Pioneer Natural Resources (PXD) 8-K Results of Operations and Financial Condition

Exhibit 99.1

NEWS RELEASE

Company Contacts:

Investors: Frank Hopkins or Chris Paulsen

Media and Public Affairs: Susan Spratlen

                                            (972) 444-9001

Pioneer Reports Fourth Quarter 2005 Results

Dallas, Texas, February 8, 2006 — Pioneer Natural Resources Company (NYSE:PXD)today announced financial and operating results for the quarter and year ended December 31, 2005.

For the fourth quarter of 2005, Pioneer reported net income of $141 million, or $1.08 per diluted share, an increase of 38% over net income for the same period last year of $102 million, or $.69 per diluted share. Income from continuing operations was $140 million, or $1.07 per diluted share, compared to income from continuing operations of $98 million, or $.66 per diluted share, for the same period in 2004.

Cash flow from operations for the fourth quarter was $372 million compared to $337 million for the same period in 2004. The increase in operating cash flow is attributable to higher prices for oil, gas and natural gas liquids partially offset by cost increases.

During 2005, Pioneer repurchased 20 million shares under announced share repurchase programs for $940 million, including $641 million of the $650 million share repurchase program announced on September 1 for execution during 2005. A $300 million repurchase program was concluded earlier in the year. An additional $350 million share repurchase program is expected to be initiated if the divestitures of Argentina and deepwater Gulf of Mexico assets are successful.

Fourth quarter oil and gas sales averaged 170,619 barrels oil equivalent per day (BOEPD). Fourth quarter oil sales averaged 44,609 barrels per day (BPD) and natural gas liquids sales averaged 21,421 BPD. Gas sales in the fourth quarter averaged 628 million cubic feet per day (MMcfpd). Fourth quarter reported prices for oil and natural gas liquids were $39.15 and $37.41 per barrel, respectively. The worldwide reported price for gas was $6.72 per thousand cubic feet (Mcf). North American reported gas prices averaged $8.37 per Mcf.

Fourth quarter production costs averaged $7.55 per barrel of oil equivalent (BOE). Exploration and abandonment costs were $83 million for the quarter and included $23 million of dry hole and abandonments associated primarily with an unsuccessful well in the Falcon area of the deepwater Gulf of Mexico and unsuccessful wells in Argentina, $28 million of geologic and geophysical expenses including seismic costs and $32 million of delay rentals, unproved acreage abandonments and other related costs.

For the same quarter last year, adjusted to exclude discontinued operations from asset sales, Pioneer reported oil and gas sales of 185,420 BOEPD, including oil sales of 47,459 BPD, natural gas liquids sales of 21,287 BPD and gas sales of 700 MMcfpd. Reported prices for fourth quarter 2004 were $35.96 per barrel for oil, $30.68 per barrel for natural gas liquids and $4.42 per Mcf for gas. North American gas prices averaged $5.24 per Mcf.

For the twelve months ended December 31, 2005, net income was $535 million, or $3.80 per diluted share, compared to $313 million, or $2.46 per diluted share for the prior year. Income from continuing operations was $424 million, or $3.02 per diluted share, compared to income from continuing operations of $299 million, or $2.35 per diluted share, for the same period in 2004. Cash flow from operations for 2005 was a record $1.3 billion compared to $1.1 billion in 2004.

Full year 2005 oil and gas sales averaged 175,571 BOEPD, including oil sales of 44,087 BPD, natural gas liquids sales of 19,729 BPD and gas sales of 671 MMcfpd. Reported prices for 2005 were $37.22 per barrel for oil, $32.22 per barrel for natural gas liquids and $5.66 per Mcf for gas, while North American gas prices averaged $6.88 per Mcf.

Full year 2004 oil and gas sales averaged 177,223 BOEPD, including oil sales of 44,982 BPD, natural gas liquids sales of 21,649 BPD and gas sales of 664 MMcfpd. Reported prices for 2004 were $31.60 per barrel for oil, $25.54 per barrel for natural gas liquids and $4.30 per Mcf for gas, while North American gas prices averaged $5.12 per Mcf.

Pioneer’s financial results and oil and gas hedges are outlined on the attached schedules. The Company will defer providing guidance ranges for future oil and gas production and operating and other costs until the results of the Gulf of Mexico asset divestiture are known.

Operations Update

During 2005, Pioneer drilled a total of 820 wells, 87% of which were in North America, and had 157 successful wells in the process of being completed and brought on production at the end of the year.

In 2006, Pioneer will significantly increase its drilling activities onshore North America. Most of the onshore program targets resource plays in the U.S. and Canada and includes development of existing fields as well as several pilots to test new plays. The Company will also be active throughout 2006 on two longer-term development projects approved over the last five months, the South Coast gas project offshore South Africa and the Oooguruk oil field development offshore the North Slope of Alaska. Exploration wells are currently drilling in Alaska and offshore Nigeria, and Pioneer also expects increased activity on its acreage in Tunisia this year.

Earnings Conference Call

This morning at 10:00 a.m. Eastern, Pioneer will discuss its fourth quarter financial and operating results with an accompanying presentation. The call will be webcast on Pioneer’s website,www.pxd.com. At the website, select ‘INVESTOR’ at the top of the page. For those who cannot listen to the live broadcast, a replay will be available shortly after the call. Or you may choose to dial (800) 310-1961 (confirmation code: 6669436) to listen to the call by telephone and view the accompanying visual presentation at the website above. A telephone replay will be available by dialing (888) 203-1112 (confirmation code: 6669436).

Pioneer is a large independent oil and gas exploration and production company, headquartered in Dallas, with operations in the United States, Canada and Africa. For more information, visit Pioneer’s website at www.pxd.com.

Except for historical information contained herein, the statements in this News Release are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements and the business prospects of Pioneer are subject to a number of risks and uncertainties, which may cause Pioneer’s actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties include, among other things, volatility of oil and gas prices, product supply and demand, competition, the ability to obtain environmental and other permits and the timing thereof, other government regulation or action, international operations and associated international political and economic instability, litigation, the costs and results of drilling and operations, availability of drilling equipment, Pioneer’s ability to replace reserves, implement its business plans (including its plans to complete certain asset divestments and to repurchase stock at favorable prices), or complete its development projects as scheduled, access to and cost of capital, uncertainties about estimates of reserves, quality of technical data, environmental and weather risks, acts of war or terrorism. These and other risks are described in Pioneer’s 10-K and 10-Q Reports and other filings with the Securities and Exchange Commission.

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

	December 31,			December 31,
	2005			2004
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	18,802		$	7,257
Accounts receivable, net		337,658			209,936
Inventories		79,659			40,332
Prepaid expenses		18,091			10,822
Deferred income taxes		158,878			115,206
Other current assets, net		10,716			9,872
Total current assets		623,804			393,425
Property, plant and equipment, at cost:
Oil and gas properties, using the successful efforts method of accounting		8,813,134			8,124,616
Accumulated depletion, depreciation and amortization		(2,577,946	)		(2,243,549	)
Total property, plant and equipment		6,235,188			5,881,067
Deferred income taxes		—			2,963
Goodwill		311,651			320,900
Other assets, net		158,591			135,132
	$	7,329,234		$	6,733,487
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	345,204		$	216,051
Interest payable		40,314			45,735
Income taxes payable		22,470			13,520
Deferred revenue		190,327			—
Other current liabilities		435,040			269,153
Total current liabilities		1,033,355			544,459
Long-term debt		2,058,412			2,385,950
Deferred income taxes		767,329			612,435
Deferred revenue		664,511			—
Other liabilities and minority interests		588,525			358,863
Stockholders’ equity		2,217,102			2,831,780
	$	7,329,234		$	6,733,487

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

	Three months ended						Year ended
	December 31,						December 31,
	2005			2004			2005			2004
	(Unaudited)			(Unaudited)			(Unaudited)
Revenues and other income:
Oil and gas	$	622,207		$	501,627		$	2,215,677		$	1,767,371
Interest and other		11,361			9,517			97,050			14,074
Gain on disposition of assets, net		57,733			69			60,496			39
		691,301			511,213			2,373,223			1,781,484
Costs and expenses:
Oil and gas production		118,449			93,400			449,320			316,107
Depletion, depreciation and amortization		136,258			150,506			568,018			556,264
Impairment of long-lived assets		—			4,859			644			39,684
Exploration and abandonments		83,080			28,517			266,751			180,750
General and administrative		33,005			25,456			124,556			80,302
Accretion of discount on asset retirement obligations		1,666			2,198			7,876			8,210
Interest		35,056			35,582			127,787			103,387
Other		45,337			22,705			112,812			33,687
		452,851			363,223			1,657,764			1,318,391
Income from continuing operations before income taxes		238,450			147,990			715,459			463,093
Income tax provision		(98,006	)		(50,476	)		(291,728	)		(164,164	)
Income from continuing operations		140,444			97,514			423,731			298,929
Income from discontinued operations, net of tax		335			4,534			110,837			13,925
Net income	$	140,779		$	102,048		$	534,568		$	312,854
Basic earnings per share:
Income from continuing operations	$	1.10		$	.68		$	3.09		$	2.39
Income from discontinued operations, net of tax		.01			.03			.81			.11
Net income	$	1.11		$	.71		$	3.90		$	2.50
Diluted earnings per share:
Income from continuing operations	$	1.07		$	.66		$	3.02		$	2.35
Income from discontinued operations, net of tax		.01			.03			.78			.11
Net income	$	1.08		$	.69		$	3.80		$	2.46
Weighted average shares outstanding:
Basic		127,243			144,249			137,110			125,156
Diluted		131,465			148,840			141,417			127,488

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

	Three months ended						Year ended
	December 31,						December 31,
	2005			2004			2005			2004
	(Unaudited)			(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net income	$	140,779		$	102,048		$	534,568		$	312,854
Depletion, depreciation and amortization		136,258			150,506			568,018			556,264
Impairment of long-lived assets		—			4,859			644			39,684
Exploration expenses, including dry holes		52,096			9,985			147,897			93,063
Deferred income taxes		79,303			44,377			236,586			138,877
Gain on disposition of assets, net		(57,733	)		(69	)		(60,496	)		(39	)
Loss (gain) on extinguishment of debt		—			(95	)		25,975			(95	)
Accretion of discount on asset retirement obligations		1,666			2,198			7,876			8,210
Discontinued operations		20			5,948			(84,098	)		21,587
Interest expense		1,823			249			6,093			(12,208	)
Commodity hedge related activity		30,306			(11,258	)		21,237			(45,102	)
Amortization of stock-based compensation		7,238			4,709			26,857			12,503
Amortization of deferred revenue		(21,817	)		—			(75,773	)		—
Other noncash items		11,253			10,516			22,030			17,008
Changes in operating assets and liabilities, net of effects from acquisition and disposition:
Accounts receivable, net		(82,760	)		(28,286	)		(128,015	)		(73,376	)
Inventories		(15,281	)		(4,273	)		(36,948	)		(14,025	)
Prepaid expenses		201			3,008			(7,504	)		974
Other current assets, net		(102	)		(875	)		(226	)		262
Accounts payable		64,822			28,023			102,116			250
Interest payable		18,842			19,973			(7,115	)		5,533
Income taxes payable		3,345			377			8,950			3,372
Other current liabilities		1,677			(5,358	)		(13,362	)		(14,037	)
Net cash provided by operating activities		371,936			336,562			1,295,310			1,051,559
Net cash provided by (used in) investing activities		(217,514	)		(180,719	)		84,734			(1,478,533	)
Net cash provided by (used in) financing activities		(200,039	)		(151,947	)		(1,371,790	)		414,258
Net increase (decrease) in cash and cash equivalents		(45,617	)		3,896			8,254			(12,716	)
Effect of exchange rate changes on cash and cash equivalents		(89	)		412			3,291			674
Cash and cash equivalents, beginning of period		64,508			2,949			7,257			19,299
Cash and cash equivalents, end of period	$	18,802		$	7,257		$	18,802		$	7,257

PIONEER NATURAL RESOURCES COMPANY
SUMMARY PRODUCTION AND PRICE DATA
(Unaudited)

		Three months ended				Year ended
		December 31,				December 31,
		2005		2004		2005		2004
Average Daily Sales Volumes from Continuing Operations:
Oil (Bbls) -	U.S.		28,565		25,857		25,943		24,700
	Argentina		7,564		7,662		7,869		8,534
	Canada		258		206		210		72
	Africa		8,222		13,734		10,065		11,676
	Worldwide		44,609		47,459		44,087		44,982
Natural gas liquids (Bbls) -	U.S.		19,086		19,296		17,402		19,678
	Argentina		1,854		1,537		1,824		1,546
	Canada		481		454		503		425
	Worldwide		21,421		21,287		19,729		21,649
Gas (Mcf) -	U.S.		450,286		540,294		497,068		516,294
	Argentina		140,025		128,247		137,032		121,654
	Canada		37,220		31,501		36,427		25,606
	Worldwide		627,531		700,042		670,527		663,554
Average Daily Sales Volumes from Discontinued Operations:
Oil (Bbls) -	U.S.		—		1,876		1,279		1,937
	Canada		—		50		28		65
	Worldwide		—		1,926		1,307		2,002
Natural gas liquids (Bbls) -	U.S.		—		52		65		60
	Canada		—		394		112		492
	Worldwide		—		446		177		552
Gas (Mcf) -	U.S.		—		6,166		4,136		5,545
	Canada		—		15,790		6,489		16,261
	Worldwide		—		21,956		10,625		21,806
Average Reported Prices (a):
Oil (per Bbl) -	U.S.	$	32.83	$	32.50	$	31.09	$	29.69
	Argentina	$	40.80	$	31.87	$	36.88	$	28.06
	Canada	$	52.99	$	50.55	$	52.12	$	48.37
	Africa	$	59.16	$	44.54	$	53.00	$	38.12
	Worldwide	$	39.15	$	35.96	$	37.22	$	31.60
Natural gas liquids (per Bbl) -	U.S.	$	36.80	$	30.25	$	31.72	$	25.05
	Argentina	$	39.42	$	33.49	$	33.17	$	29.91
	Canada	$	53.88	$	39.12	$	45.79	$	32.03
	Worldwide	$	37.41	$	30.68	$	32.22	$	25.54
Gas (per Mcf) -	U.S.	$	8.17	$	5.22	$	6.83	$	5.14
	Argentina	$	.95	$	.77	$	.88	$	.66
	Canada	$	10.83	$	5.58	$	7.67	$	4.72
	Worldwide	$	6.72	$	4.42	$	5.66	$	4.30

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

PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
(in thousands)
(Unaudited)

     EBITDAX and discretionary cash flow (“DCF”) (as defined below) are presented herein, and reconciled to the generally accepted accounting principle (“GAAP”) measures of net income and net cash provided by operating activities because of their wide acceptance by the investment community as financial indicators of a company’s ability to internally fund exploration and development activities and to service or incur debt. The Company also views the non-GAAP measures of EBITDAX and DCF as useful tools for comparisons of the Company’s financial indicators with those of peer companies that follow the full cost method of accounting. EBITDAX and DCF should not be considered as alternatives to net income or net cash provided by operating activities, as defined by GAAP.

	Three months ended						Year ended
	December 31,						December 31,
	2005			2004			2005			2004
Net income	$	140,779		$	102,048		$	534,568		$	312,854
Depletion, depreciation and amortization		136,258			150,506			568,018			556,264
Impairment of long-lived assets		—			4,859			644			39,684
Exploration and abandonments		83,080			28,517			266,751			180,750
Loss (gain) on extinguishment of debt		—			(95	)		25,975			(95	)
Accretion of discount on asset retirement obligations		1,666			2,198			7,876			8,210
Interest expense		35,056			35,582			127,787			103,387
Income tax provision		98,006			50,476			291,728			164,164
Gain on disposition of assets, net		(57,733	)		(69	)		(60,496	)		(39	)
Discontinued operations		20			5,966			(84,061	)		21,744
Current income taxes on discontinued operations		(328	)		—			2,541			—
Commodity hedge related activity		30,306			(11,258	)		21,237			(45,102	)
Amortization of stock-based compensation		7,238			4,709			26,857			12,503
Amortization of deferred revenue		(21,817	)		—			(75,773	)		—
Other noncash items		11,253			10,516			22,030			17,008
EBITDAX (a)		463,784			383,955			1,675,682			1,371,332
Less: Cash interest expense		(33,233	)		(35,333	)		(121,694	)		(115,595	)
Current income taxes		(18,375	)		(6,099	)		(57,683	)		(25,287	)
Discretionary cash flow (b)		412,176			342,523			1,496,305			1,230,450
Less: Cash exploration expense		(30,984	)		(18,550	)		(118,891	)		(87,844	)
Changes in operating assets and liabilities		(9,256	)		12,589			(82,104	)		(91,047	)
Net cash provided by operating activities	$	371,936		$	336,562		$	1,295,310		$	1,051,559

(a)

“EBITDAX” represents earnings before depletion, depreciation and amortization expense; impairment of long-lived assets; exploration and abandonments; gain or loss on extinguishment of debt; accretion of discount on asset retirement obligations; interest expense; income taxes; gain or loss on disposition of assets; noncash effects from discontinued operations; commodity hedge related activity; amortization of stock-based compensation; amortization of deferred revenue; and other noncash items.

(b)

Discretionary cash flow equals cash flows from operating activities before changes in operating assets and liabilities and before cash exploration expense.

PIONEER NATURAL RESOURCES COMPANY
SUPPLEMENTAL INFORMATION
As of February 7, 2006

Open Commodity Hedge Positions

	2006
	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter		Year		2007		2008
Average Daily Oil Production Hedged:
Swap Contracts:
Volume (Bbl)		10,000		10,000		10,000		10,000		10,000		13,000		17,000
NYMEX price (per Bbl)	$	31.69	$	31.69	$	31.69	$	31.69	$	31.69	$	30.89	$	29.21
Collar Contracts:
Volume (Bbl)		8,500		9,000		9,500		9,500		9,129		4,500		—
NYMEX price (per Bbl):
Ceiling	$	73.43	$	74.63	$	75.70	$	75.70	$	74.92	$	90.43	$	—
Floor	$	43.82	$	44.17	$	44.47	$	44.47	$	44.25	$	50.00	$	—
Average Daily Gas Production Hedged:
Swap Contracts:
Volume (MMBtu)		73,710		73,790		73,880		73,984		73,842		29,195		5,000
NYMEX price (per MMBtu) (a)	$	4.30	$	4.30	$	4.30	$	4.30	$	4.30	$	4.30	$	5.40
Collar Contracts:
Volume (MMBtu)		200,000		110,000		110,000		120,000		134,712		215,000		—
NYMEX price (per MMBtu) (a):
Ceiling	$	13.95	$	14.65	$	14.65	$	14.85	$	14.45	$	11.95	$	—
Floor	$	7.10	$	6.85	$	6.85	$	6.85	$	6.95	$	6.70	$	—

(a) Approximate, based on historical differentials to index prices.

Amortization of Volumetric Production Payment Proceeds and Net Derivative Losses
(in thousands)

	2006
	First			Second		Third		Fourth
	Quarter			Quarter		Quarter		Quarter			Year			2007			Thereafter			Total
VPP proceeds, net of transaction costs	$	46,393		$	46,321	$	45,838	$	45,527		$	184,079		$	175,216		$	460,322		$	819,617
Net hedge obligations assigned		1,556			1,565		1,558		1,569			6,248			6,016			22,957			35,221
Total deferred revenue (a)		47,949			47,886		47,396		47,096			190,327			181,232			483,279			854,838
Less net derivative losses to be recognized in pretax earnings (b)		(4,768	)		30		274		(396	)		(4,860	)		(3,540	)		(17,117	)		(25,517	)
Total VPP impact to pretax earnings	$	43,181		$	47,916	$	47,670	$	46,700		$	185,467		$	177,692		$	466,162		$	829,321

(a)	Deferred revenue will be amortized as increases to oil and gas revenues during the indicated future periods.
(b)	Represents the remaining pretax earnings impact of the derivatives assigned in the VPPs.