99.12d45765exv99w1.htmPRESENTATION
exv99w1
Exhibit 99.1
IPAA
Oil & Gas Investment Symposium
April 24, 2007
Forward-Looking Statements
Except for historical information contained herein, the statements, charts and graphsin this presentation are forward-looking statements that are made pursuant to the SafeHarbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements and the business prospects of Pioneer are subject to a number ofrisks and uncertainties that may cause Pioneer's actual results in future periods todiffer materially from the forward-looking statements. These risks and uncertaintiesinclude, among other things, volatility of oil and gas prices, product supply anddemand, competition, the ability to obtain environmental and other permits and thetiming thereof, other government regulation or action, third party approvals,international operations and associated international political and economicinstability, litigation, the costs and results of drilling and operations, availability ofdrilling equipment, Pioneer's ability to replace reserves, implement its business plans(including its plan to repurchase stock and its plan to form master limited partnershipsand offer securities representing interests therein) or complete its developmentprojects as scheduled, access to and cost of capital, uncertainties about estimates ofreserves, the assumptions underlying production forecasts, quality of technical data,environmental and weather risks, acts of war or terrorism. These and other risks aredescribed in Pioneer's 10-K and 10-Q Reports and other filings with the Securities andExchange Commission. Pioneer undertakes no duty to publicly update these statementsexcept as required by law.
Please see the Appendix to this presentation for other important information.
2007 Focus - Low-risk, Double-digit Growth
Continue to grow production with a target of 10+%
Continue to execute on low-risk development drilling at Spraberry and Raton
Establish first production at South Coast Gas (2H '07) and Oooguruk (2008)
Convert Tunisia and Edwards Trend expansion areas into growth vehicles
Continue to expand core areas with attractive bolt-on acquisitions
Advance several unconventional resource plays initiated in 2006
Plan to form two Master Limited Partnerships
Continue share repurchases
Repurchased ~9 MM shares at ~$39 in 2006
Repurchased 650,000 shares in 1Q '07 at ~$38 as part of newly expanded $750 MM share repurchase program
MLPs Enhance Pioneer's Low-risk Growth Strategy
Provide Pioneer the opportunity to substantially increase the valuationof Pioneer's proved reserves due to the valuation differences betweenMLPs and Pioneer
Allow Pioneer to more effectively pursue acquisitions jointly with theMLPs (typically MLP would buy developed reserves and PXD would buyundeveloped reserves)
Afford Pioneer an opportunity to sell its proved reserves to the MLPs andapply the proceeds (including the proceeds from the initial offerings) tofund low-risk opportunities and share repurchases, while maintainingfinancial flexibility
~90% of Pioneer's proved reserves are long-lived and current oreventual MLP candidates
Purpose of the MLP offerings:
Strong Share Repurchase Track Record
Pioneer has repurchased ~31 MM shares since acquiring
Evergreen in 2004 (21% of shares outstanding)
Increased existing program from $300 million to $750 million Q4 '04 2005 2006 Q1 '07 East 1.7 21.4 30.3 30.9
Cumulative Share Repurchases (millions)
2007 - 2010: Targeting Double-Digit Production Per Share Growth 2005 2006 2007 2008 2009 2010 Historical Production Production Outlook 33.4 35.9 39.4 43 48.9 56.57 1.8 7.7 15.3 21.5
Development
Spraberry
Raton
Canada
Edwards
Tunisia
South Coast Gas
Oooguruk
Clipper
Resource Plays
Edwards
Tunisia
Rockies
Production Per Share Growth Forecast
2007 - 2010 CAGR
Development 10% - 12%
With Risked Resource Plays up to 20%
MMBOE
36
Actual: 7%
Per Share: 19%
10+%
33*
* 2005 production pro forma for divestitures; assumes 2005 and 2006 VPP volumes in place for all of 2005
(i.e. volumes effective 2/1/05 plus 9 MBOEPD effective 1/1/06)
Strong Returns on 2007 Development Drilling & Projects1
Current Cost Environment$60/BBL & $7.50/MCFBefore Tax$60/BBL & $7.50/MCFBefore Tax$60/BBL & $7.50/MCFBefore Tax Sensitivity:2$50/BBL & $5.50/MCFBefore Tax Sensitivity:2$50/BBL & $5.50/MCFBefore Tax All-in F&D Cost$/BOE Cash Margin $/BOE IRR DROI3 IRR DROI3 Spraberry(West Texas Oil & Gas) 11 45 35% 1.8 25% 1.5 Raton(Colorado Gas) 5 27 40% 2.5 25% 1.7 Edwards Trend(Gas) 10 37 45% 2.2 25% 1.6 Tunisia(Oil & Gas) 2 55 >100% >3.0 >100% >3.0 South Africa Gas(Gas Indexed To Oil) 13 36 40% 1.8 30% 1.4 Oooguruk(Alaska Oil) 8 44 40% 1.8 30% 1.5
1) Cash margins, IRRs, DROIs and F&D costs assume current costs / differentials. Cash margins are pre-tax reflecting revenues less production costs.
3) Discounted Return on Investment (DROI) is defined as present value of future cash flow discounted at 10% divided by discounted capital investment.
2) Sensitivity case assumes no reduction in costs or differentials.
FY '05 FY '06 FY '07 20 24 27 2
Spraberry Resource Play - Cornerstone of Growth
20
1) 2005 production assumes 2005 and 2006 VPP volumes in place for all of 2005 (i.e. volumes effective 5/1/05 plus 9 MBOEPD effective 1/1/06)
24
MBOEPD
15% - 20%
20051
2006
2007
21%
Oil and gas production grew 21% in 2006 vs. 2005
Aggressive drilling program continues
14 - 16 rigs expected to drill 300 - 350 wells, with majoritydrilled to deeper Wolfcamp zone where incremental reservesand production of >20% being added to typical Spraberry well
Planning to drill 450 wells in 2008
Integrated operations significantly reducing LOE
Legacy ownership interest in 3 gas plants
Acquired 14 pulling units in late 2006
Continuing to pursue acreage expansion and bolt-onacquisitions
Added ~230 M gross acres during '06 from bolt-on acquisitionswith ~100 MMBOE resource potential
Production expected to grow 15% - 20% in 2007
825 M gross acres
4,800 active wells(>95% operated)
Largest operator
~25% of Total Production
~50% of Total Proved Reserves
(440 MMBOE - 50% PDP / 50% PUD)
Multi-year Inventory (~4,000 Locations)
Raton Expansion Continues
New Mexico
Colorado
Raton
310 M gross acres
Receives Mid-
Continent Prices
Raton FY '05 FY '06 FY '07 142 155 165 6
MMCFEPD
7% - 10%
2005
2006
2007
CBM production grew 10% in 2006 vs. 2005
300 wells drilled
Drilling program, pipeline expansion and compressioncontributed to strong production growth
2 - 3 rigs expected to drill 250 - 300 wells in 2007
Integrated well services continue to drive costefficiencies
Adding wellhead compression throughout field
Production expected to grow 7% - 10% in 2007;low end of range reflects early Q1 weatherimpacts, now back on track
142
155
10%
CIG Pipeline
~25% of Total PXD Production
~25% of Total Proved Reserves
3 - 4 Year Inventory (~1,100 Locations)
Edwards Trend Expansion on Schedule
2006 drilling program focused on exploration andappraisal activities, not development drilling
Drilled 6 discoveries with gross resource potential of 150 - 325 BCF
2007 drilling program (35 wells, including 2 - 3 newprospects) focusing primarily on development drilling
6 rigs available of which 2 are used to drill horizontal sections
While 850 mi2 3-D survey being completed on 2006discoveries to more accurately locate horizontal wells,focusing on:
Lower-risk development drilling at Pawnee and on new discoverieswhere 3-D exists
5 recent development wells tested at average initial rate of >4MMCFPD
Refracs of existing horizontal wells at Pawnee to increaseproduction and reserves
Initial results indicate increased rates by 4x -10x with a oneyear or less payout
Current net production: >45 MMCFPD
Production on track to meet or exceed projected20% - 25% growth rate for 2007
270 M gross acres FY '05 FY '06 FY '07 39.8 39.4 48 2
MMCFEPD
20% - 25%
2005
2006
2007
40
39
Tunisia Fast Becoming New Core Area
Acquired ~1,200 km2 of 3-D seismic in 2006 to optimizedrilling program for Adam, Jenein Nord and Borj El Khadra
30+ identified prospects with resource potential as large as 25 MMBOE
5 recent discoveries
3 on PXD-operated Jenein Nord block (tested at >18 MBOEPD)
1 on Adam
1 on Borj El Khadra
Net oil and gas production currently >4 MBOEPD
Includes Adam discovery and 1 successful Q1 Adam appraisal well
Production from recent Jenein Nord discoveries and secondAdam appraisal well expected to come on throughout 2007
Adam in Q2 and Jenein Nord in Q4
Expect to drill at least 9 additional wells through YE 2007
Includes appraisal of recent BEK discovery
Pursuing options for increased gas sales
Production expected to grow over 30% in 2007
Tunisia
Algeria
Libya FY '05 FY '06 FY '07 3 3 3.9 0.6
MBOEPD
30+%
2005
2006
2007
3
3
~4 MM gross acres in 5 concessions (20% - 50% interest)
>90% Drilling Success Since 2003
South Coast Gas Project On Schedule
Subsea tie-back to existing F-A platform
Drilling commenced on final developmentwell
Subsea infrastructure and well tie-ins 1H '07
First production expected 2H '07
Gas production ramps up as existing suppliesfor GTL plant decline
Strong margins; minimal production costs
Gross reserve potential: >200 BCFE
Expansion opportunities post 2012
South Africa production expected to grow20% - 25%
Subsea installation commences at South Coast Gas FY '05 FY '06 FY '07 6.6 4.1 2.5 2.7 0.3
South Africa
MBOEPD
20% - 25%
2005
2006
2007
South
Coast
Gas
7
4
Sable
Oil
Oooguruk Project On Schedule
Installing production modules and exportpipeline
Rig being installed; drilling to commence late2007
First oil production expected 2008
Peak gross production of 15 - 20 MBOPD in 2010
Gross reserve potential of 70 - 90 MMBO
All-in F&D ~$8 / BOE
No reserves booked to date
Expansion opportunities
Expansion opportunitiesExpansion opportunitiesExpansion opportunitiesExpansion opportunitiesExpansion opportunitiesExpansion opportunitiesExpansion opportunitiesExpansion opportunitiesExpansion opportunitiesExpansion opportunities
BEAUFORT SEA
Oooguruk
PrudhoeBay
Kuparuk
River
Alpine
TAPS
12
Emphasis on Value Creation
Planned formation of MLPs
Share repurchases
Low-risk strategy
Long-term growth visibility
Large drilling inventory
Attractive returns
Operating strength
Financial flexibility
Confidence to Deliver in 2007 and Beyond
Appendix
Pioneer Post-MLP Structure
Public Co.
Public Co.
Public Co.
Domestic Assets
Remainder of Spraberry
Remainder of Raton
South Texas (Edwards)
Mid-Continent
Alaska
Uinta / Piceance
Int'l Assets
Canada
Tunisia
South Africa
MLP GP
Raton
MLP
Portion of PDP
SpraberryMLP
Portion of PDP
MLP GP
PNR USA
PXD
LP units
Spraberry Type Curve (w/o Wolfcamp) Years Oil Wet Gas Dry Gas MCF Dry Gas (BOE) 0 38 97.33 49.73 7 8 1 22.87 43.04 21.99 3.67 6.03 2 18.18 34.53 17.64 2.94 4.83 3 15.78 33.51 17.12 2.85 4.69 4 13.77 28.9 14.76 2.46 4.05 5 12.34 24.39 12.46 2.08 3.41 6 11.22 24.64 12.59 2.1 3.45 7 10.31 24.2 12.36 2.06 3.39 8 10.25 22.21 11.35 1.89 3.11 9 9.48 22.47 11.48 1.91 3.15 10 8.83 20.73 10.59 1.76 2.9 11 8.14 21.73 11.1 1.85 3.04 12 7.73 23.19 11.85 1.97 3.25 13 7.41 18.96 9.69 1.61 2.65 14 7.19 17.89 9.14 1.52 2.5 15 7.03 17.59 8.99 1.5 2.46 16 6.87 18.23 9.31 1.55 2.55 17 6.61 17.79 9.09 1.52 2.49 18 6.33 16.97 8.67 1.44 2.38 19 6.08 16.29 8.32 1.39 2.28 20 5.84 15.64 7.99 1.33 2.19 21 5.6 15.01 7.67 1.28 2.1 22 5.38 14.41 7.36 1.23 2.02 23 5.16 13.83 7.06 1.18 1.94 24 4.96 13.27 6.78 1.13 1.86 25 4.76 12.74 6.51 1.08 1.78
Years
BOEPD
Oil
NGL
Gas
Avg. Working Interest: ~90%
Avg. Net Revenue Interest: ~75%
Mean EUR (Gross): 110 MBOE
With Wolfcamp: 130 MBOE
Drilling Cost: $0.9 MM / Well
With Wolfcamp: $1.1 MM / Well
Strong BTax returns at $60 / BOE
IRR: 35%; DROI: 1.8
Cash margin: $45 / BOE
Avg. Well Life: 35 Years
Wolfcamp IP
Raton Type Curve Years 2004 - 2006 Avg 0 100 1 150 2 157 3 153 4 140.5601195 5 130.0131103 6 120.257502 7 111.2339114 8 102.8874111 9 95.16719519 10 88.02627013 11 81.42116847 12 75.3116844 13 69.66062897 14 64.43360373 15 59.59879133 16 55.12676184 17 50.99029365 18 47.16420773 19 43.62521436 20 40.35177138 21 37.32395307 22 34.52332885 23 31.93285107 24 29.53675128 25 27.32044421 26 25.27043901 27 23.37425713 28 21.62035634 29 19.9980605 30 18.49749457
Years
MCFPD
Raton Type Curve reflects a combination of initial wells ina section and infill drilling
Initial wells require dewatering; infill wells do not
Avg. Working Interest: ~96%
Avg. Net Revenue Interest: ~84%
Mean EUR (Gross): 0.8 BCFE1
Drilling Cost: $0.45 MM / Well
Avg. Well Life: 35 Years
1) Reflects average EUR for 2004 - 2006 drilling program, which included a mix of initial wells in a section and infill drilling. Similar mix and EURsexpected from 2007 program.
Dewatering
Period
Pawnee EURs Expected For Edwards Trend H1 10.2 8 H2 9.1 5 H3 8.4 1 H4 7.9 7 H5 4.8 15 H6 4.0 3 H7 4.0 2 H8 3.5 9 H9 1.8 3 H10 1.7 7 H11 0.0 3 0 0 5.263 2.467 5.428 2.829 2.138 4.441 3.125 2.796 2.796 0.789 0.263 0.083333333 0 4.052 2.274 5.328 2.78 1.898 2.813 2.885 1.82 2.133 0.723 0.203 0.166666667 0 3.489 2.137 5.229 2.733 1.727 2.225 2.679 1.487 1.746 0.671 0.161 0.25 0 3.151 2.034 5.133 2.687 1.602 1.906 2.504 1.303 1.501 0.63 0.132 0.333333333 2.896 1.948 5.039 2.642 1.497 1.679 2.347 1.172 1.313 0.594 0.109 0.416666667 2.706 1.877 4.946 2.598 1.412 1.518 2.208 1.079 1.171 0.564 0.092 0.5 2.556 1.816 4.855 2.556 1.34 1.396 2.085 1.007 1.06 0.538 0.078 0.583333333 2.434 1.764 4.765 2.514 1.279 1.3 1.975 0.95 0.971 0.516 0.068 0.666666667 2.331 1.718 4.677 2.473 1.226 1.221 1.876 0.902 0.898 0.496 0.059 0.75 2.243 1.678 4.591 2.433 1.18 1.155 1.787 0.863 0.836 0.478 0.052 0.833333333 2.166 1.641 4.507 2.395 1.139 1.099 1.706 0.828 0.783 0.462 0.046 0.916666667 2.099 1.608 4.424 2.357 1.102 1.05 1.631 0.798 0.737 0.447 0.041 1 2.039 1.578 4.342 2.32 1.068 1.007 1.563 0.772 0.697 0.434 0.037 1.083333333 1.985 1.55 4.262 2.284 1.038 0.969 1.501 0.748 0.662 0.422 0.033 1.166666667 1.936 1.525 4.184 2.249 1.01 0.935 1.443 0.727 0.63 0.411 0.03 1.25 1.891 1.501 4.107 2.214 0.985 0.905 1.389 0.707 0.602 0.401 0.028 1.333333333 1.85 1.479 4.031 2.18 0.961 0.877 1.34 0.69 0.577 0.391 0.025 1.416666667 1.812 1.458 3.957 2.147 0.939 0.851 1.293 0.674 0.553 0.382 0.023 1.5 1.777 1.439 3.884 2.115 0.919 0.828 1.25 0.659 0.532 0.374 0.021 1.583333333 1.745 1.421 3.812 2.084 0.9 0.807 1.21 0.645 0.513 0.366 0.02 1.666666667 1.714 1.404 3.742 2.053 0.882 0.787 1.172 0.632 0.495 0.359 0.018 1.75 1.686 1.388 3.673 2.023 0.866 0.768 1.137 0.62 0.479 0.352 0.017 1.833333333 1.659 1.372 3.605 1.994 0.85 0.751 1.103 0.609 0.464 0.345 0.016 1.916666667 1.634 1.358 3.539 1.965 0.835 0.735 1.072 0.598 0.449 0.339 0.015 2 1.61 1.344 3.474 1.937 0.821 0.72 1.042 0.588 0.436 0.333 0.014 2.083333333 1.588 1.331 3.41 1.909 0.808 0.706 1.014 0.579 0.424 0.327 0.013 2.166666667 1.566 1.318 3.347 1.882 0.795 0.692 0.987 0.57 0.412 0.322 0.012 2.25 1.546 1.306 3.285 1.856 0.783 0.679 0.962 0.562 0.401 0.317 0.012 2.333333333 1.526 1.294 3.225 1.83 0.771 0.667 0.938 0.554 0.391 0.312 0.011 2.416666667 1.508 1.283 3.165 1.805 0.76 0.656 0.915 0.546 0.382 0.308 0.01 2.5 1.49 1.272 3.107 1.78 0.75 0.645 0.893 0.539 0.372 0.303 0.01 2.583333333 1.473 1.262 3.05 1.755 0.74 0.635 0.872 0.532 0.364 0.299 0.009 2.666666667 1.457 1.252 2.994 1.732 0.73 0.625 0.852 0.525 0.356 0.295 0.009 2.75 1.442 1.243 2.938 1.708 0.721 0.616 0.833 0.519 0.348 0.291 0.008 2.833333333 1.427 1.233 2.884 1.686 0.712 0.607 0.815 0.513 0.34 0.287 0.008 2.916666667 1.412 1.224 2.831 1.663 0.704 0.598 0.798 0.507 0.333 0.284 0.008 3 1.398 1.216 2.779 1.641 0.696 0.59 0.781 0.501 0.327 0.28 0.007 3.083333333 1.385 1.208 2.728 1.62 0.688 0.582 0.765 0.496 0.32 0.277 0.007 3.166666667 1.372 1.199 2.677 1.599 0.68 0.574 0.75 0.491 0.314 0.274 0.007 3.25 1.36 1.192 2.628 1.578 0.673 0.567 0.735 0.486 0.308 0.271 0.006 3.333333333 1.348 1.184 2.58 1.558 0.666 0.56 0.721 0.481 0.303 0.268 0.006 3.416666667 1.336 1.177 2.532 1.538 0.659 0.553 0.707 0.476 0.297 0.265 0.006 3.5 1.325 1.17 2.486 1.518 0.652 0.547 0.694 0.472 0.292 0.262 0.006 3.583333333 1.314 1.163 2.44 1.499 0.646 0.54 0.682 0.467 0.287 0.259 0.005 3.666666667 1.304 1.156 2.395 1.48 0.639 0.534 0.67 0.463 0.282 0.257 0.005 3.75 1.293 1.149 2.351 1.462 0.633 0.528 0.658 0.459 0.278 0.254 0.005 3.833333333 1.283 1.143 2.307 1.444 0.627 0.523 0.646 0.455 0.273 0.251 0.005 3.916666667 1.274 1.137 2.265 1.426 0.622 0.517 0.635 0.451 0.269 0.249 0.005 4 1.264 1.13 2.223 1.408 0.616 0.512 0.625 0.447 0.265 0.247 0.004 4.083333333 1.255 1.125 2.182 1.391 0.611 0.507 0.615 0.444 0.261 0.244 0.004 4.166666667 1.246 1.119 2.142 1.375 0.606 0.502 0.605 0.44 0.257 0.242 0.004 4.25 1.238 1.113 2.103 1.358 0.6 0.497 0.595 0.437 0.253 0.24 0.004 4.333333333 1.229 1.108 2.064 1.342 0.595 0.492 0.586 0.433 0.25 0.238 0.004 4.416666667 1.221 1.102 2.026 1.326 0.591 0.487 0.577 0.43 0.246 0.236 0.004 4.5 1.213 1.097 1.988 1.31 0.586 0.483 0.568 0.427 0.243 0.234 0.004 4.583333333 1.205 1.092 1.952 1.295 0.581 0.478 0.56 0.424 0.24 0.232 0.004 4.666666667 1.198 1.087 1.916 1.28 0.577 0.474 0.551 0.421 0.236 0.23 0.003 4.75 1.19 1.082 1.881 1.265 0.573 0.47 0.543 0.418 0.233 0.228 0.003 4.833333333 1.183 1.077 1.846 1.25 0.568 0.466 0.536 0.415 0.23 0.226 0.003 4.916666667 1.176 1.072 1.812 1.236 0.564 0.462 0.528 0.412 0.228 0.225 0.003 5 1.169 1.067 1.779 1.222 0.56 0.458 0.521 0.409 0.225 0.223 0.003 5.083333333 1.162 1.063 1.746 1.208 0.556 0.455 0.514 0.407 0.222 0.221 0.003 5.166666667 1.156 1.058 1.714 1.194 0.552 0.451 0.507 0.404 0.219 0.219 0.003 5.25 1.149 1.054 1.682 1.181 0.548 0.447 0.5 0.401 0.217 0.218 0.003 5.333333333 1.143 1.05 1.651 1.168 0.545 0.444 0.493 0.399 0.214 0.216 0.003 5.416666667 1.136 1.045 1.621 1.155 0.541 0.44 0.487 0.396 0.212 0.215 0.003 5.5 1.13 1.041 1.591 1.142 0.537 0.437 0.481 0.394 0.209 0.213 0.003 5.583333333 1.124 1.037 1.561 1.13 0.534 0.434 0.475 0.392 0.207 0.212 0.002 5.666666667 1.119 1.032 1.533 1.117 0.531 0.431 0.469 0.389 0.205 0.21 0.002 5.75 1.113 1.028 1.504 1.105 0.527 0.428 0.463 0.387 0.203 0.209 0.002 5.833333333 1.107 1.024 1.477 1.093 0.524 0.425 0.457 0.385 0.2 0.207 0.002 5.916666667 1.102 1.019 1.45 1.082 0.521 0.422 0.452 0.383 0.198 0.206 0.002 6 1.096 1.015 1.423 1.07 0.518 0.419 0.446 0.381 0.196 0.205 0.002 6.083333333 1.091 1.011 1.397 1.059 0.514 0.416 0.441 0.379 0.194 0.203 0.002 6.166666667 1.086 1.007 1.371 1.048 0.511 0.413 0.436 0.377 0.192 0.202 0.002 6.25 1.08 1.003 1.346 1.037 0.508 0.41 0.431 0.374 0.19 0.201 0.002 6.333333333 1.075 0.998 1.321 1.026 0.505 0.408 0.426 0.373 0.188 0.2 0.002 6.416666667 1.07 0.994 1.296 1.015 0.503 0.405 0.421 0.371 0.187 0.198 0.002 6.5 1.066 0.99 1.273 1.005 0.5 0.402 0.417 0.369 0.185 0.197 0.002 6.583333333 1.061 0.986 1.249 0.994 0.497 0.4 0.412 0.367 0.183 0.196 0.002 6.666666667 1.056 0.982 1.226 0.984 0.494 0.397 0.407 0.365 0.181 0.195 0.002 6.75 1.051 0.978 1.204 0.974 0.492 0.395 0.403 0.363 0.18 0.194 0.002 6.833333333 1.047 0.974 1.181 0.964 0.489 0.392 0.399 0.361 0.178 0.193 0.002 6.916666667 1.042 0.97 1.16 0.955 0.486 0.39 0.395 0.36 0.176 0.192 0.002 7 1.038 0.966 1.138 0.945 0.484 0.388 0.391 0.358 0.175 0.19 0.002 7.083333333 1.034 0.962 1.117 0.936 0.481 0.386 0.386 0.356 0.173 0.189 0.002 7.166666667 1.029 0.958 1.097 0.926 0.479 0.383 0.383 0.355 0.172 0.188 0.002 7.25 1.025 0.954 1.076 0.917 0.477 0.381 0.379 0.353 0.17 0.187 0.002 7.333333333 1.021 0.95 1.057 0.908 0.474 0.379 0.375 0.351 0.169 0.186 0.001 7.416666667 1.017 0.946 1.037 0.899 0.472 0.377 0.371 0.35 0.167 0.185 0.001 7.5 1.012 0.942 1.018 0.891 0.469 0.375 0.368 0.348 0.166 0.184 0.001 7.583333333 1.008 0.938 0.999 0.882 0.467 0.373 0.364 0.347 0.165 0.183 0.001 7.666666667 1.004 0.934 0.981 0.873 0.465 0.371 0.36 0.345 0.163 0.182 0.001 7.75 1 0.93 0.963 0.865 0.463 0.369 0.357 0.344 0.162 0.182 0.001 7.833333333 0.996 0.926 0.945 0.857 0.461 0.367 0.354 0.342 0.161 0.181 0.001 7.916666667 0.991 0.922 0.928 0.849 0.458 0.365 0.35 0.341 0.159 0.18 0.001 8 0.987 0.918 0.911 0.841 0.456 0.363 0.347 0.339 0.158 0.179 0.001 8.083333333 0.983 0.915 0.894 0.833 0.454 0.361 0.344 0.338 0.157 0.178 0.001 8.166666667 0.979 0.911 0.877 0.825 0.452 0.359 0.341 0.337 0.156 0.177 0.001
Years
MMCFPD
Pawnee gross reserves from 63 horizontal wells
Typical well EUR of 3.5 BCF
Edwards development program being modeled fromPawnee 3.5 BCF horizontal well
3-D seismic being shot to optimize drillinglocations
Strong BTax Returns @$7.50/MCF
IRR: 45%, DROI: 2.2
Working Interest: 80% to 100%
Net Revenue Interest: 65% to 80%
Drilling Cost: $3.5 MM / Well
Avg. Well Life: 35 Years
Edwards Modeling1
1) Modeling reflects geologic similarities between Pawnee and Edwards Trend prospects
Type
Curve
EUR
(BCF)
# of
wells
2007 - 2011 Maintenance Capital Requirements
1) PDP production declines ~ 7% excluding VPP volumes 2) Excludes facilities and other maintenance capital of ~ $50 MM per year
PDP production declines ~9% per year1
~ $0.5 B per year required to maintain flat production
Date PDPProduction(MBOED) VPPVolume(MBOED) DevelopmentDrilling Adds(MBOED) TotalProduction(MBOED) # ofSpraberryWells # ofRatonWellsCapEx2($MM) 2007 88 15 8 111 300 156 360 2008 81 13 17 111 312 156 370 2009 74 12 25 111 319 163 380 2010 72 7 32 111 324 168 390 2011 68 4 39 111 336 168 400
PDP Production
2009 Dev. Drilling
VPP Volume
2010 Dev. Drilling
2007 Dev. Drilling
2011 Dev. Drilling
2008 Dev. Drilling
150
125
100
75
50
25
Production (MBOED)
Q1 Q2 Q3 Q1 2000 Q2 2000 Q3 2000 Q4 2000 Q1 01 Q2 2001 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 LOE 2.99 2.42 2.47 2.18 2.05 2.2 2.33 2.36 2.58 2.89 3.19 3.29 2.88 2.63 2.68 3.02 3.3 3.29 3.44 3.43 3.71 3.81 4.22 4.8 5 5.63 4.81 6.15 6.23 5.99 6.53 Field Fuel 0.45 0.81 0.96 1.46 1.54 0.9 0.6 0.51 0.49 0.65 0.63 0.7 1 0.72 0.68 0.55 0.65 0.65 0.67 0.67 0.67 0.67 0.67 0.67 0.67 0.67 0.67 0.67 3rd Party FF 0.12 0.21 0.25 0.35 0.39 Transportation 0.33 0.34 0.33 0.15 0.4 0.48 0.52 0.57 0.54 0.55 0.54 0.55 0.48 0.38 0.37 0.37 0.47 0.47 0.49 0.25 0.88 1.19 1 1.04 1 1.2 1.25 1.22 Prod Taxes 0.27 0.38 0.37 0.67 0.67 0.79 0.93 1.08 0.76 0.61 0.53 0.5 0.63 0.6 0.43 0.84 0.59 0.55 0.56 0.59 0.59 0.59 0.77 2.23 2.54 2.72 3.32 2.96 3.28 3.2 2.29 Workover 0.05 0.1 0.16 0.28 0.06 0.11 0.16 0.21 0.16 0.16 0.14 0.3 0.28 0.26 0.17 0.2 0.11 0.15 0.13 0.23 0.28 0.17 0.29 0.62 0.57 0.54 0.56 0.72 0.74 0.92 0.48
Production Costs (per BOE)
Production & AdValorem Taxes
Q 12006
Q 22006
$11.04
$2.96
$1.21
$0.72
Q 32006
$6.15
Note: All periods presented have been restated to exclude discontinued operations
VPP-Adjusted
$9.89
$9.47
$9.84
Workovers
LOE
Transportation
Q 42006
$11.45
$3.28
$1.20
$0.74
$6.23
$5.18
Production Cost
LOE
$11.36
$3.20
$1.25
$0.92
$5.99
$5.28
$5.38
$10.52
$2.29
$1.22
$0.48
$6.53
$9.14
$5.67
VPP - Adjusted Production Costs
Pioneer presents VPP-Adjusted Production Costs (per BOE) and VPP-Adjusted LOE (per BOE) to assist investors in considering the Company'scosts in relation to the total BOEs (reported sales volumes plus VPPdelivered volumes) in connection with which those costs were incurred.VPP-Production Costs (per BOE) and VPP-Adjusted LOE (per BOE) arecalculated as follows:
Q1 '06 Q2 '06 Q3 '06 Q4 '06 Production costs as reported (thousands):
LOE $ 52,735 $ 56,071 $ 54,266 $ 60,505
Total $ 94,683 $103,065 $102,970 $ 97,539
Production (MBOE):
As reported 8,573 8,999 9,064 9,274
VPP deliveries 1,421 1,419 1,402 1,395
VPP-adjusted production 9,994 10,418 10,466 10,669
Production costs per BOE:
As reported:
LOE $ 6.15 $ 6.23 $ 5.99 $ 6.52
Total $ 11.04 $ 11.45 $ 11.36 $ 10.52
VPP-adjusted:
LOE $ 5.28 $ 5.38 $ 5.18 $ 5.67
Total $ 9.47 $ 9.89 $ 9.84 $ 9.14
PXD 17.46 PXD VPP-Adjusted 15.1 CS Universe 16.31
2006 Cash Costs vs. Peers
Source: Credit Suisse
2006 Cash Costs ($ / BOE)1
Includes production costs (including production taxes), G&A and interest expense
Includes VPP volumes of 15.4 MBOEPD
Includes 38 E&P companies covered by Credit Suisse
$17.46
$16.31
$15.10
2
3
VPP - Adjusted Cash Costs
Pioneer presents VPP-Adjusted Cash Costs (per BOE) to assist investors inconsidering the Company's cash costs in relation to the total BOEs produced(reported sales volumes plus VPP delivered volumes).
2006
Cash costs as reported (thousands):
LOE $ 398,257
G&A 121,830
Interest 107,032
Total Cash Cost $ 627,119
Production (MBOE):
As reported 35,910
VPP deliveries 5,637
VPP-adjusted production 41,547
Cash costs per BOE:
As reported:
LOE $ 11.09
G&A 3.39
Interest 2.98
Total Cash Cost $ 17.46
VPP-adjusted:
LOE $ 9.59
G&A 2.93
Interest 2.58
Total Cash Cost $ 15.10
PXD 18.63 CS Universe 20.04
2006 All-in F&D vs. Peers
Source: Credit Suisse
2006 All-in Finding & Development Costs ($ / BOE)
1) Includes 50 E&P companies covered by Credit Suisse
$18.36
$20.04
PXD
CSUniverse
YE 2006 Reserves And Current Resource Potential Year-end '06 Proved Reserves(MMBOE) Resource Potential*(MMBOE) Permian 452 120 Mid-Continent 113 0 Rockies 260 190 Gulf Coast 30 170 Alaska 0 120 Canada 31 60 Africa 19 50 Other 0 40 Total 905 ~750
* Excludes high-impact exploration
Approximate based on historical differentials to index prices
% of production Gas Apr - Dec 2008 2009 Swaps - (MMBTUD) 225,000 17,465 - NYMEX Price ($/MMBTU)1 $ 8.48 $9.22 - % Hedged N American Gas2 60% 5% - Crude Swaps - Old (BPD) - 4,000 - NYMEX Price ($/BBL) - $32.00 - Swaps - New (BPD) - 7,500 5,000 NYMEX Price ($/BPL) - $70.20 70.37 Collars - New (BPD) 4,455 - - NYMEX Call Price ($/BPL) $76.04 - - NYMEX Put Price ($/BPL) $63.00 - - % Hedge Total Liquids2 10% 21% 8% Total Equivalent % Hedged Total Equiv.2 39% 11% 4%
Hedge Position as of 4/20/2007
HEDGING STRATEGY
Capture Spikes
Protect Capital Budget and Project Economics
Pro Forma Senior Notes and Credit Facility
2006
2007
2008
2009
2010
2011
2012
2028
$32 MM
8.25%
$6 MM
5.875%
$250 MM
7.20%
2016
$527 MM
5.875%
2018
$450 MM
6.875%
$126 MM
$1.5 B Credit Facility
($1.4 B extended to 2011)
$4 MM
6.50%
Maturities and Balances as of 03/07/2007
2017
$500 MM
6.65%
Added ~150 MMBOE resource potential
Included proved reserves of 133 MMBOE (primarilyPUDs) and production of ~2,000 BOEPD
Resulted from:
Leasing ~250 M gross acres including UniversityLands
Purchasing ~145 M gross acres in bolt-on acquisitions
Entering joint ventures with 2 majors (drill to earnbeginning 2006)
Major oil company purchase metrics
Purchase price: $145 MM
Increased production from ~2,000 BOEPD in August2005 to ~6,000 BOEPD at year-end 2006
Current net present value of resource potential is~$600 MM
Continued to Acquire Quality Spraberry Acreage in 2005 / 2006
Proven Field Extensions
Wells drilled by Pioneer andothers have delivered IPs at orabove typical Spraberry well
Midland
Spraberry Field
Legacy Acreage
2005-2006 Leasing
10 Miles
University
Lands
University
Lands
28
PDP PUD Total 2001 164 72 236 27.16667 27.1667 2002 177 123 300 29.333 29.332 2003 180 154 334 29 29 2004 194 157 351 29.166 29.166 2005 199 205 404 29.39667 28.6667 2006 212 228 440 33.343 23.581
Spraberry F&D is Best Measured on an "All-in" Basis
Proved
Reserves
(MMBOE)
236
300
334
351
404
440
PDP
PUD
2001
2002
2004
2005
2006
2003
1) Excludes discontinued operations 2) Production includes VPP volumes of 733 and 9,853 BOEPD for 2005 and 2006, respectively
Spraberry has delivered ~50% of PXD's reserve adds1 in recent years (mostly PUDs)
Drilled >4,000 wells since early 1980s
Recorded >95% reserves as acquisitions or revisions rather than extensions / discoverieswhich led to near infinite organic F&D
Acquisition timing generally results in reserve recognition and drilling in different years
Therefore, Spraberry F&D should be viewed over a multi-year period on an "all-in" basis
All-in F&D ($/BOE)
2001 - 2006: ~$3
Current: ~$11
27 29 29 29 29 33
100 85 119 117 188 300
Production2(MBOEPD)
Well Count
Historical Spraberry F&D - Consistently Attractive 2001 2001 2001 2002 2003 2004 2005 2006 Capital ($MM) Capital ($MM) 128 128 128 26 70 72 275 360 Development & Exploration Development & Exploration 36 36 36 26 57 48 125 280 Acquisitions Acquisitions 92 92 92 0 13 24 150 80 # Wells Drilled # Wells Drilled 100 100 100 85 119 117 188 300 Reserves Added (MMBOE) 8 8 8 103 103 46 26 83 45 Extensions & Discoveries Extensions & Discoveries Extensions & Discoveries 0 0 0 0 0 0 6 Acquisitions Acquisitions Acquisitions 29 29 0 6 15 78 49 PDP PDP PDP 29 29 0 1 4 7 3 PUD PUD PUD 0 0 0 5 11 71 46 Revisions Revisions Revisions -21 -21 103 40 11 5 -10 F&D ($ / BOE) F&D ($ / BOE) F&D ($ / BOE) All-in F&D (including revisions) All-in F&D (including revisions) All-in F&D (including revisions) 16.00 16.00 0.25 1.52 2.77 3.31 8.00 Organic F&D (excludes revisions) Organic F&D (excludes revisions) Organic F&D (excludes revisions) ^ ^ ^ ^ ^ ^ 46.67 Acquisitions Acquisitions Acquisitions 3.17 3.17 0.00 2.17 1.60 1.92 1.63
All-in F&D ($/BOE)
2001 - 2006: ~$3
Current: ~$11
2007 Alaska Activities
2007 Alaska Activities
Beaufort Sea
Cosmopolitan Discovery
PXD 50% WI (Operator)
Test previous discovery in 2H
Oooguruk Project
PXD 70% WI (Operator)
Construction continuing; drilling 2H
NPRA Exploration
PXD 20% WI
2-well drilling program in 1H
(National Petroleum Reserve Alaska)
2007 Tunisia Drilling and Facilities Program
Adam
Borj El Khadra
Jenein
Nord
Jenein Nord (PXD-Operated), Adam, Borj El Khadra
El Hamra (PXD-Operated), Anaguid
PXD Concessions (5)
Nakhil (Borj El Khadra)
Encountered oil zone andtested at >1,000 BOPD
Planning appraisal program
Karma (Adam)
Producing ~4 MBOPD gross
Hawa & Nour 2 (Adam)
2 successful appraisal wells
1 currently producing and 1 to beon line during Q2
Jenein Nord Production Facilities
Plans to construct oil productionfacilities well underway
First production Q4
OMV Jenein Sud Discoveries
2 recently announced gas andcondensate discoveries
Discoveries (5)
Appraisals (2)
Additional 2007 Wells (9)
OMV Discoveries (2)
Jenein Nord
3 initial discoveries
Tested a combined >18 MBOEPD
Finding and Development Costs
"All-in F&D costs per BOE" means total costs incurred divided by thesummation of annual proved reserves, on a BOE basis, attributable torevisions of previous estimates, purchases of mineral-in-place and discoveriesand extensions. Consistent with industry practice, future capital costs todevelop proved undeveloped reserves are not included in costs incurred.
"Organic F&D costs per BOE" means costs incurred excluding acquisitionsdivided by the summation of annual proved reserves, on a BOE basis,attributable to revisions of previous estimates, and discoveries andextensions. Consistent with industry practice, future capital costs to developproved undeveloped reserves are not included in costs incurred.
Certain Reserve Information
The U.S. Securities and Exchange Commission (the "SEC") permits oil and gascompanies, in their filings with the SEC, to disclose only proved reserves thata company has demonstrated by actual production or conclusive formationtests to be economically and legally producible under existing economic andoperating conditions. Pioneer uses certain terms in this presentation, such as"resource", "reserve potential", "estimated ultimate recovery (EUR)","resource potential" or other descriptions of volumes of reserves potentiallyrecoverable through additional drilling or recovery techniques that the SEC'sguidelines prohibit Pioneer from including in filings with the SEC. Theseestimates are by their nature more speculative than estimates of provedreserves and accordingly are subject to substantially greater risk of beingrecovered by Pioneer.
This presentation shall not constitute an offer to sell orthe solicitation of an offer to buy any securities. Anyoffers, solicitations of offers to buy, or any sales ofsecurities will only be made in accordance with theregistration requirements of the Securities Act of 1933 oran exemption therefrom.
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