Pioneer Natural Resources

Capex

In 2009, the Company expects to reduce the capital budget by 30% to 60% compared to 2008 and generate free cash flow.

Future Plans

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

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

Production

In the first quarter of 2008 Pioneer increased average daily oil and gas sales to 110,298 barrels oil equivalent per day (BOEPD); 24% above comparable sales for the first quarter of 2007

In the 4th quarter of 2007, Pioneer increased average daily oil and gas sales to 103,330 barrels oil equivalent per day (BOEPD) excluding discontinued operations; 12% above comparable sales for the fourth quarter of 2006.

For full-year 2007, Pioneer increased oil and gas sales to 35.5 MMBOE excluding discontinued operations; a 14% increase on a production per share basis. The company replaced 357% of production.

Total production in 2006 rose 7% to 35.9 million barrels oil equivalent (MMBOE) from equivalent VPP adjusted 2005 levels. On a per share basis, total production was up 19%.

Reserves

As of December 31, 2007, its total proved oil and gas reserves were 964 million barrels oil equivalent (MMBOE). During 2007, the Company increased proved reserves by 148 MMBOE, replacing 357% of production at an average finding and development cost of $15.40 per barrel oil equivalent (BOE). The reserve additions were primarily attributable to successful drilling in Pioneer's core onshore areas (Spraberry, Raton, Edwards Trend and Tunisia) and recent acquisitions in the Spraberry, Raton and Barnett Shale fields.

Approximately 97% of Pioneer's proved reserves are in the United States, and 62% of reserves are proved developed. Approximately 51% of the Company's reserves are natural gas and 49% are oil and other liquids. Pioneer's reserves are long-lived with a reserves-to-production ratio of approximately 23 years.

Drillbit finding and development cost was $17.85 per BOE. Excluding the costs associated with the drilling of proved undeveloped reserves in the Spraberry and Raton fields, drillbit finding and development cost was approximately $12 per BOE.

Net proved reserves of 91 MMBOE were added in 2006 at a finding and development cost of $18.36 per barrel oil equivalent (BOE), resulting in reserve replacement of 200% of production.

Who's Who

Offices